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Oil and Gas Roundup — March 5

March 05, 2018
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oil rig count hits 800 for first time since 2015

U.S. oil explorers raised the rig count to 800 for the first time in almost three years amid booming domestic and overseas demand for crude and petroleum-based fuels.

Drillers have been accelerating exploration in an almost-unbroken streak since the beginning of November, vaulting American crude output to a record of more than 10 million barrels a day. The unrelenting pace of expansion signals even bigger production jumps yet to come, even as concerns about excess supplies recently weighed on oil prices.

Explorers boosted the number of rigs drilling for crude in U.S. fields by 1 last week, bringing the total to 800, according to Baker Hughes data released on Friday. American explorers already have put the nation on par with Saudi Arabia as a crude producer and may eclipse Russia as the world’s largest before the year is out.

More than 70 percent of the rigs are concentrated in just four major shale regions, the Baker Hughes data showed. The Permian Basin of Texas and New Mexico is by far the dominant exploration theater with 434 rigs searching for crude.

American oil exports have doubled in the past year, providing domestic drillers with access to markets that were mostly off-limits as recently as 2015, according to Energy Information Administration figures. During the same 12-month period, U.S. consumption of gasoline and other oil-derived fuels has risen almost 2 percent.

The overall rig count was 981 nationwide, up three over the week prior and 225 over the previous year.

Oklahoma also saw a jump of three rigs, to 124, up 26 over this time in 2017.

Of the other major oil- and gas-producing states, Texas added one rig to 483, New Mexico gained one to 88, Louisiana lost one rig to 59, North Dakota was off two to 47, Pennsylvania added two to 41, Wyoming was flat at 31, Colorado lost three to 30 and Ohio was unchanged at 22.

Republicans accuse Russia of using social media to roil U.S. energy policy

The same Russian operatives accused of manipulating the 2016 U.S. presidential election used inflammatory social media posts to disrupt U.S. energy policy, including inciting environmentalists to protest against pipeline projects, House Republicans said in a report released Thursday.

The report, released by the House Science Committee, said it found evidence Russian-sponsored agents used Facebook, Twitter, and Instagram to suppress the research and development of fossil fuels and stymie efforts to expand the use of natural gas and fracking.

“This report reveals that Russian agents created and spread propaganda on U.S. social media platforms in an obvious attempt to influence the U.S. energy market,” Texas Representative Lamar Smith, the chairman of the House Science, Space, and Technology Committee, said in a statement. “Russian agents attempted to manipulate Americans’ opinions about pipelines, fossil fuels, fracking and climate change.”

Separately, a study released by Iowa State University said English-language Russian media coverage of agricultural issues "fits the profile" of an effort to amplify controversy regarding genetically modified food.

Russia is one of the world’s biggest producers of wheat, oil and natural gas.

The House study on energy-policy manipulation cited a May 2017 Facebook post that said "Dakota Access Pipeline Has Already Leaked 84 Gallons of Oil -- like if you want justice." It received nearly 1,800 likes. Other social media posts and tweets targeted the Keystone XL pipeline, subsidies for oil companies and offered links to content aimed at stopping pipeline projects by Enbridge Inc. and other companies, according to the report.

Read more at Bloomberg.

Natural gas expected to remain most-consumed fuel in the U.S. industrial sector

EIA expects a 40% increase in natural gas consumed in the U.S. industrial sector, from 9.8 quadrillion British thermal units (Btu) in 2017 to 13.7 quadrillion Btu in 2050, according to the Annual Energy Outlook 2018 (AEO2018) Reference case. By 2020, industrial natural gas consumption will surpass the previous record set in the early 1970s, according to the AEO2018 Reference case.

The U.S. industrial sector consumes more natural gas than any other sector, surpassing electric power in 2017 and the combined residential and commercial sectors in 2010. In 2017, about two-thirds of total industrial natural gas consumption was consumed for heat or power applications—either for industrial processes, such as in furnaces, or for onsite electricity generation.

Several industries including bulk chemicals, food, glass, and metal-based durables used natural gas for 40% or more of their heat or power applications in 2017. EIA expects that these industries will continue to use about the same proportion of natural gas for heat or power applications through 2050 because of the cost associated with fuel switching. Industrial fuel switching often involves changing manufacturing processes, which requires substantial capital investment in new equipment.

As the largest natural gas consumer in the industrial sector, the bulk chemicals industry consumed 3.1 quadrillion Btu of natural gas in 2017, or the equivalent of about 3.0 trillion cubic feet. The bulk chemicals industry includes production of organic chemicals (including petrochemicals), inorganic chemicals, resins, and agricultural chemicals.


Mexico to offer first-ever shale blocks in Sept auction

Mexico will auction development rights to shale blocks in September, marking the first time the country has offered private oil companies the chance to develop the resource, which has been booming in the United States for years.

The National Hydrocarbons Commission (CNH), Mexico’s oil regulator, on Thursday launched a call for bids for its first shale tender including nine contractual areas that will be awarded on Sept. 5.

The blocks are in Mexico’s Burgos Basin, in the northwestern border state of Tamaulipas, where state-owned oil company Pemex has drilled some 20 exploratory wells in the past.

CNH President Juan Carlos Zepeda said companies that win development rights will be able to tap conventional oil and gas deposits as well as shale formations that may lie above or below.

“The auction’s winners will have the right to explore and carry out activities at any depth, throughout the column, involving shale formations as well as conventional sand formations,” said Zepeda.

Read more at Reuters.
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