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Oil and Gas Roundup — July 12

July 12, 2013
TOPICS: In the news
A roundup of oil and natural gas news from around the state, nation and world:

Study: Delaying IDC recovery to result in U.S. production, job loss

Delaying the oil and gas industry’s ability to quickly recover intangible drilling costs (IDC) would lead to significant losses in oil and gas production and jobs, and negatively affect the economics of many key oil and gas plays, according to a recent report commissioned by the American Petroleum Institute (API).

Delaying IDC deductions would have a “significant and immediate effect” on U.S. oil and gas production, resulting in a production loss in 2023 of 3.8 million barrels of oil equivalent per day from U.S. oil and gas fields, according to Wood Mackenzie, which conducted the study on API’s behalf.

Both liquids and gas production would be impacted if IDC deductibility timing is altered. By delaying IDC recovery, Wood Mackenzie estimates that, by 2023, total cumulative production of 8.9 billion barrels of oil equivalent would be lost.

“The oil and gas industry has been a bright spot for the United States, benefiting both consumers and manufacturers nationwide,” said Stephen Comstock, director of tax and accounting policy at API, in a conference call Thursday.

However, exploration and production is expensive, requiring significant financial investment before a return can be seen.

IDCs allow oil and gas companies to recover non-salvageable expenses for oil and gas drilling quickly, treating them similar to operating costs. Allowing a quick recovery of IDCs improves cash flow for oil and gas companies, allowing them to reinvest in drilling, “creating more jobs, helping to grow the economy and generating more revenue for the U.S. government without raising taxes,” Comstock noted.

Oil and gas companies can currently recover non-salvageable expenses quickly, treating them similar to operating costs.  However, lawmakers and the Obama administration have sought to repeal IDCs, which have existed for oil and gas since the early 20th century, while keeping similar measures for other industries, Comstock said.

Read more:

Washington Times column: Fracking is greener than critics claim

The only thing deeper than a natural-gas well is the ignorance of the anti-fracking crowd.

Fracking — formally called hydraulic fracturing — involves briefly pumping water, sand and chemicals into shale formations far below Earth’s surface and the aquifers that irrigate crops and quench human thirst. This process cracks these rocks and liberates the gas within. Though employed for decades with seemingly no verified contamination of groundwater, anti-fracking activists behave as though this technology were invented specifically to poison Americans.

“Fracking makes all water dirty,” declares a poster that Yoko Ono recently exhibited at a Manhattan carpet store. According to another: “Pretty soon there will be no more water to drink.”

Matt Damon’s 2012 film “Promised Land” dramatizes fracking’s supposed dangers by showing a toy farm devoured by flames.

In contrast to this hyperventilation, former Environmental Protection Agency Administrator Lisa P. Jackson told the House Oversight and Government Reform Committee in May 2011, “I’m not aware of any proven case where the fracking process itself has affected water.”

Frackophobes would be astonished to see how much Anadarko Petroleum Corp., America’s third-largest natural-gas producer, obsesses over the environment in its Marcellus Shale operations. Anadarko and the American Petroleum Institute discussed these practices during a late-June fact-finding tour they hosted for journalists here.

Before drilling, Anadarko identifies flora and fauna near production sites. In Pennsylvania, it uses outdoor cameras to determine which animals traverse the area. This helps Anadarko work with landowners to restore their property, post-production, or enhance it with vegetation that will attract desired species.

Read more:

State of Colorado joins trade group in fracking suit against county

A judge in Boulder County is allowing state regulators to join a lawsuit the Colorado Oil and Gas Association has filed challenging Longmont's ban on hydraulic fracturing.

The Longmont Times-Call reports ( the decision lets the trade association add the Colorado Oil and Gas Conservation Commission as another plaintiff.

Longmont voters passed the ban on hydraulic fracturing last November. Fracking involves blasting underground rock formations with water, sand and chemicals so oil and natural gas can escape.

Industry officials are challenging the ban because they want to be able to extract oil and gas through hydraulic fracturing, which they have done for years. Meanwhile the commission says it has regulatory authority over technical aspects of drilling.

The commission also is suing Longmont over drilling regulations passed by City Council.

Purestream deploys water-treatment system in shale play

Purestream Services has deployed its AVARA brand vapor recompression commercial water-treatment system for an Arkansas Fayetteville Shale gas producer in White County, Ark., Oil & Gas Journal reports.

The company has been contracted to treat the wastewater at a centralized water treatment facility near Searcy, Arkansas. The facility was built to accommodate produced water from shale gas wells operating in the vicinity. Treating wastewater nearer to the source of the production reduces the costs of processing the produced and frack flowback water and minimizes the environmental impacts of hauling the wastewater long distances.

Purestream utilizes two technologies in the treatment process: the Induced-Gas Flotation (IGF) technology clarifies water by removing hydrocarbons and total suspended solids to below 10 ppm, and the AVARA Vapor Recompression System removes chlorides and total dissolved solids from the wastewater to below 300 ppm.

The treated, distilled, water product is reportedly cleaner than US drinking water quality standards and is suitable for discharge. This technology allows producers to integrate new water treatment options into existing operations often at or below disposal and sourcing costs.
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