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OUR SOLUTIONS HELPED TURN 60 YEARS O F L I A B I L I T Y I N T O H I S T O R Y.
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Apr. 21, 2014
20 JOURNALLY SPEAKING
41 STATISTICS
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Volume 112.4b
22 EDITORIAL
44 MARKET CONNECTION
GENERAL INTEREST 24 Speakers debate states’ oil, gas role at GMU conference Nick Snow
States are better qualified than federal and local governments to regulate hydraulic fracturing and other unconventional oil and gas activities, two speakers agreed at an energy and environment conference at George Mason University’s School of Law.
25 Heitkamp leads Senate Democrats’ new push for Keystone XL approval Nick Snow
25 FRA to propose requiring two-member crews on trains carrying crude Nick Snow
26 WATCHING GOVERNMENT
32 Sevan Louisiana towed to Curacao 34 Statoil’s oil sands production saw slight decline in 2013 34 IEA: Global oil supplies plunge in March on lower OPEC output 36 Texas Petro Index reaches record-high in February 36 GAO: Scant data exists about NEPA analyses’ costs, benefits Nick Snow
38 DOE: ConocoPhillips can resume LNG sales to non-FTA countries Nick Snow
38 EDITOR’S PERSPECTIVE Need for still more reform awaits winner of Indian elections
Marcellus shale impact surprises
28 GlobalData: US needs to ‘fast-track LNG exports to compete in global market 28 Proved reserves of US crude oil reach 36-year high in 2012 30 Environmental groups to challenge FWS’s lesser prairie chicken ruling Nick Snow
30 Russia falls to last place in SAFE’s latest security index Nick Snow
COVER Nuevo Midstream LLC’s natural gas processing and treating near Orla, Tex., in the Delaware basin are part of the company’s Ramsey system with current inlet cryogenic capacity of 300 MMcfd. By third-quarter 2015, the company expects to have online in the area 500 MMcfd of total capacity and 2,800 gpm of amine treating capacity. Photo by Jim Belcha; from Nuevo Midstream and equity partner EnCap Flatrock Midstream.
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OGJ Newsletter
Apr. 21, 2014
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International News for oil and gas professionals
GENERAL INTEREST Q U IC K TA K E S Senate leaders ask EIA to probe oil export impacts US Senate Energy and Natural Resources Committee leaders asked the Energy Information Administration to conduct a more extensive analysis of possible consequences from lifting or easing the ban on exporting US-produced crude oil. The US Department of Energy’s independent statistics, analysis, and forecasting service has limited resources and numerous reporting requirements to Congress already, Chair Mary L. Landrieu (D-La.) and Ranking Minority Member Lisa Murkowski (R-Alas.) conceded. “We would like to convey the interest of our committee in crude oil exports, which are largely banned by statute,” they continued in an Apr. 10 letter to EIA Administrator Adam Sieminski. “As you know, the possibility of lifting the ban—partially or completely—has emerged as a subject of critical concern in Congress.” Possible areas of interest, according to Landrieu and Murkowski, might include: • Current and projected production of crude and condensate of varying grades. • US refining capacity and distribution, including the ability of US refiners to process the various grades of domestically produced crude and condensate. • US refiners’ position and ability to compete in relation to global products markets. • Economic implications of retaining or changing the current crude export policy on US producers, refiners, and consumers. • Transportation logistics connected with US crude and condensate production, including rail capacity. “This is a complex puzzle that is best solved with dynamic and ongoing analysis of the full picture, rather than a static study of a snapshot in time,” the senators’ letter said.
ConocoPhillips ups Eagle Ford resources estimate ConocoPhillips has increased its estimated resource base in the Eagle Ford play to 2.5 billion bbl of oil in place from 1.8 billion bbl, as well as its estimated production from current volumes to more than 250,000 boe/d by 2017. “ConocoPhillips’s wells in the Eagle Ford have the highest
Oil & Gas Journal
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oil rates per well and are leading the industry in value,” said ConocoPhillips Chairman and CEO Ryan Lance. During fourth-quarter 2013, the company reported production of 218,000 boe/d from the Eagle Ford, Bakken, and Permian, a 31% increase compared with fourth-quarter 2012. The Eagle Ford and Bakken reached respective peak rates of 141,000 boe/d and 43,000 boe/d during that time (OGJ Online, Jan. 31, 2014). ConocoPhillips has outlined a plan to consistently deliver 3-5%/year compound growth in production and margins from major development programs and projects already under way in the US Lower 48, Canadian oil sands, the UK and Norwegian North Sea, Malaysia, and Australia. “Beginning this year, we will be growing production and margins across our diverse asset base, and allocating 95% of our annual capital expenditures to growth projects and programs with margins that are higher than our average margin today,” said Lance. Over the next several years, the company intends to execute a $16 billion/year capital program and achieve the company’s organic reserve replacement target of more than 100%. ConocoPhillips since 2009 has added 6.7 billion boe of resources, boosted in part by the Gulf of Mexico’s Tiber, Gila, Shenandoah, and Coronado discoveries. Further activity targets offshore prospects in Australia, Angola, and Senegal; conventional exploration in Norway and Indonesia; and unconventional exploration in North America, Poland, and Colombia.
BP plans to divest Texas Panhandle assets BP America Production Co. said it intends to divest assets in the Hugoton and Panhandle West fields in Sherman and Moore counties in the Texas Panhandle. The company will retain deep rights below the base of the Brown Dolomite, it said. BP owns more than 270,000 gross acres in the two counties, encompassing 830 leases, 475 operated wells—a majority of which BP owns 100% working interest—along with 37 nonoperated wells. Other operators include ConocoPhillips Co. and Pantera Petroleum Inc. The helium and liquids-rich sour gas play has total current BP production of 4,600 boe/d, NGL production of 2,000 b/d, residue gas production of 15 MMcfd, and helium production of 96 Mcfd.
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ICE BRENT / NYMEX LIGHT SWEET CRUDE $/bbl 109.00 108.00 107.00 106.00 105.00 104.00 103.00 102.00
US INDUSTRY SCOREBOARD — 4/21 4 wk. average
Latest week 4/4
Apr. 9
Apr. 10
Apr. 11
Apr. 14
Motor gasoline Distillate Jet fuel Residual Other products
Apr. 15
TOTAL PRODUCT SUPPLIED
Crude production NGL production2 Crude imports Product imports Other supply2 3 TOTAL SUPPLY Net product imports
YTD avg. year ago1
Change, %
8,806 3,839 1,412 246 4,079 18,382
8,431 3,884 1,346 355 4,415 18,431
4.4 (1.2) 4.9 (30.7) (7.6) (0.3)
8,502 3,789 1,399 257 4,762 18,709
8,434 3,685 1,348 306 4,673 18,446
0.8 2.8 3.8 (16.0) 1.9 1.4
8,207 2,621 7,267 1,795 2,305 22,195 (1,851)
7,158 2,401 7,782 1,773 2,100 21,214 (1,077)
14.7 9.2 (6.6) 1.2 9.8 4.6 —
8,133 2,674 7,340 1,748 2,176 22,071 (1,915)
7,088 2,463 7,752 1,923 1,962 21,188 (1,092)
14.7 8.6 (5.3) (9.1) 10.9 4.2 —
15,174 15,473 86.7
14,726 15,007 84.3
3.0 3.1 —
15,295 15,598 87.5
15,028 15,370 88.0
1.8 1.5 —
Refining, 1,000 b/d Apr. 9
Apr. 10
Apr. 11
Apr. 14
Apr. 15
Crude runs to stills Input to crude stills % utilization
Latest week 4/4
Latest week
Previous week1
384,122 210,436 113,194 36,641 37,037
380,092 215,624 112,955 35,620 36,486
Change
Same week year ago1 Change
Change, %
Stocks, 1,000 bbl Crude oil Motor gasoline Distillate Jet fuel–kerosine Residual Stock cover (days)4 Apr.
91
Apr.
10 1
Apr.
11 1
Apr. 14
1
Apr.
15 1
ICE GAS OIL / NYMEX HEATING OIL ¢/gal 302.00 299.00 296.00 293.00 290.00 287.00 284.00 281.00
YTD average1
Supply, 1,000 b/d
NYMEX NATURAL GAS / SPOT GAS - HENRY HUB $/MMbtu 4.675 4.650 4.625 4.600 4.575 4.550 4.525 4.500
Change, %
Product supplied, 1,000 b/d
WTI CUSHING / BRENT SPOT $/bbl 109.00 108.00 107.00 106.00 105.00 104.00 103.00 102.00
4 wk. avg. year ago1
4,030 (5,188) 239 1,021 551
388,874 222,363 112,817 39,730 37,125
Change, %
Crude Motor gasoline Distillate Propane Futures prices5 34/11
25.3 23.9 29.5 25.3
25.2 24.5 29.9 22.7
(4,752) (11,927) 377 (3,089) (88)
Change, %
0.4 (2.4) (1.3) 11.5
26.1 26.4 29.0 29.0
(3.1) (9.5) 1.7 (12.8)
Change
Light sweet crude ($/bbl) Natural gas, $/MMbtu
102.75 4.57
100.47 4.38
(1.2) (5.4) 0.3 (7.8) (0.2)
Change
2.3 0.2
94.93 3.99
%
7.82 0.58
8.2 14.6
1
Based on revised figures. 2OGJ estimates. 3Includes other liquids, refinery processing gain, and unaccounted for crude oil. 4Stocks divided by average daily product supplied for the prior 4 weeks. 5Weekly average of daily closing futures prices. Source: Energy Information Administration, Wall Street Journal
Apr. 9
Apr. 10
Apr. 11
Apr. 14
Apr. 15
BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU ¢/gal 128.00 127.00 126.00 125.00 112.00 111.00 110.00 109.00
Apr. 9
Apr. 10
Apr. 11
Apr. 14
Apr. 15
3,900 3,600 3,300 3,000 2,700 2,400 2,100 1,800 600 300 0
3,597
3,210
389
Mar. 13
Apr. 13
May. 13
Jun. 13
Jul. 13
Aug. 13 Sept. 13
Oct. 13
Nov. 13
Dec. 13
Jan. 14
Feb. 14
Mar. 14
Note: Monthly average count
NYMEX GASOLINE (RBOB)2/ NY SPOT GASOLINE3 ¢/gal 303.00 301.00 299.00 297.00 295.00 293.00 291.00 289.00 1Not
BAKER HUGHES RIG COUNT: US / CANADA 2,200 2,000
1,831
1,771
1,800 1,600 1,400 700 500 Apr. 9
Apr. 10
Apr. 11
Apr. 14
Apr. 15 1
available 2Reformulated gasoline blendstock for oxygen blending regular unleaded
3Nonoxygenated
300 100
212
156 2/1/13
1/25/13
2/15/13
2/8/13
3/1/13
2/22/13
3/15/13
3/8/13
3/29/13
3/22/13
4/12/13
4/5/13
1/31/14
1/24/14
2/14/14
2/7/14
2/28/14
2/21/14
3/14/14
3/7/14
3/28/14
3/21/14
4/11/14
4/4/14
Note: End of week average count
9
Oil & Gas Journal | Apr. 21, 2014
The Eagle Rock gathering system serves as the primary field gathering system for Sherman and Moore counties, receiving 80% of BP’s production (OGJ Online, Aug. 13, 2012). The remaining gas is gathered by DCP Midstream Partners LP. BP in 2012 sold its Kansas Hugoton assets to Linn Energy LLC for $1.2 billion (OGJ Online, Feb. 28, 2012). In February, Occidental Petroleum Corp. agreed to sell its Hugoton assets spanning southwest Kansas, the Oklahoma panhandle, and eastern Colorado to an undisclosed buyer for $1.4 billion (OGJ Online, Feb. 13, 2014).
EXPLORATION & DEVELOPMENT Q U IC K TA K E S
rable flows were then recorded at 2,185 m and 2,252 m. The preliminary analysis indicated a high helium content in the gas, making up about 5.8% of the flow. Historically the region is known to be helium-rich. The nearby Magee gas find recorded 6% helium, 45% inerts (mostly nitrogen), and 49% hydrocarbons. Helium is about 30 times more valuable than methane for the venture. Santos said, nevertheless, it is too early to speculate on the commercial significance of the gas find. The JV is now conducting wireline operations and detailed gas sample analysis. Mt Kitty-1 is in permit EP 125 in the southern Amadeus about 200 km south southwest of Alice Springs. Santos has 70% and Central Petroleum Ltd. has 30%.
Statoil makes oil, gas find north of Valemon field Statoil ASA, together with its Valemon unit partners, made an oil and natural gas discovery in the Valemon North prospect in the North Sea, just 10 km north of the companies’ planned Valemon installation (OGJ Online, June 19, 2012). The discovery wells, 34/10-54 S and 34/10-54 A, were drilled by Transocean Inc.’s Transocean Leader semisubmersible drilling rig. The main wellbore, 34/10-54 S, proved a gross 164-m gascondensate and oil column in the Middle Jurassic Brent group. The sidetrack, 34/10-54 A, proved a gross 100-m gas-condensate column in the Brent Group and in sand of unspecified Jurassic age, and an additional gross 140-m gas-condensate column in the Statfjord Group. Gas-condensate also was found in the middle Jurassic Cook formation, Statoil reported. Statoil estimates the total volumes in Valemon North to be 20-75 million bbl of recoverable oil equivalent. “We are very satisfied with making a new discovery in the close proximity of the Valemon gas and condensate field currently under development,” said Irene Rummelhoff, senior vicepresident, exploration, Norway. Valemon field, discovered in 1985, is one of Statoil’s largest ongoing development projects on the Norwegian Continental Shelf. Recoverable reserves from the field are estimated at 206 million boe. The development concept is a fixed platform, with rich gas export to Heimdal and condensate export to Kvitebjorn. Production start-up is expected in this year’s fourth quarter.
