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Oil and Gas Roundup March 27

March 27, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oklahoma rig count down 3; U.S. count falls by 21

The number of rigs exploring for oil and natural gas in Oklahoma fell by three to 133, according to Baker-Hughes. The national rig count fell by 21 to 1,048.

Of the major oil- and gas-producing states, Texas fell by three to 462, North Dakota lost two, Louisiana was down three, Colorado and New Mexico lost two, and Wyoming was down one.

Pennsylvania gained one to 51, and Ohio was unchanged.

The number of rigs in Canada has fallen by more than half this month, from 300 on March 6 to 120 on March 27.

State jobless rate holds at 3.9 percent, but layoffs hitting mining sector hard

Despite a steady jobless rate overall, the state's mining and logging sector, which includes the oil and gas industry, took a hit in February and lost an estimated 2,400 jobs, according to data released Friday by the Oklahoma Employment Security Commission (OESC) and the U.S. Bureau of Labor Statistics.

"This decline matches the worst single month for the industry since 1990. Back in 2009 during the Great Recession, January and April also saw declines of this magnitude," said Lynn Gray, OESC's chief economist, in emailed comments.

He noted that in December and January the mining and logging sector lost an estimated 100 and 500 jobs, respectively, in addition to February's 2,400 loss.

Likewise, the manufacturing sector, which has important links to the state's oil and gas industry, saw a net decline of 1,400 jobs over the month, mostly in the durable goods area, Gray added.

Read more at Tulsa World.

Drilling activity to rebound in 2016 after exploration cuts this year

Drilling activity across the global oil and gas industry could return to 2014 levels next year, according to a new report from research firm Wood Mackenzie.

Wood Mac said Thursday that although the oil and gas industry is currently responding to the low oil price environment, with exploration budget cuts in 2015 expected to average 30 percent, drilling activity in 2016 is set to recover as many explorers seize their chance to drill at lower costs.

In its report "Upstream Cost Deflation: How Much Could Costs of Exploration Fall?", Wood Mackenzie noted that the industry is now addressing a longstanding cost inflation issue.

Dr. Andre Latham, VP Exploration Research for Wood Mackenzie, said: "Rising costs are not a new problem for explorers. Over this decade, inflation has more than offset price gains and left much of the industry struggling to create value. Now that prices have fallen sharply, this problem has become acute. In the short term, many explorers will react by simply spending less. But what they really need is lower costs."

Wood Mackenzie estimates that exploration deflation will average 33 percent by 2016, with like-for-like costs falling by 19 percent.

Read more at Rigzone.

Wyoming suit contests federal rules for public land drilling

Wyoming filed a lawsuit Thursday contesting new federal rules for oil and gas drilling on public land, alleging in part that they interfere with Wyoming's state rules.

The lawsuit in U.S. District Court of Wyoming also claims the U.S. Bureau of Land Management overstepped its statutory jurisdiction with the rules and that they conflict with the Safe Drinking Water Act.

A key part of the federal rules is regulation of hydraulic fracturing, the process of cracking open deposits of oil and gas by pumping high volumes of pressurized water mixed with fine sand and chemicals into wells.

The federal rules announced by Interior Secretary Sally Jewell last week will require companies to report the chemicals they use during fracking. Wyoming has had similar rules in place since 2010.

"It's a concern to me because Wyoming was the first state to get into the business of regulating hydraulic fracturing. It seems to me it's a disincentive for states to be proactive, to be responsible and to take leadership in an area where they have, we think, exclusive legal authority," Gov. Matt Mead said.

"We are hopeful that whatever happens in the case that there is a recognition that states like Wyoming should be rewarded for their leadership, not punished by having additional layers of regulation."

States that already have strong regulations for oil and gas development, such as Wyoming and Colorado, could be given room under the federal rules to enforce their own stipulations, Jewell said at a March 20 news conference.

Read more from the Associated Press.
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