Oil & Gas Journal, April 28, 2014 by Oil & Gas Journal

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7 NEWSLETTER

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12 LETTERS / CALENDAR

29 ADVERTISERS’ INDEX

Apr. 28, 2014

14 JOURNALLY SPEAKING

30 STATISTICS

Volume 112.4c

16 EDITORIAL

33 MARKET CONNECTION

GENERAL INTEREST 18 DOS gives federal agencies more time for Keystone XL comments Nick Snow

Eight federal agencies preparing comments on the proposed Keystone XL crude oil pipeline project’s cross-border permit received additional time, the US Department of State announced

26 GAO: Scant information exists about NEPA analyses’ costs, benefits Nick Snow

28 Texas Petro Index reaches record-high for February 28 EDITOR’S PERSPECTIVE

A moralist’s energy transition: from security to climate

19 Latest Keystone delay not political, White House spokesman says Nick Snow

The decision to give eight federal agencies more time to prepare comments about the proposed Keystone XL crude oil pipeline project’s cross-border permit was not political, White House Press Secretary Jay Carney said.

20 WATCHING GOVERNMENT

Reporting offshore near-misses

20 Four years after Macondo, offshore Arctic beckons, speakers warn Nick Snow

24 BP to sell to Hilcorp certain interests in four ANS assets 26 US gas reserve growth in 2013 was robust, AGA estimates Nick Snow

COVER Inspection proceeds on water tanks serving Anadarko Petroleum Corp.’s operations in the Uinta basin. In the tight sands of the Greater Natural Buttes area in eastern Utah, Anadarko operates more than 2,400 wells and uses refrigeration and cryogenic processing to extract NGLs. Photo from Anadarko.

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OGJ Newsletter

Apr. 28, 2014

International News for oil and gas professionals

GENERAL INTEREST Q U IC K TA K E S Hess to sell Thailand assets for $1 billion Hess Corp. has sold its interests in Thailand’s Sinphuhorm and Pailin fields to PTT Exploration & Production PCL (PTTEP) for $1 billion, effective July 1, 2013. The two assets produced a combined average of 17,000 boe/d net to Hess in 2013. The company disclosed its plans to sell assets in Thailand and Indonesian in April 2013 (OGJ Online, Apr. 30, 2013). In December, Hess entered into two separate agreements with a joint venture of PT Pertamina and PTTEP to sell its interests in the Pangkah and Natuna A assets offshore Indonesia for $1.3 billion (OGJ Online, Dec. 2, 2013). Both sales are part of a large-scale divestiture Hess undertook last year with the purpose of repaying the company’s debt and strengthen its balance sheet.

Alberta allocates spending for CCS projects The government of Alberta has budgeted $144 million (Can.) this year for two projects it is supporting for carbon capture and sequestration (CCS) related to oil sands development (OGJ Online, Feb. 26, 2013). The province plans to invest nearly $1.3 billion over 15 years in the projects, the Alberta Carbon Trunk Line and Quest project, which are to start up in 2015 and store 2.76 million tonnes/ year of carbon dioxide. The 240-km Alberta Carbon Trunk Line will collect CO2 from Industrial Heartland upgraders and carry the gas to fields for use in enhanced oil recovery. The Quest project, led by Shell Canada, will capture and sequester in the subsurface CO2 from the Scotford upgrader near Fort Saskatchewan.

For up-to-the-minute news, visit www.ogjonline.com

Moore named Gulfport Energy chief executive Michael G. Moore has been named chief executive officer and a director of Gulfport Energy Corp., Oklahoma City. He had been interim chief executive and chief financial officer. He joined Gulfport Energy in 2000 and became president in August 2013. J. Ross Kirtley was promoted to chief operating officer. He joined the company in May 2013 and became chief operating officer of Gulfport Energy’s Ohio activities in September (OGJ Online, Dec. 10, 2013). Also, Michael S. Reddin, chairman, president, and chief executive of privately held Davis Petroleum Corp., was appointed to the Gulfport Energy board of directors.

EXPLORATION & DEVELOPMENT Q U IC K TA K E S Shell makes deepwater gas find offshore Malaysia Royal Dutch Shell PLC has made a natural gas discovery with the Rosmari-1 well, which was drilled 135 km offshore Malaysia on Block SK318. The well, drilled to a total depth of 2,123 m, encountered a 450-m gas column. Shell said the discovery is a positive indicator of the gas potential in the area. “This adds to Shell’s sequence of recent exploration successes in Malaysia, with these discoveries expanding the company’s heartlands positions,” said Iain Lo, Shell Malaysia chairman. Last month, Sabah Shell Petroleum Co. Ltd. let a contract to Flowserve Corp. for supply of custom designed water injection and liquid transfer pumps for the Malikai oil field project 68 miles offshore Sabah, Malaysia (OGJ Online, Mar. 6, 2014). Shell operates Block SK318 with 85% interest. Petronas Carigali Sdn. Bhd. holds the remaining interest.

Total discovers oil deep offshore Ivory Coast Nexen names chief executive officer Nexen Energy ULC, a wholly owned subsidiary of CNOOC Ltd., has selected Fang Zhi as chief executive officer. Fang succeeds Kevin Reinhart, a 20-year company veteran who oversaw the acquisition of Nexen by CNOOC in 2012 (OGJ Online, Jan. 12, 2012; Feb. 26, 2013). Fang, currently executive vice-president, has served 30 years for CNOOC, which specified that the move will not change Nexen’s strategy and priorities as a wholly owned subsidiary.

Oil & Gas Journal

Total Exploration & Production says its Saphir-1XB exploratory well discovered oil in deep water off Ivory Coast. The well, drilled in 2,300 m of water, is the first on Block CI-514. Drilled to 4,655 m, it encountered 40 m of net pay containing 34° API oil. The company said it will evaluate the discovery and focus on its extension to the north and east. Total E&P Cote d’Ivoire operates Block CI-514 with a 54% interest. CNR International has 36%, and Petroci Holding 10%.

ICE BRENT / NYMEX LIGHT SWEET CRUDE $/bbl 110.00 109.00 108.00 107.00 105.00 104.00 103.00 102.00

US INDUSTRY SCOREBOARD — 4/28 4 wk. average

Latest week 4/11

Apr. 16

Apr. 17

Apr. 18 1

Apr. 21

Motor gasoline Distillate Jet fuel Residual Other products

Apr. 22

TOTAL PRODUCT SUPPLIED

Crude production NGL production2 Crude imports Product imports Other supply2 3 TOTAL SUPPLY Net product imports

YTD avg. year ago1

Change, %

8,832 3,841 1,408 220 3,988 18,289

8,446 3,895 1,311 357 4,596 18,605

4.6 (1.4) 7.4 (38.4) (13.2) (1.7)

8,510 3,816 1,395 250 4,717 18,688

8,430 3,681 1,342 302 4,692 18,447

0.9 3.7 3.9 (17.2) 0.5 1.3

8,228 2,627 7,508 1,846 2,361 22,570 (1,748)

7,173 2,388 7,810 1,949 2,217 21,537 (900)

14.7 10.0 (3.9) (5.3) 6.5 4.8 —

8,145 2,672 7,405 1,767 2,204 22,193 (1,887)

7,096 2,456 7,730 1,947 1,983 21,212 (1,057)

14.8 8.8 (4.2) (9.2) 11.1 4.6 —

15,339 15,643 87.5

14,766 15,088 84.7

3.9 3.7 —

15,316 15,620 87.6

15,028 15,370 88.0

1.9 1.6 —

Refining, 1,000 b/d Apr. 16

Apr. 17

Apr. 18 1

Apr. 21

Apr. 22

Crude runs to stills Input to crude stills % utilization

Latest week 4/11

Latest week

Previous week1

394,135 210,282 111,916 38,198 37,537

384,122 210,436 113,194 36,641 37,037

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. 16

Apr. 17

Apr. 18

Apr. 21

Apr.22

10,013 (154) (1,278) 1,557 500

387,641 221,730 115,181 40,975 37,788

Change, %

6,494 (11,448) (3,265) (2,777) (251)

1.7 (5.2) (2.8) (6.8) (0.7)

Change, %

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 4.700 4.675 4.650 4.625 4.600 4.575 4.550 4.525

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

Crude Motor gasoline Distillate Propane Futures prices5 34/18

25.7 23.8 29.1 26.5

25.3 23.9 29.5 25.3

1.6 (0.4) (1.4) 4.7

25.8 26.3 29.6 28.1

(0.4) (9.5) (1.7) (5.7)

Change

Light sweet crude ($/bbl) Natural gas, $/MMbtu

103.97 4.60

102.75 4.57

Change

1.2 —

93.40 4.11

9.35 0.47

11.3 11.9

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. 16

Apr. 17

Apr. 18 1

Apr. 21

Apr. 22

BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE

PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU ¢/gal 129.00 128.00 127.00 126.00 113.00 112.00 111.00 110.00

Apr. 16

Apr. 17

Apr. 18 1

Apr. 21

Apr. 22

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 312.00 309.00 306.00 303.00 301.00 299.00 297.00 295.00 1Not

BAKER HUGHES RIG COUNT: US / CANADA 2,200 2,000

1,831

1,758

1,800 1,600 1,400 700 500 300 Apr. 16

Apr. 17

Apr. 18 1

Apr. 21

Apr. 22 1

available 2Reformulated gasoline blendstock for oxygen blending regular unleaded

3Nonoxygenated

100

199

126 2/1/13

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

4/19/13

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

4/18/14

Note: End of week average count

Oil & Gas Journal | Apr. 28, 2014

Canadian Natural Resources called it “an important discovery.” Total has interests in three other offshore exploration licenses in Ivory Coast: CI-100, CI-515 and CI-516. It plans to drill exploratory wells in Blocks CI-515 and CI-516 by yearend. The group is continuing to analyze an oil discovery made on Block CI-100 in 2013 (OGJ Online, Apr. 25, 2013). Also offshore Ivory Coast, CNR International expects to begin a 10-well development drilling program in Espoir field in this year’s second half, and a 6-well phase of development at Baobab field late this year or early in 2015.

Simba Energy to conduct 2D seismic survey in Kenya Simba Energy Inc., Vancouver, BC, has signed an agreement with Bell Geospace to conduct a comprehensive airborne fulltensor gradiometry (FTG) survey on Block 2A in Kenya. The 30-day survey is expected to start in early May. The program contemplates flying 6,044 line km over two target areas within Block 2A about 2,150 sq km over the central portion of the block covering the company’s earlier defined primary and secondary target areas south-southeast from the city of Wajir and within the southern extents of the Mandera basin; and 850 sq km along the block’s southern boundary over the eastern margins of the Anza basin. Simba said it expects that data from the FTG survey will serve to provide for a more focused and cost-effective 2D seismic well location targeting program planned for later this year. The data from this FTG survey also will be combined with some additional 2D seismic data expected shortly from Taipan Resources Inc., which was recently granted permission to acquire limited 2D seismic on Block 2A. Simba said it begin interpretation of the processed 2D seismic data along with the FTG data once they are received. Simba was awarded Block 2A by Kenya’s Ministry of Energy in 2011 (OGJ Online, Aug. 3, 2011). A year later, the company acquired 750 sq km of passive seismic (OGJ Online, Apr. 16, 2012).

southwest in order to target the crestal area of mapped horizons in the prospective EG2/EG5 Central fault block. The well encountered 10 hydrocarbon-bearing sandstone reservoir zones between 1,364 ft and 6,000 ft below mean sea level. Preliminary analysis showed the vertical thickness of net hydrocarbon-bearing sands. It was drilled to a total depth of 8,133 ft with well sands totals of 421 ft, of which 352 ft is gas and 69 ft is oil. Trinity Chief Executive Officer Joel Monty Pemberton told OGJ that while his company was aware of the failure, it was not sure to what extent the size of the company’s discovery has been negatively impacted. He said it was logical to expect it meant the size of the discovery will have to be downgraded, but he could not tell without the information from the well.

