January 2018, Vol. 245, No. 1

In The News

In the News

Perry Pushes NAFTA Renegotiation, Signs MOU with Saudi Arabia

U.S. Energy Secretary Rick Perry said it makes sense for the United States, Canada and Mexico to renegotiate the North American Free Trade Agreement, in part because of the enormous new supply of U.S. oil and gas locked in once-inaccessible shale rocks.

Asked whether renegotiating NAFTA – a thorny and potentially yearlong process that the Trump administration began last summer – would affect energy trade between the three countries, Perry said the renegotiation was a “good process; it’s a healthy process.”

“Fifteen years ago, they told us we found all the oil and gas there was to find and that the days of being able to develop oil and gas were over with,” Perry said, “Well, that’s not the case. So does it make sense to sit down with our colleagues in Canada and Mexico to renegotiate a new North America Free Trade Agreement? Yes, I think it does.”

In a later move, Rick Perry and H.E. Khalid Al Falih, Saudi Minister of Energy, Industry, and Mineral Resources, signed a Memorandum of Understanding on Dec. 5 to enhance relations between the countries in the energy fields, including cooperation opportunities in clean energy.

“This MOU outlines a future alliance not only in supercritical carbon dioxide, but also in a range of clean fossil fuels and carbon management opportunities. Together through the development of clean energy technologies our two countries can lead the world in promoting economic growth and energy production in an environmentally responsible way.

The two countries will exchange experts, engineers, and scientists, along with facilitating the transfer of technology. The MOU is designed to encourage the organization of joint seminars and workshops, as well as visits by experts to facilities, such as research laboratories, institutes, and industrial sites. The MOU covers many technical fields including supercritical carbon dioxide (sCO-2) power cycles; carbon capture, utilization, and storage (CCUS); chemical looping and oxy-combustion; the energy-water nexus.

Keystone Pipeline Leak Likely Caused by 2008 Damage

A federal agency says the Nov. 16 leak in TransCanada’s Keystone oil pipeline in South Dakota likely was caused by damage during construction in 2008.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a corrective action report regarding the estimated 210,000-gallon oil spill. The report says a weight installed on the pipeline nearly a decade ago may have damaged the pipeline and coating. According to the report, weights are placed on the pipeline in areas “where water could potentially result in buoyancy concerns.”

TransCanada Corp. said it plans to run an inspection device through the pipeline to make sure other segments don’t have similar characteristics. The company will run the pipeline inspection gauge within a four-month period.

Sioux Tribe Vows Renewed Vigilance on Keystone XL Pipeline

William Kindle, president of the Rosebud Sioux Tribe (Sicangu Lakota Oyate), promised continued vigilance in light of the Nebraska Public Service Commission’s November decision to permit TransCanada Corp.’s proposed Keystone XL pipeline to cross that state’s lands. The Rosebud Sioux Tribe has retained the Native American Rights Fund (NARF) to represent its interests with regard to the Keystone XL pipeline.

The pipeline’s proposed route crosses through traditional Lakota homelands and treaty territories, and will affect not only the Rosebud Sioux Tribe, but also Native Nations in Montana, South Dakota, and Nebraska. Opponents claim the pipeline also endangers the Ogallala Aquifer, which supplies water for Native and non-Native users’ residential and agricultural needs on the High Plains in eight states.

“The land, water, tribal sovereignty, and governmental services were not ‘given’ to us in those treaties,” Kindle said. “They were bargained for with the blood of our ancestors. We will not dishonor our relatives and unnecessarily endanger our health, safety, and well-being. The Rosebud Sioux Tribe will take any and all necessary steps, up to and including litigation, to protect our people, our land and water, and our cultural and historic resources.”

Judge Orders Monitoring, Audit of Dakota Access Pipeline

A federal judge imposed a series of conditions on the Dakota Access pipeline, which is currently transporting oil while undergoing a court-ordered environmental review.

U.S. District Court Judge James Boasberg ordered Dakota Access operators to coordinate an oil spill response plan with federal and tribal officials near Lake Oahe in North Dakota, conduct a third-party audit of the pipeline’s compliance with federal and state regulations, and produce bi-monthly reports on the pipeline’s operations.

Opponents of the pipeline, including the Standing Rock Sioux and Cheyenne River Sioux tribes, requested Boasberg impose conditions on the pipeline until regulators finalize that review. Federal officials expect that process to stretch into the spring.

