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Oil and Gas Roundup — Feb. 1

February 01, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count up 1

The number of drilling rigs actively exploring for oil or natural gas in Oklahoma increased by one last week to 88, Baker Hughes Inc. reported Friday. The tally is down 95 rigs from a year ago, when it was 183.

The number of rigs exploring for oil and natural gas in the U.S. declined by 18 to 619.

The Houston firm said Friday 498 rigs sought oil and 121 explored for natural gas amid depressed energy prices. A year ago, 1,543 rigs were active.

Among major oil- and gas-producing states, Texas declined by 13 rigs, New Mexico was down four, Louisiana dropped three and Kansas, North Dakota and Pennsylvania were off one apiece.

Alaska and Colorado each increased by two rigs.

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

Latest Duke study on shale doesn’t hold water

Researchers at Duke University recently released a study that looks at the consumption of water from 2009 to 2012 in Pennsylvania as shale development increased and the state was just beginning to transition to more natural gas-fired power generation.

The study argues that “during the early stages of Pennsylvania’s coal-to-gas transition, production and generation of coal and natural gas contributed to a yearly 2.6–8.4% increase in the state’s water consumption.”

But that argument doesn’t exactly hold water. Before we get into the reasons why, it’s worth noting that the authors of the report took the time to acknowledge assistance from John Rogers of the anti-fossil fuel group, Union of Concerned Scientists (UCS):

“The authors thank John Rogers of the Union of Concerned Scientists (UCS) for useful conversations and suggestions in the early phases of this project and for providing access to the UCS database on cooling technologies in U.S. power plants.”

UCS is the same organization that praised New York’s decision to ban fracking as “a great example of science trumping politics” and has a number of fracking “toolkits” that are littered with misinformation on its website. That the researchers consulted UCS data is troubling to say the least.

Read more at Energy In Depth.

Shell transitioning Houston truck fleet from diesel to LNG

Royal Dutch Shell is switching its trucking fleet to more liquefied natural gas-fueled vehicles in Houston and Louisiana as more companies increasingly move away from dirtier diesel fuel.

The use of LNG and compressed natural gas — another new CNG fueling station opened recently in Houston — in commercial vehicles has rapidly expanded because of the nation’s cheap and bountiful supply of natural gas.

Shell said it partnered with Miami-based Ryder transportation company for 15 new, heavy-duty LNG trucks to support its oil and gas logistics operations in Houston and Lafayette, Louisiana. The 15 new trucks will replace diesel-fueled Shell vehicles. Shell will provide the LNG fuel.

“LNG can be a good choice for truck owners and more are making the switch to LNG,” said Dan Flynn, Shell vice president for logistics, in a prepared statement, adding that Shell’s LNG is a cleaner fuel  that meets emissions regulations without the need for treatment systems used in diesel engines.

As an alternative to LNG vehicles, the 15th CNG fueling station in Houston opened Thursday. The new filling station at Pinto Business Park on Fallbrook Drive just west of Interstate 45 in North Houston is the third station in Houston opened by Freedom CNG.

The new CNG station will fuel the Metropolitan Transit Authority of Harris County’s new fleet of 50 CNG-fueled, public transportation buses.

Read more at FuelFix.

Exxon: Global use of oil and gas will continue to increase

The largest fossil fuel company in the world predicts our energy mix won’t change a whole lot over the next 25 years. In fact, Exxon Mobil projects that oil and gas will actually increase by 2040.

This unfortunate future stems from the age-old conundrum of trying not to eat sugar when your pockets are full of candy.

The Earth has so much fossil fuel, and it has become so cheap to extract it, that it defies logic to think that humans will not keep burning it as their main source of energy.

The continued low oil prices are a case in point. Oil prices will remain well below $70/bbl for many years, and natural gas prices will stay below $4/mmcf for decades.

Even coal is cheap. And because coal is the easiest energy source to use without much infrastructure, coal is still the choice for developing countries, climate change notwithstanding.

So America and Europe can attempt to decrease fossil fuel use all they want, this strategy seems to be going nowhere globally.

Read more at Forbes.

FERC must use caution if changing environmental review process, gas groups say

An abrupt change to FERC's environmental review process for infrastructure projects will cause confusion and delay, and may not even serve the goals and purpose of the National Environmental Policy Act, natural gas trade associations said on Jan. 29.

In comments filed with the commission, the Natural Gas Supply Association and the Center for Liquefied Natural Gas said that FERC's draft guidance manual for environmental report preparation "should not be used as a mechanism to impose requirements beyond FERC's current regulations."

The groups noted that FERC's current regulations were informed by a notice and comment rulemaking process. In contrast, they classified the FERC guidance as an "instant proceeding," and said the guidance would impose a "uniform burden" on all projects that may not meaningfully contribute to its environmental review.

"FERC repeatedly has held in each case it has considered that it is not consistent with the legal precedent interpreting the [Council on Environmental Quality, or CEQ] regulations and NEPA requirements to determine that the alleged impacts of natural gas production automatically are direct or indirect effects of the permitting of FERC-regulated natural gas infrastructure projects," the comments said. "As the commission recently explained, proposed pipelines do not cause the environmental effects of natural gas production and the environmental effects are not reasonably foreseeable.

Instead of using the guidance as new regulations, the groups asked FERC to use it as a tool for working with prospective project developers. Injecting the guidance into applications that have made significant progress through the FERC process should be avoided, they said.

"Retroactive application has the potential to inject confusion, uncertainty, and substantial delays into FERC's reviews of these infrastructure projects that are critical to the United States' energy security and promotion of more diverse sources of energy for our strategic allies abroad," the comments said.

Read more at SNL.
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