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Oil and Gas Roundup — July 17

July 17, 2017
TOPICS: OIPA, In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oil prices hold steady as U.S. oil rig count rises

The number of active oil and gas rigs in the United States was flat last week overall, after gaining 505 rigs in the last 12 months. But on the oil side, the number of rigs still increased—this week by two—while gas rigs decreased by 2 for a net growth of zero. Combined, the total oil and gas rig count in the U.S. now stands at 952 rigs.

Oklahoma saw a decrease of two rigs to 134. Of the other major oil- and gas-producing states, Texas gained three to 466, Louisiana lost two to 67, New Mexico was flat at 59, North Dakota gained one to 53, Colorado was up one to 37, and Pennsylvania (34), Ohio (27) and Wyoming (25) were all unchanged.

Prices rose by mid-day on Friday with Shell’s declaration of a force majeure on Nigeria’s Bonny Light grade, and on last week’s IEA report showing a forecast for increased global demand this year. WTI was up .89% at 12:31 pm EST at $46.46 — almost $2 above last-week’s levels. The Brent crude benchmark was up .93% at $48.87, also a near-$2 gain per barrel. By 12:59pm, prices were even higher, with both benchmarks trading up over 1% for the day.

During 2017 — a year of tumultuous prices that began on January 3, 2017, at $58.30 per barrel for WTI and fell almost $10 to today’s $46.46 — the number of US rigs have increased almost 50 percent. Of the 14 major US basins for oil and gas, 7 have seen over a 100 percent increase in the number of active oil and gas rigs. The largest basin — the Permian — has seen a total increase of 213 oil and gas rigs in 2017, bringing the Permian’s 2017 growth to 133 percent overall.

Since the advent of the OPEC agreement, oil rigs in the United States have increased by 288, and have only taken on losses in two weeks out of the 32 weeks since the deal was sealed—a fact that OPEC is finding it increasingly hard to ignore as it considers next steps.

Russia ran campaign against U.S. oil, gas activity

Russia has been in the news just about every day this year.

The top news story recently involves Russia’s involvement in the 2016 Presidential elections, which was highlighted in a Jan. 6 report issued by the Office of the Director of National Intelligence.

The declassified version of the report, entitled “Assessing Russian Activities and Intentions in Recent U.S. Elections,” included an analytic assessment drafted and coordinated among the Central Intelligence Agency, Federal Bureau of Investigation, and the National Security Agency.

“We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the U.S. presidential election,” the report stated under its Key Judgments section.

Even though the primary focus of the report was on the presidential election and the political process, it also included Russian influence on U.S. energy policy, including running “anti-fracking programming, highlighting environmental issues and the impacts on public health. This is likely reflective of the Russian Government’s concern about the impact on fracking and U.S. natural gas production on the global energy market and the potential challenges to Gazprom’s profitability.”

Gazprom is Russia’s national oil and gas company.

Now, two members of Congress have sent a letter to the Secretary of Treasury requesting an investigation concerning allegations that Russia has attempted to harm the domestic oil and gas industry by funding environmental groups that seek to eliminate hydraulic fracturing in the U.S. and elsewhere.

House Science, Space and Technology Committee chairman Lamar Smith, R-Texas, and energy subcommittee chairman Randy Weber, R-Texas, stated in a letter to Treasury Secretary Steve Mnuchin that Russia has tried to “suppress the widespread adoption of fracking in Europe and the U.S.”

Read more at Times Record News.

U.S. to offer 76 million acres for oil and gas exploration in Gulf of Mexico

U.S. Secretary of the Interior Ryan Zinke has announced that the Department of the Interior would offer 75.9 million acres for oil and gas exploration in the Gulf of Mexico.

The region-wide lease sale is scheduled to take place on 16 August 2017.
It will include all available unleased areas in federal waters offshore Texas, Louisiana, Mississippi, Alabama, and Florida.

The Department will offer a reduced royalty rate for shallow water leases to boost exploration and production activity under current market conditions.
Under the National Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2017-2022, Lease Sale 249 will be the first offshore sale.

Lease Sale 249 will cover about 14,220 unleased blocks in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from nine to more than 11,115ft.

