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Oil and Gas Roundup — March 29

March 29, 2017
A rundown of oil and natural gas industry news from around the state, nation and world:

Trump’s executive order undoes Obama-era climate policies

President Donald Trump is set to sign a sweeping executive order on climate change on Tuesday, rolling back federal enforcement of environmental regulations, including the Clean Power Plan, the regulation at the heart of the Obama administration's efforts to combat global warming.

Trump and Vice President Mike Pence will travel to the Environmental Protection Agency Tuesday afternoon to begin the formal review of the Clean Power Plan, currently on hold under order from the D.C. Circuit Court of Appeals, which requires utilities to reduce carbon emissions by 32 from 2005 levels by 2030.

Trump repeatedly disparaged the regulation as a job killer on the campaign trail last year, promising to revive the mining industry after what he and other Republicans have termed former President Barack Obama's "war on coal." The review is the first step in efforts to significantly re-write or replace the rule to loosen its emissions caps.

"This order will help keep energy and electricity affordable, reliable and clean in order to boost economic growth and job creation," White House press secretary Sean Spicer said on Monday.

The order also will instruct EPA Administrator Scott Pruitt to relax carbon emissions standards for new power plants, roll back an Obama-era goal of reducing methane emissions by 40 percent by 2025, lift Obama's moratorium on the new leases of federal land for coal mining, retract a 2016 Council on Environmental Quality guidance to federal agencies required to conduct environmental reviews before new construction project and issue a new guidance to federal agencies to review whether their policies inhibit domestic energy production.

Read more at U.S. News.

Weatherford’s Ruscev warns of domestic overproduction

The biggest challenges the oil and natural gas industry face are those created by the oil and natural gas industry, an oil-field services company executive said Tuesday at an energy conference in Oklahoma City.

Drilling activity has recovered as oil prices rebound from 12-year lows hit early last year. But industry leaders must be careful to avoid over producing and driving prices down again, said Mario Ruscev, executive vice president of global product lines and chief technology officer at Weatherford International.

"What is really scary is not the oil price. We'll find a way to deal with that. What scares me is our behavior," Ruscev said. "I'm very optimistic about the future. The only thing that worries me is ourselves. Sometimes we don't want to see things."

Ruscev was the keynote speaker at Tuesday's Society of Petroleum Engineering Oklahoma City Oil and Gas Symposium.

The number of rigs drilling for oil and natural gas hit a more than 60-year low of 404 in early 2016, but has since more than doubled to 809 last week, according to Baker Hughes.

"I would feel less scared if it was 600 because that would be more stable, but it's difficult to say that to people because they still have debt to pay from last time," Ruscev said. "More drilling means more production. That goes into the oil market, which adjusts the equilibrium. When you have too much of it, the price goes down.

"If we continue like this, it's bound to happen. We are bound to make it happen because everybody needs to pump."

Read Adam Wilmoth’s story at NewsOK.

U.S. shale enlists genetics to boost output

A small group of U.S. oil producers has been trying to exploit advances in DNA science to wring more crude from shale rock, as the domestic energy industry keeps pushing relentlessly to cut costs and compete with the world's top exporters.

Shale producers have slashed production costs as much as 50 percent over two years, waging a price war with the Organization of the Petroleum Exporting Countries.

Now, U.S. shale producers can compete in a $50-per-barrel oil market, and about a dozen shale companies are seeking to cut costs further by analyzing DNA samples extracted from oil wells to identify promising spots to drill.

The technique involves testing DNA extracts from microbes found in rock samples and comparing them to DNA extracted from oil. Similarities or differences can pinpoint areas with the biggest potential. The process can help cut the time needed to begin pumping, shaving production costs as much as 10 percent, said Ajay Kshatriya, chief executive and co-founder of Biota Technology, the company that developed this application of DNA science for use in oilfields.

The information can help drillers avoid missteps that prevent maximum production, such as applying insufficient pressure to reach oil trapped in rocks, or drilling wells too closely together, Kshatriya said.

"This is a whole new way of measuring these wells and, by extension, sucking out more oil for less," he said.

Read more at Reuters.

Oil drillers face an angry mob in Mexico’s guerrilla country

In Mexico's guerilla country, angry mobs are standing up to oil companies looking to drill new exploratory wells.

Last month, an angry mob smashed the windows of a town hall before setting it on fire. Participants said they were protesting the government's plans to auction off land near their farming community to private drillers.

"With machetes, with pistols, with whatever necessary, we will defend our land," said Elmer Escalante, an elementary school teacher. "Oil development here won't mean jobs for us. But it will mean the ruin of our land."

In a larger sense, the unrest may reflect the momentum building around Andrés Manuel López Obrador, or "Amlo," the front-runner in next year's presidential election.

While current President Enrique Peña Nieto has tried to revive Mexico's struggling oil and gas industry by bringing in foreign capital from giants like Chevron Corp. and Exxon Mobil Corp., Amlo has pledged to roll back these changes

Read more at Bloomberg.
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