Santos tests gas at Mt Kitty-1 in central Australia The Santos Ltd.-operated wildcat Mt Kitty-1 in the Amadeus basin of central Australia has flowed gas on test from four zones in the target Heavitree formation below 2,140 m subsurface. The well was air-drilled to the target where it encountered a formation thickness in the reservoir of 109 m on its way down to the programmed total depth of 2,295 m. Elevated gas readings were recorded on penetration of the Heavitree prior to the test program. A flow test at 2,144 m produced 500 Mcfd of gas before declining to 70 Mcfd after 10 min. A second test at 2,156 m produced 530 Mcfd decreasing to 420 Mcfd after 18 min. Compa-
Oil & Gas Journal | Apr. 21, 2014
BOEM proposes Lease Sale 238 in western gulf The US Bureau of Ocean Energy Management (BOEM) will offer 3,992 blocks over 21.4 million acres offshore Texas for oil and gas exploration and development in August’s western Gulf of Mexico Lease Sale 238. The blocks, which lie 9-25 miles offshore in 5-3,346 m of water, could result in the production of 116-200 million bbl of oil and 538-938 bcf of natural gas, BOEM projected. BOEM specified it plans to offer blocks located, or partially located, within the 3-statute mile US-Mexico Boundary Area subject to the terms of the US-Mexico Transboundary Hydrocarbon Agreement. The sale will be the sixth offshore sale under the Obama administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012-17. The first five sales offered more than 60 million acres and netted nearly $2.3 billion. Western gulf Lease Sale 233, held in August 2013, received 61 bids from 12 companies totaling $102,351,712 in apparent high bids (OGJ Online, Aug. 28, 2013). Last month’s central gulf Lease Sale 231 garnered 380 bids from 50 companies resulting in a total of $850 million in apparent high bids (OGJ Online, Mar. 19, 2014).
DRILLING & PRODUCTION Q U IC K TA K E S Total lets $3.5 billion contract for Kaombo Total E&P Angola has let a contract to a consortium comprised of Technip SA and Heerema Marine Contractors for the engineering, procurement, construction, installation, and precommissioning of subsea umbilicals, risers, and flowlines for the Kaombo project on Block 32 offshore Angola. The deal is worth $3.5 billion, distributed 55% to Technip and 45% to Heerema. The project’s scope of work consists of the engineering, procurement, fabrication, transport, and installation of 18 rigid risers, 300 km of rigid pipe-in-pipe production and single pipe injection pipelines, and a large number of subsea structures, piles, and steel jumpers. The contract also covers the transport and installation of 115 km of client-supplied umbilicals, manifolds, well jumpers, and flying leads.
11
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Technip said the engineering work will begin immediately in the Paris, Leiden, and Luanda centers. Most of the offshore installation activities are scheduled for 2016-17. Heerema intends to mobilize Balder, its deepwater construction vessel, to install risers and the PIP production pipelines. Technip’s vessel, the Deep Blue, will install the remaining pipelines. Other vessels from Technip’s fleet will install the flexibles and umbilicals and provide construction work support. The project is scheduled for completion in first-half 2018. Total recently made a final investment decision with its Kaombo development partners, reducing its capital expenditures from $20 billion to $16 billion (OGJ Online, Apr. 14, 2014).
Chevron, YPF to continue Vaca Muerta development Chevron Corp. and YPF SA, Buenos Aires, will continue development of Argentina’s Vaca Muerta shale formation. Chevron says it will build off the progress of its 2013 drilling program with YPF, investing in large-scale drilling and production in the 96,000-acre Loma Campana concession. The initial development agreement was signed in July 2013 by Chevron subsidiaries after several months of negotiations with the Argentinian government (OGJ Online, July 16, 2013). It represented the first significant investment in the country since YPF was renationalized in 2012 when President Cristrina Fernandez de Kirchner expropriated 51% of the company from Repsol YPF SA, Madrid. Chevron says the continuing Vaca Buena development will include exploration for shale oil and gas resources in a 49,000acre area of Chihuido de la Sierra Negra concession, one of the main producing areas of the Neuquen basin in west-central Argentina. In 2012, Repsol said a large investment in Vaca Buena could double oil and gas production in Argentina in 10 years. At that time, Ryder Scott Co. LP, Houston, estimated that the entire 7.4-million acre play had resource potential of 116 boe proved, probable, and possible reserves, 1.525 billion boe of contingent reserves, and 21.167 billion boe of prospective resources (OGJ Online, Mar. 27, 2012).
Stanley gas-condensate field development approved The Papua New Guinea government has approved Horizon Oil Ltd.’s proposed $300 million development of the Stanley gascondensate field in the country’s western province. Papua New Guinea Petroleum and Energy Minister Nixon Duban has been authorized by the National Executive Council to sign a gas agreement with Horizon and its fellow partners. This agreement prescribes the key rights and obligations of the state and licensees for the Stanley project, including fiscal terms and commitments to local content. There also is approval for benefit sharing arrangements among the local landowners. Stanley field will now be issued with a petroleum development license (PDL10) and a pipeline license (PL10) following the formal ceremony to sign the gas agreement this week. Stanley will initially be developed as a condensate extrac-
Oil & Gas Journal | Apr. 21, 2014
tion project with reinjection of dry gas until a market develops, both locally and potentially as part of a wider gas-gathering system associated with the country’s LNG projects. The plan is to produce at a rate of 140 MMcfd of gas from two wells, which is expected to yield a condensate flow of 400 b/d, plus potential for 40 tonnes/day of LPG. A condensate recovery plant will be built at Stanley field along with a liquids pipeline to Kiunga on the Fly River. Storage will be built at Kiunga while a river tanker being built in Jiangsu in China will ferry the condensate to market outlets. Stanley-1 flowed at 30 MMcfd of gas and 24 bbl/MMcf of condensate after a workover in mid-2008. Horizon, which is project operator with 30% interest, estimates the project will produce about 8 million bbl of condensate over 10 years. Osaka Gas has 20% interest, while Talisman Energy began with 40% and Mitsubishi 10%. Talisman brokered a deal with Mitsubishi in 2013 to sell down its interest in this and a number of other PNG projects such that Mitsubishi’s share would rise to an average of 20% in each of the permits concerned.
PROCESSING Q U IC K TA K E S Joint venture launches refinery in Kurdistan Black Diamond Oil Co. and Rezhwan Co. have agreed to form a joint venture for a refinery in the Kurdistan region of Iraq that is scheduled to begin operations as soon as next week, the companies said in an Apr. 13 release. The refinery, near the Kurdish capital of Erbil, will process crude Black Diamond purchases directly from above-ground reserves in Taq Taq field in central Iraq, about 50 miles eastsoutheast of Erbil. Rezhwan will act as the refinery’s operator. The gasoline-producing plant will have an initial crude oil processing capacity of 11,000 b/d, which Black Diamond plans to increase by 22,000 b/d starting in May, the company said. With proved and probable reserves totaling 607 million bbl of an estimated 1.7 billion bbl of oil in place, Taq Taq—Kurdistan region’s largest oil-producing field—produced 80,000100,000 b/d of crude, all of which currently is transported by truck, according to field operator Genel Energy PLC (OGJ Online, Mar. 13, 2013). Production from Taq Taq averaged 75,500 b/d in 2012 vs. 66,000 b/d in 2011. With a projected total depth of 5,400 m, the TT-22 Taq Taq deep exploratory well is due to spud shortly, Genel Energy said. But with a gross unrisked resource of 250 million bbl of oil equivalent still in Jurassic and Triassic reservoirs, Genel Energy said it believes ultimate recovery from Taq Taq could reach 1 billion bbl.
Suriname refinery expansion advances The construction phase is progressing for a major expansion and efficiency project to double crude capacity at the Tout Lui Faut refining complex about 12 miles south of Suriname’s capital city of Paramaribo (OGJ Online, Sept. 9, 2009).
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Precommissioning preparations have now been completed to start up some of the new systems related to the expansion, according to Suriname state oil firm Staatsolie. In a series of sessions during February and March, the construction, commissioning, and startup and refining operations divisions established plans to complete additional project milestones, including the final powering of a substation as well as the start-ups of cool water pumps and air compressors at the site, Staatsolie said. The deadline for meeting these last project milestones is May 15, according to the company. Once completed, Staatsolie’s expansion project—which began in February 2012 and was designed to reduce the country’s dependence on imported fuel products—will more than double the refinery’s capacity to 15,000 b/d from a current 7,000 b/d to produce high-quality diesel, gasoline, and fuel oil (OGJ Online, July 28, 2011). Most recently, Staatsolie let a contract to Honeywell for a manufacturing execution system at the Tout Lui Faut plant, at which time Staatsolie said the expanded refinery would be commissioned in October (OGJ Online, Jan. 21, 2014).
New ethylene plant proposed for Louisiana Shintech Inc., the US uni of Shin-Etsu Chemical Co. Ltd., Tokyo, has applied to the Louisiana Department of Environment Quality for a permit to build a grassroots ethylene plant. The company intends to build the plant, which would have a production capacity of 500,000 tonnes/year of ethylene, on land for industrial use that it already owns, Shintech said. Concurrently with carrying out the required processes to secure a building permit, Shintech will continue its feasibility study with regard to the amount to be invested for the proposed plant construction, the profitability of the project, and the amount of time that will take for construction to be completed, the company said. Neither a timetable for the final investment decision on the project nor a specific location for the proposed plant was disclosed. Following its implementation of an in-house production system for chlorine, Shintech said the proposed plant aligns with its strategy of setting up in-house production of ethylene starting from its own raw materials to ensure a stable supply and further strengthen its integrated PVC production system.
TRANSPORTATION Q U IC K TA K E S LNG Ltd. lets Magnolia LNG technical services agreement Liquefied Natural Gas Ltd.’s wholly owned subsidiary Magnolia LNG LCC (MLNG) let a technical services agreement to SK E&C USA Inc. (SKEC), a wholly owned subsidiary of SK Engineering & Construction Co. Ltd., of South Korea covering ongoing engineering, procurement, and construction activities for MLNG’s planned 8-million tonne/year liquefaction plant in Lake Charles, La. Under the agreement, SKEC will:
Oil & Gas Journal | Apr. 21, 2014
• Continue to review all pre-frontend engineering and design information and data included in the preliminary resource reports submitted to the US Federal Energy Regulatory Commission. • Assist MLNG in completing final resource reports as part of MLNG’s filing application to FERC, targeted for submission the end of the month. • Complete the FEED for the Magnolia LNG project including gas pretreatment facilities, four 2-million tpy LNG trains, two 160,000-cu m full containment storage tanks, jetty, and ship loader facilities, and all related infrastructure and services. • Prepare a detailed lump-sum turnkey EPC cost estimate on an open book basis Nov. 28. • Negotiate and agree with MLNG a detailed lump-sum turnkey EPC contract term sheet; targeted for June 30. • Negotiate and agree a definitive and binding lump-sum turnkey EPC contract based on the term sheet. SKEC has been working on several of these activities under a shorter term letter of engagement, which the technical services agreement supersedes. SKEC has already completed a satisfactory detailed review of LNG Ltd.’s optimized single mixed refrigerant process technology, to be used for MLNG, and provided the company with an initial estimated EPC cost of $1.57 billion, consistent with the LNG Ltd.’s budget estimate.
Antero books all of TGP pipeline expansion capacity Antero Resources Inc. was awarded all of the natural gas capacity offered by Kinder Morgan Energy Partners LP’s Tennessee Gas Pipeline Co. (TGP) in an open season for its proposed Broad Run Flexibility and Broad Run Expansion projects. The open season totaled 790 MMcfd of firm capacity for 15 years on the Broad Run Lateral in West Virginia and on TGP’s 100 and 500 mainlines. The projects include horsepower and piping modifications at existing stations, and one compressor station on the Broad Run Lateral, all in West Virginia; two TGP mainline compressor stations in Tennessee and Kentucky; and modifications to five existing mainline compressor stations in Kentucky. The Broad Run Flexibility Project provides 590 MMcfd of firm transportation capacity from TGP’s Broad Run Lateral in TGP Zone 3 to mutually agreeable delivery points in TGP Zone 1. TGP expects the Broad Run Flexibility Project to enter service Nov. 1, 2015. TGP expects the Broad Run Expansion Project to provide an incremental 200 MMcfd firm transportation capacity on the same path by Nov. 1, 2017. KMEP expects the projects to cost $782 million. Antero last month became the anchor ethane supplier for Brazil-based Odebrecht SA subsidiary Odebrecht Oil & Gas SA’s proposed Appalachian Shale Cracker Enterprise petrochemical complex in Wood County, W.Va. (OGJ Online, Mar. 28, 2014).
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2014-2015 EVENT CALENDAR Denotes new listing or AIPN Spring Conference, New York City, a change in previously website: http://aipn.org/ published information. Events/SC2014.aspx 27-29.
M2M for Oil and Gas Conference, London, APRIL 2014 website: www.smionline.co.uk/energy/ SPE-SAS Annual Technical Symposium uk/conference/m2m& Exhibition, Al Kobar, security 28-29. website: http://spesas. Small-Mid Scale LNG org/atse/ 21-24. Summit, Amsterdam, Russia & CIS Bottom of website: http://www. smallmidlng.com/ the Barrel Technology Conference & Exhibition, 29-30. Moscow, website: http:// www.europetro.com/en/ Smart Grids Summit, Malaga, website: http:// rusbbtc_2014 22-23. thesmartgridssummit. com 29-30. Texas Alliance Expo and Annual Meeting, Wichita Falls, website: http://texasalliance.org/ MAY 2014 event/alliance-expo-anAnnual Oilfield nual-meeting/ 22-23. Housing Solutions Conference, HousAnnual Utica & Marton, website: http:// cellus Infrastructure Development Summit, www.petroleumconnection.com/housPittsburgh, website: http://infocastinc.com/ ing/ 1-2. events/utica/?gclid=CP jrzPWnnL0CFUVp7Aod- API International Oil Spill Conference, SawGsAzA 22-24. vannah, website: www. CIS Oil&Gas Summit, api.org/events-andBaku, www.theenergy- training/calendar-ofexchange.co.uk/event/ events/2014/iosc2014 5-8. cis-oil-gas-summit 22-24. OTC Offshore Technology Conference, HousUSEA Annual Memton, website: www. bership Meeting & otcnet.org 5-8. Public Policy Forum, Washing, DC, website: Annual East Texas http://www.usea.org/ Energy Symposium, event/2014-useaKilgore, Texas, website: annual-membershipmeeting-public-policy- www.easttexasoilmuseum.com 6. forum 23.
