July 2017, Vol. 244, No. 7

In The News

In the News

Ray Lewis Honored by Houston Pipeliners Association

The Pipeliners Association of Houston celebrated a very special career at its June 5 meeting, honoring long-time ROSEN Group Director Ray Lewis on his 60th anniversary working in the industry with its 2017 Pipeliner of the Year Award.

Lewis was introduced to the standing-room-only crowd by his long-time industry friend, Danny Nicholson. He told how Lewis, now 90, broke into pipelining in the late-1950s with Williams Pressure Testing and was doing hydro-testing before there was such a thing as pigging. Lewis, a native of Arkansas who recently retired from ROSEN, was known in his early days as something of a “time-keeper” among a crew of drinkers. A teetotaler himself, he often found himself responsible for getting the other men back to their rooms so they could work the next day, Nicholson said.

His legacy is two-fold, Nicholson said. “He is the father of pipeline integrity; he is also a man of personal integrity.”

With his family, including his wife Nancy, in attendance, Lewis received a standing ovation as he stood to accept his award. At a recent retirement event at ROSEN’s Houston office, the pipeline veteran explained that in addition to his Christian faith, some of his sober attitude toward his job came as a result of being born in the 1920s.

“I saw many men fight vigorously over the prospect of a job – I saw many men cry,” he said of the Great Depression era. “A job became something close to sacred to me.”

Other highlights of Lewis’s career include the 20 years he spent at Halliburton, several years as an editor of Pipeline & Gas Journal and with Gulf Publishing Co., but his greatest contribution is likely the invaluable amount of experience he passed on to future generations through his tireless mentoring over the years. At the ceremony marking Lewis’s retirement, ROSEN established a scholarship in his honor.

Administration Mulling Reducing Time for Environmental Reviews

The Trump administration may enforce restrictions on the length of environmental reviews as part of an effort to streamline the project approval process in his $1 trillion infrastructure package, reports The Hill.

Transportation Secretary Elaine Chao, speaking at a Competitive Enterprise Institute dinner June 7, outlined some of the broad details of Trump’s rebuilding proposal.

The plan is expected to roll back regulations that can slow down transportation projects and streamline the lengthy construction approval and permitting process, with the goal of bringing the timeline from as long as 10 years down to two years. Chao said the administration’s infrastructure task force has already identified dozens of potential proposals to “cut red tape and reduce time delays and cost burdens.”

One idea is to allow steps in the permitting process to occur simultaneously instead of sequentially. Another idea under consideration is enforcing the page-limit restrictions on environmental reports, which Chao said can reach tens of thousands of pages.

“Streamlining the regulatory process not only cuts costs, it can improve the environmental outcomes by delivering infrastructure improvements more quickly,” she said. “Resources will be spent on actual environmental mitigation, rather than stacks of paperwork.”

Secretary Zinke Signs Order to Jump-Start Alaskan Energy
U.S. Secretary of the Interior Ryan Zinke signed a secretarial order to jump-start Alaskan energy production in the National Petroleum Reserve-Alaska (NPR-A) and update resource assessments for areas of the North Slope, including the “1002 area” of the Arctic National Wildlife Refuge (ANWR).

Zinke’s order, signed at the Alaska Oil and Gas Association annual conference, directs his agency to develop a revised Integrated Activity Plan for the NPR-A that “strikes an appropriate statutory balance of promoting development while protecting surface resources.” It directs the assistant secretaries of Land and Minerals Management and Water and Science to submit a joint plan with an updated assessment of undiscovered, technically recoverable oil and natural gas resources of the North Slope.

The NPR-A is estimated to contain approximately 895 million barrels of economically recoverable oil and 52.8 Tcf of natural gas, but about half its 22.8 million acres is blocked from leasing under the Integrated Activity Plan approved in 2013. The 1.5 million-acre coastal plain of the 19 million-acre ANWR is the largest unexplored, potentially productive U.S. basin. Its most promising area, Section 1002, was set aside by Congress and the president in 1980 because of its potential for oil and gas development.

U.S. Natural Gas Production Projected to Rise through 2018

The U.S. Energy Information Institute (EIA) projected that U.S. dry natural gas production will average 73.3 Bcf/d in 2017, 1 Bcf/d higher than 2016, when annual production declined for the first time since 2005. The agency also forecast that production will increase an additional 3.3 Bcf/d in 2018.
Average U.S. natural gas prices in 2016 were at their lowest level since 1999, EIA reported, due to rapid production growth in 2015 and reduced demand for heating fuel in the mild 2015–16 winter. Despite a modest recovery in prices later in the year, natural gas production decreased by 2.3 Bcf/d in 2016.
U.S. Oil Production May Reach Record High in 2017

U.S. oil production may reach an all-time high of 10 MMbpd before the end of this year, according to Rystad Energy. The energy data warehouse said its analysis shows production growing by an average 95,000 bpd each month of 2017. All of the growth stems from shale drilling, as the more modest growth from deepwater Gulf of Mexico production is offsetting declines from other conventional oilfields.

The historic record of 10 MMbpd was reached during November 1970 when U.S. oil prices were around $3 per barrel. This record was nearly broken in April 2015, when production reached 9.6 MMbbls, before dropping 1 MMbpd for 18 months as oil prices fell.

“U.S. oil production has grown faster at $50 than any analysts in the market predicted,” said Bjørnar Tonhaugen, vice president Oil Markets at Rystad Energy. “As these numbers are getting confirmed, the initial optimism about OPEC’s temporary cuts, may turn to increasing skepticism about OPEC’s choice of policy once the current output deal expires next year.”

