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Oil and Gas Roundup — Nov. 20

November 20, 2013
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

ONEOK Partners betting big in the Bakken Shale

ONEOK Partners LP will spend up to $780 million over two years on growth projects to move greater volumes of natural gas production from the prolific Bakken Shale, the Tulsa-based firm announced Tuesday.

Those plans include the new Lonesome Creek processing plant in McKenzie County, N.D., part of the Williston Basin production area. Once operational, the Lonesome Creek facility could treat 200 million cubic feet in natural gas per day.

The Lonesome Creek plant project will cost between $320 million and $390 million. It will be ONEOK Partners’ largest natural gas processing plant in North Dakota and raise its processing capacity to 800 million cubic feet per day statewide.

ONEOK Partners also will complete its second expansion of the Bakken NGL Pipeline, increasing that system’s capacity by 25,000 barrels to 160,000 barrels per day.

"Production in the Williston Basin continues to increase with no signs of leveling off or slowing," ONEOK Partners President Terry K. Spencer said in a statement. "The new Lonesome Creek plant and related infrastructure will be well-positioned to capitalize on existing ONEOK Partners assets and provide producers in the area with essential natural gas processing capacity.

"This additional expansion of our Bakken NGL Pipeline will allow us to transport additional natural gas liquids (NGL) volumes from the Lonesome Creek plant to our Mid-Continent NGL infrastructure," he added.

Read the Tulsa World story:

WPX Energy funds documentary about fracking

Lights, camera, fracking.

WPX Energy Inc. hasn't gone Hollywood, but it and other oil and gas industry insiders say they need to fight fire with film. The Tulsa-based WPX has funded a new documentary, "Down Deep," which explores and works to debunk the various allegations made by opponents of hydraulic fracturing.

The 26-minute piece was the brainstorm of WPX CEO Ralph Hill, who sees it as an innovative way of spreading the message that fracking is safe and necessary for the U.S. energy future. "Down Deep" follows anti-fracking productions such as the documentary "Gasland" and the Matt Damon vehicle "Promised Land."

"What I see is certain people taking potshots" at the industry without including the facts about the practice, Hill said. Hydraulic fracturing is using a water, sand and chemical mix to blast holes into shale rock and capture oil and gas trapped far below the surface.

Read the Tulsa World story:

Hydraulic fracturing sees widespread support in new poll

More than half of people in a new survey support hydraulic fracturing, or fracking, even in the towns where they live.

Fifty-six percent of people with an opinion about fracking support the process, which extracts natural gas from shale, according to a survey released Monday by the Robert Morris University Polling Institute. Forty-four percent are against fracking, the poll said.

Furthermore, after receiving a balanced presentation from energy and environmental groups, 42 percent strongly supported fracking, 33 percent were against it either somewhat or strongly, and 25 percent weren't sure.

Fracking supporters noted that fracking can help the United States gain energy independence and boost the economy.

Read more:

ConocoPhillips CEO calls for removing crude oil export ban

Removing the current ban on crude oil exports would lower consumer prices and stimulate further tight oil production,  ConocoPhillips CEO Ryan Lance told a Houston audience Tuesday.

The United States has dramatically increased its production of oil from tight formations like shale tight oil in the last five years, but refining and pipeline limitations have created bottlenecks of crude that have lowered prices and discouraged production,  Lance said at the 2013 Deloitte Oil and Gas Conference in Houston.

Most of the country’s domestic refineries are designed to process the heavy, sour crude coming from Canada and South America, while the shale regions are producing a lighter, sweet crude for which US refineries are not well-equipped.

“The refineries are tooled up for sour crudes, with only so much capacity for light sweet crudes,” Lance said. “Either you are going to shut down production, or you get wide differentials to try to incentivize capital investment in more facilities. The world needs the crude and there are places where we could export that crude into existing refineries.”

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TransCanada pushes Keystone Pipeline project start to 2016

TransCanada Corp. pushed the start date for its $5.4 billion Keystone XL oil pipeline into 2016, the second delay this year as the company awaits U.S. approval for the project.

The pipeline, which would stretch from Alberta’s oil sands to the U.S. Gulf Coast, can begin operating no sooner than two years after it gets a U.S. presidential permit, Chief Executive Officer Russ Girling said in an interview today. With the permit expected early next year, “there’s no way we can get it done faster than two years,” Girling said.

The company has previously suggested it may be able to build the northern leg of the project within two years. TransCanada split its original Keystone XL project after President Barack Obama rejected a prior route last year because of fears its path through Nebraska would threaten ecologically sensitive lands. TransCanada is currently building the southern leg, which doesn’t require a permit because it doesn’t cross the U.S. border, and has revised the route for the other portion.

The project has galvanized environmental groups that argue it will increase greenhouse-gas emissions by encouraging development of Alberta’s oil sands, which require more energy than most conventional crude production. Supporters say the oil sands will be developed with or without Keystone XL and the line’s construction will create jobs.

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U.S. shale production boosts midstream growth

US production from unconventional oil and gas production is driving demand for midstream infrastructure, and more consolidation of midstream companies is likely, the Deloitte Center for Energy Solutions said in a report released Nov. 19 at the 2013 Deloitte Oil & Gas Conference in Houston.
Growing midstream infrastructure needs could require more than $200 billion in additional investment by 2035, Deloitte said.

The use of hydraulic fracturing and horizontal drilling pushed US production in 2012 to its highest level in 16 years. Consequently, producers need more pipelines, gathering systems, and processing plants.

During 2006-12, midstream companies invested almost twice the amount as they did during 1992-2006, Deloitte said in a report entitled “The rise of the midstream: Shale reinvigorates midstream growth.” Yet despite this rise, producers in the Bakken formation of North Dakota and the South Texas Eagle Ford liquids play still need more midstream services.

The US Energy Information Administration estimates 35% of the Bakken natural gas production was flared or otherwise not marketed because of the insufficiency in the infrastructure required to store or transport it.

In the Eagle Ford, rail shipments are increasing for lack of enough pipelines to handle production volumes, much of which is now being moved by rail and truck.

Read more:
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