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Oil and Gas Roundup — Sept. 26

September 26, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oklahoma rig count up 2; U.S. count jumps 5

The number of rigs exploring for oil and natural gas in Oklahoma increased by two to 67 last week, while the nationwide count went up by five to 511.

A year ago, 105 rigs were active in the state and 838 in the U.S.

Of the other major oil- and gas-producing states, Texas gained two rigs to 246, Louisiana fell by one to 40, North Dakota was up one to 28, New Mexico lost one rig to 27, Pennsylvania was up one to 22, and Colorado (19), Ohio (14) and Wyoming (13) were all flat.

Oil prices continued to hover between $40 and $50 per barrel at the end of the week, as they have since June. The price gained ground earlier in the week on speculation that the Organization of Petroleum Exporting Countries might agree next week to freeze production quotas. The price fell Friday on reports that Saudi Arabia and Iran were unable to reach an agreement.

Domestic benchmark West Texas Intermediate crude dropped $1.84 Friday to close at $44.48 a barrel, still up $1.45 from $43.03 one week ago.


$1 million grant will help diversify rural Oklahoma oil, natural gas companies

A $1 million federal grant promises to help rural Oklahoma oil and natural gas companies diversify in a move promoters say will create hundreds of jobs and boost the region's economy.

Representatives from the U.S. Economic Development Authority this week presented the grant to the Oklahoma Center for the Advancement of Science and Technology.

"One of the things we talk about with economic development is helping communities and companies diversify," said Jorge Ayala, the authority's regional director. "Inevitably there are industry downturns. We're always looking for opportunities to help communities become more resilient to those downturns."

The grant is the largest single funding OCAST has received. The state technology agency said it will match the grant with $500,000 in state funds and use the money to work with new and existing partner companies throughout rural Oklahoma. The grant is designed to create at least 340 jobs over the next two years.

"We have some challenges in the energy world now, so there are a lot of companies as well as individuals who need to transform or move to other areas of work," OCAST Executive Director C. Michael Carolina said. "So we're going to help work with pivoting from energy into other markets. We do expect that the energy industry will come back. That's great, but it's an opportunity to show flexibility in our state by taking companies that manufacture a product and look at other applications for those products."

OCAST already is working with a dirt-moving company that sells and maintains attachments for Caterpillar tractors designed to help set up oil-field rig sites. That company is exploring how to use that technology on farm tractors to boost agriculture development.

Another company designs valves and parts for oil-field equipment and is adapting that technology for aviation and defense uses.

Read The Oklahoman story.


States, industry urge 10th Circuit to uphold hydraulic fracturing rule ban

Four states, the U.S. Chamber of Commerce, and several other oil and gas industry groups on Friday told the Tenth Circuit it should not disturb a lower court ruling setting aside a federal rule for hydraulic fracturing on federal and Native American lands.

In amicus briefs submitted to the appeals court, the various rule opponents said the U.S. Bureau of Land Management’s regulations imposing stringent well casing and wastewater storage requirements and requiring drillers to disclose what chemicals they are using in hydraulic fracturing operations should not be revived as the agency has requested.

Alaska, Kansas, Montana and Texas said the rule violates federalism principles and the normal deference afforded to federal government agencies should not apply in this case because the states rights issue carries more weight.

“The federal appellants have asserted that while Congress in 2005 clearly prohibited the federal government from regulating hydraulic fracturing in connection with oil and gas exploration and production, it simultaneously intended to grant such regulatory authority to the [U.S. Department of the Interior]. This erroneous ‘heads I win, tails you lose’ legal interpretation would effect a back-door federalization of state oil and gas conservation programs,” the states said.

In a separate brief, the U.S. Chamber of Commerce argued that Congress expressly withheld the authority to regulate hydraulic fracturing from the U.S. Environmental Protection Agency, the federal agency with principal responsibility for environmental regulation.

Read more at Law360 (free subscription required).


Trump trumpets rollback of energy development regulations

Republican presidential nominee Donald Trump on Thursday doubled down on his full-throated support of fossil fuel development and use, telling a Pennsylvania shale conference that if elected, he would remove federal regulatory barriers to increased coal, oil and gas production and fast-track energy infrastructure projects.

