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Oil and Gas Roundup — March 18

March 18, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Report: Removing U.S. oil ban would create jobs beyond drilling

Lifting a 40-year-old U.S. ban on crude exports would create a wide range of jobs in the oil drilling supply chain and broader economy even in states that produce little or no oil, according to a report released on Tuesday.

Some 394,000 to 859,000 U.S. jobs could be created annually from 2016 to 2030 by lifting the ban, according to the IHS report, titled: "Unleashing the Supply Chain: Assessing the Economic Impact of a U.S. crude oil free trade policy."

Only 10 percent of the jobs would be created in actual oil production, while 30 percent would come from the supply chain, and 60 percent would come from the broader economy, the report said. The supply chain jobs would be created in industries that support drilling, such as oil field trucks, construction, information technology and rail.

Many of the jobs would be created in Florida, Washington, New York, Massachusetts, and other states that are not known as oil producers.

"The jobs story extends across the supply chain, right across the United States," said Daniel Yergin, a vice chairman at IHS and an oil historian. "It's not just an oil patch story, it's a U.S. story."


Low global oil prices unlikely to slow some U.S. LNG projects, analyst says

The current wave of low crude oil prices is unlikely to halt proposed projects to export liquefied natural gas from the US, providing they already have long-term supply contracts in place with customers, a veteran analyst and former US Federal Energy Regulatory Commission member said Monday.

However, developers of other proposed LNG export projects that have not already negotiated supply deals with LNG customers are likely to face another obstacle toward getting their projects financed and built as a result of the decrease in prices, Branko Terzic told Platts in an interview.

The recent precipitous drop in global oil prices has led some observers to speculate that proposed projects to export LNG from the US would no longer be economic, but for the US export projects that have already secured all the necessary regulatory approvals and either are, or soon will be, under construction, oil prices are not a consideration, Terzic said.

This is because those projects already have long-term -- 20 years or longer -- LNG supply contracts in place, based on projections of long-term oil prices.


IPAA: EPA should avoid imposing huge economic burdens with new ozone rule

The Independent Petroleum Association of America recently submitted comments to the U.S. Environmental Protection Agency (EPA) regarding its proposed revision of the National Ambient Air Quality Standards (NAAQS) for ozone.

Just to provide a bit of background, the EPA is considering a proposal to tighten its regulations for the ozone standard from 75 parts per billion (ppb) to a range between 70 ppb to 65 ppb.  EPA is going ahead with this plan even though large portions of the country have yet to meet the agency’s current standard, and despite the fact that states and counties are making great strides in improving air quality.  If a county doesn’t meet EPA’s standard, it is considered in “non-attainment” and must comply with additional permitting requirements to start a new business or new construction project, making economic growth exceedingly difficult.

EPA claims that the tightened standard would provide big health benefits, but as IPAA points out in its comments, EPA’s health assessment “does not withstand scrutiny.”
IPAA highlights research from Energy In Depth, which outlined the questionable data that EPA used to claim the new rule would deliver significant health benefits.

In 2011, when the EPA proposed (and later withdrew) a 70 ppb standard, its median “net benefits” estimate for a 65 ppb standard was only $700 million, with a high possibility that the costs could outweigh any benefits. But in 2014, the EPA changed its mind, claiming net benefits of the same lower ozone standard are now as high as $23 billion – a 3,100 percent increase in net benefits for the exact same standard.

Read more at Energy In Depth

Devon shows off new digs in San Angelo

A green beacon flashed in Devon Energy’s San Angelo control room, indicating all systems were a go on a production well miles away in Sweetwater.

Three desks held computers hooked up to a dozen monitors and four wall-mounted TVs, scanning about 600 wells peppered around San Angelo and Ozona, checking oil and water levels and incoming production figures.

The Decision Support Center, as Devon calls it, affords the company more control over its operations than ever before, said Tim Raley, production superintendent of San Angelo’s branch.

“Our industry is really changing,” Raley told a group touring the new Devon facility Tuesday. “This room sets us apart — it’s making us productive.”

Devon on Tuesday opened the facility to local business leaders for a run down of operations and a look around the new digs — more than 40,000 square feet of technological wonderment on the south end of San Angelo.


Refiners sue railroad

A trade group that represents U.S. refinery owners is suing BNSF Railway Co. for charging them to use tank cars implicated in several fiery train derailments, Alison Sider reports. BNSF has started charging an extra $1,000 for each older railcar used to ship crude, but the American Fuel & Petrochemical Manufacturers alleges BNSF is overstepping its authority and penalizing oil shippers for using less crash-resistant tank cars.

At the same time, crash investigators in Canada, where several of the derailments have happened, called for faster implementation of tougher standards for railroad tank cars hauling flammable liquids. Transport Canada has proposed a 10-year timetable for retrofitting or replacing existing tank cars, but the Transportation Safety Board questioned that schedule.

The safety board also said the condition of tracks in the part of northern Ontario where two oil trains derailed recently may have played a part in the accidents.

“Petroleum crude oil unit trains transporting heavily loaded tank cars will tend to impart higher-than-usual forces to the track infrastructure during their operation. These higher forces expose any weaknesses that may be present in the track structure, making the track more susceptible to failure,” the board said.

— Wall Street Journal

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