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Oil and Gas Roundup — Dec. 5

December 05, 2016
TOPICS: In the news
A roundup of oil and natural gas news from around the state, nation and world:

State rig count up 2; U.S. number up 4

The number of rigs exploring for oil and natural gas in the state of Oklahoma climbed by two to 81 at the end of the week, as the U.S. rig count jumped four to 597.

A year ago, 737 rigs were active in the U.S. and 84 in Oklahoma.

Nationwide, 477 rigs were searching for oil and 119 for natural gas.

Of the other major oil- and gas-producing states, Texas gained seven to 286, Louisiana lost four to 48, North Dakota fell two to 31, New Mexico and Pennsylvania were unchanged at 29, Colorado fell two to 20 and Ohio and Wyoming were unchanged at 18 and 17, respectively.

Leading basins were the Permian, with seven new rigs, and the Haynesville, with three gains.

Obama administration blocks Dakota Access Pipeline months after approving it

The U.S. Army Corps of Engineers will not be granting the company building the Dakota Access Pipeline (DAPL) the easement it needs to cross the Missouri River, despite the project being nearly complete.

American Indians and environmentalists camped out at the project’s construction site hailed the decision a victory, while Energy Transfer Partners and pipeline supporters are bashing the Corps for reversing its stance on the project.

Army Assistant Secretary for Civil Works Jo-Ellen Darcy said the Corps would not approve the easement based on the need “explore alternate routes” for the pipeline. It’s a stunning reversal from July 2016, when the Corps approved the easement for the project.

“Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it’s clear that there’s more work to do,” Darcy said in a statement.

“The best way to complete that work responsibly and expeditiously is to explore alternate routes for the pipeline crossing,” she said.

Her decision was criticized by DAPL supporters.

“This purely political decision flies in the face of common sense and the rule of law,” Craig Stevens, spokesperson for the Midwest Alliance for Infrastructure Now Coalition, said in a statement.

Read more at Daily Caller.

Stanford study finds efforts to reduce Oklahoma seismicity are proving effective

On the same day the Associated Press reported the rate of earthquakes in Oklahoma has dropped “dramatically” since May, a new study shows how current wastewater injection policies could reduce Oklahoma’s seismic activity to background levels in five to 10 years.

The new report, co-authored by Stanford University geophysicist Mark Zoback and colleague Cornelius Langenbruch, used a physics-based statistical model in Oklahoma’s two most seismically active regions to find, “On the basis of our results, the mandated saltwater injection rate reduction in 2016 was an effective step in mitigating the seismic hazard associated with the occurrence of triggered and induced earthquakes in Oklahoma because injection rates in both CO (central Oklahoma) and WO (western Oklahoma) drop below the observed triggering thresholds.

“Consequently, widely felt M ≥ 3 earthquakes in the affected areas, as well as the probability of potentially damaging events, should significantly decrease by the end of 2016 and return to tectonic levels within the next few years.”

In February and March of this year, the Oklahoma Corporation Commission (OCC) issued directives to reduce wastewater injection into the Arbuckle formation by 40 percent below 2014 levels in the state’s two most seismically-prone areas — central as western Oklahoma. The Stanford study suggests those policies — along with the market downturn — are effectively reducing the number of earthquakes in the state.

Previous research from EID showed that the rate of earthquakes in Oklahoma of magnitude 2.8 or greater had declined 81 percent in November when compared to the peak month of June 2015. Instances of M 2.8-and-greater earthquakes —the minimum size for which the Oklahoma Geological Survey (OGS) has a complete catalog — have also declined 80 percent from January.

Read more at Energy In Depth.

Natural gas becomes something Mexico, U.S. can agree on as capacity soars

The incoming administration of President-elect Donald Trump is confronting two major policy challenges with Mexico in the form of tighter immigration controls and potential NAFTA renegotiation.

However, there's something already flowing across the border that is proving its weight in gold to both countries.

Vast amounts of U.S. natural gas, a product of the shale revolution, is being shipped in increasing capacity to feed Mexico's burgeoning nat gas demand. In the wake of its 2013 energy reforms, the country has been gradually reshaping its oil and gas sector, with much of its energy needs being met by its neighbor to the north.

Last year, Mexico's Energy Ministry set a goal to triple its gas imports from the U.S. over five years, as part of a plan to bolster its own energy infrastructure. Among developed nations, U.S. nat gas prices are by far the least expensive. In a recent report, the International Energy Agency said the globalizing of the natural gas market will eventually make U.S. prices "a global reference point."
Citing Mexico's growing energy needs, the Energy Information Administration said this week that U.S. pipeline capacity to ship nat gas exports south of the border stood at 7.3 billion cubic feet per day (bcf/d) — which may double within the next few years.

The U.S. shipped more than 1.7 trillion cubic feet of nat gas in 2015, most of that via pipeline, with Mexico absorbing around 1 trillion of that amount, EIA data show — a sum that's nearly tripled since 2010.

Read more at CNBC.

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