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Oil and Gas Roundup — July 24

July 24, 2017
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oklahoma, U.S. rig counts lose ground

The number of rigs exploring for oil and natural gas in Oklahoma fell by three to 131 at the end of the week ending July 21 as the national count dropped two to 950.

A year ago 59 rigs were in operation in Oklahoma and 462 across the U.S.

Of the active rigs, 764 were exploring for oil and 186 for natural gas; 803 rigs were horizontal and 72 vertical.

Of the other major oil- and gas-producing states, Texas fell three to 463, Louisiana gained four to 71, New Mexico lost two to 57, North Dakota was up one to 54 and Colorado (37), Ohio (27) and Wyoming (25) were flat.

While a step in the right direction, TED’s fracking video misses on major issues

A recent animated video published by TED discussing the hydraulic fracturing process has made rounds on social media this week, garnering 4.8 million views and more than 36,000 shares on Facebook.

The video examines the various steps of fracking and energy development, and is — to its credit — a more accurate description than most. However, it does have some glaring errors, namely the video’s inaccurate claim about water contamination from the fracking process, the conflation of fracking with wastewater injection in regard to seismicity, and the downplaying of benefits to health and air quality brought about by fracking.

When a well is hydraulically fractured, the process is taking place deep beneath the surface – up to 10,000 feet down, or roughly two miles. For comparison, residential water wells are generally around 500 feet, while aquifers used for drinking water can be several hundred up to about two thousand feet deep before the salinity and other natural contaminants make it undrinkable.

In other words, with a mile or more of hard, impermeable shale rock between the fracking process and groundwater, there is no evidence of fracking fluids leaking up to drinking water aquifers as shown in the TED video.

Read more at Energy In Depth.

Half of well productivity gains may be due to core acreage drilling, not better HF designs, MIT says

Much has been made of productivity gains in oil and gas operations since the oil price downturn in 2014.

Many companies emphasize that their current wells are significantly more productive than old wells. In general, much of the improved output has been attributed to improved completions designs. Higher proppant loading and tighter spacing, among other variables, have certainly yielded more productive wells.

However, not everyone who watches the oil and gas industry believes this is the case. According to a recent research study conducted by Massachusetts Institute of Technology’s Energy Initiative, improved frac designs only tell part of the story.

Along with using bigger and better frac designs, companies have been focused on the “core” of their acreage: if oil prices are low there is little incentive to drill in sub-par areas.

However, little information is available to establish how much of the observed productivity gains are due to designs and how much are due to location—i.e., better rock.

Researchers from MIT attempted to answer this question.

Using well results from the Bakken, the MIT researchers attempted to gauge the effects of “sweet spotting.” Using a modeling system called regression-kriging, abbreviated “RK,” the researchers believe they have identified the effects of location.

Read more at Oil & Gas 360.

BHP Billiton to step up U.S. shale production

BHP Billiton Ltd. said it plans to step up activity in the U.S. oil-and-gas shale fields that activist shareholders are agitating for the resources company to offload.

The move is expected to revive flagging onshore production volumes even as BHP continues to invest in conventional energy operations and exploration in the Gulf of Mexico and other basins while seeking to sell some unwanted U.S. shale acreage.

BHP has been forced to defend its strategy after New York hedge fund Elliott Management Corp. led a series of attacks in recent months, calling for a sweeping overhaul of the world's largest-listed mining company and criticizing the billions of dollars spent on acquisitions and mistimed share buybacks.

The push by Elliott and other shareholders has drawn BHP's petroleum division into the spotlight and revived questions about the billions of dollars spent picking on onshore U.S. assets at the height of the natural-gas boom.

BHP on Wednesday forecast a rise in overall production across its operations over the 2018 financial year, as steady growth in iron-ore output and a rebound in commodities including copper offset a further drop in petroleum volumes in the 12 months through June.

Read more at MarketWatch.

Russia’s financial support for anti-fracking groups is no coincidence

As Mitt Romney understood all too well, Vladimir Putin has long sought to interfere with domestic American politics.

Years before Donald Trump came down that escalator and Hillary Clinton’s staff was tricked into giving up its e-mail passwords, Russia was pouring millions of dollars into anti-fracking campaigns across Europe and the U.S.

Fracking, or hydraulic fracturing, is a drilling technique in which high-pressure liquids are blasted into rock, allowing for the extraction of oil and natural gas that was previously impossible to reach.

The technology is the main reason that the U.S. has moved toward energy independence in recent years, and it could potentially allow Europe to break its dependence on Russian oil and natural gas. Which, naturally, makes it a threat to the Kremlin’s interests.

In 2012, Bulgaria issued a shale-gas license to Chevron. Immediately, activists pounced, peddling hyperbolic warnings that fracking pollutes drinking water. (In reality, the practice carries a minimal risk of groundwater pollution when done properly.)

Protests erupted, and the Bulgarian government caved, banning fracking entirely. Gazprom, Russia’s state-run energy company, proceeded to give the Bulgarian government a 20 percent discount for signing a ten-year contract for the provision of natural gas.

Read more at National Review.
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