DRILLING & PRODUCTION Q U IC K TA K E S Gazprom Neft loads first oil shipment from Arctic field JSC Gazprom Neft has loaded its first shipment of oil produced from Prirazlomnoye field, 60 km offshore on the Russian Arctic shelf. The field was discovered in 1989 and is the only Russian hydrocarbon development project in the Arctic shelf. The 70,000-ton load of oil will be delivered to consumers in northwestern Europe by the Mikhail Ulyanov and Kirill Lavrov oil vessels, which were built on Gazprom’s request for shipping oil from Prirazlomnoye. Gazprom said 300,000 bbl of oil are expected to be shipped from the field this year. The field’s recoverable oil reserves total 71.96 million tons, with projected oil production expected to reach 6 million tons/ year after 2020. This is the first time that Arctic oil has entered the global market. The oil was traded among refining companies in northwestern Europe during the first quarter. “Today’s event is highly important for strengthening Russia’s position in the global oil market. We increased the flexibility

Repsol drills dry hole offshore Trinidad and Tobago Spain’s Repsol has drilled a dry hole with its Pinter One offshore Trinidad and Tobago’s east coast. The dry hole represents a major failure for the company, which has been trying to boost its falling crude production from its Teak Samman and Pouis acreage. Repsol began drilling Pinter One on Dec. 26, 2013, and wrapped up the well in February after reaching its total depth of 13,000 ft. The failure also has major implications for the announced discovery of 32 million bbl of recoverable reserves by Bayfield Energy, which has since been sold to Trinity Exploration & Production Co. Bayfield in 2012 announced on the London Stock Exchange that it made a discovery with its EG8 well on Galeota Block and that the discovery extends into Repsol’s acreage. EG8 was deviated from its surface location towards the

Oil & Gas Journal | Apr. 28, 2014

The Mikhail Ulyanov oil vessel arrives at Prirazlomnaya field to load oil from the platform. Photo from Gazprom Neft.

and reliability of oil supply to almost any part of the world,” said Gazprom Management Committee Chair Alexey Miller. Gazprom said part of the feedstock will be sold under longterm contracts once Prirazlomnoye production is increased. Drilling, production, storage, end-product processing, and loading are conducted on an offshore ice-resistant stationary platform that Gazprom says “fully excludes any oil spills during production, storage, and loading processes.” Production from the platform began in December. Gazprom Neft is operator of Prirazlomnoye; wholly owned subsidiary Gazprom Neft Shelf is license holder.

Suncor reports oil sands employee fatality Suncor Energy Inc. reported that an employee fatality occurred at its oil sands site on Apr. 20. The company said emergency service personnel responded at 11:30 a.m. after an employee was severely injured while working. The employee was immediately transported to the Northern Lights Regional Health Centre in Wood Buffalo, Alta., where he was pronounced deceased. Suncor said it’s working with the appropriate authorities and will complete a full investigation into the cause of the incident. The name of the individual was not released.

Petrobras hits production record in Santos, Campos Petroleo Brasileiro SA (Petrobras) recently reached an oil production record of 428,000 b/d in company-operated fields in the Santos and Campos basins. The company said the new mark was a result of the increased output that came with the Mar. 17 launch of operations from the P-58 platform in the Parque das Baleias area of northern Campos. The platform has been producing 50,000 b/d through three presalt wells. Petrobras holds 100% of the rights in the area. Twenty-four production wells have been drilled overall, of which 15 are in the Campos and nine in the Santos. Production from Campos and Santos has reached 222,000 b/d and 206,000 b/d, respectively. Fifteen more production wells are expected to start up by yearend, of which 11 will be in the Santos and four in the Campos. Of the 15 wells, two are connected to the Cidade de Sao Paulo floating production, storage, and offloading vessel, five to the Cidade de Paraty FPSO, one to the P-48 platform, and three to the P-58 platform. The remaining four wells will be split between the the Cidade de Ilhabela FPSO and the Cidade de Mangaratiba FPSO, both of which are slated to be installed and start producing in this year’s second half. Petrobras last year reported plans to increase net production from its offshore presalt formation in the Campos and Santos to more than 2 million b/d of oil by 2020 (OGJ Online, May 7, 2013).

PROCESSING Q U IC K TA K E S KNPC finalizes contracts for Clean Fuels Project Kuwait National Petroleum Co. (KNPC) has finalized lumpsum turnkey contracts previously let to three groups of oil and gas service providers for work related to its Clean Fuels Project (CFP) at the Mina Abdullah and Mina Al Ahmadi refineries in southern Kuwait (OGJ Online, Feb. 19, 2014). KNPC officially signed the three contracts Kuwait on Apr. 13 with JGC Corp., Petrofac, and Fluor Corp., all of which head separate consortia of firms tapped for the project, KNPC said. KNPC awarded a $3.4 billion contract in February to a joint venture of Fluor Corp., Daewoo Engineering & Construction Co., and Hyundai Heavy Industries Co. to design, construct, and commission the Mina Abdullah Package 2 CFP, with an additional $3.7 billion contract let earlier that month to a consortium led by Petrofac for CFP-related work related at its Mina Abdullah and Shuaiba refineries. KNPC in March awarded JGC Corp. and its partners GS Engineering & Construction and SK Engineering & Construction a $4.9 billion contract to provide engineering, procurement, construction as well as commissioning assistance and testing services for CFP-related work at Mina Al Ahmadi, JGC said. With the official signing of contracts concluded, Kuwaiti government officials on Apr. 16 held a workshop for team leaders at the Mina Al Ahmadi and Mina Abdullah refineries and project consultant Foster Wheeler that focused on identifying and developing a plan to address potential risks associated with implementing the CFP, according to KNPC. Kuwait’s CFP is designed to reconfigure the country’s three refineries and, in conjunction with grassroots construction planned at Al Zour, nearly double total refining capacity to 1.4 million b/d. Under the CFP, KNPC will integrate and upgrade the 270,000-b/d Mina Abdullah and 466,000-b/d Mina Al Ahmadi refineries and ultimately close the 200,000-b/d refinery at Shuaiba following the completion of the Al Zour refinery (OGJ Online, Dec. 3, 2013). The newly integrated refineries will operate as a merchant complex with total capacity of about 800,000 b/d, the company has said.

LyondellBasell ends talks to sell French refinery LyondellBasell has ceased discussions with Sotragem SA, Monaco, for the sale of its shuttered 105,000-b/d Berre refinery in France to Sotragem SAM. After a comprehensive analysis, the company determined that Sotragem offered neither acceptable commercial terms nor any guarantee for a viable takeover of the refinery with an actual restart of its operations, LyondellBasell said. While it continues to operate the petrochemical plant on the site, LyondellBasell halted refinery operations at Berre in January 2012 amid challenges facing the European refinery market. Sotragem, a petroleum products trading firm, came forward in September 2013 as the sole bidder for the Berre refinery,

Oil & Gas Journal | Apr. 28, 2014

which was offered for sale beginning in 2011, LyondellBasell said (OGJ Online, June 7, 2011). Despite the ending of talks with Sotragem, LyondellBasell said it remains committed to its core business operations at the Berre petrochemical cluster, adding that it has implemented projects to enhance the competitiveness of its Berre cracker and downstream activities at the site over the past 2 years.

Suncor begins maintenance at Quebec refinery Suncor Energy Inc. has started planned maintenance at its 137,000-b/d refinery in Montreal, Que. The scheduled maintenance will last about 4 weeks, Suncor said. Impacts to refinery throughput and utilization as a result of the maintenance were not disclosed, but Suncor said it has factored these into the company’s annual guidance. The company also said it has made necessary arrangements to ensure sufficient finished products are available and expects all customer supply agreements will be met during the maintenance period.

Maintenance under way at Baku refinery State Oil Co. of Azerbaijan Republic (SOCAR) has started additional maintenance on units within its 239,000-b/d Heydar Aliyev (formerly New Baku) refinery at Baku, Azerbaijan. Both the vacuum distillation and atmospheric towers at the plant are undergoing installation and repair work. Installations and repairs for the refinery’s vacuum distillation column, including the replacement of vacuum heat exchangers, are slated to last 30 days, while work on the atmospheric column is scheduled for 21 days, according to SOCAR. The company added that major repair work also remains under way on the refinery’s catalytic cracking unit (OGJ Online, Apr. 11, 2014). SOCAR did not disclose current production rates at the plant.

TRANSPORTATION Q U IC K TA K E S Alaska passes bill to advance state’s LNG project Alaska’s state legislature has passed Senate Bill 138, which would advance a large-diameter, 800-mile natural gas pipeline project to transport production from Alaska’s North Slope (ANS) to a 15-18 million tonne/year LNG plant on the state’s south-central coast. The project will now move into the pre-frontend engineering and design phase to further refine the cost and engineering aspects. The bill affirms the commercial agreement signed by the state, Alaska Gasline Development Corp. (AGDC), the producers, and TransCanada Corp. to advance the Alaska LNG project (OGJ, Jan. 27, 2014, p. 25). Passage of SB 138 also expands the role and mission of AGDC, enabling it to carry the state’s equity interest in the project’s infrastructure, particularly the liquefaction and marine facilities. AGDC said it also will continue to aggressively pursue the advancement of the Alaska Stand Alone Pipeline (ASAP)

Oil & Gas Journal | Apr. 28, 2014

project parallel to the Alaska LNG project. “SB 138 is a huge validation of the legislature’s decision to create an Alaskan-owned pipeline development company,” said AGDC Pres. Dan Fauske. “AGDC will now lead the state’s participation in this exciting LNG export project, while continuing to advance ASAP, the smaller in-state alternative.” Alaska Gov. Sean Parnell (R) previously described the move toward a larger-diameter pipe as “a simple answer to a complex question about how to lower the cost of getting Alaska’s gas to Alaskans: Get more gas in the pipe (OGJ, Jan. 28, 2013, p. 14).” The larger diameter will allow enough gas to be shipped to both meet the state’s needs and still have material for export, while creating the economies of scale necessary to maximize project efficiency and reduce costs.