PSIG Annual Meeting, Baltimore, website: http://www.psig.org/ 6-9. Morocco Oil & Gas Summit, Marrakesh, website: http://moroccosummit.com 7-8.
Uzbekistan International Oil & Gas Conference, Tashkent, website: http:// www.oguzbekistan. com/2013/about-conference.html 13-15.
SPE International Conference and ExhibiFour Corners Oil & Gas tion on Oilfield Scale, Conference, Farming- Aberdeen, website: www: www.spe.org/ ton, N.M., website: http://www.fourcorner- events 14-15. soilandgas.com/registration.html 7-8. AFPM National Occupational & Process GPA MidContinent An- Safety Conference and nual Meeting, Midwest Exhibition, San Antonio, (202) 457-0480, City, Okla., website: www.gpaglobal.org 8. (202) 457-0486 (fax), e-mail: meetings@ afpm.org, website: BBTC International www.afpm.org/ConferBottom of the Barrel ences 14-15. Technology Conference, Lisbon, website: Annual Asia Pacific http://www.europetro. Small and Mid Scale com/en/bbtc_2014 LNG Forum, Singapore, 8-9. website: www.apacing. SPE International Con- com 14-16. ference and Exhibition GPA Europe Technion Oilfield Corrosion, cal Meeting, Leiden, Aberdeen, website: website: https://www. www: www.spe.org/ gpaeurope.com/eventevents 12-13. details.aspx?event=32 14-16. Deloitte Energy Conference, National Harbor, Md., website: IADC Drilling Onshore Conference & Exhibihttps://www.deloitte. tion, Houston, website: com/view/en_US/us/ Events-Deloitte/9de4 http://www.iadc.org/ event/drilling_on51a76d364410VgnV CM3000003456f70a shore_2014/ 15. RCRD.htm?oper=REG 13-14. IEF International Energy Forum, Moscow, Eastern Oil & Gas Con- website: http://www.ief. ference & Trade Show, org/events/ief14 15-16. Pittsburgh, website: http://www.pioga.org/ World Fuel Oil Summit event/2014-eastern-oil- VII, Athens, website: gas-conference-andhttp://www.worldfueloiltrade-show/ 13-14. summit.com/ 15-17.
MEPIPES Oil and Gas Pipelines in the Middle East Conference, Abu Dhabi, website: www. theenergyexchange. co.uk/event/oil-andgas-pipelines-middleeast-2014. 18-21.
Advanced Contract Risk Management for Oil & Gas Summit, SPE High CO2 and H2S Houston, website: Gas Fields Develophttp://www.contracment Completions and triskmanagement.us/ Productions Operations 20-21. Forum, Bali, website: http://www.spe.org/ DUG Permian Basin events/14fsap/ 18-23. Conference, Fort Worth, Texas, website: SPE Hydrocarbon Eco- http://www.dugpermnomics and Evaluation ian.com/?gclid=CN30i Conference, HousPKenL0CFRQV7AodTm ton, website: http:// 4A4A 20-22. www.spe.org/events/ hees/2014/ 19-20. International Conference on Petroleum World XTL Summit, Data, Integration & London, website: http:// Data Management, www.cwcxtl.com/ Houston, website: 19-21. http://www.pnecconferences.com/index.html SPE Hydrocarbon Eco- 20-22. nomics and Evaluation Symposium, Houston, AFPM Annual Meeting, website: www.spe.org/ San Antonio, (202) events/calendar/ 19-21. 457-0480, (202) 457-0486 (fax), e-mail: Flame–Europe’s Lead- meetings@afpm. ing Natural Gas & LNG org, website: www. afpm.org/Conferences Conference, Amster20-23. dam website: http:// www.icbi-flame.com/ FKN2382OGJW 19-22. AFPM Reliability & Maintenance Conference and Exhibition, API Spring RefinSan Antonio, (202) ing and Equipment 457-0480, (202) Standards Meeting, Orlando, website: www. 457-0486 (fax), e-mail: meetings@afpm. api.org/events-andorg, website: www. training/calendar-ofafpm.org/Conferences events/2014/spring20-23. refining 19-23.
API Spring Operating Practices Symposium, Orlando, website: http://www.api.org/ International DownOpEx Operational events-and-training/calstream Technology & Excellence in Oil & Gas & Petrochemicals Strategy Conference, International School of IOGCC Midyear Issues endar-of-events/2014/ Hydrocarbon Measure- Summit, Biloxi, Miss., springops 20. Conference, Moscow, Lisbon, website: http://www.europetro. ments, Oklahoma City, website: www.iogcc. website: http://www. website: http://www. state.ok.us/events TGC Turkmenistan europetro.com/en/ruso- com/en/idtc_2014 ishm.info/ 13-15. 18-20. Gas Congress, Avaza, 6-7. pex2014 24-25.
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Turkmenbashi, website: http://www.turkmenistangascongress.com/ conference-delegatebooking-form 20-21.
International LNG in B.C. Conference, Vancouver, website: http://engage.gov. bc.ca/lnginbc/lngconference/ 21-23. SPE Latin American and Caribbean Petroleum Engineering Con-
Oil & Gas Journal | Apr. 21, 2014
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2014-2015 EVENT CALENDAR ference, Maracaibo, International Caspian website: www.spe.org/ Oil & Gas Exhibition events 21-23. & Conference, Baku, website: http://www. caspianoil-gas.com/ GPA Permian Basin 3-6. Annual Meeting, Odessa, website: www. gpaglobal.org. 22. PIRA Canadian Energy Conference, Calgary, Alta, website: www. The Mexican Oil pira.com 4. & Gas Opportunities Update, Houston, website: http://www. Annual Ireland Oil & petroleumconnecGas Summit, Dublin, tion.com/MexicoUpwebsite: http://irelanddate2014/ 27. summit.com 4-5.
Annual California Energy Summit, San Francisco, website: http://www.infocastinc. com/events/ca-energy ?gclid=CMHC2K2R2b 0CFU4R7AodfiMA0A 28-30.
GTL North America Conference, Houston, website: www. gtlnorthamerica.com 4-5. Tulsa Oilfield Expo, Tulsa, website: http:// www.tulsaoilfieldexpo. com 4-5.
New Libya Oil & Gas Summit, London, website: http://libyaoilgas. SPE London Annual com 29-30. Conference, London, website: http://www. spe.org/events/ JUNE 2014 lond/2014/ 4-5. SPE Exploitation of Tight Carbonates Forum, San Diego, website: http://www. spe.org/events/14fus2/ 1-6. Annual Mining Americas Summit, Denver, website: http://www. miningamericas.com/ 2-3. Annual International Operating Conference & Trade Show, Houston, website: http://www.ilta.org/ CalendarofEvents/ AOCTS/2014/2014info. htm 2-4. Annual Unconventional Gas & Oil Conference, London, website: http:// www.oilandgasunconventional.com/ 2-5.
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Latin American Leadership Forum, Cartagena, website: http://www. cg-la.com/forums 4-6. IPAA OGIS Toronto Meeting, Toronto, Ont., website: http:// www.ipaa.org/ meetings-events/eventdetails/?mid=308 5. SPEE Annual Meeting, Stowe, Vermont, website: https://secure. spee.org/ 7-10. PIRA Scenario Planning Conference, Houston, website: www.pira.com 9. Annual Global Procurement and Supply Chain Management for the Oil and Gas Industry Conference,
Houston, website: http:// www.ifmr-events.com/ marcusevans-conferences-event-details. asp?EventID=21085 9-11.
USEA Annual Energy Efficiency Forum, Washington, DC, website: http://www. eeforum.net 12.
SPE Energy Resources Conference, Port of Spain, website: www. spe.org/events/calendar/ 9-11.
World Petroleum Congress, Moscow, website: www.21wpc. com 15-19.
Africa Energy Forum, Istanbul, website: http://africa-energyforum.com/ 18-20.
E&P Information & Data Management Asia Pacific Conference, Singapore, website: www. IPAA Midyear Meeting, smi-online.co.uk/energy/asia/conference/ Colorado Springs, ep-information-datawebsite: www.ipaa. and-knowledge-manorg/meetings-events/ agement-asia-pacific upcoming-meetings/ 9-10. 18-20.
Annual Lebanon Oil & Gas Summit, Beirut, PIRA Scenario Planwebsite: http://irn-inter- ning Conference, national.com 16-17. London, website: www. pira.com 19-20. Pipe Tech World Summit, Rome, website: PIRA Understanding http://www.pipetechGlobal Oil Markets ConPIRA Understanding summit.com/ 16-18. ference, London, www. Global Oil Markets pira.com 19-20. Conference, Houston, EAGE Conference & website: www.pira.com. Exhibition, Amsterdam, Myanmar Oil & 10-11. website: http://www. Gas Summit, Yangon, eage.org/events/index. website: http://www. SPE African Health, php?eventid=1000&Op myanmaroilexhibition. Safety, Security, and endivs=s3 16-19. com/ 23-24. Environment and Social Responsibility Confer- API Exploration and Iran Oil & Gas Summit, ence and Exhibition, Production Standards Abu Dubai, website: Nairobi, website: http:// Conference on Oilfield www.iransummit.com www.spe.org/events/ Equipment and Materi- 23-25. hsea/2014/ 10-12. als, Chicago, website: www.api.org/eventsAnnual Energy ExposiSPE Heavy Oil and-training/calendar- tion & Symposium, Conference-Canada in of-events/2014/e-pBillings, Mont., website: Conjunction with GPS, standards 16-20. http://energyexposition. Calgary Alta., website: com/ 25-26. www.spe.org/events/ EuALF SPE Aberdeen calendar/ 10-12. European Artificial Lift API Tanker Conference, Forum, Aberdeen, web- Austin, website: http:// SPE Exploration and site: http://www.spewww.api.org/eventsDevelopment in Unuk.org/default.aspx. and-training/calendarconventional Reservoir LocID-0a4008003. of-events/2014/tanker Symposium, Neuquen, Lang-EN.emID-965. 25-26. website: www.spe.org/ rss-cal.EventID-13676. events/calendar/ 10-12. htm 17-18. AAPL American’s Landman Annual MeetGlobal Petroleum Show, PIRA London Energy ing, Montreal, Que., Calgary, AB, website: Conference, London, website: http://www. http://www.digitalrefining. website: www.pira.com landman.org/ 25-28. com/55,events,Global_ 17-18. Petroleum_Show.html 10-12. IADC World Drilling JULY 2014 Conference & ExhibiTight & Shale Gas tion, Vienna, website: South Texas Oilfield Expo, Summit, Edinburgh, http://www.iadc.org/ San Antonio, website: website: http://www. event/iadc-worldhttp://www.southtexasoilwplgroup.com/aci/ drilling-2014-confer- fieldexpo.com/?gclid=CO conferences/eu-eug3. ence-exhibition-2/ r78Mypi70CFY3m7Aodeasp 11-12. 18-19. wEAvA 9-10. Enercom’s London Oil & Gas Conference, London, website: http:// www.enercominc.com/ the-london-oil-andgas-conference/ 10-11.
SPE Well Construction Efficiency: NPT, Reliability and Process Improvement Forum, Santa Fe, website: http://www.spe.org/ events/14fus4/ 13-18. North American Custody Transfer Measurement Conference, Denver, website: http:// www.ceesi.com/Training/CustodyTransferMeasurementConference.aspx 15-17. SPE Low Carbon Intensity Process for Low-Mobility Oil Recovery Forum, Newport Beach, website: http://www.spe.org/ events/14fus3/ July 27-Aug. 1.
AUGUST 2014 SPE Nigeria Annual International Conference & Exhibition, Lagos, website: www.spe.org/ events/calendar 5-7. EnerCom’s Oil & Gas Conference, Denver, website: http://www.enercominc.com/the-oiland-gas-conference/ 17-21. GeoBaikal Exploration and Field Development in East Siberia, Irkutsk website: http://www. eage.org/events/index. php?eventid=1131&Op endivs=s3 18-22.
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JOURNALLY SPEAKING
Oil and gas symbols Believed to be about 40,000 years old, the “Lion Man” from the Swabian Alps in Germany is widely accepted as the world’s oldest known statue. The discovery of the Lion Man dates to August 1939, when fragments of mammoth ivory were excavated at the back of the Stadel Cave in the Swabian Alps. When the statue was eventually reassembled in 1970, it was regarded as a standing bear or big cat—but with human characteristics—according to The Art Newspaper. It was recently thought to be 32,000 years old but with the discovery of new pieces, the statue’s age has been refined using radio-carbon dating of other bones found in the strata and reveals a date of 40,000 years ago. After reading a story about the Lion Man, this LEENA KOOTTUNGAL editor became curious about statues symbolic to Survey Editor/News Writer the oil and gas industry.
Landmarks “The Golden Driller” is a 43,500 lb, 76 ft statue of an oil worker. It is the largest free-standing statue in the world, and the fourth-tallest statue in the US. It was first erected by Mid-Continental Supply Co. at the 1953 International Petroleum Exposition. The Driller received such favorable reviews that it was temporarily brought back for the 1959 show. The company donated the statue to the Tulsa County Fairgrounds Trust Authority. In 1979, the Driller was adopted as the state monument. A plaque at the base of the monument reads: “The Golden Driller, a symbol of the International Petroleum Exposition. Dedicated to the men of the petroleum industry who by their vision and dar“The Doodlebugger” welcomes visitors to the Society of Exploration Geophysicists in Tulsa. Photo from American Oil & Gas Historical Society.
