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Oil and Gas Roundup — March 4

March 04, 2014
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Private equity attracted to Oklahoma energy plays

Two years after selling the bulk of his company’s assets for $650 million, self-described serial entrepreneur Steve Antry is at it again.

The CEO of Tulsa-based Eagle Energy Exploration has returned to long-time backer Houston-based Riverstone Holdings LLC for a pledge of at least $300 million to hunt for oil and natural gas acreage to buy, develop and eventually sell.

Antry is one of the growing number of oil and natural gas entrepreneurs backed by more than 250 private equity firms nationwide. He spoke at the DUG (Developing Unconventional Gas) Mid-Continent conference in Tulsa on Monday

While private equity backers are looking at companies throughout the state, Antry said it is a very different kind of investor than the state saw three decades ago.

“It’s a very sophisticated investor today,” Antry said. “We have to justify every dollar we spend. It’s not like the ’80s when there was stupid money out there. This is very sophisticated money. They have ways to financially model everything. I’m a better oilman now because I’ve known Riverstone.”

The arrangement is good for the private companies funded by the investors, but it also is beneficial to Oklahoma.

Read The Oklahoman story:

Anti-HF activists (in suits) make more misleading water claims

A Boston-based group called Ceres made national and international headlines this week by claiming hydraulic fracturing has put the oil and natural gas industry on a “collision course” with other water users in some of America’s driest states.

But the group’s latest report is highly misleading and concealed key data from the news media and the public showing much smaller water impacts from oil and natural gas operations. The report also presents Ceres as a nonprofit concerned with protecting investors in oil and natural gas companies, when its membership includes environmental activist groups that openly oppose oil and natural gas production.

The recent report builds on a 2013 Ceres paper (debunked here) based on the “Aqueduct” mapping tool of the World Resources Institute. According to a Ceres press release, the WRI data shows “nearly half” of the wells fractured between Jan. 2011 and May 2013 “were in regions with high or extremely high water stress.” Ceres claims this creates “significant long-term water sourcing risks for [oil and natural gas] companies operating in these regions as well as their investors,” and puts the industry on a “collision course with other water users.”

But despite the best efforts of Ceres to portray water consumption as a high or extremely high risk to the oil and natural gas industry, the WRI data tell a much different story.

Read more:

Federal law blocking cheap American propane from reaching frozen East Coast

As freezing weather drained stockpiles of propane to their lowest seasonal level in two decades on the U.S. East Coast this month, shivering New Englanders couldn’t tap abundant supplies sailing out of Texas. They had to look 4,000 miles away to more-expensive heating fuel from Europe.

The reason? The Jones Act, a 94-year-old law that prohibits non-U.S. ships from transporting cargoes between the country’s ports. With pipelines full and not a single eligible propane tanker to deliver fuel from Houston to states such as New York, consumers have had to pay more than $100 a metric ton extra for propane from across the Atlantic.

“It’s kind of a crazy thing, where we’re sending ships to Europe and then in return, at some point in time, Europe is sending propane cargoes back to us,” Peter Fasullo, a principal at energy consultant EnVantage Inc. who has been following the natural gas liquids market for over 30 years, said by phone from Houston. “You have to think, isn’t there a more efficient way of doing this?”

This costly two-way propane trade is the latest example of how the unforeseen U.S. boom in shale oil and gas has left energy consumers and producers, such as Houston-based Enterprise Products Partners LP (EPD), complaining about outdated laws and infrastructure.

Read more:

Rail cars used to ship oil are 'unacceptable public risk,' NTSB official says

Rail tank cars being used to ship crude oil from North Dakota's Bakken region are an "unacceptable public risk," and even cars voluntarily upgraded by the industry may not be sufficient, a member of the National Transportation Safety Board said Wednesday.

The cars, known as DOT-111s, were involved in derailments of oil trains in Casselton, N.D., and Lac-Megantic, Quebec, just across the U.S. border, NTSB member Robert Sumwalt told a House Transportation subcommittee hearing.

Forty-seven people were killed and 30 buildings destroyed in the blaze ignited by the Lac-Megantic accident. The Casselton accident, which occurred half a mile outside the town, created a massive fire that burned for more than 24 hours.

The NTSB has been urging replacing or retrofitting the tank cars since 1991, but the most recent federal effort to write tougher regulations for new cars didn't get underway until 2011. An initial public comment period closed in December, and regulators are currently at work writing proposed new standard

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:

Why Putin hates fracking

Vladimir Putin just hates fracking — at least, he hates it when other countries do it. As the Russian president told an economic conference last year, in places where companies are fracking to extract natural gas, they turn on the faucet and “black stuff comes out of the tap.” Consider the environment, he begged his audience.

 While you’re at it, consider the many European countries that depend on Russia for their natural gas or might compete with it as suppliers. Think of Bulgaria, Romania, Poland; and think, especially, of Ukraine.

To be sure, there are environmental issues with fracking, or, more formally “hydraulic fracturing”: huge quantities of water laced with noxious chemicals are blasted deep under the surface of the earth to blow apart rock formations, releasing the gas and oil locked inside them. But, just as surely, the environment is not Putin’s main concern. (P.S. Russia isn’t exactly opposed to do a little fracking of its own.)

If the natural gas reserves in Ukraine are anything like as large as analysts believe—and that is a big “if,” but far from an impossibility—then the geopolitical and economic position of the former Soviet republic could be transformed; its independence from Moscow assured; its value to the West unquestioned.

Read more:
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