EPP to build Gulf Coast ethane export plant Enterprise Products Partners LP (EPP) plans to build a fully refrigerated ethane export plant on the Texas Gulf Coast. EPP has executed long-term contracts to support the development, designed to have an aggregate loading rate of about 10,000 bbl/ hr, or as much as 240,000 b/d. EPP expects the plant, which it describes as the largest in the world, to begin operations in third-quarter 2016. EPP will integrate the plant with its Mont Belvieu complex, which includes more than 650,000 b/d of NGL fractionation capacity and 100 million bbl of NGL storage. The company brought its eighth Mont Belvieu fractionator online late last year, bringing its system-wide capacity to more than 1 million b/d (OGJ Online, Nov. 19, 2013). The company estimates that US ethane production exceeds US demand by 300,000 b/d and that this surplus could reach 700,000 b/d by 2020, even after estimated incremental demand from planned ethylene production. A recent study by Simmons & Co., however, sees ethane rejection peaking at 545,000 b/d in 2015 and general oversupply remaining through 2016, after which the 2017 startup of seven petrochemical plants increases consumption by 520,000 b/d and absorbs incremental supply (OGJ Online, Sept. 1, 2013).

Turkey, Gazprom mull Blue Stream capacity increase Turkey and OAO Gazprom have discussed a possible increase in natural gas capacity of the Blue Stream gas pipeline to 19 billion cu m/year from 16 bcm/year. Blue Stream, which extends through the Black Sea, handles more than half of all gas purchased by Turkey from Russia. Gazprom said an increase in capacity would not require laying additional strings. Turkey is Gazprom’s second-largest sales market in Europe behind Germany. Gazprom supplied Turkey with 26.7 bcm of gas in 2013. Russian gas also is supplied to Turkey through the Trans-Balkan gas line. The relationship in the gas sector between the two countries dates back to 1984, when Turkey and the then-Union of Soviet Socialist Republics signed the gas supply agreement.

2014-2015 EVENT CALENDAR Denotes new listing or International Downstream Technology & a change in previously Strategy Conference, published information. Lisbon, website: http:// www.europetro.com/ en/idtc_2014 6-7.

APRIL 2014

PSIG Annual Meeting, Baltimore, website: http://www.psig.org/ 6-9.

AIPN Spring Conference, New York City, website: http://aipn.org/ Morocco Oil & Gas Events/SC2014.aspx Summit, Marrakesh, 27-29. website: http://moroccosummit.com 7-8. M2M for Oil and Gas Conference, London, Four Corners Oil & Gas website: www.smiConference, Farmingonline.co.uk/energy/ uk/conference/m2m- ton, N.M., website: http://www.fourcornersecurity 28-29. soilandgas.com/regisSmall-Mid Scale LNG tration.html 7-8. Summit, Amsterdam, GPA MidContinent Anwebsite: http://www. nual Meeting, Midwest smallmidlng.com/ City, Okla., website: 29-30. www.gpaglobal.org 8. Smart Grids Summit, Malaga, website: http:// BBTC International thesmartgridssummit. Bottom of the Barrel Technology Confercom 29-30. ence, Lisbon, website: http://www.europetro. com/en/bbtc_2014 MAY 2014 8-9. Annual Oilfield Housing Solutions Conference, SPE International Conference and Exhibition Houston, website: http://www.petroleum- on Oilfield Corrosion, connection.com/hous- Aberdeen, website: www: www.spe.org/ ing/ 1-2. events 12-13. API International Oil Deloitte Energy ConferSpill Conference, Savannah, website: www. ence, National Harbor, Md., website: https:// api.org/events-andwww.deloitte.com/view/ training/calendar-ofevents/2014/iosc2014 en_US/us/Events-De loitte/9de451a76d3 5-8. 64410VgnVCM3000 OTC Offshore Technol- 003456f70aRCRD. ogy Conference, Hous- htm?oper=REG 13-14. ton, website: www. Eastern Oil & Gas Conotcnet.org 5-8. ference & Trade Show, Pittsburgh, website: Annual East Texas http://www.pioga.org/ Energy Symposium, Kilgore, Texas, website: event/2014-eastern-oilwww.easttexasoilmu- gas-conference-andtrade-show/ 13-14. seum.com 6.

International School of Hydrocarbon Measurements, Oklahoma City, website: http://www. ishm.info/ 13-15. Uzbekistan International Oil & Gas Conference, Tashkent, website: http:// www.oguzbekistan. com/2013/about-conference.html 13-15. SPE International Conference and Exhibition on Oilfield Scale, Aberdeen, website: www: www.spe.org/ events 14-15. AFPM National Occupational & Process Safety Conference and Exhibition, San Antonio, (202) 457-0480, (202) 457-0486 (fax), e-mail: meetings@ afpm.org, website: www.afpm.org/Conferences 14-15. Annual Asia Pacific Small and Mid Scale LNG Forum, Singapore, website: www.apacing. com 14-16. GPA Europe Technical Meeting, Leiden, website: https://www. gpaeurope.com/eventdetails.aspx?event=32 14-16. IADC Drilling Onshore Conference & Exhibition, Houston, website: http://www.iadc.org/ event/drilling_onshore_2014/ 15. IEF International Energy Forum, Moscow, website: http://www.ief. org/events/ief14 15-16. World Fuel Oil Summit VII, Athens, website: http://www.worldfueloilsummit.com/ 15-17.

IOGCC Midyear Issues Summit, Biloxi, Miss., website: www.iogcc. state.ok.us/events 18-20.

events-and-training/cal- meetings@afpm. endar-of-events/2014/ org, website: www. springops 20. afpm.org/Conferences 20-23. TGC Turkmenistan Gas Congress, Avaza, International LNG MEPIPES Oil and Gas Turkmenbashi, website: in B.C. Conference, Pipelines in the Middle http://www.turkmeni- Vancouver, website: East Conference, Abu stangascongress.com/ http://engage.gov. Dhabi, website: www. conference-delegate- bc.ca/lnginbc/lngtheenergyexchange. booking-form 20-21. conference/ 21-23. co.uk/event/oil-andgas-pipelines-middle- Advanced Contract SPE Latin American east-2014. 18-21. Risk Management for and Caribbean PetroOil & Gas Summit, leum Engineering ConSPE High CO2 and H2S Houston, website: ference, Maracaibo, Gas Fields Develophttp://www.contracwebsite: www.spe.org/ ment Completions and triskmanagement.us/ events 21-23. Productions Operations 20-21. Forum, Bali, website: GPA Permian Basin http://www.spe.org/ DUG Permian Basin Annual Meeting, events/14fsap/ 18-23. Conference, Fort Odessa, website: www. Worth, Texas, website: gpaglobal.org. 22. SPE Hydrocarbon Eco- http://www.dugpermnomics and Evaluation ian.com/?gclid=CN30i The Mexican Oil & Conference, HousPKenL0CFRQV7AodTm Gas Opportunities ton, website: http:// 4A4A 20-22. Update, Houston, www.spe.org/events/ website: http://www. hees/2014/ 19-20. International Conferpetroleumconnecence on Petroleum tion.com/MexicoUpWorld XTL Summit, Data, Integration & date2014/ 27. London, website: http:// Data Management, www.cwcxtl.com/ Houston, website: Annual California 19-21. http://www.pnecconfer- Energy Summit, San ences.com/index.html Francisco, website: SPE Hydrocarbon Eco- 20-22. http://www.infocastinc. nomics and Evaluation com/events/ca-energy Symposium, Houston, International Confer- ?gclid=CMHC2K2R2b website: www.spe.org/ ence on Petroleum 0CFU4R7AodfiMA0A events/calendar/ 19-21. Data, Integration and 28-30. Data Management, Flame–Europe’s Lead- Houston, website: New Libya Oil & Gas ing Natural Gas & LNG http://www.pnecconfer- Summit, London, webences.com/index.html site: http://libyaoilgas. Conference, Amster20-22. dam website: http:// com 29-30. www.icbi-flame.com/ FKN2382OGJW 19-22. AFPM Annual Meeting, San Antonio, (202) JUNE 2014 457-0480, (202) API Spring Refin457-0486 (fax), e-mail: SPE Exploitation of ing and Equipment meetings@afpm. Standards Meeting, Tight Carbonates Orlando, website: www. org, website: www. Forum, San Diego, afpm.org/Conferences website: http://www. api.org/events-and20-23. training/calendar-ofspe.org/events/14fus2/ events/2014/spring1-6. refining 19-23. AFPM Reliability & Maintenance ConferAnnual Mining Amerience and Exhibition, API Spring Operating cas Summit, Denver, Practices Symposium, San Antonio, (202) website: http://www. 457-0480, (202) Orlando, website: miningamericas.com/ 457-0486 (fax), e-mail: 2-3. http://www.api.org/

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2014-2015 EVENT CALENDAR 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. International Caspian Oil & Gas Exhibition & Conference, Baku, website: http://www. caspianoil-gas.com/ 3-6. PIRA Canadian Energy Conference, Calgary, Alta, website: www. pira.com 4. Annual Ireland Oil & Gas Summit, Dublin, website: http://irelandsummit.com 4-5. GTL North America Conference, Houston, website: www. gtlnorthamerica.com 4-5. Tulsa Oilfield Expo, Tulsa, website: http:// www.tulsaoilfieldexpo. com 4-5. SPE London Annual Conference, London, website: http://www. spe.org/events/ lond/2014/ 4-5. 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 Meetwebsite: www.spe.org/ ing, Stowe, Vermont, events/calendar/ 10-12. website: https://secure. spee.org/ 7-10. Global Petroleum Show, Calgary, AB, PIRA Scenario Planwebsite: http:// ning Conference, www.digitalrefining. Houston, website: com/55,events,Global_ www.pira.com 9. Petroleum_Show.html 10-12. Annual Global Procurement and Supply Chain Tight & Shale Gas Management for the Summit, Edinburgh, Oil and Gas Industry website: http://www. Conference, Houston, wplgroup.com/aci/ website: http://www. conferences/eu-eug3. ifmr-events.com/ asp 11-12. marcusevans-conferences-event-details. USEA Annual Enasp?EventID=21085 ergy Efficiency Forum, 9-11. Washington, DC, website: http://www. SPE Energy Resources eeforum.net 12. Conference, Port of Spain, website: www. World Petroleum spe.org/events/calen- Congress, Moscow, dar/ 9-11. website: www.21wpc. com 15-19. Enercom’s London Oil & Gas Conference, Annual Lebanon Oil & London, website: http:// Gas Summit, Beirut, www.enercominc.com/ website: http://irn-interthe-london-oil-andnational.com 16-17. gas-conference/ 10-11. Pipe Tech World SumPIRA Understanding mit, Rome, website: Global Oil Markets http://www.pipetechConference, Houston, summit.com/ 16-18. website: www.pira.com. 10-11. EAGE Conference & Exhibition, Amsterdam, SPE African Health, website: http://www. Safety, Security, and eage.org/events/index. Environment and Social php?eventid=1000&Op Responsibility Confer- endivs=s3 16-19. ence and Exhibition, Nairobi, website: http:// API Exploration and www.spe.org/events/ Production Standards hsea/2014/ 10-12. Conference on Oilfield Equipment and MateriSPE Heavy Oil als, Chicago, website: Conference-Canada in www.api.org/eventsConjunction with GPS, and-training/calendarCalgary Alta., website: of-events/2014/e-pwww.spe.org/events/ standards 16-20. calendar/ 10-12. EuALF SPE Aberdeen SPE Exploration and European Artificial Lift Development in UnForum, Aberdeen, webconventional Reservoir site: http://www.speSymposium, Neuquen, uk.org/default.aspx.