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ing have created from God’s abundance a better life for mankind.” In Wyoming, “Man Made Energy,” also known as the “Welcome to Casper Eastside Gateway Monument,” depicts four prominent local oil men— Dave True, John Wold, Mick McMurry, and Fred Goodstein—working on the floor of a drilling rig. Sculpted by Seth Vandable, this statue is symbolic of the dedication and hard work required to extract oil and gas.
Methods and tools While browsing the American Oil & Gas Historical Society’s web site, this editor learned about the “Doodlebugger.” The name is a badge of honor among geophysical crews searching for petroleum. SEG’s journal, Geophysics, which first appeared in 1936, included articles about the petroleum industry’s three major prospecting methods then known: seismic, gravity, and magnetic. The lead article warned young geophysicists about employing black magic or doodle-bug methods based on unproven properties of oil, minerals, or geological formations. The Doodlebugger was unveiled during a May 2, 2002, ceremony. The bronze statue, created by sculptor Jay O’Melia, stands almost 10 ft and weighs more than 600 lb. O’Melia also created an “Oil Patch Warrior” statue of a roughneck dedicated in 1991 in Sherwood Forest near Nottingham, England. The 7-ft bronze statue honors American oil men who drilled more than 100 wells there during World War II. A replica of the Oil Patch Warrior was dedicated in 2001 in Memorial Square in Ardmore, Okla., where many of the US roughnecks volunteered for the secret project. “The Roughneck” at Texas A&M University in College Station is a bronze statue depicting an oil field worker using a chain to control a 20-ft drill pipe and tricone rotary drill bit, incorporating tools of the trade. This piece was commissioned to commemorate the dedication of the Joe C. Richardson Petroleum Engineering Building. These statues keep this editor interested in what will be sculpted next to represent the future of the industry.
Oil & Gas Journal | Apr. 21, 2014
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EDITORIAL
Compromise on climate The third report of the Intergovernmental Panel on Climate Change Fifth Assessment performs a valuable service. It establishes boundaries for compromise and thereby appeals for reasonable discussion about an important issue. The report from Working Group 3 on mitigation postulates action necessary to keep mean global temperature from rising more than 2° C. above preindustrial levels. Given the complexity of relationships among temperature, atmospheric concentrations of greenhouse gases (GHGs), and other influences, any such target and strategy for meeting it are theoretical. To meet this one, according to scientists in the working group, people must cut total GHG emissions 40-70% by midcentury and to nearly zero by 2100.
Won’t happen This will not happen. Lowering GHG emissions by even the midcentury goal would require massive displacement of hydrocarbon fuels by energy forms many times more expensive. The economic burden would be politically intolerable. People would reject the effort long before the promised benefits of avoided warming came clearly into view. In many countries in Europe, with first-step energy-substitution efforts elevating electricity bills painfully, citizens now demand relief. Governments would be foolish to impose further hardship in pursuit of IPCC numbers uncertain to deliver on the promise. Still, moderation of GHG emissions remains a prudent goal of policy, even if associated changes in measured temperature can’t be known in advance. The effort just needs to acknowledge that people won’t make large, immediate sacrifices of well-being and comfort in service to indistinct benefits in the far-distant future. This dilemma radiates the need for compromise, which requires reasoned discussion of alternative approaches. So far, reasoned discussion has been absent from the political sphere, which treats views on climate change more as matters of faith and belief than of science and economics. Politics thus quashes any approach not grounded in economic hopelessness. That must change. If reasoned discussion did somehow erupt around this issue, what might constructive compromise look like? And what role should the oil and gas industry play in it?
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At the outset, constructive compromise would acknowledge physical realities of energy. One such reality is that energy never has been created as an act of political will and never will be. With energy, people must make the best use of what nature gives them. The meaning of “best” under a new approach would incorporate cost and scale as well as environmental performance. Constructive compromise also would accept that mandates to use expensive instead of affordable energy doom themselves. Policy would be most effective if it instead fostered the discovery of ways to make physical laws work for rather than against the further decarbonization of energy and management of emissions. Policy therefore should refocus on research and retreat from the futile reengineering of markets. Efforts can proceed on other fronts while scientific exploration progresses. People can cut their energy use. Conservation works. But it works better when encouraged by education and judicious tax incentives than when it’s imposed. Performance standards for energy-consuming goods work, too, when standard-setters don’t get carried away. By a very important metric—energy use per increment of economic growth—prosperity enhances conservation meaningfully. Policies that sacrifice economic health to rote consumption targets defeat themselves—if they don’t provoke riots first.
Companies’ role Oil and gas companies can complement governmental efforts by lowering emissions from their own work and by promoting conservation through education and support for policies geared to energyuse efficiency. They can conduct and fund research. They can encourage economic growth and support tax policies that encourage economically sensible conservation. In return, companies should expect relaxation of the obstructionist bias now turning energy policy against any project that would boost supply or consumption of coal, oil, or gas. A compromise approach would keep emission reductions below 40%. But that still would represent progress—almost certainly more than unsustainable energy substitution can achieve. Who knows? Globally averaged temperature might stabilize within the 2° window, anyway. In nature, stranger things have happened.
Oil & Gas Journal | Apr. 21, 2014
GENERAL INTEREST
Speakers debate states’ oil, gas role at GMU conference Nick Snow Washington Editor
States are better qualified than federal and local governments to regulate hydraulic fracturing and other unconventional oil and gas activities, two speakers agreed at an energy and environment conference at George Mason University’s School of Law. But a third speaker argued that some states’ performances as the primary US oil and gas regulator are unsatisfactory and need to be reevaluated. Rapid growth of US oil and gas production from tight shale formations is bringing new scrutiny to regulation at all levels of government, all three speakers agreed during a panel discussion at a day-long conference, “Old Fuels, New Technologies, and Market Dynamics,” at the law school’s campus in Arlington, Va., on Apr. 7. “There’s no convincing basis for the federal government coming in and trying to regulate fracing,” said Michael L. Krancer, a partner at the law firm Blank Rome LLP in Philadelphia who formerly led Pennsylvania’s Department of Environmental Protection. “But it’s not a Republican or Democratic issue. Folks of all political stripes are getting involved.” US Environmental Protection Agency investigations in Dimock, Pa.; Pavilion, Wyo.; and Parker County, Tex., found no contamination of drinking-water supplies that could be traced to nearby gas wells that had been fraced, he said. “EPA spent millions of dollars, which could have been used to clean up environmental wastes on this troika of fumbles,” Krancer maintained.
Interstate impacts Thomas W. Merrill, Charles Evans Hughes Professor at Columbia University’s Law School, noted that while one legal theory suggests that infusions of outside capital from outside interests can influence states’ environmental rules, regulation at this level is most effective, except when it comes to potential interstate environmental impacts. “If you have something with transboundary implications, it theoretically should be federally regulated,” Merrill said. Companies involved in fracing consider tort law’s potential and act accordingly, he said, adding that establishing the cause of drinking or groundwater contamination can be difficult when unconventional oil and gas production is in-
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volved, which has led some states to require groundwater tests before any fracing commences. “Tort law is state law in this country,” Merrill said, adding, “I think most of these problems should be left to the states, with the exception of methane leaks and other potential environmental impacts.” Sharon Buccino, who directs the Land and Wildlife Program at the Natural Resources Defense Council, conceded states can be effective oil and gas regulators when they have strong programs. Colorado does a good job of notifying landowners of pending drilling applications, but other states don’t, she said. The federal government does because it’s required under the National Environmental Policy Act (NEPA), she said. “States are on the front lines of ensuring enforcement people can count on,” Buccino said. “But many don’t have the necessary resources. There were 500 spills last year in Wyoming, and no fines. One solution is to incorporate environmental monitoring costs into drilling permit charges.” Krancer responded that state oil and gas regulation is far from failing, particularly with the State Review of Oil and Natural Gas Environmental Regulations (Stronger) where stakeholders from the industry, state environmental agencies, and environmental and public interest groups review state oil and gas waste management programs against guidelines developed and agreed to by all of the participants.
EPACT exemptions Buccino questioned exemptions for oil and gas producers from the federal Safe Drinking Water Act and stormwater runoff control requirements established under the Energy Policy Act of 2005. But Krancer said EPACT recodified that oil and gas regulation should be left to the states. “The states can require advanced notice, set NEPA-like rules, and increase enforcement,” said Merrill. “The federal process is slow and cumbersome. States can respond more quickly.” Buccino reiterated that states can do certain regulatory jobs well, but added, “When we’ve done enough, we won’t have the fear and outrage that’s out there. I’ve sat across the kitchen tables of people who have a drilling rig on the property of a neighbor who’s getting the royalties while they get all the noise and pollution.”
Oil & Gas Journal | Apr. 21, 2014
Heitkamp leads Senate Democrats’ new push for Keystone XL approval Nick Snow Washington Editor
Ten other US Senate Democrats joined Heidi Heitkamp (ND) in urging US President Barack Obama to approve the proposed Keystone XL crude oil pipeline by May 31. “Please use your executive authority to expedite this process to a swift conclusion and a final decision so we can all move forward on other energy infrastructure needs in this country,” they said in an Apr. 10 letter to the president. Sens. Mary L. Landrieu (La.), who chairs the Energy and Natural Resources Committee; Mark Begich (Alas.); Joe Donnelly (Ind.); Kay Hagan (NC); Joe Manchin (W.Va.); Claire McCaskill (Mo.); Mark Pryor (Ark.); Jon Tester (Mont.); John Walsh (Mont.); and Mark Warner (Va.) also signed the letter. “This process has been exhaustive in its time, breadth, and scope,” said Heitkamp. “It has already taken much longer than anyone can reasonably justify.” She said, “We cannot miss another construction season. Given the long, cold winter this year along the Keystone XL pipeline route and the time required for ground thaw, we could be looking at a very short season [in 2014]. We need a definitive timeline laid out for a project that should be approved because it’s in our country’s best interest.” The senators said they respected the need for a final public comment period on the proposed pipeline from Alberta’s oil sands to Gulf Coast refineries (which ended on Mar. 7), as well as the importance of relevant federal agencies and officials conveying their views to US Sec. of State John F. Kerry.
Within 15 days “At the expiration of the current 90-day comment and consultation period for certain federal agencies, there should be a date no later than 15 days after that [time] for Sec. Kerry to provide you with his national interest determination recommendation,” they told Obama. “Finally, we ask that you commit to making your final decision on the [cross-border] permit application by May 31.” Responding to a reporter’s question about the Senate Democrats’ letter at the Apr. 10 daily briefing, White House Press Sec. Jay Carney said the administration’s position remains that the deliberation process at the US Department of State on Keystone XL should be allowed to run its appropriate course without interference from the White House or Congress.
Oil & Gas Journal | Apr. 21, 2014
“It was because of actions taken by Republicans in Congress that one delay was caused in the process already,” Carney said, adding, “So that review continues at [DOS] where it’s housed in accordance with past practices of previous administrations of both parties. And when there’s a decision to be announced, it will be announced.” But American Petroleum Institute Pres. Jack N. Gerard said Heitkamp and the 10 other Senate Democrats’ letter shows that many of the calls for the proposed project’s approval are coming from within the president’s own political party. “Delaying the decision on Keystone XL sends the wrong signal to the rest of the world,” Gerard said, adding, “A nation that continues to be indecisive on a simple a matter of our own energy security will have a hard time convincing the rest of the world we can be decisive when it comes to their interests. We need to send the signal we’re serious about our domestic energy policy and our global energy policy.”
FRA to propose requiring two-member crews on trains carrying crude Nick Snow Washington Editor
The Federal Railroad Administration (FRA) plans to propose requiring trains transporting crude oil to have at least two crew members, the US Department of Transportation agency announced. It said it also intends to propose a train securement rule and recommend a rulemaking on hazardous materials movement. The Apr. 9 announcement followed deliberations of three working groups created at DOT’s request following the July 6 derailment of an unmanned train carrying crude and subsequent explosion and fires that killed 47 people and extensively destroyed property at Lac Megantic, Que. (OGJ Online, July 8, 2013). Two of the working groups produced recommendations that were adopted by the full Railroad Safety Advisory Committee (RSAC) for consideration in future rulemakings, it said. After the third working group didn’t reach a consensus on crew size, FRA said it acted to move forward with a rulemaking. “Safety dictates that you never allow a single point of failure,” FRA Administrator Joseph C. Szabo said. “Ensuring that trains are adequately staffed for the type of service operated is critically important to ensure safety redundancy. We commend the RSAC’s efforts and will use the valuable input received to formulate a proposed rule that
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WATCHING GOVERNMENT NICK
SNOW
Washington Editor | Blog at www.ogj.com
Marcellus shale impact surprises Impacts of oil and gas development on nearby communities are getting more attention. Some are obvious, such as demand for more services from a suddenly bigger population before tax revenue starts to flow into formerly rural counties and towns. So are others, including longer lines at grocery stores and heavier traffic on two-lane roads. But closer examinations of what’s happened as hydraulic fracturing and horizontal drilling has brought oil and gas activity into new areas domestically has revealed a few surprises, experts said at an Apr. 10 seminar at Resources for the Future (RFF). Local manufacturing has historically tracked resource booms and busts, according to Hunt Allcott, an assistant economics professor at New York University and a faculty research fellow at the National Bureau of Economic Research. “It’s not just manufacturers of oil and gas equipment, but also nonenergy product manufacturers serving local communities’ demands,” he said. “We learned a lot from what happened in the 1970s that we’re applying now.” When Pennsylvania lawmakers realized Marcellus shale gas’s significant potential in 2012, they enacted an impact fee to provide earlier revenue to counties, townships, and communities, said James M. McElfish Jr., a senior attorney at the Environmental Law Institute.
