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Oil and Gas Roundup — August 1

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

State, U.S. rig counts up one

The number of drilling rigs searching for oil and natural gas in Oklahoma increased by one last week to 60.

The U.S. rig count inched up by one last week as oil prices posted another weekly decline.

The national rig count increased to 463, marking the highest count since March. The count reached a more than 50-year low of 404 in May, but has since increased in eight of the past nine weeks. Despite the recent gains, the rig count is down 235 this year and off 76 percent from 1,929 on Nov. 21, 2014.

The number of rigs searching for oil increased by three last week to 463 while the number of natural gas rigs decreased by two to 86. Three rigs were listed as miscellaneous.

Oklahoma's rig count is down 27 this year and is off 72 percent from 214 in November 2014.

Of the other major oil- and natural gas-producing states, Texas lost three to 214, Louisiana gained two to 46, New Mexico was up two to 28, North Dakota was unchanged at 27 and Colorado gained one to 21.

The rig counts grew this week while oil prices continued a modest retreat. Domestic benchmark West Texas Intermediate gained 46 cents Friday to close at $41.60. The oil price nearly doubled from 12-year lows set in February to a recent high of $51.60 on June 9 before giving back some of its gains over the past seven weeks.

Trump indicates towns, states should be able to ban hydraulic fracturing

In a departure from the usual position of Republicans and the wishes of the oil and natural gas industry, the GOP nominee for president said he thinks voters should be able to ban fracking at the state and local level, despite his personal support for the practice.

“I’m in favor of fracking, but I think that voters should have a big say in it,” Trump told Denver television station KUSA in an interview, a portion of which was posted Friday. “I mean, there’s some areas, maybe, they don’t want to have fracking. And I think if the voters are voting for it, that’s up to them.”
He went on to say that while fracking is needed, “if a municipality or a state wants to ban fracking, I can understand that.”
Republicans around the country have fought fiercely against local and state fracking bans.
Localities in both Texas and Colorado have passed bans on fracking within their boundaries. Texas’ legislature voted last year to prevent local fracking bans, and Colorado’s highest court ruled this year that that state’s laws prohibit such bans.
Republicans in New York tried for years to get that state to allow fracking, but Gov. Andrew Cuomo (D) banned it in 2014.
Trump in April criticized New York’s fracking ban.
“It’s just so incredible and we never took advantage,” he told a radio station at the time, according to the Journal News.
Democratic presidential hopeful Hillary Clinton said in a March debate that local and state governments should be allowed to block fracking within their borders.

— The Hill

U.S. shale gas shaking up global markets as LNG supply surges

Shale drillers from Pennsylvania to Texas flooded the U.S. with so much natural gas over the past decade that prices slid to a 17-year low. Now they’re going global, with the potential to upset markets from London to Tokyo.

The U.S. began shale gas exports by sea this year and is projected by the International Energy Agency to become the world’s third-largest liquefied natural gas supplier in five years. Gas will challenge coal at European power plants and become affordable in emerging markets, where prices have been high and supplies limited, according to the IEA and Goldman Sachs Group Inc.

LNG became the world’s second most traded commodity after oil last year and demand will keep growing, Goldman said. U.S. gas is adding to the global glut triggered by new Australian supply and weakening Asian consumption. Shale is having an outsized impact on how LNG is sold, prompting spot trading in lieu of long-term contracts.

“The U.S. clearly changed the picture,” Costanza Jacazio, a senior gas analyst with the Paris-based IEA, said in a phone interview. “It’s going basically from zero to the third-largest LNG capacity holder in the space of five years and it brings a new flexible dimension to the LNG market.”

With supplies growing, some Asian nations like Japan are contracted to buy more than they can consume, leaving surpluses to be sold. That’s lured major traders into the LNG market in recent years, including Vitol Group, Trafigura Group, Koch Industries Inc., Gunvor Group Ltd. and Noble Group, the IEA said.

Read more at Bloomberg.

U.S. to speed permits for drilling on federal land

U.S. officials announced plans Thursday to speed up permitting for oil and gas drilling on federal and Indian lands to reduce delays, as applications were projected to be down 40 percent versus their historical average amid an ongoing price slump.

Low energy prices already have curtailed domestic energy exploration, driving down revenue. That’s put a crimp in budgets for the major energy producing states, including Wyoming, New Mexico, Colorado, Alaska, North Dakota and Montana, which receive a substantial share of revenue from oil and gas activity on U.S. lands.

In an attempt to streamline drilling approvals and reduce costs for companies, U.S. Bureau of Land Management Director Neil Kornze said all drilling applications would have to be filed online under the new proposal.

The move follows years of criticism from the energy sector over the Obama administration’s handling of drilling applications. Companies say lengthy delays have driven up costs.

Online-only permitting would allow 90 percent of drilling applications to be completed within 115 days, bureau spokeswoman Beverly Winston said. The average time in 2015 was 220 days.

“The new system is a big improvement over the current, hard copy-based application system,” Kornze said in a statement.

Industry representatives welcomed the attempt to make permitting more efficient and said they have worked with Kornze’s agency to fix glitches that emerged in the automated system in the past few months.