Rystad Energy Forecasts U.S. Oil Production nearing 10 MMbpd

Rystad Energy’s comprehensive data for the United States shows that domestic oil production could pass 9.9 MMbpd in January 2018. For comparison, the EIA estimated that production will reach just 9.72 MMbpd in its September Short-Term Energy Outlook (STEO).

Some market participants and industry experts argue that even the EIA’s projection is overly optimistic. Harold Hamm, chairman of Continental Resources, claimeds the EIA is seriously overstating growth in United States’ shale production and claims this hurts shale drillers’ shareholder value.

“Largely due to Hurricane Harvey and seasonal maintenance in Alaska, production data for August gave the misleading impression that the United States’ shale production was incapable of sustainable growth. In reality, the gap between full production capacity and actual output exceeded 300,000 bpd, which is unprecedented in recent years,” said Artem Abramov, research director at Rystad Energy.

The EIA will publish a new EIA-914 survey and petroleum supply monthly report (PSM) with the actual oil production for September 2017. The preliminary estimate by the EIA is 9.34 MMbpd. Any significant adjustment to this estimate will be the first indication of who is correct on where U.S. oil production was heading toward yearend. Strong U.S. oil output in early 2018 would require more concessions by OPEC to protect oil markets from a new dip.

LAGCOE 2017 Welcomed More than 10,000 Worldwide Attendees

LAGCOE 2017 recently welcomed more than 10,000 people from 21 countries and across the U.S. to the Cajundome & Convention Center in Lafayette, LA. Attendees viewed exhibits, three keynote presentations, dozens of technical reports and presentations, as well as six special events over the three-day period.

Angela Cring, LAGCOE executive director, said: “We were very pleased with the number of attendees and exhibiting companies at LAGCOE 2017, given the challenges in the industry. It is evident that networking, innovation and preparing the next generation remain critical components for our industry, especially in lean times.”

NNPC, Chevron JV Seal $1.7 Billion Deal to Boost Oil, Gas Output

The Nigerian National Petroleum Corporation, NNPC and its joint venture partner, Chevron Nigeria Limited, CNL, executed the second and final phase of an alternative financing agreement, which the Group Managing Director, Maikanti Baru, said would help increase the country’s crude oil production by about 39,000 bpd.

Baru, who spoke in London at the signing of the agreement, said the arrangement would also help achieve an incremental peak production of about 283 MMscf/d of gas. When completed, the facility would produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in oil mining leases OMLs 90 and 91 in the Niger Delta.

Energy Intelligence Releases Top 100 Oil & Gas Rankings

Energy Intelligence has released its annual ranking of the world’s 100 largest oil and gas companies, the only ranking system that compares private sector firms with national oil companies. The Energy Intelligence Top 100 is an in-depth company analysis that ranks six key operational metrics together with 70 additional parameters of company performance.

“The latest Energy Intelligence Top 100 rankings reflect company performance during 2016 and offer an insight into the health of the industry two years into the oil price downturn,” said Tom Marchetti, president of Energy Intelligence. “The strong showing from shale-focused U.S. independents underscores how that sector has adapted to the lower price environment, while the mixed fortunes of the supermajors show the challenges this price cycle is posing for bigger integrated players.”

Six parameters are used to compile the rankings: oil reserves, natural gas reserves, oil production, natural gas production, refinery distillation capacity and refined product sales. The Energy Intelligence Top 100 analysis considers an additional 70 financial and operational parameters.

The Top 10 companies in the rankings are:

1. Saudi Aramco
2. NIOC
3. CNPC
4. PDVSA
5. ExxonMobil
6. Shell
7. BP
8. Rosneft
9. Gazprom
10. Total

Bakken Reverses Trend, Flaring on the Rise

Producers in the Bakken region made substantial progress in 2014-15 reducing the volume and percentage of gas that was flared or burned off, but those gains stalled in 2016, and flaring has actually been rising over much of 2017, according to rbnenergy.

Due to a series of events (including gas processing plant and pipeline issues), 16% of the gas produced in the Bakken in September was flared, marking the first time producers failed to meet North Dakota’s ratcheting-down target for gas burn-offs. The October and November flaring numbers are expected to improve, but there are worries that without more processing capacity, Bakken producers will have trouble achieving the North Dakota flaring target when it drops to 12% (from current 15%) in November 2018.