‘Heavily front-loaded’ The fee is charged per well for 15 years, with the heaviest collections the
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first year “so it’s pretty heavily frontloaded,” he noted. “It’s also affected by gas prices, so it’s similar to a severance tax. As the first wells move beyond the initial heavy expense, the total amount could go down if more wells aren’t added.” Local governments decide how the money is used, so several used much of what they received on additional rock salt during the recent hard winter, McElfish said. “Almost none used any of their shares for delivery of social services,” he added. Heavier traffic, meanwhile, came from each fraced well requiring about 1,000 truck trips to deliver stimulation fluids and remove flowback for disposal elsewhere, said Lucija Muehlenbachs, a University of Calgary assistant professor who’s also an RFF university fellow. Pennsylvania’s oil and gas industry quickly highlighted road congestion as a major concern, she indicated. “There also were changes in the general type of drivers, with more young males tending to drive bigger vehicles fast,” Muehlenbachs said. “We’re finding impacts on emergency medical services and long-term rehabilitation.” The state’s supreme court struck down part of these impact fees in December, and local governments are having to adjust, McElfish said. “Several also say Marcellus shale development is having positive revenue impacts, even though they can’t tax oil and gas workers’ waves, because they’re buying more goods and services locally,” he indicated.
protects the public and recognizes the nuance of railroad operations.” The agency noted that while existing FRA regulations do not mandate minimum crew staffing requirements, current industry practice is to have two-person crews for over-theroad operations. It said the notice of proposed rulemaking will most likely require a minimum two-person crew for most mainline train operations including those carrying crude. It is also expected to include appropriate exceptions, FRA said.
Additional proposals FRA said it plans to propose an additional requirement prohibiting certain unattended freight trains or standing freight cars on main track or sidings, and requiring railroads to adopt and implement procedures to verify securement of trains and unattended equipment for emergency responders. Locomotive cabs also would have to be locked and reversers removed and secured, FRA said. Railroads also would be required to obtain advance approval from the agency for locations or circumstances where unattended cars or equipment may be left, it indicated. The full RSAC also approved four recommendations by the Hazardous Materials Issues Working Group relating to identification, classification, operational control and handling of certain shipments. The recommendations, directed to the US Pipeline and Hazardous Materials Safety Administration (PHMSA), include amending or revising the definitions of “residue” and “key train,” and clarifying its regulatory jurisdiction over the loading, unloading, and storage of hazmat before and during transportation. PHMSA continues to advance a rulemaking that addresses the integrity of DOT Specification 111 tanker cars and the safe shipment by rail of flammable materials such as crude oil, FRA noted. The American Petroleum Institute
Oil & Gas Journal | Apr. 21, 2014
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GENERAL INTEREST applauded FRA’s announcement. “The multipronged approach that must be taken to enhance rail safety and crude oil transportation incorporates prevention, mitigation, and emergency response,” noted Bob Greco, API downstream director. “Ensuring trains are adequately staffed and implementing technologies like positive train control could improve safety by preventing accidents before they happen,” Greco said, adding, “The oil and gas industry will continue to work closely with the railroad industry and regulators to address safety needs in a comprehensive way.”
GlobalData: US needs to ‘fast-track’ LNG exports to compete in global market The US’s lack of approved export terminals has prevented energy companies from competing in the growing global LNG market, despite the fact that the country is now the world’s largest natural gas producer, said an analyst with research and consulting firm GlobalData. Global LNG capacity will rise an average of 10%/year during 2013-17, projected Carmine Rositano, GlobalData managing analyst, downstream oil and gas. Much of that change will be facilitated in Australia and Qatar, which will respectively hold 20% and 16% of global LNG capacity. Australia will see the Gladstone, Gorgon, Wheatstone, and Queensland terminals come online, increasing the country’s LNG capacity by 10 bcfd over 2013 levels. GlobalData forecasts that US liquefaction, meanwhile, will have just a 5% share of the global LNG capacity in 2017. “Asia will remain the key market for LNG,” Rositano said, adding, “But other areas, such as Europe, will increase their LNG imports as they seek to reduce their dependence on gas supplies from Russia.” Delays in the US caused by necessary local, state, environmental, and federal approvals, as well as the limitation that exports from US facilities can only be sold to countries with free-trade agreements (FTA), will hinder the country’s ability to compete globally, GlobalData said. “To date, over 30 applications have been filed with the [US Department of Energy] to sell LNG. However, only seven terminals have been approved to export LNG to non-FTA countries and only one facility, the Sabine Pass LNG terminal (OGJ Online, Sept. 23, 2013), has received all necessary approvals,” Rositano stated. “Being able to sell LNG to non-FTA countries, such as
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China, Japan, Taiwan, and India, is critical to success since these are key markets in the growing LNG trade. Without this approval, commercial risks would be increased and projects would be deemed commercially unviable,” Rositano warned.
Proved reserves of US crude oil reach 36-year high in 2012 US proved reserves of crude oil at yearend 2012 were estimated at 33.4 billion bbl, up 15.4% from 2011 and the highest since 1976, according to a report released Apr. 10 by the US Energy Information Administration. The report, US Crude Oil & Natural Gas Proved Reserves (2012), outlined contributing factors to the higher reserves, including a rise in exploration for liquid hydrocarbons, improved technology for developing tight-oil plays, and sustained high historical oil prices, EIA said. The report said, in 2012, proved oil reserves increased in three of the top five largest crude oil and lease condensate areas, including Texas, the Gulf of Mexico federal offshore, and North Dakota. Texas recorded the largest volumetric increase of 3 billion bbl among individual states, largely because of development in the Permian and western gulf basins, while North Dakota had the second-largest increase (1.1 billion bbl), driven by development of the Bakken and Three Forks formations in the Williston basin. Tight oil plays contained 7.3 billion bbl of proved crude oil reserves and lease condensate in 2012, accounting for 22% of the US total. Proved crude oil reserves in the Eagle Ford tight oil play in southwest Texas surpassed those in the Bakken formation of North Dakota to become the largest tight oil play in the US. US wet natural gas proved reserves were 322.7 tcf at the end of 2012, down 26 tcf from the previous year. Low natural gas prices, reflected in a 34% decline in the 12-month, first-of-the-month, average spot price of natural gas at the Henry Hub between 2011 and 2012, led to large negative net revisions (–45.6 tcf) to the reserves of existing fields that offset almost all gains from extensions of existing fields, EIA noted in its report. However, the report anticipates that proved gas reserves for 2013 will be affected positively by the recovery in gas prices from 2012 to 2013. Proved natural gas reserves in the Marcellus shale gas play in Pennsylvania and West Virginia surpassed those in the Barnett shale play of Texas to become the largest shale gas play in the US, EIA said.
Oil & Gas Journal | Apr. 21, 2014
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GENERAL INTEREST
Environmental groups to challenge FWS’s lesser prairie chicken ruling Nick Snow Washington Editor
Three environmental organizations notified the US Fish and Wildlife Service that they plan to sue over the US Department of the Interior agency’s recent designation of the lesser prairie chicken as a threatened—but not endangered—species (OGJ Online, Mar. 28, 2013). While the Mar. 27 final rule fell short of the endangered status, it disappointed Midcontinent oil and gas producers and others involved in a five-state environmental impact mitigation effort to make any federal listing unnecessary. FWS’s first-time use of Section 4(d) of the federal Endangered Species Act to create exemptions so participants to join state-organized or other voluntary conservation plans is unacceptable, the Center for Biological Diversity, Defenders of Wildlife, and WildEarth Guardians jointly said on Apr. 10. They said FWS endorsed an agreement that would let oil and gas producers in five Midcontinent states kill just under half of the bird’s remaining population over 10 years. The groups also criticized the animal’s ESA designation as threatened instead of endangered, which would have triggered mandatory conservation measures.
“This decision is a recipe for further declines of a rare and beautiful bird already teetering on the brink of extinction,” said Jason Rylander, a Defenders of Wildlife senior attorney. “[FWS] has adopted unprecedented and sweeping loopholes that seriously undermine their ability to monitor the implementation and effectiveness of new and inadequate conservation programs, increasing the likelihood of further loss of prairie chickens and further habitat destruction,” he declared. “Drought and habitat destruction are devastating the small remaining population of this magnificent grassland bird,” said Jay Lininger, a Center for Biological Diversity senior scientist. “The unenforceable state-level plan and voluntary measures are too little, too late, and will not get traction fast enough to prevent extinction.” Erik Molvar, a wildlife biologist with WildEarth Guardians, said, “In 1905, one market hunter shipped 20,000 lesser prairie-chickens out of a single county in Texas. In 2013, only 17,616 were found across the species’ entire five-state range, down from 34,440 just the year before, and counts appear to be even lower this spring.” He said, “Clearly, the local efforts aren’t enough to recover the bird and protect its most sensitive habitats. Compelling a full-scale ‘endangered species’ listing would close the loopholes and inject some much-needed backbone into conservation efforts.”
Russia falls to last place in SAFE’s latest security index Nick Snow Washington Editor
Russia, which ranked as high as No. 9 in 2005, fell to last place in the most recent quarterly update of the global Oil Security Index (OSI), released by Securing America’s Future Energy (SAFE), the nonpartisan organization dedicated to the reduction of US dependence on foreign oil. The OSI measures the oil security of more than a dozen countries around the world based on key indicators, including their structural dependence on oil, their economic exposure to the global oil market, and their capacity to respond to oil supply disruptions, SAFE said. It said Russia dropped to last place during fourth-quarter 2013, partly due to its extreme reliance on oil export revenues and the Russian economy’s relatively high oil inten-
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sity, which is about 8 times higher than the most efficient countries. Russia depends on oil exports for 51% of its total export revenue, making it second only to Saudi Arabia in that respect, SAFE said. “Oil security means different things for different countries based on individual economic and structural factors,” noted SAFE Chief Executive Robbie Diamond. “That is one of the key lessons of the index. So while countries like Russia and Saudi Arabia may be global leaders in oil production, they remain extremely vulnerable to changes in global oil prices. “This is useful insight for US policymakers as they are increasingly forced to grapple with geopolitical events,” he said, adding, “We cannot ignore the importance of oil when dealing with allies and adversaries around the globe.”
Oil & Gas Journal | Apr. 21, 2014
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US demand climbed The US, meanwhile, fell one slot in the OSI’s rankings from fifth place during third-quarter 2013 to the No. 6 spot in the year’s final quarter. While increasing production has reduced US imports and improved the nation’s energy security in recent years, SAFE said the US remains the world’s largest oil consumer, accounting for 20% of total global demand. It said the country’s fuel consumption per capita metric is the secondhighest in the OSI, and US oil intensity remains higher than many of its developed country peers. Such high levels of economy-wide oil consumption, which increased by about 800,000 b/d year-to-year in first-quarter 2013,
leave the nation exposed to price volatility and supply disruptions, according to SAFE. “Contrary to people’s expectations, we saw significant growth in US oil consumption in late 2013,” Diamond said. Domestic demand had its largest year-to-year increase since 2004, which helped drive a notable increase in spending on oil, he noted. “This suggests that increasing production and declining import levels alone are not sufficient if the United States wants to achieve greater energy security,” Diamond said. “We also need to be heavily focused on reducing the role of oil consumption in our economy through greater efficiency and fuel diversity.”
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Sevan Louisiana towed to Curacao Fairmount Marine, Rotterdam, has moved the Sevan Louisiana ultradeepwater rig from Singapore to Curacao. Towed by the Tug Fairmount Sherpa, the rig traveled 11,500 miles via Cape Hope with stops to take bunkers and for crew changes in Port Louis, Mauritius, Walvis Bay, Namibia, and Port of Spain, Trinidad. The self-propelled rig, equipped with eight thrusters, can accommodate up to 150 crew members. After arrival in Curacao, the Fairmount Sherpa performed multiple cargo runs for the Sevan Louisiana. The rig will leave Curacao on her own thrusters for her next job in the Gulf of Mexico. Sevan Louisiana was built last year at the Cosco shipyard in Nantong, China, for UK-based Seadrill Ltd. Photo from Fairmount Marine.
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Oil & Gas Journal | Apr. 21, 2014
The 19th Annual
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GENERAL INTEREST
Statoil’s oil sands production saw slight decline in 2013 Statoil ASA reported a slight decrease in its oil sands production in 2013 because of a planned multiweek plant shutdown for facility maintenance and the integration of new scientific research and experimental development measures, according to the company’s 2013 Oil Sands Report. Production decreased to 15,000 b/d of oil in 2013 from 16,000 b/d in 2012 as carbon dioxide intensity increased to 69.7 kg CO2/bbl from 55.6 kg CO2/bbl. The CO2 intensity in 2011 was 72.7 kg CO2/bbl. The report—which presents performance indicators for production, energy consumption, emissions intensity, and resource use at the Leismer Demonstration Project and in the Kai Kos Dehseh (KKD) leases in northern Alberta—stated that CO2 intensity rose because of facility maintenance and the integration of pilot technologies to reduce long-term CO2 intensity. The technology pilot measures are intended to both increase production and decrease CO2 intensity in the long term. Statoil said its CO2 intensity reduction targets of 25% by 2020 and 40% by 2025 remain firm. More steam was utilized in 2013 when a fourth steam generator was added to support new well pads and the company’s current production wells. Statoil also experienced an imbalance in the reservoir after a planned maintenance period. As a result, production levels were lower and steam use higher than usual, impacting the company’s overall CO2 intensity rate. “In 2013 we introduced new technologies to help further our ambitions. These include solvent co-injection, which has the potential to reduce the amount of steam and water used to produce a barrel of bitumen,” said Stale Tungesvik, Statoil Canada country manager and senior vice-president. The company said CO2 intensity is expected to decrease as operations normalize and additional technology is introduced. However, in the near term, the CO2 intensity for Leismer may be higher than the projected segment target. “Statoil’s technology plan remains on course. We have identified a group of 14 technologies we aim to test and deploy over the next 5-10 years. A number of these technologies support our strategy to reduce CO2 emissions at their source,” said Tungesvik. Results of the first full year of Statoil’s surface water monitoring program showed no indication the development of the Kai Kos Dehseh leases is having an effect on the natural water cycle of lakes and rivers monitored on those leases, the company said. Production at Leismer, via a steam-assisted gravity drainage facility, started in January 2011 (OGJ Online, Jan. 27, 2011).
