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Oil and Gas Roundup — March 16

March 16, 2018
TOPICS: In the news, OIPA
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count jumps 4; national count up 6

The number of rigs exploring for oil and natural gas in Oklahoma climbed by four this week to 124. Oklahoma’s was the largest increase among the states.

The U.S. count was up by six to 990. The counts are up over a year ago by 13 in Oklahoma and 201 across the nation.

Nationwide, 800 rigs were exploring for crude oil and 189 for natural gas.

Of the other major oil- and gas-producing states, Texas was up two to 492, New Mexico added one to 88, Louisiana was down one to 57, North Dakota climbed three to 53, Pennsylvania was off two to 40, Wyoming lost one to 30, Colorado fell two to 29 and Ohio was up one to 23.

The heavily active Permian Basin added one rig to 437. The Eagle Ford added one to 71. The Cana Woodford was up two to 64.

U.S. blames Russia in cyberattacks against energy companies

Federal authorities on Thursday blamed the Russian government for a two-year surge in cyberattacks against U.S. energy companies, an unprecedented rebuke of the Kremlin for an online assault that threatens energy companies in Houston and across the nation.

Since early 2016, hackers backed by Moscow have targeted small commercial facilities to stage multiple attacks on U.S. energy networks, sending companies malware-laced emails in an effort to penetrate vital control systems that run energy facilities, the Department of Homeland Security and the Federal Bureau of Investigations said in a joint statement.

Officials provided few details, but analysts said the attackers almost certainly targeted companies in Houston, home to major refineries, chemical plants, pipeline companies and oil and gas producers.

“With Houston being the energy capital of the world, if you want to disrupt operations in the U.S., this would be the place to attack,” said Steve Mustard, cybersecurity committee chair of the Automation Federation, a manufacturing trade group.

Homeland Security refused to disclose the names of companies hit by cyberattacks, which included firms that operate oil and gas facilities, nuclear power plants, water treatment plants, aviation systems and manufacturing sites. Government entities were targeted, as well.

Read more at the Houston Chronicle.

Enhanced completions, production strategies spark Haynesville’s emergence

The Haynesville Shale basin has re-emerged as one of the premier gas plays in North America. Although not on par with the Marcellus/Utica, the Haynesville is slowly building back up to the days when it produced more than 10 Bcf/d, reaching 8.3 Bcf/d in March, according to the U.S. Energy Information Administration.

Like its shale brethren throughout North America, production gains in the Haynesville can be attributed to enhanced completion designs and smarter production management strategies. Discussing these trends at Hart Energy’s recent DUG Haynesville conference were Dick Stoneburner, managing director and retired president, North America Shale Production Division, BHP Billiton Petroleum Ltd., Pine Brook Partners LP, Charles Goodson, president and CEO, PetroQuest Energy Inc., Jason Simmons, advanced technologies lead, Baker Hughes, a GE company, and Neil Modeland, business technology manger, Halliburton.

Among a range of topics, the four addressed choke management strategies, the popularity of slickwater fractures and which metrics offer the best indicators for a well’s performance.

Choke management strategies give companies flexibility in their production operations, from drawing down a reservoir quickly at the onset of production, or tapering off flow to extend the life of the well. Simmons said choke management strategies are dependent upon investor expectations and the goals of the individual operators.

Read more at E&PMag.

OPEC acknowledges the scale of the Shale Boom

OPEC for the first time is forecasting that new oil supplies from its rivals will exceed growth in demand this year as the U.S. industry thrives.

The Organization of Petroleum Exporting Countries raised its expectation for supply growth from the U.S. and other producers for a fourth consecutive month, according to its monthly market report. The outlook suggests efforts by the group and Russia to clear a global glut by cutting supply are backfiring, as new production emerges, particularly in the U.S.

Oil rallied to a three-year high in January as the supply curbs by OPEC and Russia drain a surplus unleashed by a boom in U.S. shale oil. Prices have since retreated with the American shale industry continuing to flourish, propelling output to record levels.

While global oil demand will climb by 1.6 million barrels a day this year, more than previously thought, that can be covered by an increase of 1.66 million barrels a day of supplies from outside OPEC, the organization said. It raised non-OPEC supply growth forecast by 260,000 barrels a day in the latest edition, and that from the U.S. by about 12 percent to 1.46 million a day.

As a result, OPEC’s ongoing cuts won’t be as effective in clearing the rest of the inventory surplus, the data showed. The cartel will be required to supply about 200,000 barrels a day less than anticipated in last month’s report.

Read more at Bloomberg.

China's ‘dash to natural gas' bolsters U.S. LNG

In the past decade, China's natural gas consumption has almost quadrupled to over 25 Bcf/d, or about a third of what the U.S. uses. China is the largest incremental gas demand market and will account for 30-35% of all new gas demand in the years ahead. China wants gas to account for 10% of its energy by 2020, up from 6.5% last year. This year, China's gas demand should grow 16-18%, which is about the level needed to meet government goals.

With a still maturing market, China's gas potential is simply staggering. Let's run the crazy numbers. The average Chinese uses just 20 cubic feet per day, compared to 230 cubic feet for the average American. So let's put it this way: if the Chinese ever start consuming gas like we Americans, the global market would explode by 294 Bcf/d, or a whopping 85%. Production wise, this would require an additional 14 Marcellus shale fields of new gas! This explains why the most vital global energy question will remain: got gas?

Given gas' lower greenhouse gas emissions portfolio, China's goal is to use more gas. I've already shown how China's coal plan is to use coal less directly, i.e., focus on using coal for electricity and more gas for heating and cooking. Intermittent renewables that act more as supplements than displacements and nuclear challenges also point to more gas in China.

Read more at Forbes.

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