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Oil and Gas Roundup — July 31

July 31, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count unchanged at 107

The number of rigs exploring for oil and natural gas in Oklahoma was unchanged this week, at 107, according to oilfield services company Baker Hughes. There were 209 active rigs at this time last year.

The U.S. rig count declined by two this week to 874.

Houston-based Baker Hughes said Friday 664 rigs were seeking oil and 209 explored for natural gas. One was listed as miscellaneous. A year ago, 1,889 rigs were active.

Among the other major oil- and gas-producing states, New Mexico gained three rigs to 54, Louisiana gained two to 78 and North Dakota (70), Ohio (21), Texas (375) and Wyoming (22) each gained one.

Kansas lost four rigs to 7, Utah declined by three to 4, Alaska (9) and Pennsylvania (42) each lost two and Colorado (38) and West Virginia (17) each declined by one.

Arkansas and California were also unchanged.

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

New ozone rules so over-the-top, even national parks can’t comply

The National Association of Manufacturers released an ad this week highlighting just how onerous and unworkable the Environmental Protection Agency’s proposal to tighten the ozone standard will be.  As the ad demonstrates, not even our pristine national parks can comply with the tightened ozone standard – so how much more difficult will it be for cities and towns with job sustaining industries?

Meeting the tightened ozone standard is particularly concerning for the many areas across the United States that have background levels of ozone, which have little to do with the industries or farms operating in their areas.

Air pollution in national parks is more often caused by naturally occurring phenomena such as stratospheric intrusions and wildfires, as well as pollutants migrating from countries with a heavy manufacturing base and limited regulation, such as China. As the Western States Air Resources Council, a group that represents environmental regulators from 15 states, recently explained in a letter to the EPA, “Background levels of ozone in remote locations, including many intermountain national parks, are consistently above the [National Air Ambient Quality Standards] NAAQS proposed by EPA.”

For example, Colorado’s top air quality regulator noted in an interview that “very high background levels … make the issue particularly challenging in the West.” A California air quality official from the San Joaquin Valley warned “standards that approach background concentrations” require “technologies that in many cases are not yet commercially available or even conceived.” The official said in a letter to the EPA that the federal government is setting “mandates that are impossible to meet.”

Read more at Energy In Depth.

269 business groups ask Obama to scuttle ozone rule

Representatives of 269 business groups are asking President Obama to stop his administration from moving forward on its ozone pollution rule.

The effort, organized by the National Association of Manufacturers (NAM), includes an array of national, state and local business groups in each state and across numerous industries.

They’re hoping that Obama will stop the Environmental Protection Agency’s (EPA) attempt to reduce the allowable ozone pollution level to between 65 and 70 parts per billion, from the current 75 parts per billion.

“A stricter ozone standard could close off communities across the nation to new jobs and economic growth, requiring reductions to near-background levels in many places,” the groups wrote in a letter Wednesday to Obama.

“We are bound by the limits of technological feasibility, and this regulation mandates controls that even the EPA admits are unknown.”

They argue that environmental rules have significantly improved air pollution already, and call for “balanced” policies that don’t hurt businesses.

“The need for balanced government policies and reasonable flexibilities has never been greater, and no single regulation threatens to disrupt this balance more than EPA’s ozone rule,” they wrote.

It is the latest effort by NAM and others to stop the rule. A NAM-commissioned study said the rule would cost $1.1 trillion, making it the most expensive regulation ever. The EPA disagrees, saying it would cost up to $16.6 billion but bring benefits as high as $38 billion.

Ozone, which is created by certain pollutants from the burning of fossil fuels, has been linked to respiratory ailments. But the rule could spur states to restrict various activities that contribute to the pollution, including manufacturing.

The EPA is under a court order to make the rule final by Oct. 1.

— The Hill

Mexico’s failed first round of bidding an important lesson, energy panel says

HOUSTON — Mexico stumbled with its first auction of oil and gas leases, a panel of energy experts told a congressional committee Thursday, but the missteps weren’t so bad that they couldn’t be learned from.

On July 15, Mexico held an auction that ended a 76-year state monopoly and offered private companies the first shot at its extensive oil and gas reserves. But of the 14 offshore blocks tendered, only two were successfully sold — short of even the modest expectations set by Mexican officials.

In testimony Thursday before the Western Hemisphere subcommittee of House Committee on Foreign affairs, a panel of four experts on Mexico’s energy reform unequivocally called the auction a disappointment.

Carlos Pascual, former ambassador to Mexico and analyst at energy consulting group IHS, said many companies sat the bidding out because they didn’t deem the properties valuable enough, the contracts offered were too short, and the minimum bid was too high.

“Investors are going to have to find a return on investment that is comparable or competitive with other parts of the world at a point in time when prices are low and capital expenditures are being cut,” Pascual said.

Thomas Tunstall, research director at the University of Texas at San Antonio, said that the auction would need to offer better terms if before entices interest amid a drilling slump.

Read more at FuelFix.

Hydraulic fracturing permits for half of Britain

Nearly half of Britain is set to be opened up to hydraulic fracturing by oil and gas companies, under new exploration licences the Government will award next month.

Friends of the Earth estimates that 43 per cent of Britain’s land mass is covered by the new licences, which will be issued by the Department for Energy and Climate Change in two tranches, the first in August, the second at the end of the year.

A total of 80 firms have submitted bids for the licences being made available under the ministry’s “14th licensing round.”

The Government believes that shale oil and gas exploration will create jobs and boost local economies.

However, fracking is bitterly opposed by environmental pressure groups and residents in Sussex and Lancashire, who have fought the fracking plans of Celtique Energy and Cuadrilla Resources respectively.

Energy Minister Andrea Leadsom said: “We want to get shale moving and this is a clear example of the Government’s progress, while upholding our strong environmental controls."

Read more at The Express.

Four big problems with a new report attributing CO2 reductions to bad economy rather than natural gas

A new report published in Nature claims that the bulk of the credit for the 11 percent drop in CO2 emissions between 2007 and 2013 should go to the Great Recession rather than increased use of natural gas by electrical power plants.  Of course, just about every credible organization has stated the exact opposite, acknowledging shale gas’ huge contribution to CO2 emission reductions.

And that blanket dismissal of the scientific consensus is just one of several problems with the report.  Here are the four issues that stick out the most.

The report claims, “After 2007, decreasing emissions were largely a result of economic recession with changes in   fuel mix (for example, substitution of natural gas for coal) playing a comparatively minor role.”

That’s not what the Intergovernmental Panel on Climate Change (IPCC), which has been has been described by prominent environmental organizations as the “gold standard” for understanding climate change, has concluded.

In its latest assessment, which was the product of the opinion of 1,250 international experts, the IPCC noted, “A key development since AR4 is the rapid deployment of hydraulic fracturing and horizontal drilling technologies, which has increased and diversified the gas supply… this is an important reason for a reduction of GHG emissions in the United States.”

Read more at Energy In Depth.
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