Company Funds Iowa State Research on DAPL Farm Impact
Dakota Access Pipeline LLC is funding a five-year Iowa State University research project to study the impact of pipeline construction on crop production and soil compaction. University researchers began collecting initial data last fall on university-owned farmland near Ames on an approximately two-acre site following construction activities for the Dakota Access Pipeline (DAPL). The overall goal of the project is to quantify the impact of construction utilities equipment, field traffic and deep tillage on crop yield and soil compaction. DAPL will cross about 5,740 acres of cropland in Iowa.

“The pipeline installation is an opportunity for field-based research that investigates the impact of utility construction and restoration practices on farmland, especially related to long-term crop yield and soil productivity,” said Mehari Tekeste, assistant professor of agricultural and biosystems engineering, who leads the project along with Mark Hanna, extension agricultural engineer.

Noble Sells Marcellus Midstream to Quantum Energy
Noble Energy continued to divest its Appalachian upstream and midstream holdings with an agreement to sell Marcellus Midstream to Quantum Energy Partners for $765 million. The deal gives Quantum a 50% interest in CONE Gathering LLC and a 33.5% ownership interest in CONE Midstream Partners, which owns, operates and develops natural gas and other assets in the Marcellus Shale in Pennsylvania and West Virginia.

Noble Energy’s cumulative 2017 divestiture proceeds totaled $2 billion, with the amount primarily representing an exit of the company’s Appalachia upstream and midstream businesses. Proceeds from the sales are being used to cover the cash costs associated with its acquisition of Clayton Williams Energy acquisition, reduce debt, and fund U.S. onshore oil development.

Anti-Pipeline Activist Convicted of Burglary

A pipeline protester who closed a safety valve to block the flow of oil on Kinder Morgan’s Trans Mountain Pipeline was convicted of second-degree burglary charges by a jury in Skagit County, WA. The conviction carries a maximum penalty of 10 years in prison and a $20,000 fine.

The jury deadlocked on a separate charge of sabotage against Ken Ward, 60, who broadcast live on Facebook last October as he cut through chains to access the pipeline valve as part of a coordinated, multi-state protest. Ward initially faced three felony charges, but a different jury failed to reach a verdict and a mistrial was declared. In the January trial, Ward’s defense team presented evidence of climate change and portrayed his actions as civil disobedience to prevent a greater harm, but the judge in his second trial would not allow the so-called “necessity defense.”

Colorado Residents Prefer Pipeline to Trucks
Reversing a recent trend of anti-pipeline protests, the Associated Press reported that residents living near 22-well complex in Greeley, CO were relieved to learn that Extraction Oil & Gas will build a pipeline to transport oil from its Triple Creek project before production begins.

Neighbors sued the state last year because they feared noisy trucks would haul away the petroleum around the clock, alleging that regulators weren’t doing everything possible to protect them from noise, spills and pollution. They wanted the Colorado Oil and Gas Conservation Commission, which regulates the industry, to require Extraction to build a pipeline and take other steps.

Extraction Oil & Gas spokesman Brian Cain told AP that the company always planned to build a pipeline to the project, which is about 60 miles north of Denver. He said the plans are now complete after two years of engineering, contracting and other preparations.

Encana to Sell Natural Gas Assets to Caerus Oil for $735 Million

Reuters reported that oil and gas producer Encana Corp said on Friday it would sell its Piceance natural gas assets in northwestern Colorado to privately held Caerus Oil and Gas LLC for $735 million. Oil producers have been selling assets to reduce exposure to profit-sapping natural gas assets and to increase liquidity. ConocoPhillips, the largest U.S. independent oil producer, in April sold natural gas-heavy assets in the San Juan basin to privately held Hilcorp Energy Co for about $3 billion.

The Piceance asset sale includes 550,000 net acres of leasehold and about 3,100 operated wells and produced 240 MMcf/d of natural gas in the first quarter, Encana said.

PwC Survey: Oil & Gas CEO Differ in Views

PwC’s survey of 83 oil and gas executives in 39 countries found that many share the firm’s perspectives on the economy, the impact of globalization and technological changes. However, they differ in their views about threats to the industry, which territories will be most important for growth, and which job skills will be crucial to the future of their organizations.

Energy executives view the U.S. and China as the most important countries for economic growth and rank Russia, Mexico and Saudi Arabia high on their lists of areas critical to industry growth.

Organic growth and cost reduction both rank as the top areas of focus for 69% of oil and gas CEOs. More of these CEOs will consider new M&A, selling a business or exiting a market than their counterparts in other industries. Digital and technological capabilities are also important to the executives. A detailed report of PwC’s survey is available on its website.

Innovative App for PG&E Field Crews Earns Award

InformationWeek announced Pacific Gas and Electric Company (PG&E) as the winner of the “2017 IT Excellence Award” in the Data and Analytics category. PG&E was recognized for its Mobile Asset Inspection app, which provides PG&E gas and electric power inspectors in the field with real-time information including maps, customer information, safety and access information.

PG&E’s Digital Catalyst team worked closely with electric and gas field workers during development of the app, spending 400 hours on field research discovery, shadowing field workers to learn about their day-to-day work. Satellite maps were layered with the location of PG&E’s 2 million electric poles along with decades’ worth of data on each individual pole.

“At PG&E we are constantly on the lookout for innovative technology solutions that can help deliver safe, reliable, affordable and clean energy to our customers,” said Karen Austin, PG&E senior vice president and chief information officer.

Correction

The May interview with AGA Chairman Pierce Norton included an incorrect title and date. Norton is president and CEO of ONE Gas. He joined ONEOK in 2004.