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Oil and Gas Roundup — Sept. 14

September 14, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count even as national count falls by 16

The number of drilling rigs actively exploring for oil or natural gas this week in Oklahoma held steady at 106, Baker Hughes Inc. reported Friday. The tally is down 107 rigs from a year ago.

The count is down 37 over the past three weeks and off 56 percent from 1,929 on Nov. 1. The U.S. count peaked at 4,530 in 1981 and bottomed at 488 in 1999.
Among the other major oil- and gas-producing states, only Alaska posted an increase, up one.

Texas lost nine rigs, Colorado and Louisiana declined by two, and Kansas, North Dakota and Wyoming were down one apiece.

Arkansas, California, New Mexico, Ohio, Pennsylvania, Utah and West Virginia all were unchanged.

Of the rigs operating this week across the U.S., 652 were exploring for oil, the lowest number in years, and 196 were deployed for natural gas.

House panel votes to lift oil export ban

A House subcommittee voted Thursday to lift the 40-year-old restriction on exporting crude oil, moving the legislation a significant step toward passage.

Before approving the measure by voice vote, Republicans on the Energy and Commerce subcommittee on energy and power said the bill would bring wide-ranging benefits to United States consumers and workers while benefitting the country’s allies abroad.

Democrats objected to the bill, but most signaled a willingness to negotiate on the policy to protect interests that they said could be hurt by the change.

Over the past year, oil exports have become a top priority for Republicans and the oil industry, reeling from a global glut of oil that has brought prices to their lowest point in years.

“This bipartisan bill would put an end to the outdated restrictions on the export of American oil,” Rep. Ed Whitfield (R-Ky.), chairman of the subpanel, said during the brief meeting.

“Allowing oil exports would provide a major boost for jobs and the economy, help keep gasoline affordable and strengthen our national security,” he said.

Rep. Joe Barton (R-Texas), the bill’s sponsor, said the export ban is “outdated,” and tried to allay fears that petroleum refiners would suffer from higher oil prices.

“This is a simple issue. We have an abundance of crude oil,” he said.

Read more at The Hill.

Shale producers clobbered by oil rout face added Iran supply

Shale oil producers already awash in a supply glut face added crude as early as next year after an agreement to ease sanctions on Iran cleared a Senate obstacle.

A Senate vote Thursday paved the way for President Barack Obama to ease financial penalties for doing business with Iran. Democrats kept Republicans’ disapproval resolution from advancing in a 58-42 procedural vote, with 60 required. That may allow additional Iranian exports to hit the market as early as the first quarter of 2016. New supplies will exacerbate a global oversupply that sent oil tumbling by more than half in the past year, and add to the woes of the cash-strapped shale industry.

“It’s more crude in a market that is already well supplied,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “It’s certainly not going to make things any better.”

The shale boom, which boosted U.S. production to the highest in about 40 years, helped offset the loss of Iranian exports after the U.S. and the European Union imposed sanctions on the Islamic Republic’s oil sales in July 2012 in an effort to force the country to curtail its nuclear program.

At its lowest point, Iranian production fell by about 1 million barrels a day, the equivalent of losing all the oil pumped from North Dakota, according to data compiled by Bloomberg.

Read more at Bloomberg News.

Citigroup sees U.S. oil output losing 500,000 barrels a day

A funding squeeze threatens to cut U.S. oil output by as much as half a million barrels a day by the end of the year, with shale producers among the worst affected, Citigroup Inc. said.

“Capital markets thus far have plugged shale’s funding gap but are showing signs of tightening, with impacts for drilling, oil supply and global prices,” Richard Morse and Ed Morse, analysts at Citigroup in New York, said in a note. Access to high-yield credit markets for debt-strapped producers is “sharply contracting,” they said.

High-cost oil producers in the U.S. have been forced to scale back in the past year after members of the Organization of Petroleum Exporting Countries decided to maintain output to defend their market position. U.S. crude prices have dropped almost 40 percent since OPEC announced its policy change in November to trade at about $45 a barrel Wednesday.

“The U.S. could lose up to 500,000 barrels a day of output by year-end, half from shale,” Citigroup said in the note dated Tuesday. That loss almost matches Ecuador’s daily production, which was about 536,000 barrels last month. Ecuador is the 11th-biggest producer in OPEC, whose 12 members supply about 40 percent of the world’s oil.

Read more at Bloomberg News.

Three things to know about the AP spills piece

On the Friday of Labor Day weekend, the Associated Press released an article with an accompanying video proclaiming that more drilling has meant more “spills of wastewater that foul the land, kill wildlife and threaten freshwater supplies.”  The AP focuses on spills of brine or wastewater rather than oil spills and looks specifically at the western states.

But the Associated Press left out, or simply glossed over, a lot of crucial context for its readers regarding brine spills, even though EID provided this information to them.  Here are three things to keep in mind while reading this piece:

Brine spills have gone down 50 percent per barrel as production has ramped up
The AP article looked at spills from 2009 to 2013, claiming that they have “worsened.” If you’re only looking at the numbers of spills that would be the conclusion, but a better and more relevant comparison is to look at the number of recorded spills alongside the barrels of oil that have been produced over those same years.

Earlier this year, the New York Times put together a spreadsheet that separates out the different kinds of spills in the state of North Dakota.  As production in North Dakota went up almost 400 percent over the past five years, data from that list show that the number of brine spills went down by over 50 percent on a per barrel basis.

In 2009, the United States was faced with a condition of energy scarcity and the refrain from politicians was that we only have “2 to 3 percent of the world’s oil reserves” so drilling is useless.

Thanks to fracking and horizontal drilling, we’re now the number one oil and gas producer in the world.  That boom in production should be taken into account – and the fact that, in one of our most prolific oil and gas states, brine spills per barrel were cut in half while production quadrupled.

Read more at Energy In Depth.
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