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Oil and Gas Roundup — July 11

July 11, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count gains 1; U.S. number up 9

The number of rigs exploring for oil and natural gas in Oklahoma climbed by one last week to 59, while the U.S. count jumped nine to 440.

Of the other major oil- and gas-producing states, Texas gained three rigs to 201, Louisiana was up 1 to 43, North Dakota gained two to 28 and New Mexico was up two to 21. Colorado (19), Pennsylvania (13) and Ohio (12) were flat.

Oil has slipped from about $50 a barrel to $45 in the last month as a rally spurred by supply disruptions in Nigeria and Canada and falling U.S. output lost momentum. Prices remain up about 70 percent from a 12-year low in February, a recovery that has prompted American producers to begin returning drilling rigs to service.

A year ago, 863 rigs were active in the U.S. and 106 in Oklahoma. The national rig count peaked at 4,530 in 1981 and bottomed out in May 2016 at 404.


Drilling ramp-up could get snagged on labor problems

Oil markets may have pulled out of the worst price collapse in decades, but it could still take years for U.S. shale drillers to fully rebuild the energy workforce after deep payroll cuts.

Getting the shale business working again could depend on companies hiring 80,000 to 100,000 workers over the next two and a half years, Goldman Sachs said in a recent report, after shedding nearly 150,000 jobs across the nation.

But ramping up energy employment could prove much more difficult than in the early years of the oil boom, which began just after the national recession in 2009 when people were scouring the job market. Now, the economy is improving and the two-year oil bust has pushed former oil workers into other industries like manufacturing and technology.

“Attracting the pool of talent back to this volatile and cyclical industry is going to require time and money,” said Bill Herbert, an analyst at Houston investment bank Simmons & Company International. “You’re not going to be able to generate quick and significant growth at the same time.”

Read more at My San Antonio.


$45 billion of new projects signal spending revival

Two projects worth $45 billion announced this month show the world’s largest oil companies are regaining the confidence to make big investments, emboldened by rising crude prices and low costs that promise to trigger more expansion ahead.

Chevron Corp. gave the go-ahead to a $37 billion expansion in Kazakhstan, the industry’s biggest undertaking since crude started tumbling two years ago. BP Plc signed off on the $8 billion expansion of a liquefied natural gas plant in Indonesia. Two more big projects are likely to get a green light this year, according to industry consulting firm Wood Mackenzie Ltd. and Jefferies International Ltd. -- BP’s Mad Dog Phase 2 in the Gulf of Mexico and Eni SpA’s Coral LNG development off Mozambique.

Crude’s recovery from a 12-year low and a decline in project expenses have emboldened executives to start spending again after cutting more than $1 trillion in planned investments amid sinking earnings. While protecting balance sheets is important, explorers need to at least begin a new phase of investment in exploration and production to ensure future growth.

“We have seen a recent pick-up, demonstrating that projects deemed strategically important are still going ahead,” said Angus Rodger, a Singapore-based principal analyst for upstream research at Wood Mackenzie. He expects about 10 decisions on midsize to large projects this year from fewer than 10 last year, though still well below the annual average of 40 before oil crashed.

Read more at Bloomberg.


Corrected data from retracted study show emission levels well below EPA standards

One of the authors of a recently retracted University of Cincinnati air quality study that yielded headlines such as Newsweek’s “Fracking Could Increase Risk of Cancer, New Study Finds” has admitted that the corrected study shows absolutely no evidence to support such alarmist headlines.

Retractionwatch.com confirmed Friday what EID suspected when it broke news of the retraction earlier this week — corrected data from the study shows that the levels of Polycyclic Aromatic Hydrocarbon (PAH) found near fracking sites is below the levels the U.S. Environmental Protection Agency (EPA) says would increase risk of cancer:

“… the conclusions have been reversed — the original paper stated pollution levels exceeded limits set by the U.S. Environmental Protection Agency (EPA) for lifetime cancer risk, but the corrected data set the risks below EPA levels.”

Study co-author Kim Anderson of Oregon State University was quoted in a press release accompanying the original study as saying the results showed, “Air pollution from fracking operations may pose an under-recognized health hazard to people living near them.” But Anderson was forced to concede to Retractionwatch.com that the corrected study does not support the researchers’ claims, which were widely reported as fact last May. She provided the following excerpt from the corrected study to Retractionwatch.com:

“Closest to active wells, the [excess lifetime cancer] risk estimated for maximum residential exposure was 0.04 in a million, which is below the U.S. EPA’s acceptable risk level,” Anderson told Retractionwatch.com. “Overall, risk estimates decreased 30% when comparing results from samplers closest to active wells to those farthest. This work suggests that natural gas extraction is contributing PAHs to the air, below levels that would increase cancer risk.”

Read more at Energy In Depth.
 
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