Speaking at the Shale Insight 2016 conference — jointly run by industry groups operating in the Marcellus and Utica shales — in Pittsburgh, Trump said he would open up more federal onshore and offshore areas to oil and gas drilling and revoke policies that would limit drilling techniques such as hydraulic fracturing, revoke the current moratorium on new federal coal leasing, and walk back any regulations deemed by the Obama administration to be anti-coal.

Trump also said he would streamline the permitting of energy infrastructure, including tens of billions of dollars worth of fossil fuel projects that he accuses the Obama administration of either blocking outright or nudging developers to withdraw.

“It’s all upside: more jobs, more revenues, more wealth, higher wages, and lower energy prices,” Trump told conference-goers Thursday. “I am going to lift the restrictions on American energy and allow this wealth to pour into our communities.”

Trump repeated his vow to eliminate the U.S. Environmental Protection Agency's Clean Power Plan, the Obama administration's signature climate change rule and one that calls for existing power plants to slash their carbon emissions by 32 percent from 2005 levels by 2030, as well as the EPA and U.S. Army Corps of Engineers’ controversial Waters of the United States rule, a proposed definition of which waterways fall under the agencies’ purview. Both rules are being challenged in court.

Trump also repeated his promise to rescind President Barack Obama's Climate Action Plan, which includes not only the Clean Power Plan but also the EPA's rule capping carbon emissions at new power plants and efforts to slash methane emissions from the oil and gas sector by 40 percent to 45 percent from 2012 levels by 2025.

— Law 360 (free subscription required).


Oil firm spending seen up in 2017 for first time since 2014

Companies will spend 2.5 percent more on capital expenditure next year than they did this year, the first yearly growth in such spending since 2014, BMI Research said in a Sept. 22 report. Spending will increase by another 7 percent to 14 percent in 2018. It will remain well below the $724 billion spent in 2014, before the worst oil crash in a generation caused firms to cut back on drilling and exploration to conserve cash, the researcher said.

The oil industry may be ready to open its wallet after two years of slashing investments.

North American independent producers, Asian state-run oil companies and Russian firms are prepared to boost investments next year, outweighing continued cuts from global oil majors such as Exxon Mobil Corp. and Total SA, BMI said, based on company guidance and its own estimates. Spending will increase to a total of $455 billion next year from $444 billion this year, BMI said.

“North America is where we’re really expecting things to turn around,” Christopher Haines, BMI’s head of oil and gas research, said by telephone. “We’ve seen a push to really reduce costs, reduce spending and take out any waste and inefficiency. These companies have gotten to the point where they’re all set up to react.”

BMI’s outlook is more optimistic than groups like the International Energy Agency, which said last week that the industry might cut spending in 2017 for a third year in a row as companies continue to grapple with weaker finances. Oil prices still hover around $50 a barrel, less than half the level of the summer of 2014.

— Bloomberg.


Mexican shale fields may open next year

Mexico could open up its vast shale oil fields to U.S. drillers as soon as next year, the Mexican energy secretary said Friday.

Pedro Joaquin Coldwell, speaking to energy executives, attorneys and academics at Rice University, said the long-suspended auctions for northern Mexico’s shale fields could reopen after the first quarter of 2017.

“Everything will be ready by March,” Coldwell said of the environmental regulations necessary to start the work.

Mexico, in the middle of a sweeping reform of its government-run energy sector, has been holding auctions to sell the rights to private companies to drill in untapped oil fields. The state suspended bids for shale fields when oil prices crashed two years ago. “We thought industry wouldn’t be interested,” Coldwell told the roughly 100 attending a university event on the country’s energy reform efforts.

In addition, the country lacked environmental rules to regulate hydraulic fracturing and the pipelines necessary to transport natural gas, a byproduct of oil drilling.

But recently, Coldwell said, companies have asked the country to restart the shale auction.

Coldwell said he expects to have environmental regulations ready by March and bids prepared to issue soon thereafter.

Mexico kicked foreign oil drillers out of the country more than 70 years ago and nationalized its energy industry.

Read more at FuelFix.
 
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