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Oil and Gas Roundup — Sept. 16

September 16, 2016
TOPICS: In the news
State rig count jumps 3; U.S. count down 2

The number of rigs exploring for oil and natural gas in Oklahoma increased by three this week to 65, while the national count declined by two to 506.

A year ago, 842 rigs were active nationwide and 106 in Oklahoma.
Houston oilfield services company Baker Hughes Inc. said Friday that 416 rigs sought oil and 89 explored for natural gas in the U.S. One was listed as miscellaneous.

Among the other major oil- and gas-producing states, Texas fell by one to 244, Louisiana dropped two to 41, New Mexico was unchanged at 28, North Dakota declined by one to 27, and Pennsylvania and Colorado were flat at 21 and 19.

The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May at 404.

U.S. congressional panel to hold fuel rules hearing

A congressional panel will hold a hearing on Sept. 22 to look at the fate of U.S. fuel efficiency rules through 2025 amid growing concerns from automakers.

An auto trade group representing General Motors Co, Ford Motor Co, Toyota Motor Corp, Daimler AG and Volkswagen AG (VOWG_p.DE) has said with lower gasoline prices it would be difficult to meet the requirements. Sales of less fuel-efficient trucks and SUVs have risen as gas prices have fallen.

U.S. regulators must decide by 2018 on whether the 2022 through 2025 model year requirements are feasible or should be changed.

The U.S. House Energy and Commerce Committee is holding a hearing Thursday that will include testimony from U.S. regulators and auto trade groups.

"We need to know if these standards are impacting vehicle choices, raising prices, and most importantly whether they are pushing low-income consumers out of the car-buying market altogether," said Representatives Michael Burgess and Pete Olson, both Republicans of Texas, in a joint statement.

Read more at Reuters.

How a pipeline leak in Alabama can move gas prices

Oil prices are down this week, but gasoline futures are up on worries that a pipeline leak in Alabama could lead to supply shortages on the East Coast.

The leak itself is estimated at 6,000 barrels of gasoline and poses no threat to public safety, according to press releases from Colonial Pipeline Co., which operates the pipeline.

So why is the global futures market responding? Because part of Colonial’s main gasoline-shipping route is closed, cutting off a key artery for transporting fuel from the Gulf Coast (where many refineries are) to the East Coast (where many drivers are). The spill was detected and the route was shut on Friday.

Colonial Pipeline is estimated to deliver about 40% of the gasoline consumed on the East Coast, and it is especially important to markets in southeastern states.

Without full access to Colonial, fuel suppliers are scrambling to prevent shortages. Mansfield Oil Co. is “treating this situation with the same importance and urgency as a natural disaster,” the company said in a note Thursday. “We are currently long hauling from coastal terminals and other supply regions to mitigate the effects of the shortage.”

The Environmental Protection Agency on Wednesday waived Clean Air Act requirements for 13 counties in Georgia and five counties in Tennessee “to minimize or prevent disruption of an adequate supply of fuel to consumers.” The waiver lasts through midnight tonight.

Read more at the Wall Street Journal.

Hearing highlights how costly methane regulations will yield little climate benefit

The consensus was nearly unanimous at Thursday’s House Science Committeee Environment Subcommittee hearing – appropriately titled “A Solution in Search of a Problem” – that the Environmental Protection Agency’s (EPA) methane regulations would place enormous costs on oil and gas producers while providing little environmental benefits.

As the witnesses noted many times, methane emissions are already plummeting as natural gas production soars and new rules would hit producers at a time when they are already grappling with a difficult price environment.

Just to provide a couple highlights from the hearing, Dr. Bernard Weinstein, Professor and Associate Director at Maguire Energy Institute and Cox School of Business at Southern Methodist University, noted: “Even if we did shut in all of our oil and gas wells, it would have little effect on the environment, especially if other countries continue doing what they’re doing. … I think we need a dose of realism.”

Weinstein noted that natural gas production has increased 70 percent since 1990 and during that same time frame, methane emissions have significantly decreased. As he said, “When you consider the economy is 75 percent larger… that’s remarkable.”

Erik Milito, American Petroleum Institute (API) Director of Upstream and Industry Operations, also made this point, and went on to highlight natural gas’ role in bringing down greenhouse gas emissions: “Thanks to industry efforts over the past several decades, the United States is leading the world in reducing emissions – down to near 20-year lows – all while energy production has been going up significantly.

Read more at Energy In Depth.
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