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Oil and Gas Roundup — Nov. 10

November 10, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Why banning flaring is a bad idea

A recent Forbes op-ed by Baker Institute contributor Jim Krane calls for Congress to propose a potentially devastating compromise in an attempt to persuade the Obama administration to support lifting the 40-year-old ban on crude exports:

“Congress should allow U.S. producers to export crude oil – as long as they capture and market the associated natural gas they produce, rather than waste it. In other words: Let’s replace the ban on crude exports with a ban on natural gas flaring.”

Krane’s misguided lift-one-ban-and-impose-another exchange is premised on the all-too-common misconception that flaring is completely unnecessary and even deliberately wasteful. Krane states in the op-ed:

“… flaring is flat-out waste – about $1 billion a year in U.S. natural gas that could  have generated electricity, heated homes, or kept chili simmering on the nation’s stove-tops.”

Of course, the fundamental problem with this notion is that flaring is a necessary component of oil and natural gas production. Simply put, it an outright ban on flaring would create massive safety concerns for oil and natural gas workers, as well as severely impact U.S. oil and natural gas development.

Read more at Energy In Depth.

A Republican president in 2017 could revive debate over Keystone pipeline

Republicans insist the smoldering debate about the Keystone XL oil pipeline isn’t over, but both sides concede the project will remain in limbo until the next president takes office in January 2017.

TransCanada, the company proposing the massive project, said Monday that it theoretically could resubmit its Keystone application in January 2017, assuming the next president is more favorable to new American oil and gas infrastructure projects. Company officials stressed, however, that they have to make that decision.

For now, analysts say, both sides have time to catch their breath and plan their next moves.

“I think we’ll just have to wait and see who the next president is. The fight is dormant until we see the results of the next election,” said Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute.

President Obama last week announced that he was rejecting Keystone largely on environmental grounds, ending a seven-year federal review process and temporarily halting an unprecedented public relations war between environmentalists who opposed the pipeline and lawmakers of both parties, labor unions and oil and gas sector groups that supported it.

On the flip side, environmentalists have declared a temporary victory but acknowledge that Keystone may rear its head again in 14 months.

Read more from The Washington Times.

Sierra Club (reluctantly) admits hydraulic fracturing has helped lower CO2 emissions

The Sierra Club released a report last week attempting to argue that its “Beyond Coal” campaign is the reason that the United States has been able to achieve dramatic greenhouse gas reductions even though every credible organization from the Intergovernmental Panel on Climate Change (IPCC) to the International Energy Agency (IEA) to the Energy Information Administration (EIA) has said that it’s thanks to fracking and the increased use of natural gas that U.S. CO2 emissions are at a 27 year low.

Of course, this is the same organization responsible for the “Beyond Natural Gas” campaign, which seeks to end the use of natural gas – the very fuel that is providing these dramatic declines in emissions.

But while the Sierra Club attempts to take all the credit, even this organization can’t really get away without (reluctantly) acknowledging that natural gas has played a huge role in reducing carbon emissions:

“We project that as a result of recent coal retirements, as well as advocacy for related policy measures like efficiency and demand response and market forces including historically low natural gas prices, electric sector coal use in 2015 will be approximately 9 percent lower than in 2014…”

Interestingly, Sierra Club’s own research indicates a future outlook spearheaded by natural gas is even brighter. In a hypothetical scenario set forth in the report in which all U.S. coal-burning power plants set to retire in the next 10 years were replaced exclusively with natural gas rather than with renewables, the Sierra Club projects CO2 emissions would continue to plummet, as the following graphic and excerpt from the report illustrates.

Read more at Energy In Depth.

Permian Basin output growing, but other top shale plays to fall

New federal data shows that the Energy Department expects drillers in the Permian Basin to push oil production in the shale play above 2 million barrels per day for the first time ever this November.

The U.S. Energy Information Administration’s monthly Drilling Productivity Report released Monday, which covers seven of the biggest shale plays in the country, projects production in the Permian to jump by 17,000 bpd this month. That increase would bring the play above the 2 million bpd mark. In December, the EIA expects the play to grow again by 11,000 bpd.

But the Permian is one of the outliers — the only other play expected to grow over the next two months is the Utica in the Appalachian region. Combined with the other five plays — the Eagle Ford, Bakken, Haynesville, Marcellus and Niobrara plays — oil output overall is projected to fall to 4.95 million bpd the end of the year. That would be a fall of nearly 560,000 bpd from an April 2015 peak of 5.51 million bpd.

The Eagle Ford in South Texas has had the biggest impact on overall U.S. production growth. The EIA projects output in the Eagle Ford to fall 436,000 bpd by December from a peak of 1.71 million bpd in March.

— FuelFix
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