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Oil and Gas Roundup — Dec. 30

December 30, 2013
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Expiring tax credit to drive CNG prices higher

Natural gas vehicle drivers will likely see their gas prices go up at least 50 cents a gallon after a federal tax credit runs out at the end of the year.

“At Love's (Travel Stops), we strive to maintain the lowest retail prices for our customers,” spokeswoman Kealey Dorian said.

“The CNG tax credit expiration will cause our costs to rise, but we are working to keep the impact to our natural gas customers minimal.”

The CNG credit was part of a package of tax credit extensions that passed with last year's “fiscal cliff” settlement.

Many retailers immediately dropped their prices on the gasoline alternative once the tax credit went into effect.

Read The Oklahoman story:

Pro-gas interests decry NY inaction on fracking

Born of the energy crisis of the 1970s, gas driller Lenape Resources flourished in western New York for more than three decades — until the revolutionary technology that sparked the nation’s shale gas boom brought the industry to a screeching halt in New York under a moratorium now in its sixth year.

Today, Lenape has just five employees, down from 100 in years past. “Those five, we’re trying to give them work in Pennsylvania,” said John Holko, the company’s president. “We’re not going to be here much longer.”

As another year closes with a moratorium on hydraulic fracturing for natural gas in New York and no timetable for Gov. Andrew Cuomo to decide whether to lift it, drilling interests have all but given up on the state, and environmental groups are pressing for a permanent ban.

While other states have allowed shale development even as they scramble to draft regulations, New York has had deep shale drilling on hold since it started developing new rules in 2008. Amid intense pressure from anti-fracking groups, Cuomo has said he wants his health and environmental commissioners to take all the time they need to decide whether fracking can be done safely.

Read more:

Permian Basin booms forward

The federal government recently forecast that 2016 will bring record levels of American oil production — about 9.6 million barrels of crude per day, a record set in 1970. And the Permian Basin, of course, is expected to form a large part of that domestic energy production surge.

Already, the Permian Basin remains the biggest absolute oil producer in the country. In 2013, production grew by about 93,000 barrels per day year-over year. That’s only expected to increase as companies out here adopt the technologies that have lead to such increases in North Dakota’s Bakken shale and South Texas’ Eagle Ford shale.

Next year, the federal Energy Information Administration projects crude production in these 18 counties of West Texas and eastern New Mexico will reach 1.35 million barrels a day.

Odessa and Midland illustrate the benefits and the struggles that accompany such a feat: The lowest unemployment rates in the state and some of the lowest in the country; the most dramatic increases in gross domestic product of anywhere in the nation; Top spots Forbes’ list of best cities for jobs; growing wealth.

Read more:

API notes 23.1% rise in U.S. drilling outlays in 2012

Oil and gas producers spent an estimated $153.7 billion to drill US wells in 2012, 23.1% more than in 2011, the American Petroleum Institute said in its latest Joint Association Survey of Drilling Costs.

“The US oil and natural gas revolution is gathering momentum, as companies invest more into domestic production and expand our ability to supply America’s energy needs,” API Statistics Director Hazem Arafa said. “Companies are opening more oil and gas wells, with a rising share of new investment devoted to exploration and production of oil, both onshore and offshore.”

He said the total number of new wells increased by 5.8% to 46,736 from 2011 levels. Expenditures on oil represented 61.1% of all drilling costs in 2012, up from 49.3% in 2011. Gas well spending accounted for 30.7% of costs, down from 44.2% the previous year, he added.

“Gas production remains at historic highs, but we’re seeing that new production is following the market, where the demand for oil is driving growth,” Arafa observed.

The report also showed that expenditures on shale drilling represented 34.6% of total costs, down from 52.5% in 2011. Most of the decline was in gas well drilling, while the number of new shale oil wells rose from 3,414 in 2011 to 3,619 in 2012.

Overall investment in offshore production also increased from 6.5% of all US oil and gas production expenditures in 2011 to 7.1% in 2012, Arafa said.

— Oil & Gas Journal

Drilling in Barnett Shale slows to lowest level in nearly a decade

It has been a quiet year in the Barnett Shale.

Despite a rise in natural gas prices during 2013, the number of rigs running in the big North Texas gas field hit its lowest level in roughly a decade, according to RigData. And with permits to drill new wells falling to the lowest point since 2000, the lull seems likely to continue in 2014.

“I think it will mirror this year, maybe even be a little lower,” said Gene Powell, publisher of Powell Shale Digest, an online newsletter that follows shale formations nationwide.

Consider Devon Energy, long the field’s biggest producer. It expected to drill 180 new wells in 2013, spokesman Chip Minty said. That’s 44 percent fewer than the 322 it drilled in 2012.

Devon’s decline is much bigger than the average for all Barnett Shale producers, which pared back drilling overall by less than 10 percent from 2012. But in 2013, all the numbers are down.

Read more:

The Weekly Oil & Gas Follies

Each week, Forbes and Energy In Depth columnist David Blackmon will “briefly chronicle the week’s silliness, foibles, fake news and real news related to the oil and natural gas industry.”

Check out this week’s here:
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