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Oil and Gas Roundup — August 23

August 23, 2013
TOPICS: In the news
A roundup of oil and natural gas news from around the state, nation and world:

Column: No security in higher oil, gas taxes

For more than a year, we’ve heard President Barack Obama proclaim that he supports an “all-of-the-above” energy strategy for America, including increased oil and gas production. But his actions suggest otherwise.

At present, all of the Atlantic and Pacific seaboards, along with the vast majority of federally owned lands, remain off-limits to new exploration and production. The Bureau of Safety and Environmental Enforcement continues to “slow-walk” permits for deepwater drilling in the Gulf of Mexico, and the new secretary of the Department of Energy, Ernest Moniz, has indicated his agency will “take its time” in approving new export terminals for liquefied natural gas.

The president’s delay and indecision regarding the Keystone XL pipeline that would transport heavy crude oil from Alberta to refineries along the Texas/Louisiana Gulf Crescent also belies Mr. Obama’s commitment to “all-of-the-above.”

Now the president is calling for $90 billion in higher taxes on the U.S. oil and gas industry in his fiscal year 2014 budget. These revenues would be raised largely by disallowing the expensing of intangible drilling costs, repealing the percentage depletion allowance, and prohibiting oil and gas companies from utilizing several provisions of the tax code available to all other industries.

Since 1913, oil and gas companies have been able to expense intangible drilling costs which are much like the research and development deductions enjoyed by other industries. Eliminating this deduction would discourage innovation in the energy sector, thereby jeopardizing valuable advances in oil and gas exploration.

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Shale, hydraulic fracturing are not the main cause of Texas water shortages

One of the challenging aspects of shale oil and gas development in the United States comes from the fact that some of the large shale reservoirs are located in areas that are arid or semi-arid.  Some, like the Eagle Ford and Cline Shales in Texas and the Niobrara in Colorado, are affected by ongoing drought conditions.  This reality can make the sourcing of water for hydraulic fracturing operations a difficult undertaking.

This situation can also result in the industry taking full blame for water shortage issues in misleading and distorted media reports, like one that ran in the U.K. Guardian on Aug. 11. The article, which unfortunately has led to a series of follow-up pieces in other media outlets, spends its first 500 words or so placing full blame for chronic water shortages in and near Barnhart, Texas on the very recent boom in the oil and gas industry.   

While it finally does get around to at least indirectly admitting the real, far more complex crux of the matter in its final few paragraphs, the writer achieves her obviously intended effect of drumming up alarm about the Texas oil and gas boom.

What is the real crux of the matter?  First, take a look at a map and see where Barnhardt is actually located:  southwest of San Angelo, east of Fort Stockton, in the middle of the West Texas desert.  This area has always, since human beings began settling it, experienced water shortages and wells periodically running dry.

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National Journal sits down with Continental’s Harold Hamm

WILLISTON, N.D.—Washington's fixation on Harold Hamm, the onetime top energy adviser to Republican presidential candidate Mitt Romney, has waned since the former Massachusetts governor lost the 2012 race. But as long as America is booming with oil, as it is here in the Bakken shale-oil fields of North Dakota, Hamm will be more relevant than he ever was in Romney's campaign.

In an interview over biscuits and gravy at a Holiday Inn Express off an ugly industrial-lined highway in the heart of America's oil boom, Hamm weighed in on fracking (doesn't want federal regulations), climate change (suggests population control), and wind power (he's not a fan).

NJ: The Interior Department is finalizing rules that will strengthen regulations on oil and natural-gas drilling operations on federal lands. This includes hydraulic fracturing, or fracking, the controversial technology environmentalists have blamed for water and air contamination. How will these regulations affect your business?

Hamm: State regulators have done an awfully good job. [North Dakota] is no exception. Finest regulators that exist anywhere.... You have to comply with [the regulations]. Getting leases from the federal government in some places is just nonexistent. We've got instances where we've been waiting on leases to be put up for sale. We've been waiting two or three years.

NJ: Will the fracking regulations slow drilling in the Bakken?

Hamm: It all does. It needs to be left to the state. The geology differs state by state. The conditions differ state by state. Most of the rules we're involved with from a regulatory aspect have been adopted from the early producing states — Oklahoma, Texas.

NJ: How is the Obama administration doing overall with its energy policies?

Hamm: I think there has just been a bias against fossil fuels.

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Investor T. Boone Pickens more in love with NG than ever

DALLAS — Investor T. Boone Pickens hasn’t changed his tune about getting the U.S. off dependence on foreign oil and onto plentiful natural gas for Class 8 trucks and other vehicles, with maybe one exception. Natural gas is an even more plentiful fuel than he originally thought — able to supply the nation’s needs for “well over 100 years,” he said.

“In America we’re together on energy: We have plenty of resources so we don’t have to do business with anyone we don’t want to,” notably the OPEC oil cartel, Pickens told attendees of the annual Commercial Vehicle Outlook Conference here before the start of the Great American Trucking Show.

For the record, Pickens is in favor of doing business with Mexico and Canada, and he said he wants the U.S. to have “an energy policy” to help make that possible and to more quickly advance natural gas development and infrastructure.

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Midstates Petroleum to add 130 Oklahoma jobs

TULSA (AP) — Midstates Petroleum Inc. plans to hire about 130 people by the end of the year to work in the Mississippi Lime oil fields in northern Oklahoma, company officials said.

The Houston-based company expanded into Oklahoma this year when it acquired assets from Tulsa-based Eagle Energy LLC and Panther Energy.
Midstates Chief Operating Officer Steve Pugh said Wednesday that the company expects to have about 100 employees in Tulsa by the end of the year, along with about 30 employees in the field, he told the Tulsa World.

"One year ago, Midstates didn't have an office. We didn't have an operation in Oklahoma," Pugh said. "I'm happy to say today we have over 50 employees."

Midstates Petroleum says the company will extend employment offers to 64 employees who'd worked at Panther Energy.

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