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Oil and Gas Roundup — Sept. 4

September 04, 2013
TOPICS: In the news

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

U.S. energy lifting economy more than expected


Newly found sources of domestic oil and natural gas are having an even bigger impact on the economy than first projected, adding more than $1,200 last year to the discretionary income of the average U.S. family, a new study says.


The explosion in domestic energy production now supports 1.2 million jobs, directly or indirectly, says consulting firm IHS, in a study released Wednesday. That number will grow to 3.3 million by 2020, and new energy's contribution to U.S. families' disposable incomes will hit $2,000 per household per year by 2015, said IHS.


IHS' numbers are larger than findings by other economists, which also point to a major impact from shale oil and gas. The introduction of technologies like hydraulic fracturing and horizontal drilling, which made it practical to recover previously unused oil reserves, has helped drive a 58% increase in natural gas reserves since 2007, cut the price of natural gas by nearly three-fourths, and sparked more than $120 billion in U.S.-based investment last year, IHS said. Its study was partly financed by a number of energy and manufacturing industry groups.


"Anyone who doubts the reality of this is not paying attention,'' said John Larson, vice president of IHS and co-leader of a team of 13 contributors from the firm's energy, economics and manufacturing-industry consulting groups. "You're seeing the production numbers in both gas and oil to support it.''


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U.S. SEC will rewrite contested disclosure rule


The Securities and Exchange Commission will not appeal a US District Court ruling that vacated an agency decision to force oil, natural gas, coal and other companies to publicly disclose payments made to foreign governments, it said Tuesday.


Instead, the SEC, on the last day it had to appeal the July decision, said it would rewrite the financial disclosure rule.


"The court remanded the matter for further SEC proceedings, which the commission will undertake informed by the court's decision," SEC spokesman John Nester said in a statement.


The US District Court for the District of Columbia had sided with arguments from the American Petroleum Institute, US Chamber of Commerce and other plaintiffs that the SEC, in writing regulations based on the Dodd-Frank Wall Street reform law, "misread the statute to mandate public disclosure of the reports."


The court also ruled that the SEC's decision to deny any exemption to the rule, as requested by industry groups, "was, given the limited explanation provided, arbitrary and capricious."


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Research examines changing role of patents in natural gas industry


New research from Penn State and the University of Alberta suggests that patents related to hydraulic fracturing can be used in the industry to limit the availability of information about the fluids expended as part of the natural gas extraction process.


Though a variety of stakeholders have increasingly questioned potential environmental, safety, and health hazards related to hydraulic fracturing, many of the components used during hydraulic fracturing operations cannot be identified because “they are withheld as proprietary or trade secrets,” according to the researchers.


Researcher Dan Cahoy, a Smeal professor of business law, and colleagues Zhen Lei from Penn State’s College of Earth and Mineral Sciences along with Joel Gehman from the University of Alberta School of Business have found that patents may be controlling or limiting the release of significant information when it comes to certain aspects of hydraulic fracturing.


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Keystone decision not likely until 2014; senators urge end to delays


The fate of TransCanada's Keystone XL pipeline isn't likely to be determined until 2014, almost a decade after the Calgary-based energy giant first conceived of the project.


The U.S. State Department said in a recent statement to the media that it won't release its final environmental assessment of the $7 billion pipeline until it's pored over and published more than a million public comments on its draft ecological analysis. Those efforts, ongoing since March, could be completed this week.


Then, State Department officials begin a 90-day review of whether the pipeline is in the U.S. national interest, a determination that can be appealed by other federal agencies for 15 days. That likely pushes an ultimate decision on the pipeline by U.S. President Barack Obama into the new year.


TransCanada wouldn't comment on the prospect of the approval process stretching into 2014.


"This is a process that is controlled by the Department of State, not TransCanada," said company spokesman Shawn Howard on Tuesday.


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New Zealand oil, gas blocks attract interest despite exploration failures


Foreign interest in New Zealand oil and gas exploration is running high despite a lack of significant finds in recent years coupled with slumping output from the country's only producing field.


The New Zealand government, eager to beef up oil-export earnings and trim dependency on agriculture, says its latest offering of onshore and offshore blocks has attracted more inquiries than previous rounds and exploratory drilling this Southern Hemisphere summer is set to be the busiest in recent history.


Crude oil is the fourth-biggest component of New Zealand's export basket in value terms after dairy, meat and wood. However, production has fallen over the past five years, with 2012 oil output averaging 40,300 barrels a day, down 13% on year and nearly a third compared with 2008. Natural gas production rose 7% in 2012.


The government is offering eight onshore and offshore blocks covering more than 190,000 square kilometers, with bids due in by Sept. 26 and successful bidders to be named by the end of the year.


The number of data packs requested by potential bidders is "substantially higher" than in previous rounds, Kevin Rolens, director of New Zealand Petroleum & Minerals, said in an interview.


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BNSF Railway is spending $240 million in Texas this year


BNSF Railway Co. will spend an estimated $240 million on maintenance and rail-capacity expansion projects in Texas this year, including $50 million for a South San Antonio facility to distribute sand into the Eagle Ford Shale.


The railroad’s other Texas projects include boosting rail capacity in its hometown of Fort Worth, replacing the Galveston Causeway Bridge and expanding its Houston Intermodal Facility.


In addition, BNSF also will upgrade signal upgrades as part of a federally mandated program and continue track maintenance across the state.


“BNSF’s capital investments in Texas will help ensure our network is prepared for growing demand for freight rail,” BNSF Chairman and CEO Matthew K. Rose said in a written statement.


The Texas upgrades are part of BNSF’s record 2013 capital outlay of $4.3 billion. Since 2000, BNSF has invested more than $42 billion to improve and expand its rail network.


— Sanford Nowlin, San Antonio Business Journal

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