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Oil and Gas Roundup — June 1

June 01, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oklahoma rig count up by 2; national rigs decline by 10

The number of drilling rigs actively exploring for oil or natural gas this week in Oklahoma increased by two to 106, Baker Hughes Inc. reported Friday. The tally is down 93 rigs from a year ago, when it was 199.

Nationwide, the net number of active drilling units decreased by 10 this week to 875. The total is down 991 rigs from a year ago, when it was 1,866.

Of the rigs operating this week across the U.S., 646 rigs were exploring for oil, the lowest number in several years, while 225 were deployed for natural gas and four were classified as miscellaneous.

Of the other major oil- and gas-producing states, Texas lost four rigs, California declined by three and Arkansas, Louisiana and Pennsylvania each dropped two. North Dakota was down one.

Colorado also gained two rigs; Alaska and New Mexico were up one each. Kansas, Ohio, Utah, West Virginia and Wyoming were all unchanged.

The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.

Sand industry in North America booming, thanks to shale

New data released this week from the U.S. Geological Survey (USGS) shows that the United States will continue to be the world leader in frac sand production.

The massive increase in hydraulic fracturing in the United States over the past few years has caused the frac sand industry to take off.

According to the report, the North American frac sand market is a $2.2 billion industry and is projected to expand by up to 8.9 percent by the end of 2016. These huge numbers mean jobs for the American people and tax dollars for local governments.

Wisconsin is currently the top frac sand producer in the U.S. with 2014 production reaching 24 million metric tons. In just five years, Wisconsin has gone from 5 mines and 5 processing plants, to 63 mines and 45 processing facilities (not to mention another 27 railroad loading facilities).  Needless to say, the economic benefits of the frac sand industry have been and will continue to be felt across Wisconsin.

The production of frac sand was originally limited to Texas and Wisconsin, but now it is produced across the country to meet the needs of oil producers.

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Water recycling costs coming down in South Texas

Water recycling has long been a goal for the oil and gas industry, and now costs are coming down enough to make it competitive.

Jeff Soward with Corpus Christi-based Arana Water said last week at the Eagle Ford Consortium’s conference in San Antonio that recycling in some instances is cheaper than the cost of trucking oil-field water to be pumped down a disposal well.

Shale wells require millions of gallons of water. Hydraulic fracturing pumps water, chemicals and sand at high pressure to crack shale, allowing oil and gas to flow up a well.

But water also returns to the surface alongside the oil and gas — some of that was pumped down the hole and some of it comes out of the rock formation itself. All of it must either be cleaned for reuse or taken to a disposal well.

Soward estimated that just a fraction of oil-field water gets recycled now.

“But it’s coming,” said Soward, whose firm cleans water for Eagle Ford operators, often taking it to a saltwater quality that can be used for hydraulic fracturing by the operator. “It’s really not that hard.”

The San Antonio Express-News previously looked at more than 23,000 Texas wells drilled from 2011 to 2013. Eagle Ford operators reported using more than 14 billion gallons, or around 43,770 acre-feet in 2012 in 3,522 Eagle Ford wells, the approximate annual usage for 153,000 San Antonio households.

But it’s impossible to know how much of that water was fresh, from brackish sources or recycled. Both the industry and the state have been pushing for more recycling in recent years.

— FuelFix

Western states decry Obama plan to save greater sage grouse

There’s one big problem with the Bureau of Land Management’s newly released federal habitat plan for the greater sage grouse: It’s federal.

That was the reaction Thursday from Western Republicans, industry groups and economic development advocates, who accused the Obama administration of bigfooting in what should be a state-led effort to protect the declining species — while balancing economic and development interests across the region.

“This is just flat-out wrong,” said House Committee on Natural Resources Chairman Rob Bishop, Utah Republican. “If the administration really cares about the bird, they will adopt the state plans as they originally said they would. The state plans work. This proposal is only about controlling land, not saving the bird.”

The clash comes as the federal Fish and Wildlife Service must decide whether to list the greater sage grouse by Sept. 30, a ruling that could have devastating consequences for Western states whose economies rely on agriculture and energy development.

Interior Secretary Sally Jewell, who unveiled the updated BLM land-use strategy Thursday at a press conference in Cheyenne with Wyoming Gov. Matt Mead, said a federal role is necessary because “as land managers of two-thirds of greater sage grouse habitat, we have a responsibility to take action that ensures a bright future for wildlife and a thriving Western economy.”

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How to make business sense of Mexico’s energy reform

Mexico is opening its oil and gas fields to foreign investment for the first time in decades – a potential business bonanza for companies that can navigate the changes.

A preliminary report released last week on Mexican energy reform was prepared by the University of Texas at San Antonio Institute for Economic Development, the Universidad Autonoma de Nuevo Leon, the Asociacion de Empresarios Mexicanos and the Woodrow Wilson Center.

The report is aimed at companies on both sides of the border trying to figure out how to get a toehold in the new energy market in Mexico.

It includes a general overview and the legal framework, focusing on the Mexican states of Coahuila, Nuevo Leon, Tamaulipas and Veracruz.

So far Mexico has moved to quickly put out for bid some of its offshore and conventional onshore acreage. It’s unclear when the country’s shale fields will be offered.

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