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Oil and Gas Roundup — Aug. 4

August 04, 2017
TOPICS: In the news, OIPA
A roundup of oil and natural gas industry news from around the state, nation and world:

Rig count down in state, nation

The number of rigs exploring for oil and natural gas this week fell by two to 132 in Oklahoma, by four to 954 nationwide and by seven to 1,171 throughout North America.

A year ago, 61 rigs were exploring in the Sooner State and 586 in the U.S.

Of the active rigs, 765 were searching for oil and 189 for natural gas.

Of the other major oil- and gas-producing states, Texas gained four rigs to 466, Louisiana lost five to 67, New Mexico fell by one to 60, North Dakota was off one to 53, and Colorado (37), Pennsylvania, (34) Ohio (28) and Wyoming (26) were unchanged.

Climate activist chimes in on Oklahoma earthquakes, reveals lack of knowledge

With a 41-word quote and a 68-character tweet Thursday, climate activist Bill McKibben further confirmed what EID has long suspected — he knows nothing about fracking.
Early Thursday morning, McKibben weighed in on seismic activity in Oklahoma by tweeting, “7 earthquakes in Oklahoma in 24 hours—no wonder Scott Pruitt wanted to move to DC #fracking.”

And about an hour before that tweet, McKibben was quoted in a Washington Post story on a sparsely attended weekend protest of TransCanada’s planned Maryland pipeline, saying,
“More and more, people realize that each of these [pipeline] projects deepens our commitment to fossil fuels, locking us in for 40 or 50 more years. The scientific verdict on natural gas has changed, and changed dramatically, in the past half-decade.”

Though McKibben’s earthquake tweet and his claim that the “scientific verdict” on natural gas has “changed dramatically” dealt with different issues, they were equally egregious in their disregard of the facts.

The scientific consensus on natural gas also remains exactly the same as it was nine years ago when McKibben was standing on the steps of the U.S. Capitol demanding power plants switch to the clean burning fuel — natural gas has significant climate benefits which have helped the U.S. dramatically reduce greenhouse gas emissions, period.

Read more at Energy In Depth.

Exxon may expand light crude refining at Texas plant

ExxonMobil Corp is considering expanding light crude processing capacity at its Beaumont, Texas, refinery with the addition of a third crude distillation unit, a company spokeswoman said on Thursday.

If approved, construction could begin on Unit C in 2019 and be completed in 2022, said Exxon spokeswoman Charlotte Huffaker. She declined to disclose the contemplated capacity or possible cost of the Unit C expansion.

"These investments reflect the increased availability of abundant, affordable supplies of U.S. light crude," Huffaker said.
The expansion would be part of the $20-billion 'Growing the Gulf' project announced in March by Exxon Chairman and Chief Executive Darren Woods.

While Exxon has mentioned potential expansion of light oil refining capacity at the Beaumont plant as part of that project, this is the first time the company has talked about Unit C and given a timeline for possible construction.

Since at least 2014, Exxon has been considering the addition of a large distillation unit that would boost Beaumont's crude oil refining capacity from 362,300 barrels per day (bpd) to between 700,000 and 850,000 bpd, sources told Reuters in 2014 and 2015.

Read more at Reuters.

Senate restores FERC quorum

The Senate voted Thursday evening to confirm two of President Trump's nominees to the Federal Energy Regulatory Commission (FERC), paving the way for the commission to have its first quorum in six months.

Neil Chatterjee and Robert Powelson were confirmed by unanimous consent and are slated to join the five-member board, which has seen its action paused since February following a pair of retirements.

FERC is responsible for permitting decisions on energy projects like natural gas pipelines and export terminals. The lack of a quorum has left FERC unable to move such projects forward, inaction that has led to frustration in the energy, manufacturing and business communities.
Neither Chatterjee nor Powelson was considered a controversial pick. Chatterjee is an energy aide to Senate Majority Leader Mitch McConnell (R-Ky.), and Powelson is a Pennsylvania utilities regulator.

The Senate Energy and Natural Resources Committee advanced both nominations in June on 20-3 votes. Democrats, though, had been hesitant to bring their nominations to the floor for confirmation votes until they were assured a Democratic nominee would receive a vote as well.

Read more at The Hill.

Critics make another plea for speedy defeat of Obama EPA rule

Critics of an Obama-era rule to cut methane emissions from the oil and gas industry are making what may be their final push to quickly sideline the regulation.

In a filing to the U.S. Court of Appeals for the District of Columbia Circuit, two dozen oil and gas industry groups argued that the full court should reconsider a panel decision that revived U.S. EPA's 2016 methane restrictions last month.

The Trump administration is rethinking the methane standards and in June issued a 90-day stay of core elements of the rule. A three-judge panel of the D.C. Circuit last month ruled that EPA's attempt to delay the rule was unlawful and ordered the agency to begin enforcing it.

Industry groups are pushing the court's 11 active judges to rehear the case. They say the panel erred because EPA's decision to use a Clean Air Act reconsideration process to justify pausing the rule does not amount to a final agency action that would fall under the court's jurisdiction. Instead, they argue, EPA's actions are not ripe for judicial review until EPA completes its reconsideration process.

EPA has not made its own request for rehearing. A coalition of states opposed to the methane standards requested rehearing but did not file a reply defending their position yesterday. If the court does not grant rehearing, EPA will have to enforce the standards while it goes through a public notice and comment process for a proposed two-year delay.

The full court is expected to issue a decision soon on whether to reconsider the panel's decision. Nine of the court's 11 active judges earlier this week ordered EPA to enforce the rule for now.

— E&E News.

The oil market's hidden signals show U.S. producers are hedging again

Look under the hood of the oil market and one thing becomes apparent -- shale producers seem to be hedging again.

Demand for the contracts that producers use to guarantee price levels soared after 2018 West Texas Intermediate crude returned to $50 a barrel. At the same time a raft of trades were reported to U.S. regulators last week that showed some producers hedging at levels as low as $45 a barrel, according to data compiled by Bloomberg.

“We’ve witnessed a lot of producer interest as WTI moved towards $50 a barrel,” says Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA. A flatter oil futures curve and surging demand for put options are indicators of recent producer activity, he added.

After OPEC and its allies agreed to cut production late last year, U.S. producers hedged in droves, turning the oil market’s structure upside down as they sold later contracts to lock in their output. Banks including Societe Generale SA said that this activity had stopped when prices entered a bear market in June. Now, producers are at it once again, adding to the specter of a rising supply outlook in the market.

Demand for put options that producers use to lock in prices has jumped over the last two weeks. An indicator known as the skew that compares put option and call option prices has shot up for December 2018 Brent and WTI contracts, indicating that producers are guaranteeing sales for next year. There was also a 32 percent increase in the number of West Texas Intermediate contracts for June 2018 last month, PVM Oil Associates analyst Stephen Brennock wrote in an emailed report Wednesday.

Read more at Bloomberg News.
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