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Oil and Gas Roundup — July 12

July 12, 2018
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

U.S. set to become world’s largest oil producer in 2019

U.S. crude oil production is expected to average more than 12 million barrels per day late next year for the first time ever, the U.S. Energy Information Administration said in a monthly report on Tuesday.

U.S. oil production has soared, boosted by improved technology for tapping shale formations. Output rose 5.6 percent last year and is expected to grow 15.4 percent this year. If the forecasts are realized, that will make the United States the world’s largest crude producer, surpassing Russia.

“Production growth in the United States, Brazil, Canada, and Russia will make up the majority of total global supply growth in 2019,” EIA Administrator Linda Capuano said in a statement after the report was released.

The agency increased its 2019 average forecast by 40,000 bpd to 11.80 million bpd, and increased its forecast for the fourth quarter of that year by 50,000 bpd to 12.02 million.

U.S. crude production this year is expected to be 10.79 million bpd, unchanged from last month’s forecast, according to the agency, which is the statistical arm of the U.S. Department of Energy.

Read more at Reuters.

EPA takes next step toward replacing Obama-era Clean Power Plan

The Trump administration is taking a big step forward in its effort to replace the Obama administration’s climate change rule for power plants with a more industry-friendly alternative.

The Environmental Protection Agency said that on Monday it sent a proposed rule to reduce carbon dioxide emissions from power plants to the White House Office of Management and Budget (OMB) for review.

The OMB review, an internal process that checks for compliance with various laws and administration priorities, is the final step before the rule can be released publicly and made available for public comment.

The EPA hasn’t revealed the contents of the proposal. The Trump administration in December requested public input on ideas for a replacement.

The rule would replace the Clean Power Plan, the main pillar of former President Obama’s climate change agenda that sought a 32 percent cut in carbon emissions from the country’s power sector by 2030. States were allowed to decide how best to accomplish that goal.

The Obama rule was put on hold by the Supreme Court in 2016 as a result of litigation led in part by then-Oklahoma Attorney General Scott Pruitt. Pruitt went on to become EPA administrator before resigning last week under the cloud of numerous scandals.

Read more at The Hill.

Lack of pipelines slows carbon capture

From Occidental Petroleum’s headquarters in central Houston, executives can look eastward to the petrochemical complex lining the Houston Ship Channel and watch as tens of thousands of tons of carbon dioxide get pumped into the atmosphere each day.

That gas poses an existential threat to the oil and gas industry as governments worldwide crack down on carbon emissions in an effort to slow climate change, but it is also the life blood of Occidental, which has long pumped carbon dioxide into their oil wells to extricate crude that otherwise would remain trapped underground.

Now, as the U.S. government urges companies to expand the use of carbon dioxide in oil production and other industrial activity - toward creating markets and incentives to capture the gas before it gets into the atmosphere — a roadblock is emerging. Few pipelines are available to move the carbon captured from industrialized areas such as the Houston Ship Channel to remote oil fields where it can be used and stored underground.

“One barrier is the lack of a robust pipeline infrastructure,” said Jody Elliott, president of Occidental Oil and Gas Domestic.“Industries that emit CO2, like refineries, power generators, ethanol plants, cement plants, may not be located near a pipeline.”

Read more at the Houston Chronicle.

The pipeline Trump says risks making Germany ‘a captive of Russia’

A planned natural-gas pipeline, Nord Stream 2, is the latest point of friction between U.S. President Donald Trump and German Chancellor Angela Merkel. At a summit meeting of North Atlantic Treaty Organization members, Trump said the pipeline risks making Germany “a captive of Russia.”

He’s not the first American leader to criticize the pipeline project, and the U.S. isn’t alone in its disapproval.

Nord Stream is a planned new 1,230 kilometer (764-mile) undersea pipeline that will carry natural gas from fields in Russia to the EU network at Germany’s Baltic coast.

It will double the capacity of an existing undersea route and cut Russia’s reliance on gas transit through Ukraine. (Russia has been locked in conflict with Ukraine since 2014, when a pro-Russian president there was forced from power and Russia seized the country’s Crimean Peninsula.)

Russia’s Gazprom PJSC is overseeing the project with funding from five investors including Royal Dutch Shell Plc and Engie SA, which are providing half of the 9.5 billion-euro ($10.3 billion) in cost.

Read more at Bloomberg.

U.S. oil exports to India soar ahead of sanctions on Iran

U.S. crude oil exports to India hit a record in June and so far this year are almost double last year’s total as the Asian nation’s refiners move to replace supplies from Iran and Venezuela in a win for the Trump administration.

U.S. President Donald Trump’s administration has been pressuring its allies to cut imports of Iranian goods to zero by November and India’s shift advances the U.S. administration efforts to use energy to further its political goals.

The United States has become a major crude exporter, sending 1.76 million barrels per day (bpd) abroad in April, according to the latest government figures.

All told, producers and traders in the United States will send more than 15 million barrels of U.S. crude to India this year through July, compared with 8 million barrels in all of 2017.

The exports to India could go higher if China imposes levies on its U.S. oil imports over the latest round of U.S. tariffs, which could damp Chinese purchases and lead U.S. crude prices lower.

Read more at Reuters.
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