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Statoil and Thailand’s PTT Exploration & Production (PTTEP), which in 2010 acquired 40% in the KKD project for $2.2 billion (OGJ Online, Nov. 23, 2010), signed an agreement in January of this year to divide their respective interests. Following the transaction, Statoil will continue as operator and 100% owner for the Leismer and Corner development projects, while PTTEP will own 100% of the Thornbury, Hangingstone, and South Leismer areas.
IEA: Global oil supplies plunge in March on lower OPEC output Global crude oil supplies fell month-on-month in March by a steep 1.2 million b/d to 91.75 million b/d, with a decline in output from members of the Organization of the Petroleum Exporting Countries accounting for near 75% of the loss, according to the International Energy Agency’s most recent Oil Market Report. Due to sharply lower supplies from Iraq, Saudi Arabia, and Libya, OPEC crude oil supplies in March fell 890,000 b/d to just 29.62 million b/d—the lowest level in 5 months. “Libyan and Iraqi outputs were down on worsening civil unrest and operational issues, respectively, while Saudi Arabia curbed supplies last month in the wake of weaker demand from refiners during the peak spring refinery turnaround period,” IEA said. OPEC’s “effective” spare capacity in March was estimated at 3.53 million b/d, up from 3.31 million b/d in February. Following an upward revision to demand and reduced forecast for non-OPEC supplies, the “call on OPEC crude and stock change” for the second quarter was raised by 100,000 b/d to 29.4 million b/d and for the second half by 350,000 b/d to an average 30.6 million b/d. For all of 2014, the non-OPEC supply forecast has been revised lower by 250,000 b/d compared with last month’s report due to downward adjustments to the forecast for countries of the former Soviet Union, and to a lesser extent, smaller changes to Europe and Latin America output. Output from both Russia and Kazakhstan is projected to fall this year because of accelerated declines at Russia’s legacy fields and ongoing (and extensive) repairs on Kashagan field’s leaky pipeline system. The forecast of global demand growth has been marginally trimmed to 1.3 million b/d in 2014 vs. 1.4 million b/d in last month’s report, reflecting lower Russian demand projection in the wake of its annexation of Crimea. The adjustment is in line with underlying downward revisions to Russian gross domestic product by the World Bank and the International Monetary Fund, IEA said. The World
Oil & Gas Journal | Apr. 21, 2014
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GENERAL INTEREST Bank cut by half its base-case projection for Russian economic growth in 2014—to 1.1% from its December estimate of 2.2%. The bank noted that, in a “high-risk” scenario for Russia, “An intensification of political tension could lead to heightened uncertainties around economic sanctions which would further depress confidence and investment activities.” The forecast of US oil demand growth this year has been trimmed marginally by 20,000 b/d from last month’s report, to 19 million b/d, following lower-than-expected delivery data for January and February. IEA’s demand forecast for China, meanwhile, is maintained at 10.4 million b/d for 2014, 3.4% up on the year earlier, in the prospect of renewed government support for the slowing down Chinese economy.
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36
Texas Petro Index reaches record-high in February The Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators released by the Texas Alliance of Energy Producers (TAEP), reached yet another record high, tallying a score of 300.6 in February as a result of rapidly increasing production, higher wellhead prices, and revised statewide employment numbers (OGJ Online, Oct. 2, 2013). Producers in Texas increased oil output by more than 22% in February compared with February 2013, noted Karr Ingham, economist and creator of the index. Ingham added that natural gas production was up about 1%. “Combined with higher wellhead prices for both commodities, the value of oil and gas produced in Texas during February increased by more than $2.85 billion in the past year to about $10.63 billion,” Ingham said. Texas producers recovered about 2.75 million b/d of crude oil in February—the most since 1980. Crude oil production in Texas totaled an estimated 77.2 million bbl, about 14.1 million bbl more than in February 2013. The value of Texas-produced crude oil reached a total of $7.48 billion, a 29.2% jump vs. February 2013. The estimated Texas natural gas output was more than 625.2 bcf. With gas prices in February averaging 5.04/ Mcf—an increase of about 55.6% compared with the average wellhead price of $3.24/Mcf in February 2013—the value of Texas-produced gas increased 57.3% to about $3.15 billion.
Ever-expanding workforce Revised statewide employment estimates by the Texas Workforce Commission (TWC) indicated the oil and gas industry continues to hire new workers at an impressive pace, faster than even the robust growth in prior years. The number of Texans on oil and gas industry payrolls averaged a record
285,000, according to statistical methods based on TWC estimates, about 4.9% more than in February 2013. Record-setting estimated oil and gas industry employment in February replaced the record estimate of 282,700, set in August 2013. “In 2012, workforce commissioners revised total upstream payroll employment upward by about 3,200 jobs to more than 270,000 jobs, which reflected a growth rate of 10.2% at yearend compared to yearend 2011,” Ingham said, adding, “In 2013, another 10,000 jobs were added to upstream oil and gas company payrolls, and that job growth has escalated during early part of this year.” He said, “At yearend 2013, the yearover-year rate of industry employment growth was about 3.7%. In February, the year-over-year rate of industry employment growth was nearly 5%, with about 13,400 jobs added over the last 12 months. Since the industry downturn in 2009, about 103,000 jobs have been added to upstream oil and gas company payrolls.” The most recent low ebb in industry employment, 179,200, occurred in October 2009. During the previous growth cycle, industry employment peaked at 223,200 in November 2008.
GAO: Scant data exists about NEPA analyses’ costs, benefits Nick Snow Washington Editor
Little information exists about the costs and benefits of analyses required under the National Environmental Policy Act, the Government Accountability Office said. Federal agencies do not routinely track the costs, and there is no government-wide mechanism to do so, GAO investigators said they learned from officials at the US Environmental Protection Agency, White House Council on Environmental Quality, and other agencies.
Oil & Gas Journal | Apr. 21, 2014
GENERAL INTEREST “Information on the benefits of completing NEPA analyses is largely qualitative,” the Apr. 15 report continued. “According to studies and agency officials, some of the qualitative benefits of NEPA include its role in encouraging public participation and in discovering and addressing project design problems that could be more costly in the long run.” The fact that federal agencies’ activities under NEPA are hard to separate from other required environmental analyses under federal laws such as the Endangered Species Act and the Clean Water Act; executive orders; agency guidance; and state and local laws further complicates analysis of NEPA’s costs and benefits, GAO said. “This report substantiates concerns that the federal government has no system to track time or costs associated with NEPA, which is one of the most expansive regulatory laws in the country,” US Rep. Rob Bishop (R-Utah), who chairs the House Natural Resources Committee’s Public Lands and Environmental Subcommittee. NEPA is important for many reasons, but delays and problems associated with its processes are significant, he maintained. “I am also very troubled by the constant use of NEPA as a litigious weapon to halt or delay projects that wealthy special interest groups don’t like,” said Bishop, who requested the investigation.
‘Costly, hidden, duplicative’ Officials of two associations representing US oil and gas producers also responded to the report’s findings. “The NEPA process has been found to be costly, largely hidden from the public, and duplicative of other environmental legislation,” said Daniel T. Naatz, Independent Petroleum Association of America’s vicepresident of federal resources and political affairs. “This report echoes the problems America’s independent producers have encountered when dealing with a variety of agencies regarding environmental assessments, environmental impact statements, and categorical exclusions,” Naatz said, adding, “Independent producers continue to struggle to operate on federal lands and NEPA continues to be an opaque barrier for entry.” NEPA analysis was originally designed to enable transparent disclosure of environmental and economic impacts from federal projects so that impacts could be mitigated and better decisions made, according to the Denver-based Western Energy Alliance (WEA). The 1970 law was not designed to be a means for unaccountable environmental groups to raise money while stopping social progress, it added. “GAO confirmed what western producers have been struggling with for years: long, drawn-out NEPA analysis that prevents economic growth and job creation,” said Kathleen Sgamma, WEA vice-president of government and public affairs. “NEPA delays to proposed western oil and gas projects on public lands are holding up nearly 79,000 jobs and $17.8 billion in annual economic activity.”
Oil & Gas Journal | Apr. 21, 2014
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37
GENERAL INTEREST
DOE: ConocoPhillips can resume LNG sales to non-FTA countries Nick Snow Washington Editor
The US Department of Energy approved a ConocoPhillips Co. subsidiary’s request to resume exports of LNG to countries not having a freetrade agreement with the US from the company’s Kenai facility in Alaska in an Apr. 14 order. ConocoPhillips’s authorization for such LNG exports from the site expired on Mar. 31, it noted. Exports of as much as 40 bcf of gas equivalent would be authorized for 2 years, DOE’s Fossil Energy Office said in the order. The overseas sales would provide additional demand for Cook Inlet gas, which is otherwise not needed in the state, ConocoPhillips Alaska Natural Gas Corp. said in its application. It included a Sept. 5 letter from Alaska’s Department of Natural Resources supporting this point. A Feb. 19 DOE order authorizes LNG sales from ConocoPhillips Alaska’s Kenai Peninsula installation to countries that have an FTA agreement with the US, the company noted. Those sales would be part of the 40bcf limit, it said. Alaska’s two US senators applauded DOE’s action. “I’m glad ConocoPhillips will be able to add to Alaska’s 40year history of supplying natural gas to Japan,” said Lisa Murkowski (R), the Energy and Natural Resources Committee’s ranking minority member. “DOE’s announcement also highlights the growth that’s occurring in Cook Inlet, where there is now ample gas supply to both meet local needs and help out our friends overseas,” she observed. “This is great news for the cradle of Alaska’s oil and gas industry on the Kenai Peninsula,” said Mark Begich (D). “With plenty of gas available to meet local needs through at least 2018, we’re seeing the kind of job growth re-
38
THE EDITOR’S PERSPECTIVE sponsible oil and gas development can provide.” He said he urged DOE to process the ConocoPhillips application to ship LNG to non-FTA countries outside the queue the department established for other LNG export applications. Only six applications in that group have been approved as being in the national interest, and at least 24 more remain, Begich said. The company plans to operate the liquefaction plant seasonally, during summer when regional gas demand is low, the senator indicated. ConocoPhillips separately said it is committed to meeting its local gas supply contracts and to diverting gas from the LNG facility to address local supply issues if needed. It previously said it would seek a new export authorization if local Cook Inlet area gas needs were met and there was sufficient gas available for export. It said that during 2013, local utilities executed agreements securing their gas supplies through at least the first quarter of 2018. “The Cook Inlet area gas supply forecast has increased, which is a positive development for local utilities,” ConocoPhillips said. “LNG exports will provide a market opportunity for Cook Inlet gas production in excess of local market demand.”
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Need for still more reform awaits winner of Indian elections by Bob Tippee, Editor A question larger than who wins elections in the world’s fourth-ranked oil-consuming country is how much difference the outcome might make. Elections in India opened Apr. 7 and will continue through May 12. An overarching issue is reinvigoration of a once-booming economy with a growth rate down by half since 2010. A candidate leading in at least name recognition is Rahul Gandhi of the Congress Party, which founders in its second term atop the governing United Progressive Alliance after having been restored to power in 2004. Economic drift has shaken popular confidence in Gandhi’s party and Prime Minister Manmohan Singh, a designer of the liberalization effort begun in 1991. Worse, scandals involving Congress Party members have stained Singh’s reputation for honesty and inflamed a citizenry weary of corruption. An alternative candidate with strong support of business leaders is Narendra Modi of the Hindu-nationalist Bharatiya Janata Party. Modi was chief minister of Gujarat during the rapidly industrializing state’s economic boom. But he has been criticized for not doing enough to quell deadly riots against Muslims in 2002. An interesting long shot is Arvind Kejriwal, leader of the new Aam Aadmi Party, which routed Congress in Delhi Assembly elections last December. Kejriwal is running a populist, anticorruption campaign. As chief minister of Delhi, he oversaw aggressive subsidization of public services. But when opposition parties blocked legislation to set up an anticorruption board, calling it unconstitutional, he resigned in principal after 49 days in office. Indian voters have clearly defined choices. But national problems transcend ideological differences. India remains hobbled by market controls, bureaucracy, and dissipation of political potency among 28 states and 7 union territories inhabited by 1.2 billion people, nearly 70% of whom live on less than $2/day. India certainly needs less corruption, more economic growth, and more-equitable distribution of opportunity. But it also needs institutional reforms that seem ever in progress but seldom closer to realization than they were in the last political cycle. ONLINE APR. 11, 2014 | bobt@ogjonline.com
Oil & Gas Journal | Apr. 21, 2014
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Oil & Gas Journal | Apr. 21, 2014
STATISTICS IMPORTS OF CRUDE AND PRODUCTS — Districts 1-4 — — District 5 — ———— Total US ———— 4-4 3-28 4-4 3-28 4-4 3-28 4-5 * 2014 2014 2014 2014 2014 2014 2013 ––––––––––––––––––––––––— 1,000 b/d ––––––––––––––––––––––––— Total motor gasoline ............. Mo. gas. blending comp. ..... Distillate............................... Residual .............................. Jet fuel-kerosine .................. Propane-propylene .............. Other ...................................
