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Oil and Gas Roundup — Nov. 16

November 16, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

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Entrepreneurs search for wastewater solutions

Brian Kalt’s got a pretty funky plan to stop the surge in earthquakes in Oklahoma and save the state’s reeling oil industry.

The key is to come up with an alternative to dumping drillers’ waste water right back into the ground, so Kalt’s little company will extract the salt particles, release the purified water into rivers and, then, to defray costs and make the scheme economically viable, sell the salt for use on snowy roads and in industrial machinery. (With a little more scrubbing, it could even be served on kitchen tables.) Kalt says he’s already signed tentative deals with salt companies and is, naturally, excited about his innovation.

“This is the silver bullet,” he says.
There are very few spots across America’s vast oil patch right now that have a buzz to them, a sense that their business is hot or about to take off. The niche market for dirty-water disposal in Oklahoma -- measured at about $3 billion -- is definitely one of them.

Kalt forms part of a crush of entrepreneurs who are cooking up ways to fix Oklahoma’s quake problem. There’s an MIT grad who concocted a system that turns the salt slurry into a thick, and easier to dispose, brine; and an Oklahoma native who devised a process that allows drillers to put the water to use in other parts of their operations; even General Electric Co. is tinkering with an idea or two (though it wasn’t willing to reveal much about what they might look like).

It’s not clear that any of these solutions will work, and if they do, it’s not clear that there’s much money to be made in the business, but that’s not stunting the enthusiasm any. The whole thing has a certain gold rush feel to it, said Bill Hermann, marketing director of Tulsa-based Produced Water Technologies LLC.

“Everybody thinks they’re going to get rich and they’re scheming up grand ideas on how to address the problem,” Hermann said. He and his colleagues have ginned up yet another alternative: a system that would essentially trap the heat produced by oilfield equipment and use it to evaporate the water.

The stakes couldn’t be higher for Oklahoma. Oil is king here. The industry is the state’s largest source of tax revenue and employs one out of every seven workers. Daily output has doubled over the past five years to 421,000 barrels a day, placing the state fifth in national rankings.

Read more at Bloomberg.

Oil demand won't peak before 2040, despite Paris deal, IEA says

The International Energy Agency expects global oil consumption to peak no sooner than 2040, leaving its long-term forecasts for supply and demand unchanged despite the 2015 Paris Climate Change Agreement entering into force.

The Paris accord to cut harmful emissions seeks to wean the world economy off fossil fuels in the second half of the century in an effort to limit the rise in average world temperatures to "well below" 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times.

But while demand for oil to power passenger cars, for example, may drop, other sectors may offset this fall.

"The difficulty of finding alternatives to oil in road freight, aviation and petrochemicals means that, up to 2040, the growth in these three sectors alone is greater than the growth in global oil demand," the IEA said in its annual World Energy Outlook.

From 2020, the European Union will impose much tougher legislation to control vehicle emissions, which many expect to quickly erode use of traditional fuels such as gasoline and diesel, a major source of oil demand.

In the report, the IEA looks at three scenarios for oil supply and demand. Its central, or "New Policies", scenario assumes signatory countries will attempt to meet the requirements set by Paris, as well as existing environmental legislation, while its "450 scenario" assumes signatories will adhere to the agreement and oil demand will fall off sharply and the "current policies" scenario does not factor in the Paris deal.

Read more at Reuters.

U.S. emerges as net exporter of natural gas

In a historic first, the US in early November began seeing small net volumes of natural gas exports that recently climbed above 1 Bcf/d, an analysis of data from Platts Analytics' Bentek Energy showed Monday.

The emergence and rapid acceleration in export volumes comes amid a recent decline in Canadian imports and a ramp up in feedgas volumes delivered to the Sabine Pass LNG export terminal.

In November, imports of Canadian gas have averaged just 4.5 Bcf/d and are down 21% from imports that averaged 5.7 Bcf/d in October.

Over the same period, feedgas deliveries to Sabine Pass have climbed to record highs, averaging 1.5 Bcf/d month to date, up from an average 249 MMcf/d in October.

On Monday, preliminary data showed the US exporting about 910 MMcf of gas.

Read more at Platts.

Obama administration completes rule to curb methane from federal oil, gas production

The U.S. Interior Department finalized rules on Tuesday aimed at preventing methane leaks from oil and gas production on federal and tribal lands, one of the last major Obama administration rules aimed at fighting climate change.

Interior's Bureau of Land Management (BLM) said on Tuesday the rule, updating 30-year-old regulations that govern flaring, venting and natural gas leaks from oil and gas production, could avoid wasting up to 41 billion cubic feet (BCF) of natural gas per year.

“This rule to prevent waste of our nation’s natural gas supplies is good government, plain and simple,” said Interior Secretary Sally Jewell.

“We are proving that we can cut harmful methane emissions that contribute to climate change, while putting in place standards that make good economic sense for the nation."

Environmental groups praised the rule, but industry and some western states called it unnecessary. One industry group sued BLM. The incoming Trump administration has promised to cut what it calls superfluous restrictions on energy production.

An Interior Department fact sheet said that between 2009 and 2015, oil and gas producers vented, flared and leaked 462 BCF of natural gas on federal and Indian lands, wasting as much as $23 million annually in royalty revenue.

Venting and leaks during oil and gas operations cause major emissions of methane, a greenhouse gas at least 25 times more potent than carbon dioxide.

The rule would phase in a limit on flaring over several years affecting 16 percent of oil wells, which account for 87 percent of gas flared, the BLM said.

Read more at Reuters.
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