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LocID-0a4008003. of-events/2014/tanker Lang-EN.emID-965. 25-26. rss-cal.EventID-13676. htm 17-18. AAPL American’s Landman Annual MeetPIRA London Energy ing, Montreal, Que., Conference, London, website: http://www. website: www.pira.com landman.org/ 25-28. 17-18. IADC World Drilling Conference & Exhibition, Vienna, website: http://www.iadc.org/ event/iadc-world-drilling-2014-conferenceexhibition-2/ 18-19.

JULY 2014 South Texas Oilfield Expo, San Antonio, website: http://www.southtexasoilfieldexpo.com/?gclid=CO r78Mypi70CFY3m7AodewEAvA 9-10.

Africa Energy Forum, Istanbul, website: http://africa-energyforum.com/ 18-20.

E&P Information & Data Management Asia Pacific Conference, Singapore, website: IPAA Midyear Meeting, www.smi-online. Colorado Springs, co.uk/energy/asia/ website: www.ipaa. conference/eporg/meetings-events/ information-data-andupcoming-meetings/ knowledge-manage18-20. ment-asia-pacific 9-10. PIRA Scenario Planning Conference, London, website: www. pira.com 19-20.

SPE Well Construction Efficiency: NPT, Reliability and Process Improvement Forum, Santa Fe, website: http://www.spe.org/ PIRA Understanding Global Oil Markets Con- events/14fus4/ 13-18. ference, London, www. pira.com 19-20. North American Custody Transfer Measurement Conference, Myanmar Oil & Gas Denver, website: http:// Summit, Yangon, www.ceesi.com/Trainwebsite: http://www. myanmaroilexhibition. ing/CustodyTransferMeasurementConfercom/ 23-24. ence.aspx 15-17. Iran Oil & Gas Summit, SPE Low Carbon Abu Dubai, website: www.iransummit.com Intensity Process for Low-Mobility Oil 23-25. Recovery Forum, NewAnnual Energy Exposi- port Beach, website: http://www.spe.org/ tion & Symposium, Billings, Mont., website: events/14fus3/ July http://energyexposition. 27-Aug. 1. com/ 25-26.

& 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. AFPM Cat Cracker Seminar, Houston, website: http://www. afpm.org/conferences/ 19-20.

IADC Asset Integrity & Reliability Conference, Houston, website: http://www.iadc.org/ event/asset-integrity-2014/ 20. NAPE South Summer Expo, Houston, website: http://www. napeexpo.com/napeshows/nape-south 20-22. Annual Frac Sand Supply & Logistics Conference, San Antonio, website: /www. petroleumconnection. com/sand/ 21-22. Pipeline & Energy Expo, Tulsa, website: http://www.pipelineenergyexpo.com/ home 25-27. Unconventional Resources Technology Conference, Denver, website: http://www. urtec.org/ 25-27.

IADC/SPE Asia Pacific Drilling Technology Conference, API Tanker Conference, AUGUST 2014 Bangkok, website: Austin, website: http:// SPE Nigeria Annual In- www.iadc.org/events www.api.org/eventsand-training/calendar- ternational Conference 25-27.

JOURNALLY SPEAKING

The right word As both writers and copyreaders, Oil & Gas Journal editors spend the bulk of their days charged with perfecting the art of word choice. From using her or his own words to weave a news story from scratch to bringing order to technical article submissions, the editor’s fundamental task becomes choosing language that preserves an accurate, precise history of the oil and gas business. But consider for a moment the natural order of any language belonging to any particular group of people. As a culture and the activities of its daily experience change over time, so too will the language used to describe those things evolve and adapt. New words will emerge, old words will take on ROBERT BRELSFORD Downstream Technology new meanings, and some words will vanish altoEditor gether. The language of the petroleum industry is no exception, particularly during what many of its members are calling its renaissance. For this downstream technology editor, it’s precisely this renaissance that has led to the need for a closer examination (and perhaps clarification) of the word “refinery.”

To be precise The industry typically gives us its own language to describe and identify its plants and processes or the designs and styles of its installations and infrastructure. Many of these words have become standardized, part of our greater international vocabulary, both industry-related and at-large. But as North American light, tight crude oil (LTO) production continues to expand and prompt many US operators to seek ways to contend with a decades-old export ban to bring surplus crude to market, the term “mini-refinery” increasingly has started to crop up in general media reports as well as in company press releases. But is this “mini-refinery” creature actually a refinery as the industry has come to understand that word? As explained by the US Energy Information Administration, a refinery is “an installation that manufactures finished petroleum products from crude oil, unfinished oils, natural gas liquids, oth-

er hydrocarbons, and oxygenates.” That’s a mouthful to make just one very simple point: a refinery makes finished products. The word “manufactures” also is a loaded term when it comes to refining. A particular refinery can range from simple to complex, and the types of “manufacturing” that take place span the spectrum from no-frills separation to the more intricate processes of coking, cracking, isomerization, hydrotreating, and blending. As it has been used to-date, the term “minirefinery” actually describes the simplest of refineries, or rather, the first one or two steps of separation (distillation) and sometimes reforming that take place in all refineries. Unless the installation contains additional units to further process crude oil into finished products, however, these “mini-refineries” are more appropriately termed “topping plants” or “splitters.”

Splitting hairs To clarify then, at OGJ, a refinery is a plant that, through a series of processes, destroys or breaks crude down into an array of desired, finished petroleum products. This distinction may be technical, yes, with some perhaps tempted to call it finicky or fussy. And it very well may be all of those things. But with more and more of these topping plants and splitters in the works to process rising North American LTO production into exportable material likely to require further refining once it reaches a final destination, the distinction is, after all, a precise one. The call of all OGJ editors, regardless of the words given them, is to find the language that best serves their readers. OGJ is, after all, known as the industry’s publication of record, with some—since its first iteration in 1902—having gone so far as to describe it as the industry’s conscience. This is by design, mind you, a mission instilled and still sustained by a guiding principle in OGJ’s founding—its accurate and independent reporting style.

Oil & Gas Journal | Apr. 28, 2014

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EDITORIAL

New Keystone dawdling New dawdling over the Keystone XL pipeline border crossing fails the US in so many ways that identifying the worst way should be difficult. But it’s not. The worst way the decision fails the country is not that it so thoroughly undermines recent enhancement of energy security. The Keystone XL pipeline should represent the backbone of a logistically optimized North America able to export more oil than it produces. Delaying a permit decision under study nearly 6 years hampers yet again progress toward that goal. Degradation of security interests is bad, to be sure. It’s just not the worst part of the Obama administration’s mishandling of Keystone XL.

Industrial advantage Bad, too, is the low regard the latest delay displays for a US industrial advantage. The country possesses world-leading high-conversion refining capacity in its Midwest and Gulf Coast states, capacity able to make most profitable and efficient use of low-quality bitumen from Canada. With its latest Keystone XL decision, the administration essentially scoffs, “Big deal.” Yet not even this refusal to let the country capitalize fully on its manufacturing infrastructure represents the worst offense. Thoroughly woeful is the delay’s mistreatment of Canada, the closest ally the US has in every sense of the word. Bitumen and synthetic crude from the oil sands of Alberta are finding their ways to markets and will continue to do so. But the Keystone XL pipeline promises to be the most efficient connection of the oil sands to proximate markets for heavy, low-quality crude. The need to use lessefficient, more-costly alternatives—and, perhaps ultimately, divert to more-distant centers of upgrading capacity—lowers the value of bitumen at the point of production. The delay is therefore costly to the Albertan and Canadian economies and governments. But, no, this financial sandbagging of a friend, embarrassing as should be to all Americans, isn’t the worst aspect of yet another delay in the Keystone decision. Nor are the throw-away reasons the State Department gave in its announcement of the deci-

sion. A Nebraska court ruling about a routing decision? Please. The 2.5 million comments received by the State Department? Most of those represent cut-and-paste boilerplate from activist groups such as 350.org, the web site of which, after the decision, thanked “everyone who sent a message, shared, and organized to flood the State Department with comments.” And downright laughable are claims that the decision isn’t political, such as the Jan. 21 howler by White House Press Sec. Jay Carney. Do Carney and his bosses think Americans don’t understand how important environmental pressure groups and their money are to Obama and congressional Democrats seeking reelection in November? Maybe they hope no one noticed in February when hedge fund tycoon and climate-change crusader Tom Steyer of California pledged $100 million, half of it his own, to Democratic candidates sharing his environmental views. None of that speaks well of US judgment. But the worst part of the latest dissembling on Keystone XL is what it exposes about policy-making. Activists representing nowhere near a majority of Americans have captured the regulatory apparatus. They stoke fear with exaggeration and phantom problems, such as Keystone XL’s supposed threats to drinking water and the climate. They use organization to outmaneuver members of a more-diffuse majority not sharing their views. Then they block projects when they can, and when they can’t—as with Keystone XL so far—they delay. And delay. And delay. The effect in either case is the same.

Activism vs. governance Activism isn’t all bad. Activism instigates change when change is needed. Where hydrocarbon energy is concerned, though, activism has congealed into a reflex policy response opposed to any new increment of oil and gas supply, heedless of economic consequences and other national interests. Governance shouldn’t work this way. Keystone XL is more than a pipeline fight. It’s a battle over executive power. And obstructionists, for whom delay means triumph and cost means little, are winning.

Oil & Gas Journal | Apr. 28, 2014

The 19th Annual

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GENERAL INTEREST

DOS gives federal agencies more time for Keystone XL comments Nick Snow Washington Editor

Eight federal agencies preparing comments on the proposed Keystone XL crude oil pipeline project’s cross-border permit received additional time, the US Department of State announced. It did not set a new deadline, but emphasized that the agency consultation process will not start over. “Agencies need additional time based on the uncertainty created by the ongoing litigation in the Nebraska Supreme Court, which could ultimately affect the pipeline route in that state,” DOS said in its Apr. 18 announcement. “In addition, during this time we will review and appropriately consider the unprecedented number of new public comments, approximately 2.5 million, received during the public comment period that closed on Mar. 7,” it continued. When it released the latest final supplemental environmental impact statement on Jan. 31, DOS announced that the US Departments of Defense, Justice, Interior, Commerce, Transportation, Energy, Homeland Security, and the Environmental Protection Agency would submit comments under an executive order on whether the crude oil pipeline from Alberta’s oil sands to Midcontinent and Gulf Coast refineries is in the nation’s best interest. “The permit process will conclude once factors that have a significant impact on determining the national interest of the proposed project have been evaluated and appropriately reflected in the decision documents,” its statement said. “The department will give the agencies sufficient time to submit their views.”

‘Disappointed, frustrated’ Russ Girling, chief executive of TransCanada Corp., the project’s sponsor, said the Calgary oil and gas transmission company was “disappointed and frustrated with yet another delay,” which he found inexplicable. “The first leg of our Keystone pipeline began shipping oil to refineries outside of St. Louis in 2010,” he continued. “It is about the same length of pipe as Keystone XL, carries the same oil, and also crosses the 49th parallel. It took just 21 months to study and approve,” Girling said. He added, “After more than 2,000 days, five exhaustive environmental reviews, and over 17,000 pages of scientific

data, Keystone XL continues to languish.” Top officials of two major US oil and gas industry associations also were displeased. “It’s a sad day for America’s workers when politics trumps job-creating policy at the White House,” said American Petroleum Institute Pres. Jack N. Gerard. “After nearly 6 years of review, repeated research on the pipeline’s benefits to economic security and job growth, numerous studies confirming no significant environmental impacts, with the backing of organized labor, and poll after poll showing the support of American voters—if the White House lacks the political leadership to make a decision, we call on Congress to represent the will of the people and act,” he said.

