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Oil and Gas Roundup — Nov. 2

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

U.S. rig count down 12, half from Oklahoma

Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. this week declined by 12 to 775, with half of those losses coming from Oklahoma as the state rig count fell by six to 84.

That's the state's lowest rig count in six years.

Houston’s Baker Hughes said Friday that 578 rigs were seeking oil and 197 explored for natural gas. A year ago, with oil prices about double the prices now, 1,929 rigs were active.

Among major oil- and gas-producing states, Texas lost seven rigs, Louisiana lost two and North Dakota, Ohio and West Virginia each lost one.

Kansas and New Mexico each gained two rigs and Alaska and Pennsylvania each gained one.

Arkansas, California, Colorado, Utah and Wyoming were unchanged.

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

Oil export backers plan to use highway bill as vehicle

WASHINGTON — Lawmakers seeking to repeal the longstanding U.S. ban on exporting crude are eyeing a federal highway bill as a vehicle to lift the oil-trade restrictions.

Two oil export amendments have been teed up for possible consideration when the House of Representatives next week takes up legislation that would reauthorize federal highway and transit programs for six years.

The highway bill is seen as one of just a few must-pass measures on Congress’ agenda this year, making it a prime candidate for unrelated provisions, like the crude exports proposals. The highway bill also is a top priority for lawmakers, as it funds major infrastructure and transportation projects nationwide.

The Senate has already passed its own long-term highway bill without an oil export provision. If the House voted to add language authorizing widespread oil exports, the issue would be negotiated by a joint House-Senate conference committee made up of Democrats and Republicans from both chambers.

The tactic has major political benefits — if export language is added to the House transportation bill and then survives a conference committee, the Senate would never take a vote solely on the issue. Instead, the chamber would be presented with the final compromise transportation bill — in the form of a conference report — and asked to vote the whole thing up or down.

The strategy also could make it more difficult for President Barack Obama to go through with a threatened veto of oil exports legislation. The House passed legislation lifting the oil export ban earlier this month, but supporters fell 29 votes shy of the 290 they need to override the veto that White House advisers said they would recommend.

George Baker, executive director of Producers for American Crude Oil Exports, a group of independent oil producers pushing for the change, said “the highway bill is the perfect vehicle to finally make this a reality.”

Read more at FuelFix.

Report: Economic benefits of shale stretch for hundreds of miles

Researchers from Dartmouth College recently released a new study that looked at the economic ripple effect of shale development. The study, Geographic Dispersion of Economic Evidence from the Fracking Revolution naturally found significant economic development in producing counties, but what’s even more interesting is that the economic impacts were felt throughout the entire region.

From the report: “Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs.” (emphasis added)

The report’s sample consisted of an eight year timeline with 3,082 counties and 24,646 county-year observations for each industry. This allowed the researchers to conclude that new oil and gas extraction has led to an increase in aggregate U.S. employment of 735,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession. Shale development also boosted gross domestic product throughout metropolitan areas across the U.S.

According to the report: “Employment in the mining industry grew by 60 percent during a period when overall US unemployment reached 10 percent.” (emphasis added)

The report also noted an economic impact spillover effect from shale development into other industries that support development.

Read more at Energy In Depth.

Shale gas methane leakage 'seriously overestimated'

From Platts:

Previous estimates of methane leakage in shale gas production have been "seriously over-estimated," according to a report released Monday by British free-market policy think tank the Centre for Policy Studies.

Methane, the main component of natural gas, has a high greenhouse potential, and opponents argue that even if one or two percent of the gas leaks, the advantage of natural gas over coal would be negated, it said.

"This estimate is incorrect; over a 100-year time span, an implausible 12% of the produced natural gas used today would have to leak in order to negate an advantage over coal," the report said.

"The best current estimates for the average leakage across the whole supply chain are below 3%; even at 3% leakage natural gas would produce less than half the warming of coal averaged over the 100 years following emission," it said.

The UK shale gas industry has struggled to get off the ground despite strong support from the current Conservative Party government.

The Centre for Policy Studies, which was co-founded by former Conservative Prime Minister Margaret Thatcher in 1974, said, "there is a concern, held by many thoughtful people and others, that the danger of fugitive methane is a compelling reason to stop all development of shale gas."

"Another way of thinking about the same issue is to ask how much better is natural gas than coal at certain leakage rates, and over certain timeframes."

The report is authored by Richard Muller, professor of physics at the University of California, and his daughter Elizabeth Muller, who together founded Berkeley Earth in 2010, a non-profit organization focused on climate change.

Expected shale gas boom in Eastern Europe becomes a bust

From The Financial Express:

LONDON — The much-heralded eastern European shale gas boom has, for now at least, quietly become a bust, according to a report.

The reasons for the bust across the region are varied: sometimes unfavourable regulatory and tax regimes, as well as bans or temporary moratoria on hydraulic fracturing such as in Bulgaria, Romania and the Czech Republic, often following environmental protests, the report said.

Unconventional gas seemed a few years ago to hold out great promise in the centre and east of the European continent.

With Moscow flexing its geopolitical muscles, shale gas offered the prospect of reducing energy costs and reliance on Russian imports, which in some former Soviet bloc countries is 100 per cent, the report added.

Lower oil prices have also changed the financial equation, in a region where drilling costs are high and which lacks the infrastructure whose development has driven costs down in the US.

With development of unconventional gas stalling, a pointer to the future, moreover, may be this month’s European Union (EU)-backed deal to build a 534km gas pipeline from Poland to the Baltic states. All three Baltic republics were until recently entirely dependent on supplies from Russia.

Also this month, outgoing Polish Prime Minister Ewa Kopacz officially opened a long-delayed liquefied natural gas terminal on Poland’s Baltic coast at Swinoujscie. The first LNG tanker is expected to dock in late November, the report said.

It may ultimately be domestic companies and smaller independents, not the international majors, that will harness the unconventional resources of Eastern Europe.
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