follow us Twitter Facebook
<< Back to News

Oil and Gas Roundup — July 1

July 01, 2013
TOPICS: In the news

A roundup of oil and natural gas news from around the state, nation and world:

Sinopec completes Chesapeake deal


BEIJING — China Petrochemical Corporation (Sinopec) said on Saturday that it has completed the purchase of 50 percent of Chesapeake's share in its Mississippi Lime assets for 1.02 billion U.S. dollars.


Chesapeake is the second-largest natural gas developer in the United States and its Mississippi Lime oil and natural gas assets are in northern Oklahoma.

Sinopec signed the agreement with Chesapeake on Feb. 23 through its wholly owned subsidiary Sinopec International Petroleum Exploration and Production Corporation.


The deal means Sinopec acquires 425,000 acres in the Mississippi Lime shale formation, with estimated proven and probable oil equivalent of 245 million barrels.

Sinopec bought one-third of the Devon Energy Corporation's gas reserves for $2.5 billion U.S. in 2012.



Energy Secretary Moniz defends safety of HF


The president’s Climate Action Plan last week reinforced the important role natural gas production will continue to play in America’s energy future. And according to Ernest Moniz, secretary of the U.S. Department of Energy, the states are critical in making sure this development is properly carried out.


As Brian Scheid writes in Platts Gas Daily:


“Energy Secretary Ernest Moniz, in his first interview since taking office last month, expressed firm support for the domestic natural gas industry, both in stressing his desire to quickly approve liquefied natural gas exports and backing the role of states in regulating hydraulic fracturing.


“‘I think in the end there has to be a very, very strong state role there’ for states, Moniz said in an interview set to air Sunday on Platts Energy Week. ‘The situations are different in different states, the geologies are different,’ he said…”


Secretary Moniz isn’t alone in his opinion. Former EPA administrator Lisa Jackson has strongly defended state regulation of oil and gas development — including hydraulic fracturing — stating in 2011: “We have no data right now that lead us to believe one way or the other that there needs to be specific federal regulation of the fracking process.”


Jackson continued in her interview by observing, “States are stepping up and doing a good job. It doesn’t have to be EPA that regulates the 10,000 wells that might go in.” EPA’s Drinking Water Division Director Steve Heare has also said states are doing a “good job” regulating hydraulic fracturing.


It’s not surprising states have received this praise given the proven safety record of hydraulic fracturing over its 60-plus year lifespan. But in addition to the strong state role, shale development is also regulated by no fewer than eight federal laws.


As EID has reported on in the past, a 2012 Government Accountability Office study cites specific federal environmental and public health laws that govern the entire shale development process, including but not limited to the Safe Drinking Water Act (SDWA), which applies to disposal wells, the Clean Water Act, the Clean Air Act and the Emergency Planning and Community Right-to-Know Act, among others.


While states are and should be taking the lead, the notion that this development is somehow exempt from federal regulation is clearly a bogus talking point.

Moniz also emphasized the manageability of environmental concerns related to hydraulic fracturing, notably in regard to methane leakage. As Moniz told Platts:


“I think the issues in terms of the environmental footprint of hydraulic fracturing are manageable,” he said. “They’re challenging, but manageable.”


Read more:



Columnist: Shale boom will not stop with the U.S.


The success of the shale revolution will be slow to replicate outside the United States because of limited access to drilling equipment and skilled personnel, according to influential oil analyst Leonardo Maugeri.


Maugeri has produced a thoughtful assessment of the U.S. oil industry. But he is too pessimistic about the potential for shale production in the rest of the world and its role in restraining medium-term and long-term oil prices.


“The drilling-intense nature of the shale business is a factor that will make the expansion of the shale phenomenon in other parts of the world improbable — at least in this decade,” according to Maugeri, a former executive at oil company ENI and now a scholar at Harvard University's Belfer Center for Science and International Affairs.


“No other country can likely match even a fraction of the U.S. drilling and fracking power,” Maugeri explains in a report published on Thursday. “No other country ... has the specialised crews, tools and capabilities to perform intensive fracking activity.”


The report's main shortcoming is treating the global drilling fleet as fixed. That may be true in the very short term, but over a five-year or 10-year horizon the rig fleet will respond to changes in industry practices and price incentives.


The industry will need a much larger fleet of smaller and cheaper rigs for drilling on land.


The crucial questions are how high oil and gas prices need to be encourage the expansion and how quickly it can be accomplished.


Read more from Reuters columnist John Kemp:



In Texas shale patch, drillers bring power to the pump


In the remote Eagle Ford shale fields of South Texas, drillers racing to pump crude from new wells are finding themselves in a most unexpected line of work: the utility business.


Struggling to tap into a regional electricity grid built for small towns and vast cattle ranches, companies including Marathon Oil Corp are saving time by installing new power lines themselves. Despite the heavy initial outlays, the new lines will reduce power costs at some of the 5,000 wells drilled across the region.


Power sales into the Eagle Ford region have surged fourfold in the past two years, according to AEP Texas, a unit of American Electric Power, which operates high-voltage transmission lines and a distribution network across much of South Texas. Last year, demand for power increased by 373 megawatts, equivalent to nearly 400 new Walmart stores.


The boom arrived without warning as hydraulic fracturing and horizontal drilling allowed drillers to tap shale reserves, and it has transformed the rural landscape into a thriving hub of energy activity. Oil output has risen from nothing to 500,000 barrels per day in three years. Eagle Ford may top 1 million bpd next year, which would make it the country's largest onshore oil source.


“We were never ready for that,” says Robert Knowles, an AEP Texas distribution engineer.


Read more:


<< Back to news