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Oil and Gas Roundup — July 2

July 02, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State, national rig count up

The number of rigs exploring for oil and natural gas in the U.S. climbed for the second straight week, to 862, Baker Hughes reported on Thursday.

The Oklahoma rig count was up by 1 to 106, behind only Texas' 363 rigs.

At this time last year, there were 1,874 active rigs in the U.S. and 209 in Oklahoma.

Among the other major oil- and gas-producing states, Texas and North Dakota gained two; New Mexico and Ohio each gained one.

Louisiana dropped by two; Colorado and West Virginia lost one apiece. Pennsylvania and Wyoming were unchanged.

OGS scientist to take USGS post

Oklahoma Geological Survey seismologist Austin Holland is set to take a post in New Mexico with the U.S. Geological Survey, according to reports.

Holland has been at the forefront of research into the recent increase in seismic activity in Oklahoma.

"The main reason for the move is to change my family dynamics," Holland told EnergyWire. "I have averaged about 80 hours each week for the 5˝ years I have been here. I want to change my work-life balance, and this opportunity is a good way to do that."

Holland said he has accepted a "tentative offer" from the U.S. Geological Survey to be a supervisory geophysicist at the Albuquerque Seismic Lab. Details are still being worked out, he told EnergyWire.

Holland's departure follows the retirement in recent months of former Director Randy Keller and University of Oklahoma geology school Dean Larry Grillot.

Holland said there was no pressure to leave, and university officials made what he called a "generous counteroffer," the site reported.

Read the E&E News story (subscription required).

New data reveals which U.S. HF wells needed the most water to drill

Drillers in the Eagle Ford Shale use among the most water in the country to drill for oil and gas, according to a study from the U.S. Geological Survey released Tuesday.

Using data collected from IHS Energy on more than 81,000 wells across the U.S., USGS researchers said they created the first map providing a comprehensive look at the rate of water usage across the nation’s major shale plays.

The shale plays where hydraulic fracturing dominated the majority of oil and gas drilling were also the same plays where water use was highest, ranging between 2.6 million gallons and 9.7 million gallons of water per well.

Among those plays were the Eagle Ford in South Texas and the Marcellus and Utica plays in Pennsylvania and West Virginia, as well as other areas of Texas, Louisiana, Oklahoma and Arkansas. The study noted that water use varied greatly across different types of oil and gas reservoirs — shale reservoirs need the most water, while tight oil formations are drilled using gel-based fracking liquids instead. That’s why drillers in the Bakken in North Dakota and other plays in Colorado weren’t among the biggest water users.

The data also showed that water use in drilling has exploded in volume since 2000 coinciding with the surge in development of shale gas, a trickier commodity to extract from deep underground before horizontal drilling paired with fracking unlocked the substance.

See the map and read more at FuelFix.

22 states sue EPA over water rule

Litigation against the Environmental Protection Agency's clean water rules reached a fevered pitch on Tuesday.

Nine states added to a frenzy of lawsuits being leveled against the EPA and the Army Corps of Engineers after the Waters of the United States rule was published in the Federal Register on Monday.

The publishing of the rule marks the day a regulation officially becomes law, and thus ripe for litigation.
North Dakota led a group of 13 states Monday in a lawsuit filed in the U.S. District Court in Bismarck, challenging the EPA over the rule. The states include Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota and Wyoming, and the New Mexico Environment Department and State Engineer.

Officials say the goal is to delay or defeat the regulations before they take effect at the end of August.

West Virginia led the charge with eight other states in a separate court filing against the EPA on Tuesday. The states argue that the rules undermine the constitutional rights of states to manage their own waterways.

Read more at Washington Examiner.

EIA: U.S. crude oil production for April rises to most since 1971

U.S. crude oil production rose 9,000 barrels a day to 9.701 million barrels a day in April, the highest since May 1971, the U.S. Energy Information Administration said in monthly data released Tuesday.

Technology for tapping shale oil has helped the U.S. unlock vast reserves of crude that were previously inaccessible, boosting production.

The modest increase from last month may suggest that a production plateau is approaching, which could deal a blow to U.S. crude prices, which have been generally rallying since March.

The flood of oil was one factor contributing to a price rout in the second half of last year, but production has continued at high levels even as drillers have shut in rigs in an attempt to scale back production.

The EIA, the statistical arm of the Department of Energy, expects that crude production will decline on a monthly basis starting in June.

Because U.S. crude production has risen, while regulations limit exports of oil but not fuel, overall petroleum product exports were the highest for April on record at 2.873 million barrels per day, according to the data released Tuesday.

U.S. April gasoline demand domestically rose 1.8 percent, or 160,000 bpd, versus last year at 9.139 mln bpd, compared with a 4.3 percent rise in March.

— Reuters

BP's chief economist sees U.S. shale weathering oil surplus

Shale output in the United States will prove resilient to low oil prices likely to be prolonged by the prospect of half a million barrels per day of Iranian crude making its way back to the market, BP's (BP.L) chief economist said on Tuesday.

Talks in Vienna between world powers trying to end sanctions on Tehran in return for limits on Iran's most sensitive nuclear activities could bring a significant increase in Iranian oil exports.

BP's Spencer Dale, however, told Reuters that it would probably take time for any easing of sanctions to filter through to oil markets if an Iran deal is agreed.

His "hunch" was that the outcome of the talks would be closer to U.S. demands that restrictions should be eased after a period of monitoring rather than the rapid change sought by Iran.

U.S. and European Union sanctions ban their companies from buying Iranian oil.

Of the 1 million barrels per day (bpd) of Iranian supplies that left the market since sanctions were imposed, Dale said the consensus view is that about half of that could be brought back over three to four months.

Read the Reuters story.
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