‘Bad public policy’ “This politically motivated decision comes as no surprise,” American Fuel & Petrochemical Manufacturers Pres. Charles T. Drevna separately said, adding, “Delaying a decision until after the November elections is bad public policy.” Drevna continued, “President Obama could have decided today to allow the pipeline, which has already been extensively studied and found to have little to no impact on the environment, but would greatly enhance our national security, create thousands of immediate jobs and grow local, state and federal tax revenue. Instead he chose to put politics ahead of America’s security, the economy, and consumers.” Other business groups also criticized the delay. “Manufacturers and workers are absolutely astounded by the latest delay,” National Association of Manufacturers Pres. Jay Timmons said, adding, “Enough is enough. Manufacturers are united in calling on the president to end this nonsense and approve the Keystone XL pipeline immediately.” The Laborers International Union of North America’s leader blasted the new delay. “It’s not the oil that’s dirty, it’s the politics,” LIUNA Gen. Pres. Terry O’Sullivan said. “Once again, the administration is making a political calculation instead of doing what is right for the country. This certainly is no example of profiles in courage.”

Congressional responses Congressional energy leaders also weren’t reticent in their reactions. “Today’s decision by the administration amounts to nothing short of an indefinite delay,” US Senate Energy and Natural Resources Committee Chair Mary L. Landrieu

Oil & Gas Journal | Apr. 28, 2014

Latest Keystone delay not political, White House spokesman says Nick Snow Washington Editor The decision to give eight federal agencies more time to prepare comments about the proposed Keystone XL crude oil pipeline project’s cross-border permit was not political, White House Press Sec. Jay Carney said. “My response to any questions or statements about this is that it is a process run by the [US Department of State], as has been the case in previous administrations of both parties,” he said during the White House’s Apr. 21 daily press briefing. Carney’s remarks came 3 days after DOS announced that the federal departments and agencies that US President Barack Obama had asked to comment on the project’s latest final environmental impact statement on Jan. 31 would receive additional time. It did not set a new deadline, but emphasized that the agency consultation process would not start over (See story, p. 18). “There was a decision by the Nebraska Supreme Court— not here in Washington, but by the Nebraska Supreme Court—that affects potentially the pipeline route,” Carney continued. He said DOS, which is running the process to review the final supplemental environmental impact statement for the proposed crude oil pipeline project from Alberta’s oil sands to US Midcontinent and Gulf Coast refineries, acted

(D-La.) said. “By making it clear that [it] will not move the process forward until there is a resolution in a lawsuit in Nebraska, the administration is sending a signal that the small minority who oppose the pipeline can tie up the process in court forever.” Separately, Lisa Murkowski (R-Alas.), the committee’s ranking minority member, said, “The administration’s choice to delay indefinitely a decision on extending the Keystone XL pipeline is nothing short of a stunning act of political cowardice. And the timing of this announcement—waiting until a Friday afternoon during the holy Passover holiday in the hope that most Americans would be too busy with their families to notice—only adds further insult.” US House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said, “Once again, in this so-called ‘Year of Action,’ the Obama administration has hit the pause button on jobs and affordable energy. All Keystone XL requires is a simple ‘yes’ or ‘no,’ but after over 2,000 days, the administration is still incapable of making a decision, putting politics ahead of jobs—not exactly a profile in courage.” But US Senate Environment and Public Works Commit-

Oil & Gas Journal | Apr. 28, 2014

on what it believes was the Nebraska court decision’s impact on the process itself. Lancaster County, Neb., District Judge Stephanie F. Stacy ruled on Feb. 19 that legislation authorizing Gov. Dave Heineman (R) to approve a route for Keystone XL was unconstitutional under state law. Atty. Gen. Jon Bruning (R) immediately appealed the decision to the state’s supreme court in Lincoln, where it awaits judicial review (OGJ Online, Feb. 20, 2014). The project’s supporters in Congress strongly criticized DOS’s action. “President Obama’s Keystone XL strategy is clearly defeat through delay,” US Senate Energy and Natural Resources Committee Member John Hoeven (R-ND) said on Apr. 18. “He claims adherence to process, but whenever he runs out of process, he finds more process,” Hoeven said, adding, “If he were clear and transparent with the American people, he wouldn’t be issuing the announcement of yet another delay on the afternoon on Good Friday hoping to minimize the news coverage.” Carney said Obama has been consistent in his wanting the process at DOS to run its course. “We have seen attempts to inject politics into this—actions by Congress, for example, that have actually served to delay the normal process that [DOS] runs,” the White House press secretary said.

tee Chair Barbara Boxer (D-Calif.) said DOS made the right choice. “I was pleased to learn today that [US Sec. of State John F. Kerry] has agreed to take into account the public health impacts of the tar sands oil when he considers whether the pipeline is in the national interest,” she said, adding, “But I still do not have a clear-cut answer on whether there will be a separate health impacts study, which is clearly in the public interest.” Environmental organizations were pleased. “It is already clear that the Keystone XL tar sands pipeline fails the climate test and will damage our climate, our lands, and our waters,” said Susan Casey-Lefkowitz, who directs the Natural Resources Defense Council’s International Program. “Getting this decision right includes being able to evaluate the yet-to-be determined route through Nebraska and continuing to listen to the many voices that have raised concerns about Keystone XL,” she declared “The newly extended comment period will show what we already know: the more Americans learn about this project, the more they see that the Keystone XL tar sands pipeline is not in the national interest,” she said.

WATCHING GOVERNMENT NICK

SNOW

Washington Editor | Blog at www.ogj.com

Four years after Macondo, offshore Arctic beckons, speakers warn Nick Snow Washington Editor

Reporting offshore near-misses Creating a more effective offshore oil and gas safety culture was on many people’s minds as the fourth anniversary of the Macondo deepwater well disaster came and went on Apr. 20. One growing question involves the best ways to report near-misses. “If we really want safety, we have to do more,” Brian Salerno, who directs the US Bureau of Safety and Environmental Enforcement, said in an Apr. 16 commentary. “We have to foster a culture of safety among all personnel involved in offshore operations so that it becomes part of the way business is conducted.” The Safety and Environmental Management Systems that BSEE requires are one key. “We recently completed the first round of SEMS audits and found that the audit information was limited,” Salerno said. “This is because there were few insights into how effectively an individual company used its SEMS process to identify and correct problems.” SEMS II built some improvements into the process, such as a requirement for outside auditors, but Salerno said more needs to be done. “For one thing, we need to address the reluctance to be forthcoming with information due to fears about liabilities, or perhaps worries that it might invite increased scrutiny by BSEE,” he said. “We will be searching for options to increase the amount of information that is shared with the bureau and the rest of industry.”

The main purpose Everyone agrees top management must be committed to the idea. Charlie Williams, who directs the industry-funded Center for Offshore Safety in Houston, suggested that operating employees may be in the best position to manage prevention and mitigation barriers. “The subset is preventing personal injuries,” he told reporters Apr. 15 at the American Petroleum Institute’s Washington headquarters. “But the main purpose is to recognize a condition which can lead to an incident and relieve it. Near-misses that aren’t actual incidents also are important.” Fran Ulmer, who chairs the US Arctic Research Commission, said at two separate Washington conferences that reporting near-misses helps not just in improving regulation, but also in learning from mistakes. “I’ve been told the industry doesn’t like what the Interior Department is proposing, but human beings are reluctant to change,” she said during the Bipartisan Policy Center’s Apr. 21 discussion on offshore Arctic oil and gas issues. Williams said the center’s key focus in 2014 is voluntary auditing of contractors and service companies that are not now required to have SEMS. “It’s a journey with constant unease that an incident can happen,” he said, adding, “At least now, we have a place for the offshore oil and gas industry to get together and share experiences and what they have shown.”

Lessons learned from the Macondo deepwater well incident and crude oil spill are in danger of being minimized in a push to develop offshore Arctic oil and gas resources, speakers warned during two separate forums around the anniversary of the offshore well’s Apr. 20, 2010, blowout and explosion that took 11 lives and destroyed the Deepwater Horizon semisubmersible rig. The global oil and gas industry, government regulators, and local leaders will need to work closer than ever to avoid the same mistakes, speakers said at an Apr. 17 forum at Resources for the Future (RFF) and an Apr. 21 conference sponsored by the Bipartisan Policy Council (BPC). “You’re never finished. The goal has continued to move. It’s not static,” observed Christopher A. Smith, principal deputy US energy secretary for fossil energy, who spoke at both events. “But you can go down to Houston and visit the Deepwater Containment Co., which uses a technology that didn’t exist before the Macondo accident,” Smith said on Apr. 21. “The US Department of the Interior also has done a good job of better defining its regulatory responsibilities and eliminating conflicts of interest. You have to be thoughtful about how you share information, but you also have to keep moving forward.” Michael R. Bromwich, who oversaw the 2010-11 reorganization of the US Minerals Management Service after the Macondo incident, said during the BPC event: “We’re in a lull right now. Shell’s drilling off Alaska was a series of fiascoes about future activity there. It raised real questions about whether it will continue.”

Oil & Gas Journal | Apr. 28, 2014

CONFERENCE & EXHIBITION 26 - 28 JANUARY 2015 QATAR NATIONAL CONVENTION CENTRE DOHA, QATAR Held under the Patronage of H.E. Dr Mohd Bin Saleh Al-Sada, Minister of Energy & Industry, State of Qatar Organised by:

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OPTIMIZING PERFORMANCE CALL FOR ABSTRACTS Deadline 15 May 2014 Offshore Middle East is the premier event dedicated to the offshore exploration and production industries in the Gulf region. Are you interested in speaking at the 5th Annual Offshore Middle East Conference and Exhibition? Owned and produced by:

We are pleased to announce that the Advisory Committee of Offshore Middle East is now accepting abstracts for the 2015 conference. Over 1600 attendees from 48 countries attended the event in 2013 providing excellent networking opportunities and a forum for sharing ideas and experiences.

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We invite you to submit an abstract and share your knowledge, experience and ideas with technical and strategic decision-makers and strategists by 15 May 2014.

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GENERAL INTEREST Shell Offshore Co.’s Beaufort and Chukchi Sea leases raise many questions about both the industry’s capacity work safely and the government’s capacity to regulate Alaska offshore oil and gas activity effectively, said Fran Ulmer, who chairs the US Arctic Commission.

