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Oil and Gas Roundup — Dec. 14

December 14, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oklahoman editorial calls for more vigorous LNG market

Just in time for a more fossil fuel-friendly presidential administration, the international market for liquefied natural gas (LNG) faces smoother sailing. At least we hope it does.

Actually, it's already underway — despite the hostility the oil, gas and coal industries have faced during the past eight years. A more vigorous LNG market is good news for gas-producing states such as Oklahoma.

LNG is natural gas that's been processed by cooling it to 260 degrees below zero (on the Fahrenheit scale). The process essentially turns a gas into a liquid, which is stored during transport across the oceans. This conversion method squeezes the volume of gas by 600 times.

Once delivered, LNG is warmed and returns to its original gaseous state. Pipelines can then distribute North American natural gas to customers in faraway nations. In a sense, the process is the reverse of the typical 20th-century model for oil: Crude gathered in, say, Saudi Arabia was transported on tanker ships to North America. This benefits the supplier, but not necessarily producing regions on this continent.

Given that North American producers aren't the only source for LNG, easing bureaucratic restrictions on export terminals is essential to maintain a competitive environment for producers and the thousands of employees who work for them.

Read more at NewsOK.

EPA finalized groundwater report reinforces no widespread, systemic impacts from fracking

In yet another sign EPA’s word changing in its final groundwater report was driven by politics rather than science, EPA Deputy Assistant Administrator Thomas Burke admitted when pressed by Wall Street Journal reporter Amy Harder that documented number of cases of water contamination from fracking-related activities is indeed small — even though language from the draft report stating cases of contamination “were small compared to the large number” of fracked wells was taken out of the final report. From the Wall Street Journal,

When asked, Mr. Burke did reiterate the report’s earlier findings that the EPA found only a small number of cases of contamination but stressed the lack of data.

“While the number of identified cases of drinking water contamination is small, the scientific evidence is insufficient to support estimates of the frequency of contamination,” Burke told the Wall Street Journal. “Scientists involved with finalizing the assessment specifically identified this uncertainty in the report.” (emphasis added)

Of course, there’s absolutely no difference between saying the “number of identified cases of drinking water contamination is small” and there are “no widespread, systemic impacts.”

On Dec. 13, the Environmental Protection Agency (EPA) released the final results of its long awaited groundwater study. While the agency made some wording changes to its previous topline finding, the data have not changed. This study took five years to complete, and in that time EPA found nothing to suggest that fracking is a serious risk to groundwater. Because of this, the report only reinforces what EPA found previously – that “hydraulic fracturing activities have not led to widespread, systemic impacts to drinking water resources.”

If fracking were a major threat to drinking water supplies, the data gathered by EPA would show it – but they don’t. If fracking were contaminating water on a widespread level, the evidence would also have been found in the dozens and dozens of peer-reviewed studies that have been conducted over the past decade. So perhaps contrary to its intention, EPA’s study officially closes the book on the environmental activists’ deliberate misinformation campaign.

Read more at Energy In Depth.

EIA: U.S. shale oil output forecast to rise by 2,000 barrels a day in January

Oil production from seven major U.S. shale plays is forecast to climb by 2,000 barrels a day to 4.542 million barrels a day in January from December, according to a monthly report from the Energy Information Administration released Monday.

Oil output at the Eagle Ford shale play in South Texas is expected to see the largest oil output decline at 23,000 barrels a day. However, output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to climb by 37,000 barrels a day.

January West Texas Intermediate oil settled at $52.83 a barrel, up $1.33, or 2.6%, on the New York Mercantile Exchange, buoyed by an agreement among major oil producers to cut back output starting Jan. 1.

— MarketWatch.

Shell’s floating giant will revolutionize the natural gas industry

It’s not unusual to see giant cruise or cargo ships out at sea today. But even by those standards, Shell’s new floating liquefied natural gas facility is huge.

Dubbed Prelude after the gas field where it will operate off the coast of northwestern Australia, the massive facility is 488 meters long and 74 meters wide. Its footprint is larger than an average New York City block, or, if you prefer sports, large enough for four soccer fields.

Called FLNG in industry parlance, the floating facility is on a course to revolutionize the energy industry. Prelude will process natural gas at sea, where it is pumped from underneath the ocean floor — a process that normally takes place on land.

While Prelude is a giant, it’s still much smaller than a land-based plant, which creates special challenges, says Mike Peterson of GE Oil & Gas. His business unit is building and testing a key component for the FLNG facility called the dynamic flexible riser. These high-tech pipes bring the gas up from the seabed before it is cooled to around -160°C (almost double the lowest temperature ever recorded in Antarctica) and turned into liquid.

The risers have been designed to withstand some of the harshest weather and sea conditions imaginable. They are being built and tested in GE’s facility in Newcastle, U.K. “They are like very fancy garden hoses,” Peterson says. “We build them from layers of metallic and polymer components. Each weighs around 320 tonnes and must be capable of functioning for 25 years through thick and thin.”


Israel and Turkey seek to shield natural gas ties from politics

Israel and Turkey are working to eliminate a major obstacle to natural gas deals: their own fractious history.

The two governments are working on a framework for the export of Israeli natural gas to Turkey that would protect contracts between companies if diplomatic ties break down, Israeli Energy Ministry Director-General Shaul Meridor said in an interview in Jerusalem. With such a shield in place, gas could begin flowing from Israeli waters to Turkey as soon as 2019, he said.

“For banks to eventually finance such a project they will have to know that no matter what happens between the countries politically, the business side will be protected,” he said.

The prospect of energy ties helped the countries patch up a six-year rift over a deadly Israeli raid on a Turkish ship that sought to breach Israel’s blockade of the Hamas-ruled Gaza Strip. Israel was looking for export markets, while Turkey sought to bolster its status as an energy hub and diversify away from Russian gas. But while companies are in talks to sign gas deals, concerns linger that diplomatic relations could deteriorate.

Partners in the Leviathan field, Israel’s biggest natural gas reservoir, are negotiating to export about 10 billion cubic meters of gas per year to Turkey, Bloomberg reported in March. Through its units, billionaire Yitzchak Teshuva’s Delek Group Ltd. owns a 45.3 percent stake in Leviathan, while Houston, Texas-based Noble Energy Inc. holds 39.7 percent.

Read more at Bloomberg.
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