But Kathleen Sgamma with the Western Energy Alliance voiced doubt about the potential time savings. She said the long time to process permits is driven in part by environmental studies and other requirements not counted in the administration’s 220-day processing average.

Read more at FuelFix.

Clinton advisor attempts to resurrect debunked fracking “exemption” talking point

With the Democratic National Convention underway, a couple of news outlets have reported on comments made by Trevor Houser, Hillary Clinton’s energy adviser, who said at a Politico event yesterday that Clinton would end the so-called “Halliburton loophole” for fracking.

Houser went on to repeat a long debunked claim that has been pushed by activists: “Congress stripped [the Environmental Protection Agency] of its authorities to protect communities under the Safe Drinking Water Act, something called the ‘Halliburton loophole.'”

As Energy In Depth has pointed out many times, Congress never “stripped” the Environmental Protection Agency of that authority – the EPA never had it in the first place.  You don’t have to take our word for it, either.  In fact, it was President Bill Clinton’s EPA Administrator, Carol Browner, who made that clear way back 1995.

As she put it, “EPA does not regulate – and does not believe it is legally required to regulate – the hydraulic fracturing of methane gas production wells under its UIC program.”

Browner added: “EPA’s position is that the fracturing of methane gas production wells is not an injection operation subject to regulation under the Underground Injection Control (UIC) program.”

Now, even though states have (and have always had) primary regulatory authority over hydraulic fracturing, this doesn’t mean that shale producers not required to comply with a host of federal laws.

Read more at Energy In Depth.

Waste from test hydraulic fracturing wells safe to be on highways, research concludes

Researchers at West Virginia University studied drilling wastes produced at two research wells near Morgantown and found they are well below federal guidelines for radioactive or hazardous waste.

Paul Ziemkiewicz, director of the West Virginia Water Research Institute at WVU, will present these and other findings from the Marcellus Shale Energy and Environmental Laboratory, or MSEEL, at the Appalachian Basin Technology Workshop in Canonsburg, Pennsylvania.

Dr. Ziemkiewicz and his research team are studying the solid and liquid drilling wastes that are generated during shale gas development. These include drill cuttings, muds and produced water.

Drilling a horizontal well in the Marcellus Shale produces about 500 tons of rock fragments, known as cuttings. WVU researchers have been studying the radioactivity and toxicity of the drill cuttings, which are trucked on public roads to county landfills.

MSEEL scientists found that using the "green" drilling mud BioBase 365 at the well site resulted in all 12 cuttings samples passing the U.S. Environmental Protection Agency's test for leaching toxicity, allowing them to be classified as non-hazardous for non-radiological parameters like benzene and arsenic.

They determined that the drilling mud exerted a strong influence over the environmental risks associated with handling and disposing of drill cuttings.

Read more at Science Daily.

More Dems are calling anti-oil crusade an impractical fantasy

The Democratic Party’s move to push away from the “keep it in the ground” anti-oil movement is gaining steam, as liberal lawmakers continue assaulting the crusade at the Democratic National Convention.

Iowa Congressman Dave Loebsack and former Pennsylvania Gov. Ed Rendell, both Democrats, used a portion of their commentary at a Wednesday Politico event on energy and climate decrying the movement to force fossil fuels on the dust heap of history.

“We can’t just flip a switch and say ‘no more fossil fuels, now it’s all renewables.’ That’s not practical, it’s not possible,” Loebsack said.

Rendell, who was in office while the natural gas revolution was in its infant stage, seconded Loebsack’s position, adding that fracking is not only beneficial but also necessary.

“But if you regulate it [fracking] well, it can be a valuable source of the economy and good for the environment,” Rendell said, adding that anti-frackers are notoriously intolerant of pro-fracking positions.

The Loebsack and Rendell’s comments echo those made by other liberal government sophisticates, such as Obama Science Advisor John Holdren, who told reporters on July 11 that the anti-oil movement is “unrealistic.”

Read more at the Daily Caller.

America’s shale gas heads to East Asia for first time

East Asia, which imports more liquefied natural gas than any other region of the world, is preparing to receive its first supplies from America’s shale bounty.

A tanker that loaded liquefied natural gas at Cheniere Energy Inc.’s export terminal in Louisiana is bound for the Far East, according to an official at tanker owner Maran Gas Maritime Inc. who asked not to be identified because he isn’t authorized by the company to speak on the record. The company that chartered the vessel, Royal Dutch Shell Plc, has yet to say exactly which country and buyer will receive the cargo, he said.

The shipment to East Asia is a long time coming for a market once pegged as the most likely destination for U.S. shale gas. Instead, most of the cargoes that have left Cheniere’s LNG terminal since exports began in February have landed in closer-by Latin America.

An expansion of the Panama Canal stands to change that, with more than half of U.S. LNG export capacity slated to be online by 2020 contracted to Asian buyers, based on a Bloomberg New Energy Finance analysis.

“The Panama Canal opens an entirely new transit route for Asia, rather than going around South Africa or the Horn,” Ted Michael, an LNG analyst for energy data provider Genscape Inc., said by telephone from Boulder, Colorado. “We will see more of this in the future.”

Read more at Hellenic Shipping News.
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