Primary mistakes “We need to prepare a region that’s both exceedingly valuable and exceedingly vulnerable for what lies ahead,” Ulmer suggested during panel discussions at both events. Ulmer also said that complacency and overconfidence

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were the biggest mistakes industry and government made before the Macondo incident. Bromwich agreed. “What struck me after I reported for work in 2010 was how undeveloped prevention, spill response, and containment were,” he said, adding, “The question for regulators is whether we’re ready, given the Arctic’s challenges. If a company apparently can’t deal with a spill there, it’s hard to imaging its being allowed to go forward.” Bromwich added, “We’re in a much better place now, but we can’t simply rely on changes implemented in 2010-11 without continuing the discussion, review, and activity.” Other speakers emphasized the importance of developing practices and regulations that effectively address the worst possible problems that could result from oil and gas activity in the Arctic and other frontier regions. “It wasn’t technology, but people, which failed at Macondo,” said Richard A. Sears, a consulting professor at Stanford University’s School of Earth Sciences, at the BPC event. “Training needs to be better. Beyond that, more needs to be invested in determining how to respond.” Sears said, “The oil companies don’t know how to respond to a major accident in the Arctic. Their managements aren’t asking whether they would be able to survive the consequences financially. Even with a company the size of BP, with the damages it’s going to have to pay after Macondo, I don’t think the Gulf of Mexico will be profitable for it on a lifecycle basis.” Smith called for greater recognition that there are potential consequences in the Arctic for indigenous peoples who have been there for centuries that go beyond dollars and cents. So did other speakers at RFF’s conference on Apr. 17.

‘Wanted to move on’ Robert B. Gagosian, president of the Consortium for Ocean Leadership, said the group that has operated since 2007 is trying to get new ideas for dealing with an offshore oil spill to address whether new technologies need

Oil & Gas Journal | Apr. 28, 2014

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to be developed for use in more severe conditions. “I don’t see strong leadership right now,” Gagosian said. “People and groups aren’t working together. My concern is that we’ll be in the same situation 10-20 years from now because so many people wanted to move on.” Steve Cochran, director of the Environmental Defense Fund’s Mississippi River Delta Restoration Project, stated, “It’s important to remember that penalties matter. They serve to remind operators that mistakes can cost their companies money.” Leonard Shabman, an RFF senior scholar who previously was a staff economist at the US Water Resources Council, added, “So far, the whole discussion has been about fixing things that are broken, not preventing them from breaking in the first place. We need more data. Without it, people make [stuff] up, and very quickly start operating in a fact-free zone.” William Y. Brown, the US Bureau of Ocean Energy Management’s chief environmental officer, said the US Department of the Interior agency is “quite involved” in studying Arctic resources. “We would like to see a standing committee within the National Academies of Science conduct research both domestically and internationally,” he indicated. Mark Fesmire, Alaska regional director for another DOI agency, the US Bureau of Safety and Environmental Enforcement, said it is a co-leader of the US delegation to the Arctic Council studying pollution sources and containment. “I think

Oil & Gas Journal | Apr. 28, 2014

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BSEE has spent several million dollars this year to research Arctic spill response,” he said.

Not yet ready However, Beth Kerttula, a fellow at Stanford’s Center for Ocean Solutions who formerly served in Alaska’s House of Representatives, said the state is not ready for Arctic offshore oil and gas development. “Alaska now is in the unenviable position of being the only coastal state without a management program,” she told participants at RFF’s conference. “We lost it by only 1 vote in the legislature because the oil industry spent so much money lobbying against it. We need to develop spill prevention capabilities and response mechanisms. We also need a decent port.” Alaska’s offshore oil and gas potential looked more attractive in 2008 than it does now since major potential resources have been identified on continental shelves on both sides of the Atlantic Ocean, according to David W. Houseknecht, a research geologist at the US Geological Survey in Reston, Va. “Ice conditions and the relatively small understanding of oil and gas development impacts on forms of life there still need to be addressed,” he said at BPC’s event. “We tend to look at high-consequence risks and probability more now,” said Oliver Moghissi, vice-president of technology at DNV GL North America Oil & Gas, who also participated in

GENERAL INTEREST that conference. “We need to add operator responsibility, regulatory oversight, and better management. Damages from an incident in the offshore Arctic may not be as great as in the [Gulf of Mexico], but the event is much more likely.” Operators need to have technical competence and experience, the right suppliers and contractors, and good third-party oversight to ensure that risks are controlled and problems are anticipated and managed, Moghissi maintained. “Our understanding of the subsurface environment and the technology necessary to develop resources is farther advanced than our knowledge of impacts,” Houseknecht said. “It’s becoming more apparent that the Arctic environment is increasingly

international forces, including climate change. We’re learning more each year, and increasingly realize how little we actually understand.” Bromwich said Interior started to promote development of global standards and practices following the Macondo incident, but soon discovered that other countries sometimes resist suggestions that they change their regulatory regimes. The challenge is to help them develop acceptable regulatory structures and get the necessary training for their enforcement officers, he explained, adding, “The problem is that their appetites for resource development often exceed their desires to promote safety and environmental protection.”

BP to sell to Hilcorp certain interests in four ANS assets BP PLC reported that it will sell certain interests in four of its operated oil fields on Alaska’s North Slope to Houston independent Hilcorp. The agreement includes all of BP’s interests in the Endicott and Northstar oil fields and a 50% interest in each of

Endicott was the first continuously producing offshore field in the Arctic and lies about 3 miles offshore on Alaska’s North Slope. Photo from BP PLC.

the Liberty and the Milne Point fields. The sale also includes BP’s interests in the oil and gas pipelines associated with these fields, the company said. Together the assets included in the sale represent about 19,700 boe/d of net production for BP, less than 15% of BP’s total net production on the ANS. As a result of the sale and subject to approval, Hilcorp is expected to become the operator of Endicott, Northstar, and Milne Point oil fields and their associated pipelines and infrastructure. The company said the agreement does not affect BP’s position as operator and co-owner of Prudhoe Bay oil field nor its other interests in Alaska. BP also expects to submit a development plan for Liberty by yearend. “This agreement will help build a more competitive and sustainable business for BP in Alaska,” said BP Upstream Chief Executive Officer Lamar McKay. He said the deal also will allow the company to play to two of its “great strengths,” namely managing giant fields and gas value chains. “We will now concentrate on continuing development and production from the giant Prudhoe Bay field and working to advance the future opportunity of Alaska LNG,” McKay added. BP said it “remains committed” to plans for increased investment at Prudhoe Bay, which have resulted from recent oil tax reform by the State of Alaska. The plans include adding two drilling rigs, one in 2015 and a second in 2016, for a total incremental $1 billion investment over 5 years. These activities are expected to account for 200 Alaska jobs and 30-40 additional wells being drilled each year. About 250 employees are associated with the assets included in the agreement and the company is committed to providing clarity about their future as soon as possible. The majority of those BP employees at or supporting Milne Point, Endicott, and Northstar are expected to be offered positions with Hilcorp with no break in employment, the company said.

Oil & Gas Journal | Apr. 28, 2014

GENERAL INTEREST

Northstar, which lies about 6 miles northwest of Prudhoe Bay in about 39 ft of water, started production in 2001. Photo from BP PLC.

The sale, which will be subject to state and federal regulatory approval, is anticipated to be complete by yearend. Financial details of the transaction were not disclosed.

The assets Milne Point field, about 25 miles west of Prudhoe Bay, was discovered in 1969 and began production in 1985. BP became the field’s operator in 1994. In 2013, average net BP production from the field was about 15,800 boe/d. BP currently holds 100% interest in the field, and will hold 50% interest after the deal. Northstar, which lies about 6 miles northwest of Prudhoe Bay in about 39 ft of water, started production in 2001. The unit sits in state and federal waters. Average net BP production in 2013 from Northstar was about 6,800 boe/d. BP currently holds 98.6% interest in the field; Murphy Oil Co. holds 1.4%. BP will hold no interest in Northstar after the deal. Liberty field lies on federal leases about 6 miles offshore in the Beaufort Sea and east of Prudhoe Bay oil field. BP drilled the Liberty discovery well in 1997. BP currently holds 100% interest in the field, and will hold 50% interest after the deal. Endicott, which lies about 3 miles offshore, started production in 1987 and was the first continuously producing offshore field in the Arctic. Average net BP production from Endicott in 2013 was about 5,000 boe/d. BP currently holds

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THINK YOU’VE SEEN IT ALL? Milne Point is about 25 miles west of Prudhoe Bay and averages production—net to BP PLC—of 15,800 boe/d. Photo from BP.

Oil & Gas Journal | Apr. 28, 2014

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GENERAL INTEREST 68% interest in the field, and will hold no interest in the field after the deal. Other interest holders are ExxonMobil Corp. 21% and Chevron Corp. 11%.

Governor comments Shortly after the Apr. 22 announcement of the deal, Alaska Gov. Sean Parnell released a statement that said, in part: “Today’s announcement means another entrepreneurial company will be working to accelerate production and find additional reserves on the North Slope. Hilcorp has a proven record of improving production in Cook Inlet, and their new North Slope commitment shows the More Alaska Production Act has created the right environment to attract new companies and competition to the North Slope.” The announcement was made just days after the Alaskan Legislature passed Senate Bill 138, which authorized Alaska’s participation in the $45-65 billion Alaska LNG project, which would commercialize Alaska’s vast, untapped reserves of ANS gas (OGJ Online, Apr. 21, 2014). “I applaud the thorough and bipartisan deliberations the Legislature had on Senate Bill 138 and believe the process is already bearing fruit,” Parnell said, adding, “Today’s announcement is important, because it builds on BP’s previous commitments of billions of dollars in new oil investments at Prudhoe and Alaska’s legacy fields, and reflects a focus on advancing the Alaska LNG project, and unlocking gas from Prudhoe and Pt. Thomson.”

US gas reserve growth in 2013 was robust, AGA estimates Nick Snow Washington Editor

US natural gas producers added more than 35 tcf of reserves in 2013, the American Gas Association said in its latest annual preliminary estimate based on reported results by the 30 largest companies representing more than half of the total US production and reserves. “In addition, negative revisions to existing reserves were modest,” AGA said, adding that with US production of about 24 tcf, the reserves inventory increased compared with that estimated for 2012 by the Energy Information Administration. AGA said it expects total US reserves at yearend 2013 may have been 330 tcf, or higher, which is slightly below the 334 tcf identified by EIA at yearend 2011—the most recent date on which complete figures are available.

“In essence, the companies added much more gas than they produced in 2013,” said Chris McGill, AGA’s vice-president for policy analysis. “Most of the reserve additions we see today are associated with unconventional resources, including the Marcellus and Eagle Ford shales.” Improved prices over 2012’s $2.75/MMbtu range may be making dry gas plays more attractive, he told reporters during an Apr. 17 teleconference. “At $100/bbl oil and $4.50/Mcf gas, oil on an MMbtu basis is priced higher,” McGill said. “On the other hand, we’re not talking about wellhead gas prices in the $2.75 range as we were in 2012. When you begin to talk about $4 sustained prices, more of the gas resource base is economically attractive.” Mature unconventional gas plays continue to produce, he continued. “The Barnett shale produced 1 tcf in 2013 because lifting costs are very low,” McGill said. “The Haynesville shale is a different story because it’s dry gas that’s relatively deep. It’s more sensitive to market pricing. It’s also in a region where there’s growing liquids-associated gas supply from the Eagle Ford shale.” He said, “That region of the country is looking for markets, and producers are interested in LNG exports, because of the Haynesville shale. It’s not just the price; it’s the demand relationship.” AGA listed ExxonMobil Corp. as the largest US gas reserves holder, with more than 26 tcf, followed by Chesapeake Energy Corp., BP PLC, ConocoPhillips Co., and Anadarko Petroleum Corp. “In fact, ExxonMobil’s current reserves position is more than twice the second largest reserves holder,” it said. Seven of the 10 largest US gas reserves holders are independent producers, while the remaining three are integrated multinationals, AGA added.