478 442 314 110 129 65 178
523 454 222 183 106 85 2
23 20 4 8 0 7 29
10 8 18 19 1 (27) 65
501 462 318 118 129 72 207
533 462 240 202 107 58 67
875 808 139 193 0 74 22
Total products ......................
1,716
1,575
91
94
1,807
1,669
2,111
Total crude ...........................
6,300
5,687
1,012
1,144
7,312
6,831
7,719
Total imports ........................
8,016
7,262
1,103
1,238
9,119
8,500
9,830
*Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.
IHS PURVIN & GERTZ LNG NETBACK MATRIX—APR. 11, 2014 Receiving terminal
–––––––––––––––––––––––––––– Liquefaction plant –––––––––––––––––––––––––––––––– Algeria Malaysia Nigeria Austr. NW Shelf Qatar Trinidad –––––––––––––––––––––––––––––––– $/MMbtu ––––––––––––––––––––––––––––––––––––
Barcelona Everett Isle of Grain Lake Charles Sodegaura Zeebrugge
11.69 2.92 6.98 1.88 10.98 10.03
9.18 0.55 4.42 (0.33) 13.81 7.37
10.69 2.47 6.17 1.59 11.09 9.15
9.09 0.63 4.31 (0.10) 13.41 7.24
9.96 1.20 5.14 0.19 12.40 8.13
10.59 3.26 6.21 2.62 9.96 9.24
Additional analysis of market trends is available through OGJ Online, Oil & Gas Journal’s electronic information source, at http://www.ogj.com.
OGJ CRACK SPREAD 4–11–14* 4–12–13* Change Change, ———–—$/bbl ——–—— %
SPOT PRICES Product value Brent crude Crack spread
120.90 115.75 106.39 103.72 14.51 12.02
FUTURES MARKET PRICES One month Product value 124.51 121.49 Light sweet crude 102.75 93.40 Crack spread 21.76 28.09 Six month Product value 116.59 116.13 Light sweet crude 98.02 93.59 Crack spread 18.57 22.54
5.16 2.67 2.49
4.5 2.6 20.7
3.02
2.5
9.35 10.0 (6.33) (22.5) 0.46
0.4
4.43 4.7 (3.97) (17.6)
*Average for week ending. Source: Oil & Gas Journal Data available at PennEnergy Research Center.
Defnitions, see OGJ Apr. 9, 2007, p. 57. Source: IHS Purvin & Gertz Data available at PennEnergy Research Center.
CRUDE AND PRODUCT STOCKS —–– Motor gasoline —–– Blending Jet fuel, ————— Fuel oils ————— PropaneCrude oil Total comp. kerosine Distillate Residual propylene ———————————————————————————— 1,000 bbl —————————————————————————
District PADD 1 ..................................... PADD 2 ..................................... PADD 3 ..................................... PADD 4 ..................................... PADD 5 .....................................
10,894 97,511 202,003 21,895 51,819
53,899 47,249 74,540 6,129 28,620
46,620 37,815 62,921 3,805 25,916
8,003 6,681 11,774 677 9,507
32,186 26,879 36,635 3,769 13,725
8,804 1,708 22,056 171 4,297
1,887 8,126 16,584 1 988 —
Apr. 4, 2014 ............................. Mar. 28, 2014 ........................... Apr. 5, 20132 .............................
384,122 380,091 388,874
210,437 215,625 222,363
177,077 181,452 172,149
36,642 35,620 39,730
113,194 112,954 112,817
37,036 36,487 37,125
27,585 26,568 40,025
1 Includes PADD 5. 2Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.
REFINERY REPORT—APR. 4, 2014 REFINERY –––––– OPERATIONS –––––– Gross Crude oil inputs inputs ––––––– 1,000 b/d ––––––––
District
–––––––––––––––––––––––––––– REFINERY OUTPUT ––––––––––––––––––––––––––– Total motor Jet fuel, ––––––– Fuel oils –––––––– Propanegasoline kerosine Distillate Residual propylene –––––––––––––––––––––––––––––––– 1,000 b/d –––––––––––––––––––––––––––––––
PADD 1 .............................................. PADD 2 .............................................. PADD 3 .............................................. PADD 4 .............................................. PADD 5 ..............................................
960 3,196 8,356 520 2,662
951 3,194 8,221 503 2,469
3,139 2,495 2,094 367 1,745
78 210 804 21 410
324 1,035 2,631 160 648
58 65 261 14 113
156 239 844 1 167 —
Apr. 4, 2014 ........................................ Mar. 28, 2014 ..................................... Apr. 5, 2013 ........................................
15,694 15,622 15,472
15,338 15,315 15,115
9,840 9,526 8,932
1,523 1,488 1,532
4,798 4,788 4,539
511 458 575
1,406 1,412 1,374
17,933 Operable capacity 1
87.5 utilization rate
2
Includes PADD 5. Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.
Oil & Gas Journal | Apr. 21, 2014
41
STATISTICS OGJ GASOLINE PRICES
OGJ PRODUCTION REPORT
BAKER HUGHES RIG COUNT
Price Pump Pump ex tax price* price 4-9-14 4-9-14 4-10-13 ————— ¢/gal ————— (Approx. prices for self-service unleaded gasoline) Atlanta .......................... 301.7 348.6 Baltimore ...................... 307.7 353.1 Boston ........................... 308.7 353.6 Buffalo .......................... 287.6 355.6 Miami ............................ 316.0 370.4 Newark .......................... 311.2 344.1 New York........................ 293.6 361.6 Norfolk........................... 318.5 354.2 Philadelphia .................. 302.4 362.6 Pittsburgh ..................... 298.9 359.1 Wash., DC...................... 318.6 360.5 PAD I avg .................. 305.9 356.7
367.6 357.6 348.2 376.5 368.2 328.2 387.1 343.2 382.0 362.2 364.1 362.2
Chicago ......................... Cleveland ...................... Des Moines .................... Detroit ........................... Indianapolis .................. Kansas City ................... Louisville ....................... Memphis ....................... Milwaukee ..................... Minn.-St. Paul ............... Oklahoma City ............... Omaha .......................... St. Louis ........................ Tulsa ............................. Wichita .......................... PAD II avg .................
343.3 308.4 310.3 301.3 308.6 315.0 316.9 330.2 314.0 314.0 299.0 300.7 305.7 297.7 313.0 311.9
400.8 354.8 350.7 358.8 365.7 350.7 366.1 370.0 365.3 361.0 334.4 346.4 341.4 333.1 356.4 357.0
413.0 342.1 352.1 367.6 360.9 328.7 358.8 345.6 361.5 362.9 332.6 337.6 331.6 332.0 349.4 351.8
Albuquerque .................. Birmingham .................. Dallas-Fort Worth .......... Houston ......................... Little Rock ..................... New Orleans .................. San Antonio ................... PAD III avg ................
304.7 294.6 295.1 298.7 291.1 298.3 299.9 297.5
342.0 334.0 333.5 337.1 331.3 336.7 338.3 336.1
334.5 348.1 353.0 344.8 349.6 349.6 346.3 346.5
Cheyenne....................... Denver ........................... Salt Lake City ................ PAD IV avg ................
293.4 318.3 299.9 303.9
335.8 358.7 342.8 345.8
340.4 360.2 350.1 350.2
Los Angeles ................... Phoenix.......................... Portland ........................ San Diego ...................... San Francisco................ Seattle........................... PAD V avg ................. Week’s avg. .................. Mar. avg.. ...................... Feb. avg. ...................... 2014 to date ................. 2013 to date .................
337.6 335.2 327.3 312.6 338.1 319.2 328.3 309.7 302.1 286.1 292.1 306.5
408.5 372.6 376.8 383.5 409.0 375.1 387.6 357.0 349.4 333.4 339.2 352.7
423.0 358.7 361.7 418.7 420.0 380.0 393.7 359.5 370.7 361.5 — —
1
4-11-14
4-12-13
Alabama............................................ Alaska ............................................... Arkansas ........................................... California .......................................... Land................................................ Offshore .......................................... Colorado ............................................ Florida ............................................... Illinois ............................................... Indiana.............................................. Kansas .............................................. Kentucky............................................ Louisiana .......................................... N. Land ........................................... S. Inland waters .............................. S. Land............................................ Offshore .......................................... Maryland ........................................... Michigan ........................................... Mississippi ........................................ Montana ............................................ Nebraska ........................................... New Mexico........................................ New York............................................ North Dakota ..................................... Ohio................................................... Oklahoma .......................................... Pennsylvania ..................................... South Dakota..................................... Texas ................................................. Offshore .......................................... Inland waters .................................. Dist. 1 ............................................. Dist. 2 ............................................. Dist. 3 ............................................. Dist. 4 ............................................. Dist. 5 ............................................. Dist. 6 ............................................. Dist. 7B ........................................... Dist. 7C ........................................... Dist. 8 ............................................. Dist. 8A ........................................... Dist. 9 ............................................. Dist. 10 ........................................... Utah .................................................. West Virginia ..................................... Wyoming............................................ Others—ID-1; NV-2 ..........................
5 10 11 41 40 1 62 1 3 0 27 3 108 24 18 18 48 0 0 13 7 2 91 0 178 34 192 54 0 884 3 1 128 81 56 34 7 33 8 93 316 37 17 70 27 26 49 3
5 10 15 39 37 2 59 1 2 2 24 2 107 22 25 15 45 0 1 10 10 2 80 1 178 32 185 59 1 848 2 0 140 79 45 36 14 26 17 82 275 39 26 67 28 24 42 4
Total US ........................................ Total Canada ................................
1,831 212
1,771 156
Grand total ................................... US oil rigs.......................................... US gas rigs........................................ Total US offshore ............................... Total US cum. avg. YTD .....................
2,043 1,517 310 53 1,785
1,927 1,387 377 49 1,757
2 4-11-14 4-12-13 –—— 1,000 b/d —–—
(Crude oil and lease condensate) Alabama ................................. 26 Alaska .................................... 536 California ............................... 596 Colorado ................................. 187 Florida .................................... 6 Illinois .................................... 25 Kansas ................................... 132 Louisiana ............................... 1,210 Michigan ................................ 22 Mississippi ............................. 65 Montana ................................. 78 New Mexico............................. 290 North Dakota .......................... 991 Oklahoma ............................... 344 Texas ...................................... 3,349 Utah ....................................... 106 Wyoming ................................. 182 All others ................................ 80 Total .................................. 8,225 1 OGJ estimate. 2Revised. Source: Oil & Gas Journal. Data available at PennEnergy Research Center.
US CRUDE PRICES Alaska-North Slope 27° ......................................... Light Louisiana Sweet ........................................... California-Midway Sunset 13° .............................. California Buena Vista Hills 26° ........................... Wyoming Sweet ..................................................... East Texas Sweet ................................................... West Texas Sour 34° .............................................. West Texas Intermediate........................................ Oklahoma Sweet.................................................... Texas Upper Gulf Coast ......................................... Michigan Sour ....................................................... Kansas Common ................................................... North Dakota Sweet ...............................................
Research Center.
WORLD CRUDE PRICES OPEC reference basket
Rotary rigs from spudding in to total depth. Defnitions, see OGJ Sept. 18, 2006, p. 46. Source: Baker Hughes Inc. Data available at PennEnergy Research Center.
IHS PETRODATA RIG COUNT 4-4-14 ¢/gal
Spot market product prices No. 2 Distillate Motor gasoline Low sulfur diesel fuel (Conventional-regular) New York Harbor ......... 275.60 New York Harbor ......... Gulf Coast .................. 276.40 Gulf Coast .................. Los Angeles ................ Motor gasoline Kerosine jet fuel (RBOB-regular) New York Harbor ......... 309.40 Gulf Coast ..................
291.70 288.50 295.00 284.70
Propane No. 2 heating oil New York Harbor ......... 286.20 Mont Belvieu .............. 108.00
APR. 11, 2014 Total supply of rigs US Gulf of Mexico. . . . . . South America Northwest Europe. . . . . West Africa. . . . . . Middle East. . . . . . . Southeast Asia. . . . . . . Worldwide. . . .
Wkly. avg.
$/bbl 4-11-14 103.59 –– Mo. avg., $/bbl –– Feb.-14 Mar.-14
OPEC reference basket....................... Arab light-Saudi Arabia ....................... Basrah light-Iraq ................................. Bonny light 37o-Nigeria........................ Es Sider-Libya ...................................... Girassol-Angola.................................... Iran heavy-Iran..................................... Kuwait export-Kuwait ........................... Marine-Qatar........................................ Merey-Venezuela .................................. Murban-UAE ......................................... Oriente-Ecuador ................................... Saharan blend 44o-Algeria ................... Other crudes Minas 34o-Indonesia ............................ Fateh 32o-Dubai ................................... Isthmus 33o-Mexico ............................. Tia Juana light 31o-Venezuela .............. Brent 38o-UK ........................................ Urals-Russia ........................................ Differentials WTI/Brent ............................................. Brent/Dubai..........................................
Includes state and federal motor fuel taxes and state sales tax. Local governments may impose additional taxes. Source: Oil & Gas Journal. Data available at PennEnergy Research Center.
4-4-14 ¢/gal
4-11-14 $/bbl* 97.76 99.11 10.60 107.90 95.24 98.50 95.25 100.25 100.25 94.00 92.25 99.25 90.44
*Current major refner’s posted prices except N. Slope lags 2 months. 40° gravity crude unless differing gravity is shown. Source: Oil & Gas Journal. Data available at PennEnergy
*
REFINED PRODUCT PRICES
28 529 593 163 5 26 132 1,229 21 67 81 258 789 303 2,695 91 172 84 7,266
105.38 106.30 103.38 110.77 108.47 109.54 104.96 104.17 104.91 94.00 108.69 97.44 110.52
104.15 104.80 102.10 109.50 107.15 108.67 104.01 103.05 104.07 93.23 107.60 94.96 108.95
108.46 105.04 100.47 108.87 107.43 102.74
113.60 104.32 98.87 107.55 106.66 108.06
(8.09) 3.83
(7.02) 3.23
Source: OPEC Monthly Oil Market Report. Data available at PennEnergy Research Center.
