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Oil and Gas Roundup — Jan. 17

January 17, 2018
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Judge reprimands enviro lawyers for ‘bad faith’ efforts in Pa., orders $52,000 in restitution

A Pennsylvania federal judge in January sanctioned a pair of Community Environmental Legal Defense Fund (CELDF) attorneys for their “bad faith” efforts to impose an injection well ban in Grant Township, Pa., based on an “implausible” legal theory and “frivolous” and “discredited arguments.”

As E&E News reported, United States District Court Judge Susan Baxter’s reprimand of CELDF executive director Thomas Lindsey and attorney Elizabeth Dunne was a “deep blow” to the extreme Pennsylvania-based group’s relentless and futile campaign to implement “Community Bill of Rights” measures throughout the U.S. The CELDF attorneys have been ordered to pay $52,000 in legal costs accrued by Pennsylvania General Energy Co. (PEG) during its fight against CELDF’s attempt to ban the company’s U.S. Environmental Protection Agency-permitted Class II injection well.

Judge Baxter also ruled that Linzey be referenced to the Disciplinary Board of the Supreme Court of Pennsylvania “for such further proceedings as the Board may deem appropriate,” which means the CELDF leader could be facing further punishment.
Judge Baxter’s ruling did not mince words, stating,

“This Court has determined that Attorneys Linzey and Dunne have pursued certain claims and defenses in bad faith. Based upon prior CELDF litigation, each was on notice of the legal implausibility of the arguments previously advanced…”

“Despite their own prior litigation, CELDF and Attorney Linzey, in particular, continue to advance discredited arguments as a basis for CELDF’s ill-conceived and sponsored CBR, and in doing so have vexatiously multiplied the litigation of this matter.” (emphasis added)

Read more at Energy In Depth.


Rig count no longer predictor of production

For U.S. shale drillers who have seen prices climb almost 50 percent in six months, it’s been largely a rig-less recovery, a conundrum for traders seeking to forecast the future.

Normally, you’d expect the rigs to return to the field in significant numbers as producers flush with added cash looked to boost output. But the weekly Baker Hughes tally has stayed remarkably still.

The reason: explorers are doing more with less, forcing traders to use a bigger toolbox of stats, metrics and gauges to track U.S. production that’s expected to top 10 million barrels a day as the year progresses. That includes everything from producer spending surveys to oilfield hiring reports, and even demand for the tiny grains of sand that prop open oil-bearing cracks.

"A well that comes online in U.S. onshore today is dramatically different than one that came on five or 10 years ago," Leo Mariani, an analyst who covers explorers and producers at NatAlliance Securities, said in a phone interview. "It’s just a different animal."

For the market, that means the country that’s become the world’s swing producer and a thorn in OPEC’s side is becoming a whole lot harder to read.

The number of rigs drilling for oil in the U.S. -- from the Gulf of Mexico to the Permian Basin in Texas to the Bakken shale in North Dakota -- is less than half the count in the middle of 2014, when the crude market crash began. And yet, America is set to rival Saudi Arabia and Russia, with production expected to top 10 million barrels as early as next month and to reach 11 million toward the end of next year.

Read more at Bloomberg.


HF firms arise from oil-price rout on a course to dominate 2018

Less than two weeks in, 2018 is shaping up to be the year of the fracker.

The world’s two biggest oilfield service providers, Schlumberger Ltd. and Baker Hughes, are the best performers in the Standard & Poor’s 500 Energy Index this year. Even smaller rivals are cashing in on investor enthusiasm over a 50 percent rise in oil prices since late June.

Enter Liberty Oilfield Services Inc., the Denver-based provider of hydraulic fracturing that climbed 28 percent in its Friday debut as a public company. After pricing its IPO at $17 a share, Liberty jumped to $21.77 in New York trading, boosting its market value to $2.6 billion.

“The timing has turned out well for us,” said Chris Wright, chief executive officer for the 6-year-old company, in a phone interview. “We’re basically a bunch of highly competitive tech nerds that built organically from the ground up a frack company.”

