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Oil and Gas Roundup — Sept. 26

September 26, 2017
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count off 3 to 127; U.S. count down 1 to 935

The number of rigs exploring for oil and natural gas bell Oklahoma by three and nationwide by one as of Sept. 22.

The state rig count now stands at 127; the U.S. count is 935 — up from the 511 rigs that were active a year ago.

Houston oilfield services company Baker Hughes said Friday that 744 rigs sought oil and 190 explored for natural gas. One was listed as miscellaneous.

Among major oil- and gas-producing states, Louisiana gained three rigs to 65.

Texas (453) and New Mexico (68) each gained one rig. North Dakota (49) also lost three rigs, and Colorado (33) was off two.

Ohio (29), Pennsylvania (33) and Wyoming (25) were unchanged.

The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May of 2016 at 404.

Fracking rule may see jumbled comeback as court tosses case

Confusion and mixed messages dominated the conversation yesterday as court watchers unpacked a major ruling on the Obama administration's embattled hydraulic fracturing rule.

The 10th U.S. Circuit Court of Appeals dismissed litigation over the Interior Department's fracking rule without directly weighing the core legal question of whether the federal government has authority over the oil and gas extraction process.

But the panel of judges also scrapped a lower court's 2016 ruling that struck down the regulation, clearing the way for the rule to take effect — however briefly — even as the Trump administration works to rescind it. The court has not yet issued a final mandate in the case, and the rule won't be revived until then.

Supporters and opponents of the fracking rule pushed dueling messages in the wake of the decision yesterday, each declaring victory.

Environmental groups celebrated the revival of the rule, claiming vindication after a yearslong legal battle. Sierra Club attorney Nathan Matthews said the ruling "reinstates much-needed protections."

Industry groups, meanwhile, cheered the 10th Circuit's conclusion that it would be a waste of the court's resources to answer the underlying legal question of fracking authority.

"Today's court decision confirms what IPAA has advocated all along: Dismissing the appeal would protect independent producers from the uncertainty of whether it was necessary to comply with regulations that are certain to be revoked," Independent Petroleum Association of America President Barry Russell said.

But the legal tug of war is likely far from over.

The Trump administration, backed by industry and several Western states, is expected to move quickly to block implementation of the fracking rule. Any such effort by Interior's Bureau of Land Management will face legal pushback from environmentalists that have defended the standards since their unveiling more than two years ago.

New litigation will likely follow any attempt by the Trump administration to avoid implementing the rule. And separate lawsuits are expected once Interior finalizes its official rescission of the rule.
The 10th Circuit's judgment doesn't officially take effect until the court issues a mandate. For cases involving the U.S. government, courts have 52 days after a ruling to issue the mandate. That would give the Trump administration until mid-November to delay the regulation or finalize its rescission before having to implement it.

— E&E News (subscription required)

America’s top industry in terms of jobs growth driven by oil and gas’ resurgence

Business research firm LimeLeads recently released a list of the top-10 American industries in terms of job growth since last August, and thanks to the recent resurgence of the oil and gas industry, “Support Activities for Mining” tops the charts by a long shot.

“Of all American industries, Support Activities for Mining experienced the fastest growth rate in the past year. This sector added 52,500 new jobs, bringing its total employment number to 307,000 – a whopping increase of 20.6%.”

The latter figure is driven by the fact that the most recent Bureau of Labor Statistics data (through July of this year) show more than 30,000 of the net 52,500 jobs added in the “Support Activities for Mining” subsector are oil and natural gas support workers, a subset of the larger mining and logging industry.

The “oil and natural gas support workers” subsector includes occupations such as derrick operators, roustabouts and service unit operators, whose duties include taking core samples, making geological observations at prospective sites, excavating slush pits and cellars, and such oil and gas operations as spudding in, drilling in, re-drilling, directional drilling and well surveying.

Driven by oil and gas activity, LimeLeads found “Support Activities for Mining” growth rate was more than 13 times the national average over the past 12 months. By comparison, overall national jobs growth was 1.45 percent from August 2016 to August 2017.

Read more at Energy In Depth.

Refinery demand, not OPEC, is the key to keeping oil prices above $50 a barrel, analysts say

Oil exporters met in Vienna on Friday to discuss their pact to cut production, but many analysts are not focused on Austria this week. Instead, they're watching refineries around the world for signs that the oil price rally can continue.

U.S. West Texas Intermediate crude hit a nearly four-month high at $50.81 on Thursday, despite three straight weeks of rising stockpiles in the aftermath of Hurricane Harvey, which shut a quarter of U.S. refining capacity. On Friday, international benchmark Brent crude oil was trading within $2 of its 2017 high of $58.37.

This comes as the market focus has flipped from how quickly OPEC can drain a global glut of crude oil to how hungry the world remains for fuel. A major catalyst for the recent run-up was improved forecasts for 2017 global demand from the International Energy Agency and OPEC.

Now, there are signs three years of oversupply are coming to an end.

Brent has flipped into backwardation, meaning prices for immediate delivery are higher than contracts for future shipment. That is a sign traders believe the market is tightening. It also helps to empty stockpiles by encouraging traders to sell oil immediately, instead of storing it to take advantage of higher prices in the future.

Read more at CNBC.

U.S. oil exports to meet 5 percent of non-U.S. global demand by 2022, exec says

Crude oil exports from the United States will increase to meet 5 percent of global demand by 2022, as refiners seek more low-sulfur crude to meet stricter rules for cleaner fuels, an executive from Enterprise Partners LP said on Monday.

U.S. oil exports may rise to about 4 million barrels per day (bpd) by 2022, a four-fold jump from this year, said Brent Secrest, a senior vice president at Enterprise Products. During that same period, global oil demand, excluding the U.S., may rise to as much as 73 million bpd, up from 65 million bpd currently, he said.

Demand for light, low-sulfur, or sweet, crude is set to rise as countries push refiners to produce cleaner fuels, as highlighted by the Internationals Maritime Organization’s (IMO) new rules to cut the sulfur content in the fuel used in large container ships, or bunker fuel, by 2020.

“The (crude oil) barrels have to clear across the water ... To the demand in Asia, to the demand in Europe,” he told an industry event in Singapore.

U.S. crude oil production has spiked following the higher output of low-sulfur crude from shale formations since the late-2000s, causing a glut in domestic crude supplies. U.S. refiners, however, are geared toward processing denser oil with a higher sulfur content.

Read more at Reuters.
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