GAO: Scant information 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. “Information on the benefits of completing NEPA analyses is largely qualitative,” the Apr. 15 report continued. “According

Oil & Gas Journal | Apr. 28, 2014

GENERAL INTEREST 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 vice-president 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. 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.”

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GENERAL INTEREST

Texas Petro Index reaches record-high for 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 Ingham said revised statewide employment estimates by the Texas Workforce Commission 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 EDITOR’S PERSPECTIVE The number of Texans on oil and gas industry payrolls averaged a record 285,000, according to statistical methods based upon 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.

OIL & GAS JOURNAL REPRINTS Reprints of any article appearing in Oil & Gas Journal may be purchased by contacting Rhonda Brown, Reprint Marketing Manager, Foster Printing Co. 4295 Ohio St., Michigan City, IN 46360, 1-866-879-9144 (ext. 194) 219-561-2023 (fax) E-mail: rhondab@fosterprinting.com Web site: www.fosterprinting.com

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A moralist’s energy transition: from security to climate by Bob Tippee, Editor

From a master of high-minded muddleheadedness on energy comes, well, more high-minded muddle-headedness on energy. Former President Jimmy Carter famously elevated energy policy to “the moral equivalent of war” in a 1977 speech in which he warned, “The energy crisis has not yet overwhelmed us, but it will if we do not act quickly.” Motivated by concern about security after the Arab oil embargo of 1973-74, his rhetoric shivered with the apocalyptic urgency now typical of climate-change activism. That, the former president apparently can’t resist. With nine other recipients of the Nobel Peace Prize, Carter signed a letter, published in a Politico advertisement Apr. 16, trying to shame President Barack Obama and Sec. of State John Kerry into rejecting the Keystone XL pipeline border crossing. “Your decision on the Keystone XL tar sands pipeline will define your climate legacy,” declared the letter, sponsored by the Nobel Women’s Initiative, National Resources Defense Council, Environmental Defence, and Sierra Club. The signatories claimed to have “a moral obligation” to speak out. They cited “hundreds of millions of people whose lives and livelihoods are being threatened and lost as a result of the changing climate and environmental damage caused by our dangerous addiction to oil.” Their hyperbole is grotesque, their judgments cruelly selective. What about 1.3 billion impoverished people now lacking access to electricity, whose prospects would darken further under the energy-cost increases promised by climate activism? Under Carter, energy policy largely failed. The former president inherited a mess of price and market controls and made things worse. “We are now running out of gas and oil,” he asserted in his 1977 speech, calling for “a transition in the way people use energy.” So he committed the country to “strict conservation” and costly promotion of energy forms other than oil, including coal. The transition that survived was between objects of contrived panic: from security to climate. Otherwise, oil and gas haven’t run out, alternatives remain too expensive, and the moralizing is no less tiresome. ONLINE APR. 17, 2014 | bobt@ogjonline.com

Oil & Gas Journal | Apr. 28, 2014

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STATISTICS IMPORTS OF CRUDE AND PRODUCTS — Districts 1-4 — — District 5 — 4-11 4-4 4-11 4-4 2014 2014 2014 2014 ––––––––––––––––––––––––— 1,000 b/d

———— Total US ———— 4-11 4-4 4-12* 2014 2014 2013 ––––––––––––––––––––––––—

Total motor gasoline ............. Mo. gas. blending comp. ..... Distillate............................... Residual .............................. Jet fuel-kerosine .................. Propane-propylene .............. Other ...................................

523 462 258 129 218 54 282

478 442 314 110 129 65 178

9 9 0 25 0 18 33

23 20 4 8 0 (7) 43

532 471 258 154 218 72 315

501 462 318 118 129 58 221

606 526 337 298 83 99 319

Total products ......................

1,926

1,716

2,020

1,807

2,268

Total crude ...........................

6,709

6,300

1,562

1,012

8,271

7,312

7,430

Total imports ........................

8,635

8,016

1,656

1,103

10,291

9,119

9,698

*Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.

IHS PURVIN & GERTZ LNG NETBACK MATRIX—APR. 18, 2014 Receiving terminal

–––––––––––––––––––––––––––– Liquefaction plant –––––––––––––––––––––––––––––––– Algeria Malaysia Nigeria Austr. NW Shelf Qatar Trinidad –––––––––––––––––––––––––––––––– $/MMbtu ––––––––––––––––––––––––––––––––––––

Barcelona Everett Isle of Grain Lake Charles Sodegaura Zeebrugge

11.80 2.90 7.28 2.01 10.98 10.03

9.18 1.76 4.69 (0.20) 13.81 7.41

10.69 2.45 6.46 1.72 11.09 9.17

9.16 1.93 4.58 0.03 13.41 7.28

9.96 1.18 5.41 0.32 12.40 8.17

10.59 3.24 6.50 2.75 9.97 9.25

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 4–18–14* 4–19–13* Change Change, ———–—$/bbl ——–—— %

SPOT PRICES Product value Brent crude Crack spread

124.02 111.76 109.09 98.23 14.93 13.53

FUTURES MARKET PRICES One month Product value 127.04 116.36 Light sweet crude 103.97 87.97 Crack spread 23.08 28.39 Six month Product value 118.50 110.55 Light sweet crude 99.16 88.26 Crack spread 19.34 22.28

12.26 10.86 1.40

11.0 11.1 10.4

10.68

9.2

16.00 18.2 (5.31) (18.7) 7.95

7.2

10.90 12.3 (2.94) (13.2)

*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 .....................................

11,804 97,355 207,173 22,025 55,778

54,158 48,317 73,781 6,373 27,653

47,505 38,683 62,573 3,954 25,223

9,540 6,490 12,390 656 9,121

32,204 27,180 35,445 3,780 13,307

8,787 1,852 22,068 175 4,655

2,141 8,852 16,287 1 1,077 —

Apr. 11, 2014 ........................... Apr. 4, 2014 .............................. Apr. 12, 20132 ...........................

394,135 384,122 387,641

210,282 210,437 221,730

177,938 177,077 171,161

38,197 36,642 40,976

111,916 113,194 115,181

37,537 37,036 37,788

28,357 27,585 39,026

Includes PADD 5. 2Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.

REFINERY REPORT—APR. 11, 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 ..............................................

1,027 3,482 8,227 525 2,669

1,018 3,474 8,138 524 2,459

2,859 2,621 2,133 381 1,643

82 225 766 24 381

262 983 2,832 175 628

66 59 195 16 120

157 267 796 1 158 —

Apr. 11, 2014 ...................................... Apr. 4, 2014 ........................................ Apr. 12, 20132 .....................................

15,930 15,694 15,372

15,613 15,338 15,074

9,637 9,840 8,890

1,478 1,523 1,484

4,880 4,798 4,476

456 511 426

1,378 1,406 1,334

17,933 Operable capacity 1

88.8 utilization rate

Includes PADD 5. Revised. Source: US Energy Information Administration Data available at PennEnergy Research Center.

Oil & Gas Journal | Apr. 28, 2014

STATISTICS OGJ GASOLINE PRICES

BAKER HUGHES RIG COUNT

OGJ PRODUCTION REPORT 1

Price Pump Pump ex tax price* price 4-16-14 4-16-14 4-17-13 ————— ¢/gal ————— (Approx. prices for self-service unleaded gasoline) Atlanta .......................... 303.3 350.1 Baltimore ...................... 309.6 355.0 Boston ........................... 310.9 355.8 Buffalo .......................... 289.2 357.1 Miami ............................ 317.6 372.1 Newark .......................... 313.1 346.0 New York........................ 295.2 363.1 Norfolk........................... 319.6 355.3 Philadelphia .................. 303.9 364.1 Pittsburgh ..................... 300.8 361.0 Wash., DC...................... 320.9 362.8 PAD I avg .................. 307.6 358.4

359.8 349.8 340.0 369.4 360.0 320.0 379.6 335.0 374.6 354.0 356.0 354.4

Chicago ......................... Cleveland ...................... Des Moines .................... Detroit ........................... Indianapolis .................. Kansas City ................... Louisville ....................... Memphis ....................... Milwaukee ..................... Minn.-St. Paul ............... Oklahoma City ............... Omaha .......................... St. Louis ........................ Tulsa ............................. Wichita .......................... PAD II avg .................

350.0 315.1 317.1 308.0 315.4 321.8 323.4 337.5 320.4 320.6 305.3 307.0 312.0 303.6 319.3 318.4

407.5 361.5 357.5 365.5 372.5 357.5 372.6 377.3 371.7 367.6 340.7 352.7 347.7 339.0 362.7 363.6

408.9 338.0 348.0 362.8 357.6 323.5 354.9 341.8 357.8 358.9 323.8 325.5 325.8 324.6 345.1 346.5

Albuquerque .................. Birmingham .................. Dallas-Fort Worth .......... Houston ......................... Little Rock ..................... New Orleans .................. San Antonio ................... PAD III avg ................

315.3 303.9 303.4 304.6 300.8 307.1 308.3 306.2

352.6 343.3 341.8 343.0 341.0 345.5 346.7 344.8

331.4 340.6 344.3 335.5 342.5 340.5 338.7 339.1

Cheyenne....................... Denver ........................... Salt Lake City ................ PAD IV avg ................

293.5 318.4 300.0 303.9

335.9 358.8 342.9 345.8

340.7 360.7 350.6 350.7

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 .................

345.9 346.7 338.7 324.2 347.4 329.1 338.7 315.4 302.1 286.1 293.5 306.6

416.8 384.1 388.2 395.1 418.3 385.0 397.9 362.7 349.4 333.4 340.7 352.7

416.9 356.8 358.8 416.8 418.3 373.3 390.2 353.8 370.7 361.5 — —

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.

4-19-13

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 9 12 40 39 1 62 1 3 0 28 3 110 25 14 23 48 0 0 14 7 2 89 0 178 36 187 59 0 884 2 0 124 81 54 36 8 34 9 93 320 38 16 69 27 23 49 3

4 8 15 41 39 2 61 1 2 3 24 2 108 22 25 16 45 0 1 13 10 2 78 1 176 30 180 60 1 837 2 0 134 86 38 36 14 26 18 82 275 36 26 64 31 24 40 5

Total US ........................................ Total Canada ................................

1,831 199

1,758 126

Grand total ................................... US oil rigs.......................................... US gas rigs........................................ Total US offshore ............................... Total US cum. avg. YTD .....................

2,030 1,510 316 52 1,788

1,884 1,371 379 49 1,757

2 4-18-14 4-19-13 –—— 1,000 b/d —–—

(Crude oil and lease condensate) Alabama ................................. 28 Alaska .................................... 557 California ............................... 600 Colorado ................................. 188 Florida .................................... 6 Illinois .................................... 25 Kansas ................................... 132 Louisiana ............................... 1,215 Michigan ................................ 22 Mississippi ............................. 66 Montana ................................. 78 New Mexico............................. 292 North Dakota .......................... 995 Oklahoma ............................... 345 Texas ...................................... 3,370 Utah ....................................... 106 Wyoming ................................. 182 All others ................................ 79 Total .................................. 8,286 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 ...............................................