Ten region-wide lease sales are scheduled to be conducted for the Gulf of Mexico under the program.

During the program period, the Department will hold two Gulf lease sales each year. The lease sales will include all available blocks in the combined Western, Central, and Eastern Gulf of Mexico Planning Areas.

The Gulf of Mexico OCS, which covers about 160 million acres, is estimated to have recoverable resources of 550 million barrels of oil and 1.25 trillion cubic feet of gas.  

Read more at EBR.

Energy costs making California unaffordable for too many

California continues to grow increasingly unaffordable as Californians continue to bear rising costs of everyday necessities — such as water, housing, food and energy. In the Central Valley, we hear story after story about how expensive it is living and working in our state as family budgets are getting squeezed.

This cannot continue. When it comes to energy costs, it certainly doesn’t have to be this way.

California is blessed with seemingly boundless natural resources and innovative outside-the-box thinking, yet our citizens suffer energy costs that are two times higher than the U.S. national average. Affordability is the most significant issue facing California, yet onerous regulations and red tape only worsen this problem for so many California families.

Here is how dire the situation is becoming:
• When considering cost-of-living, California has the highest poverty rate in the entire nation.
• In the last year alone, homelessness soared by 23 percent in Los Angeles County.
• California has the highest average gas prices in the continental United States.
• Over the last year, California resident ratepayers paid $4.8 billion more than the average ratepayer elsewhere in the U.S. using the same amount of energy.

Addressing the energy cost issue would go a long way for families across the state that are struggling to work and live here. In Washington, D.C., producing more and reducing the price of American energy has been a continuous focus. The benefit will be more American jobs, less dependence on foreign energy sources, and a safer global environment. This is a commonsense effort.

Read more at LA Daily News.

Floor votes set for 2 contentious pipeline bills

The House will vote this week on two contentious bills aimed at streamlining pipeline permitting.

H.R. 2883, from Rep. Markwayne Mullin (R-Okla.), would change the permitting process for cross-border pipelines and transmission projects, transferring approval authority away from the State Department to the Federal Energy Regulatory Commission for pipelines and the Department of Energy for transmission projects.

The measure would also eliminate a presidential permit requirement that was used by President Obama to reject the Keystone XL pipeline and later by President Trump to reverse his predecessor's decision.

Democrats say the bill is designed to ensure quick approval for projects and
would limit the scope of environmental reviews.

H.R. 2910, from Rep. Bill Flores (R-Texas), would reinforce FERC's role as the lead agency for permitting interstate natural gas pipelines and allow it to impose deadlines on other federal and state regulators.

Democrats maintain that the bill overlaps with FERC's existing authorities and could limit input from other agencies.

Both measures advanced through the Energy and Commerce Committee last month despite Democratic objections (E&E News PM, June 28).

Neither bill has a Senate counterpart.

— E&E News.

Corporation Commissioners pen Tulsa World column

As the state’s first established agency and one that has played a major role in the state’s key economic sectors since inception, the Oklahoma Corporation Commission is no stranger to challenges. But as Will Rogers wisely observed, “Even if you’re on the right track, you’ll get run over if you just sit there.” That’s why the Corporation Commission is moving forward with a top-down reorganization, the result of work that started years ago.

Briefly, this work has included development of a new strategic plan, the use of embedded auditors from the state auditor’s office, and working with business process experts at the Office of Management and Enterprise Services as well as stakeholders to develop new efficiencies and practices. None of this work is considered final, but is instead part of an ongoing process to address the constant changes in the economic and environmental sectors for which the Corporation Commission is responsible.

The latest resulting changes: As of July 1 the number of our divisions has been reduced from 8 to 5. The Corporation Commission’s court and legal divisions have been combined and reorganized to make the system more efficient and eliminate unnecessary delays in cases while continuing to ensure due process.

Administration has been restructured to, among other things, improve cost tracking and the budget process. The Commission’s Information Technology functions have been transitioned to OMES, and with its help a new data management system will be developed that will give stakeholders and the general public much-needed improved access to essential data, as well as offer efficiency gains and lower costs for stakeholders.

Read more at the Tulsa World.
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