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Oil and Gas Roundup — June 12

June 12, 2017
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, country and world:

Rig count jumps 5 in Oklahoma, 11 nationwide

The number of rigs exploring for oil and natural gas climbed by five to 131 in Oklahoma and by 11 to 927 nationwide for the week ending June 9.

A year ago, 58 rigs were active in the state and 414 across the U.S.

Of the other major oil- and gas-producing states, Texas lost three rigs to 460, Louisiana gained one to 64, New Mexico was up four to 59, North Dakota was flat at 46, Colorado was off one to 34, Pennsylvania gained one to 34, Ohio jumped two to 27 and Wyoming added one rig to 26.

Nationwide, 741 rigs were exploring for oil and 185 for natural gas; 780 rigs were drilling horizontally and 181 vertically.

U.S. racks up massive natural gas trade surplus with Mexico

U.S. energy companies exported $3.7 billion of natural gas to Mexico last year, putting a huge dent in our $7 billion trade deficit with our southern neighbor. In the absence of environmental activists and policymakers blocking proposed pipelines and export terminals, our natural gas trade surplus with Mexico would be even higher.

Mexico’s economy is growing at a steady pace (2.4 percent), translating to steady growth in energy demand. By 2029, Mexico’s natural gas demand is expected to grow by 31 percent. At the same time, Mexican natural gas production is declining, dropping 10 percent during the past year.

Our growing natural gas trade surplus is bringing in tremendous wealth from south of the border. Our natural gas exports to Mexico are expected to double in just the next two years. This growing trade surplus and infusion of wealth is a model that can and should be emulated in our trade with other nations.

[For economic context, while policymakers debate whether and how to pay for a Mexican border wall, Mexico will be sending enough money in natural gas purchases every year to pay the estimated costs of a border wall.]

Most of the natural gas we sell to Mexico is delivered through pipelines. Currently, 17 pipelines deliver natural gas to Mexico and another four are under construction. Nevertheless, Mexican demand is so high that we don’t have enough pipelines to deliver all the natural gas Mexico would like to purchase. In 2016, for the first time, U.S. energy producers delivered significant quantities of natural gas to Mexico via liquefied natural gas (LNG) tankers.

Read more at Forbes.

First tanker with U.S. natural gas reaches Poland

The first ever tanker with liquefied natural gas from the United States arrived in Poland on Thursday as part of the country’s — and the region’s — efforts to cut its dependence on Russia.

It was the first delivery of U.S. gas to eastern and northern Europe, which is building a new network of energy sources and gas transportation. Last year, Poland opened its first terminal for liquefied natural gas, or LNG, in Swinoujscie, on the Baltic Sea coast, to be able to receive such gas from distant suppliers like the U.S. or Qatar, which has already made some deliveries.

During a ceremony welcoming the U. S. tanker “Clean Ocean,” Prime Minister Beata Szydlo said it was a historic moment that improves the region’s energy security.

“Today Poland can say that it is a safe and sovereign country, also because we have such wonderful investments” like the LNG terminal, Szydlo said. “Days like this go down in history.”

She urged the U.S. to develop “further and more efficient cooperation.”

The region is trying to cut its reliance on Russia, which has occasionally used its gas exports to exert political pressure. It is planning to bring in gas from the North Sea and also to boost its own production.
Officials did not reveal the size of the delivery or the cost of the deal, which was made with Houston-based Cheniere Energy, Inc.

Read more.

U.S. natural gas output seen up in 2017, but still below 2015 record

The U.S. Energy Information Administration last week said dry natural gas production in 2017 would rise to 73.30 billion cubic feet per day (bcfd) from 72.29 bcfd in 2016, according to its Short Term Energy Outlook in June.

That output projection is down from EIA's forecast in May of 74.07 bcfd and falls short of the record high 74.14 bcfd produced on average in 2015.

EIA also projected U.S. gas consumption would fall to 73.41 bcfd in 2017 from a record 75.12 bcfd in 2016. The 2016 high was the seventh annual demand record in a row.

That 2017 consumption projection in the June STEO report was up a bit from EIA's 73.38-bcfd forecast for the year in its May report.

U.S. eating into OPEC market share, economist says

Producers operating in U.S. shale basins, notably Texas, are eating into a market share abandoned by OPEC, an economist in the state said.

Members of the Organization of Petroleum Exporting Countries and other producers, like Russia, agreed in January to sideline the equivalent of 2 percent of global oil demand in an effort to balance a market favoring the supply side. Parties to the agreement last month decided to extend the arrangement into May 2018.

Karr Ingham, an economist with the independent Texas Alliance of Energy Producers, said U.S. oil was taking up the slack now that exports were allowed under U.S. law.

"Producers in Texas and across the U.S. will gladly take the market share given up by nations that attempt to manage oil markets and prices by centralized decisions to manipulate production," he said in an emailed statement.

The U.S. Energy Information Administration put the four-week moving average for crude oil exports at 927,000 barrels per day, more than double the average for the same period last year. That means the United States is exporting about as much oil as is sidelined by the OPEC-led production agreement.

U.S. oil is becoming competitive in the Asian market in part because of the discount for West Texas Intermediate, the U.S. benchmark for the price of oil, against the Persian Gulf benchmark, Dubai.

Read more at UPI.
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