Oilfield-service providers, which oil companies hire to do everything from mapping prospects to maximizing field output, were the first to get clobbered when the worst crude-market crash in a generation kicked off in 2014. They accounted for the largest chunk of job cuts that cast hundreds of thousands out of work and incurred massive financial losses.

Now, the service providers are poised to benefit more than any other subsector of the oil industry, according to Bloomberg Intelligence.

Read more at Bloomberg.


Top energy executive says natural gas industry will need 'over $150 billion of infrastructure investment'

Energy guru Charif Souki, the chairman and co-founder of Tellurian, told CNBC on Wednesday that the natural gas industry is going to need a major fund infusion to keep drilling.

"We have so much natural gas in this country," Souki told "Mad Money" host Jim Cramer. "Just the amount of gas that is already behind pipe, or that is going to be found because of oil production at $60 a barrel, is going to require over $150 billion of infrastructure investment over the next five years."

Souki, formerly CEO of Cheniere Energy, co-founded Tellurian to take advantage of the industry's need for low-cost liquefied natural gas.

Tellurian is currently developing export terminals for liquefied natural gas, making investments in pipelines and funding some natural gas production. Construction on its first U.S.-based terminal is slated to begin in 2019.

But Souki, one of the few executives in the space who called both the collapse and recovery in oil prices, said infrastructure was proving to be a bigger hurdle than many people think.

Read more at CNBC.


Gerard to step down from American Petroleum Institute

Jack Gerard, the oil industry’s top lobbyist in Washington who spent eight years clashing with the Obama administration over energy policy, announced Wednesday he’ll step down this summer, creating a key opening for the sector at a time that it’s poised for even greater growth under President Trump’s fossil fuel-friendly approach.

Mr. Gerard, the president and CEO of the powerful American Petroleum Institute, said he’ll leave his post in August when his contract expires. He’s been with API, the oil industry’s most prominent trade group and a politically potent force in Washington, for a decade.

“Serving the oil and natural gas industry during this historic time, when an American energy renaissance has made the U.S. the world’s leading producer and refiner of oil and natural gas, has been among the most fulfilling professional experiences of my career,” he said in a statement. “We have accomplished what few would have imagined: important public policy victories at all levels of government, and a revitalized association that has expanded globally and added significant strength to its advocacy capabilities”

Indeed, Mr. Gerard presided over API during a time of unprecedented growth for the U.S. oil-and-gas industry. He’s been at the forefront of a massive expansion in domestic oil and natural gas drilling over the past decade, and during his tenure, the U.S. has become a global leader in oil and gas development and has reversed America’s longstanding status as an importer of energy.

In 2006, the U.S. produced 5,086 barrels of crude oil each day on average. By 2016, that had grown to 8,857 — the highest figure since the 1980s. American natural gas production also hit record highs during Mr. Gerard’s time at API, thanks largely to the shale gas revolution and the perfection of the drilling technique known as fracking.

Read more at the Washington Times.


Chief energy expert: US set to become 'undisputed leader' in oil and gas

A global energy chief said he foresees the United States becoming the "undisputed leader" in oil and gas production for "years to come."
 
Speaking at an event at the Center for Strategic and International Studies in Washington, D.C., Tuesday, Fatih Birol, executive director for the International Energy Agency (IEA), said that the U.S. is primed to lead the world in oil and gas production.
 
"With all the implications, this is the most important transformation we're seeing within the oil and gas industry," Fatah said while rolling out the IEA's World Energy Outlook for 2017.

Birol, a noted expert in the energy sector, echoed similar comments earlier Tuesday at a Senate Energy and Resources Committee hearing. Speaking on Capitol Hill, Birol told senators that the country's anticipated energy production dominance will be a result of a "shale revolution."
 
"The U.S. is becoming the undisputed leader of oil and gas production worldwide," Birol said.
 
Birol went on to call the growth in oil production within the U.S. "unprecedented" for both its size and pace of growth and compared the increases to Saudi Arabia 50 years ago.
 
In terms of natural gas, Birol guessed that the U.S. would be the largest exporter of the fuel by 2020, adding that China will be the biggest customer.

However, Birol warned senators that China's increasing need for energy, as it winds down its own coal production, will lead the country to rival the U.S. for nuclear energy.

— The Hill.
 
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