Marketed Marketed supply Marketed utilization of rigs contracted rate (%)
US NATURAL GAS STORAGE1
112
86
81
94.2
83
81
81
100.0
93
92
92
100.0
80
76
69
90.8
146
142
131
92.3
Producing region ................ Consuming region east ...... Consuming region west ...... Total US .............................
101 836
93 782
81 741
87.1 94.8
Total US2 ............................
4-4–14
3-28–14
4-4–13
–——––—— bcf —––——– 361 352 691 305 310 648 160 160 336 826 822 1,675 Change, Jan.-14 Jan.-13 % 1,926
2,702
Change,
% (47.8) (52.9) (52.4) (50.7)
(28.7)
1
Source: EIA Weekly Petroleum Status Report. Data available at PennEnergy Research Center.
42
Source: IHS Petrodata Data available in PennEnergy Research Center
Working gas. 2At end of period. Source: Energy Information Administration Data available at PennEnergy Research Center.
Oil & Gas Journal | Apr. 21, 2014
STATISTICS BAKER HUGHES INTERNATIONAL RIG COUNT
BAKER HUGHES WELL COUNT Basin
–––––– Mar. 2014 –––––– Mar. 2013 Land Off. Total Total
Region
WESTERN HEMISPHERE
Argentina ................................ Bolivia ..................................... Brazil....................................... Canada ................................... Chile........................................ Colombia ................................. Ecuador ................................... Mexico ..................................... Peru......................................... Trinidad ................................... US ........................................... Venezuela ................................ Other ....................................... Subtotal ..................................
1st qtr.*
4th qtr.
Year ago
Change, %
Ardmore Woodford Arkoma Woodford Barnett Cana Woodford DJ-Niobrara Eagle Ford Fayetteville Granite Wash Haynesville Marcellus Mississippian Permian Utica Williston Others
31 24 327 94 267 1,110 127 132 97 524 386 2,374 102 707 2,550
66 25 374 77 258 1,171 129 148 94 576 408 2,351 112 737 2,557
49 13 443 82 266 1,044 157 141 109 475 343 2,169 131 582 2,530
(36.7) 84.6 (26.2) 14.6 0.4 6.3 (19.1) (6.4 (11.0) 10.3 12.5 9.5 (22.1) 21.5 0.8
Total
8,852
9,083
8,534
3.7
101 — 7 — 24 23 449 1 3 — 45 — 24 1 55 33 4 2 2 1 1,750 54 72 9 — — --------------- --------------2,536 124
101 76 7 9 47 74 449 464 3 2 45 43 25 24 88 120 6 5 3 3 1,803 1,756 81 81 — — --------------- --------------2,658 2,657
13 7 1 1 — 22 82 40 22 14 1 — 1 15 1 1 3 2 5 — 1 — — — 3 16 — 6 1 — --------------- --------------134 124
20 16 2 2 22 17 122 116 36 44 1 1 16 10 2 2 5 9 5 3 1 3 — — 19 19 6 4 1 1 --------------- --------------258 247
*Current quarter well count data is preliminary and is subject to revisions. Source: Baker Hughes Inc. Data available in PennEnergy Research Center
44 — 1 5 13 11 10 — 1 12 --------------97
— 14 3 2 1 1 5 — — 9 --------------35
44 14 4 7 14 12 15 — 1 21 --------------132
47 9 5 4 2 15 15 1 2 15 --------------115
Egypt Nigeria Norway Peru Qatar Trinidad and Tobago Yemen
— — — — —
— — — — —
— — — — —
— — — — —
7,030 2,910
— 2,930
10,780 2,730
(34.8) —
Total
9,940
2,930
13,510
(26.4)
19 — 43 — 90 — 34 58 20 3 75 — — 4 4 --------------350
10 1 10 — — — — 1 — 8 21 — — — — --------------51
29 1 53 — 90 — 34 59 20 11 96 — — 4 4 --------------401
28 — 51 — 65 — 31 42 19 7 84 — — 3 6 --------------336
1 — 3 4 2 5 4 — 3 9 39 1 22 --------------93 3,210
1 3 — 1 — 2 6 21 — — 1 16 4 --------------55 389
2 3 3 5 2 7 10 21 3 9 40 17 26 --------------148 3,597
1 2 2 6 2 3 8 20 5 8 30 21 25 --------------133 3,488
ASIA-PACIFIC Australia ................................. Brunei ..................................... China-offshore ........................ India........................................ Indonesia ................................ Japan ...................................... Malaysia.................................. Myanmar ................................. New Zealand ........................... Papua New Guinea .................. Philippines .............................. Taiwan..................................... Thailand .................................. Vietnam................................... Other ....................................... Subtotal ..................................
AFRICA Algeria..................................... Angola ..................................... Congo ...................................... Gabon...................................... Kenya ...................................... Libya ....................................... Nigeria .................................... South Africa ............................ Tunisia .................................... Other ....................................... Subtotal ..................................
MIDDLE EAST Abu Dhabi ............................... Dubai ...................................... Egypt ....................................... Iran ......................................... Iraq ......................................... Jordan ..................................... Kuwait ..................................... Oman ...................................... Pakistan .................................. Qatar ....................................... Saudi Arabia ........................... Sudan...................................... Syria ........................................ Yemen ..................................... Other ....................................... Subtotal .................................. EUROPE Croatia .................................... Denmark.................................. France ..................................... Germany .................................. Hungary................................... Italy ......................................... Netherlands............................. Norway .................................... Poland ..................................... Romania.................................. Turkey ...................................... UK ........................................... Other ....................................... Subtotal .................................. Total ........................................
WATERBORNE ENERGY INC. US LNG IMPORTS Change Country
Jan. Dec. Jan. 2014 2013 2013 ————— MMcf ————
PROPANE PRICES Jan. Feb. Jan. Feb. 2014 2014 2013 2013 ——–—––––––––– ¢/gal —––—–––––——–
from a year ago, % Mont Belvieu
139.50
144.30
83.80
86.20
Source: EIA Weekly Petroleum Status Report Data available at PennEnergy Research Center.
Source: Waterborne Energy Inc. Data available at PennEnergy Research Center. No new data at press time.
MUSE, STANCIL & CO. REFINING MARGINS US US US US NorthSouthGulf East MidWest west east Coast Coast west Coast Europe Asia ––––––––––––––––––––––––––––––––––– $/bbl ––––––––––––––––––––––––––––––––––– Mar. 2014 Product revenues Feedstock costs Gross margin Fixed costs Variable costs Cash operating margin Feb. 2014 YTD avg. 2013 avg. 2012 avg. 2011 avg.
117.92 (104.17)
118.75 (112.60)
122.68 (95.47)
123.85 (106.06)
117.73 (112.14)
114.11 (108.15)
13.75 (2.35) (1.21)
6.15 (3.26) (1.10)
27.21 (2.64) (1.00)
17.79 (3.08) (1.81)
5.59 (2.64) (1.83)
5.96 (2.05) (2.12)
10.19 9.52 9.24 7.42 8.67 5.62
1.79 5.48 2.79 2.22 4.77 0.20
23.57 23.67 21.93 24.96 28.64 20.04
12.90 13.70 12.84 15.85 14.86 10.99
1.12 2.10 1.30 3.14 6.60 4.25
1.79 2.06 2.16 1.97 3.26 2.93
Source: Muse, Stancil & Co. See OGJ, Jan. 15, 2001, p. 46 Data available at PennEnergy Research Center.
Defnitions, see OGJ Sept. 18, 2006, p. 42. Source: Baker Hughes Inc. Data available at PennEnergy Research Center.
MUSE, STANCIL & CO. GASOLINE MARKETING MARGINS Feb. 2014 Retail price Taxes Wholesale price Spot price Retail margin Wholesale margin Gross marketing margin Jan. 2014 YTD avg. 2013 avg. 2012 avg. 2011 avg.
MUSE, STANCIL & CO. ETHYLENE MARGINS
Los Chicago* Houston Angeles New York ———–———— ¢/gal ————–——— 358.52 60.80 280.45 271.23 17.27 9.22 26.49 37.50 32.00 32.33 33.55 16.44
314.98 38.40 269.09 267.28 7.49 1.81 9.30 21.00 15.15 20.45 22.46 23.39
380.68 65.43 285.19 287.45 30.06 (2.26) 27.80 37.66 32.73 35.26 37.32 29.82
364.76 54.25 284.82 277.63 25.69 7.19 32.88 45.18 39.03 36.05 36.82 37.34
*The wholesale price shown for Chicago is the RFG price utilized for the wholesale margin. The Chicago retail margin includes a weighted average of RFG and conventional wholesale purchases. Source: Muse, Stancil & Co. See OGJ, Oct. 15, 2001, p. 46. Data available at PennEnergy Research Center. Note: Margins include ethanol blending in all markets.
Oil & Gas Journal | Apr. 21, 2014
MUSE, STANCIL & CO. US GAS PROCESSING MARGINS
Ethane Propane Naphtha ——–——– ¢/lb ethylene –—–——— Mar. 2014 Mar. 2014 Product revenues Feedstock costs
58.23 (12.37)
101.64 (60.30)
127.09 (133.04
Gross margin Fixed costs Variable costs
45.86 (6.64) (4.05)
41.34 (7.85) (4.70)
(5.95) (8.88) (6.18)
Cash operating margin
35.17
28.79
(21.01)
Feb. 2014 YTD avg. 2013 avg. 2012 avg. 2011 avg.
30.67 34.99 42.10 37.32 21.63
8.65 17.23 32.09 31.96 10.43
(22.00) (19.84) (19.60) (20.62) (22.93)
Source: Muse, Stancil & Co. See OGJ, Sept. 16, 2002, p. 46. Data available at PennEnergy Research Center.
Gross revenue Gas Liquids Gas purchase cost Operating costs Cash operating margin Feb. 2014 YTD avg. 2013 avg. 2012 avg. 2011 avg. Breakeven producer payment, % of liquids
Gulf MidCoast continent ———–– $/Mcf —–—–— 4.39 1.19 4.89 0.07 0.63
4.35 3.94 5.84 0.15 2.30
0.52 0.53 0.58 0.81 1.03
0.99 1.10 1.61 1.80 2.40
55%
98%
Source: Muse, Stancil & Co. See OGJ, May 21, 2001, p. 54. Data available at PennEnergy Research Center.
43
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The New:
OIL & GAS MINING LEASES
The Journal of Energy from Innovation www.uogreport.com
T h e
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R e S e R V e
F O R
N O R T h
A M e R I C A N
S h A L e
P L AY S
VOLUME 1 NUMBER 1
Beyond US border, Mexico primes shale pot Tayvis Dunnahoe, Editor
Oil production from 14 of the most active counties in the South Texas eagle Ford shale reached 28 MMbbl in the last year. Gas production doubled from the previous year to 271 bcf, and for the
same period, condensate tripled to 21 MMbbl, according to a March report from the eagle Ford Task Force, which was established by the Texas Railroad Commission. By 2015, the eagle Ford shale will become the largest standalone energy project in the world as
SHALE GAS BASINS OF EASTERN MEXICO Nomada
El Burro Uplift
y la lP y Oi la rd sP Eagl e Fo Ga or d le F Ea g
Montañez
Habano Emergente Percutor
te s yo Pe
Coahuila Platform
46
es Arch os ach -Pic
Sabinas Basin
Arbolero-1
U S Burgos
Texas
measured by capital expenditures, the report indicates. Meanwhile, across the border from South Texas, Mexico is gearing up to initiate its own shale boom. “The eagle Ford doesn’t stop at the border,” said edgar Rangel-German, commissioner with Mexico’s National hydrocarbons Commission (CNh). The US energy Information Administration (eIA) reported in 2011 that Mexico has the second-largest shale gas potential in Latin America and the fourth-largest in the world. The country contains 61 tcf of natural gas reserves but the eIA report places Mexico’s shale gas potential at 680 tcf. EAGLE FORD
Mexico state oil c been analyzing t the eIA along wit of resources, bei the world was a n believe the eIA’s n mated,” Rangel-G Mexico’s CNh new laws in the c The commission i sanctioning reser tioning e&P proj mation concerni and overseeing o The country is in i unconventional
The Bureau of Indian Affairs, Pawnee Agency, Pawnee, OK, is offering the sale of Restricted Indian Land for Oil & Gas Mining Leases, located in Noble, Pawnee, Kay Counties & part of Payne Co., north of the Cimarron River on Tuesday, May 20, 2014. Persons or frms interested in bidding or those desiring additional information should contact the Trust Management Services Offce at 918-762-2585.
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Assistant/Associate Professor of Petroleum Engineering in Reservoir Characterization In response to program growth and campus strategic initiatives, the Geological Sciences and Engineering Department at Missouri S&T seeks applicants for a tenure track faculty opening in Petroleum Engineering with appointment at the assistant or associate professor level. Candidates must have an earned PhD in petroleum engineering, petroleum geosciences, or a closely related area appropriate to support research and teaching in reservoir characterization, geostatistics, petrophysics, and/or formation evaluation. Industrial experience in analyzing and evaluating the many indices used to characterize unconventional resources is strongly preferred. For full position description including application procedures visit: http://hraadi.mst.edu/hr/employment/faculty/ (reference number R00059882). For additional information (but not to submit applications) contact Dr. Runar Nygaard, 153 McNutt Hall, Rolla, MO 65409; nygaardr@mst. edu; (573) 341-4759. Review of applications will begin May 10, 2014, and applications will be accepted and reviewed until the position is flled.
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WHERE THE INDUSTRY GOES TO CLASSIFY www.ogj.com/market-connection.html Oil & Gas Journal | Apr. 21, 2014