4-11-14 ¢/gal

WORLD CRUDE PRICES OPEC reference basket

Motor gasoline No. 2 Distillate (Conventional-regular) Low sulfur diesel fuel New York Harbor ......... 293.40 New York Harbor ......... Gulf Coast .................. 282.40 Gulf Coast .................. Los Angeles ................ Motor gasoline Kerosine jet fuel (RBOB-regular) New York Harbor ......... 330.40 Gulf Coast ..................

APR. 18, 2014

293.50 290.20 295.50 286.00

Propane No. 2 heating oil New York Harbor ......... 286.80 Mont Belvieu .............. 111.50

US Gulf of Mexico. . . . . . South America Northwest Europe. . . . . West Africa. . . . . . Middle East. . . . . . . Southeast Asia. . . . . . . Worldwide. . . .

93.0

98.8

100.0

90.8

146

142

131

92.3

101 838

93 784

81 741

87.1 94.5

$/bbl 4-18-14 105.40 –– Mo. avg., $/bbl –– Feb.-14 Mar.-14 105.38 106.30 103.38 110.77 108.47 109.54 104.96 104.17 104.91 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

108.46 105.04 100.47 108.87 107.43 102.52

113.60 104.32 98.87 107.55 106.66 102.74

(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 (%)

112

Wkly. avg.

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..........................................

Source: Baker Hughes Inc. Data available at PennEnergy Research Center.

Spot market product prices

4-18-14 $/bbl* 97.76 99.67 102.05 108.96 95.80 99.00 95.75 100.75 100.75 94.50 92.75 99.75 90.94

Research Center.

Rotary rigs from spudding in to total depth. Defnitions, see OGJ Sept. 18, 2006, p. 46.

Total supply of rigs

28 526 594 164 5 27 133 1,245 21 67 81 262 791 309 2,707 91 171 81 7,303

*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

IHS PETRODATA RIG COUNT

REFINED PRODUCT PRICES 4-11-14 ¢/gal

4-18-14

US NATURAL GAS STORAGE1 4-11-14

Producing region ................ Consuming region east ...... Consuming region west ...... Total US ............................. Total US2 ............................

4-4-13

4-11-13

–——––—— bcf —––——– 371 361 701 311 305 662 168 160 336 850 826 1,699 Change, Jan. -14 Jan. -13 % 1,926

2,702

Change,

% (47.1) (53.0) (50.0) (50.0)

(28.7)

Source: EIA Weekly Petroleum Status Report. Data available at PennEnergy Research Center.

Oil & Gas Journal | Apr. 28, 2014

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.

STATISTICS WORLD OIL BALANCE

OECD TOTAL NET OIL IMPORTS

––––––— 2013 ——–––– –––—––— 2012––——–– 3rd 2nd 1st 4th 3rd 2nd qtr. qtr. qtr. qtr. qtr. qtr. ————————– Million b/d ————————– DEMAND OECD US & Territories ...................... Canada .................................. Mexico.................................... Japan .................................... South Korea ........................... France.................................... Italy ...................................... United Kingdom ..................... Germany ................................ Other OECD Europe ............................... Australia & New Zealand ............................. Total OECD ........................

19.25 2.30 2.09 4.32 2.26 1.76 1.34 1.52 2.44

18.79 2.31 2.14 4.11 2.28 1.75 1.28 1.54 2.51

18.76 2.28 2.11 5.08 2.31 1.75 1.28 1.50 2.30

18.66 2.37 2.24 4.86 2.37 1.71 1.33 1.47 2.44

18.81 2.34 2.11 4.48 2.26 1.73 1.38 1.49 2.41

18.76 2.23 2.13 4.29 2.23 1.71 1.36 1.53 2.39

6.90

6.69

6.34

6.69

6.78

6.77

1.28 46.07

1.28 45.33

1.28 45.63

1.31 46.10

1.27 45.74

1.27 45.33

NON-OECD China .................................... FSU ........................................ Non-OECD Europe .................. Other Asia .............................. Other non-OECD..................... Total non-OECD ................

10.56 4.76 0.73 10.83 17.93 44.80

10.61 4.49 0.71 11.25 17.33 44.39

10.55 4.56 0.70 11.03 16.63 43.46

10.80 4.58 0.71 11.19 16.76 44.04

10.28 4.59 0.73 10.78 17.39 43.78

10.07 4.39 0.73 11.06 16.87 43.11

TOTAL DEMAND...........................

90.88

89.72

89.09

90.14

89.52

88.44

SUPPLY OECD US .......................................... Canada .................................. Mexico.................................... North Sea ............................... Other OECD ............................ Total OECD ........................ NON-OECD FSU ........................................ China .................................... Other non-OECD..................... Total non-OECD, non-OPEC .....................

12.61 4.21 2.90 2.73 1.55 24.00

12.06 3.86 2.89 2.88 1.53 23.22

11.69 4.11 2.93 2.93 1.49 23.15

11.67 4.04 2.92 2.90 1.55 23.08

10.98 3.74 2.94 2.76 1.61 22.03

10.92 3.74 2.95 3.20 1.60 22.41

13.52 4.37 12.71

13.47 4.49 12.39

13.53 4.46 11.90

13.50 4.51 12.49

13.37 4.41 12.59

13.37 4.36 12.21

30.60

30.35

29.89

30.50

30.37

Chg. vs. previous Nov. Oct. Sept. Nov. ——– year —— 2013 2013 2013 2012 Volume % –———————— Million b/d ––——————– Canada ............................ US .................................... Mexico .............................. France .............................. Germany ........................... Italy .................................. Netherlands...................... Spain................................ Other importers ............... Norway ............................. United Kingdom................ Total OECD Europe ...... Japan ............................... South Korea ...................... Other OECD ......................

(2,366) 5,334 (872) 1,551 2,148 1,142 691 1,014 3,627 (1,382) 605 9,396 4,681 2,042 1,809

(2,063) 5,594 (969) 1,693 2,317 1,127 951 1,238 3,732 (1,248) 693 10,503 3,567 2,241 2,158

(2,179) 6,349 (956) 1,493 2,086 1,009 1,047 1,009 4,045 (1,141) 644 10,192 4,359 2,242 1,712

(2,066) 6,777 (679) 1,587 2,519 1,064 949 1,162 3,839 (1,419) 895 10,596 4,195 2,191 1,772

3 (1,183) (290) 106 (202) 63 2 76 (107) 171 (202) (93) (628) 50 386

(0.1) (17.5) 42.7 6.7 (8.0) 5.9 0.2 6.5 (2.8) (12.1) (22.6) (0.9) (15.0) 2.3 21.8

Total OECD ..................

20,024

21,031

21,719

22,786

(1,755)

(7.7)

Source: US Energy Information Administration Data available at PennEnergy Research Center.

OECD* TOTAL GROSS IMPORTS FROM OPEC Chg. vs. previous Nov. Oct. Sept. Nov. ——– year —–— 2013 2013 2013 2012 Volume % –———————— Million b/d ––——————– Canada ............................. US ..................................... Mexico ...............................

187 3,529 —

284 3,411 —

344 3,921 10

338 4,228 21

(151) (699) —

(44.7) (16.5) —

29.94

France ............................... Germany ............................ Italy ................................... Netherlands....................... Spain................................. Other importers ................

587 382 514 828 625 1,134

467 459 571 509 578 1,041

577 456 585 526 617 1,179

649 573 719 586 660 1,372

(62) (191) (205) 242 (35) (238)

(9.6) (33.3) (28.5) 41.3 (5.3) (17.3)

OPEC* ........................................

35.99

36.29

35.75

36.03

36.83

36.94

United Kingdom.................

395

400

460

456

(61)

(13.4)

TOTAL SUPPLY ............................

90.59

89.87

88.79

89.60

89.20

89.22

Total OECD Europe .......

4,465

4,025

4,400

5,015

(550)

(11.0)

Stock change ............................

(0.28)

0.15

(0.30)

(0.54)

(0.32)

0.78

Japan ................................ South Korea .......................

3,625 2,732

3,043 2,773

3,460 2,755

3,325 2,665

300 67

9.0 2.5

*Includes Angola. Source: US Energy Information Administration Data available at PennEnergy Research Center. NOTE: No new data at press time.

Other OECD .......................

283

292

287

291

(8)

(2.7)

Total OECD ...................

14,821

13,828

15,177

15,883

(1,062)

(6.7)

*Organization for Economic Cooperation and Development. Source: US Energy Information Administration Data available at PennEnergy Research Center.

US PETROLEUM IMPORTS FROM SOURCE COUNTRY Chg. vs. Average previous Dec. Nov. —––—YTD——– ——– year —— 2013 2013 2013 2012 Volume % –———––––––—— 1,000 b/d ––—––––––———– Algeria.............................. Angola .............................. Kuwait .............................. Nigeria ............................. Saudi Arabia .................... Venezuela ......................... Other OPEC....................... Total OPEC ..................

110 136 332 99 1,520 847 526 3,570

144 125 397 93 1,557 796 417 3,529

115 217 328 281 1,328 797 641 3,707

242 233 305 441 1,365 960 725 4,271

(127) (16) 23 (160) (37) (163) (84) (564)

(52.5) (6.9) 7.5 (36.3) (2.7) (17.0) (11.6) (13.2)

Canada ............................ Mexico .............................. Norway ............................. United Kingdom................ Virgin Islands ................... Other non-OPEC ............... Total non-OPEC ........... TOTAL IMPORTS ...........

3,324 1,030 52 146 0 1,380 5,932 9,502

3,104 1,014 52 124 0 1,485 5,779 9,308

3,125 919 54 147 0 1,842 6,087 9,794

2,946 1,035 75 149 12 2,110 6,327 10,598

179 (116) (21) (2) (12) (268) (240) (804)

6.1 (11.2) (28.0) (1.3) (100.0) (12.7) (3.8) (7.6)

Source: US Energy Information Administration Data available at PennEnergy Research Center.

OIL STOCKS IN OECD COUNTRIES* Chg. vs. previous Nov. Oct. Sept. Nov. ——– year —— 2013 2013 2013 2012 Volume % –———————— Million bbl ––——————– France ................................. Germany .............................. Italy ..................................... United Kingdom................... Other OECD Europe.............. Total OECD Europe .........

167 287 125 82 676 1,337

167 288 123 81 688 1,347

166 287 126 82 691 1,352

160 287 138 85 675 1,345

7 — (13) (3) 1 (8)

4.4 — (9.4) (3.5) 0.1 (0.6)

Canada ............................... US .......................................

175 1,792

176 1,812

183 1,832

174 1,810

1 (18)

0.6 (1.0)

Japan .................................. South Korea ......................... Other OECD .........................

584 181 114

587 190 114

591 191 112

604 177 107

(20) 4 7

(3.3) 2.3 6.5

Total OECD .....................

4,183

4,226

4,261

4,217

(34)

(0.8)

*End of period. Source: US Energy Information Administration Data available at PennEnergy Research Center.

Oil & Gas Journal | Apr. 28, 2014

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T h e

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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

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

Oil & Gas Journal | Apr. 28, 2014

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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