Operations
OPECs Newest Member Actually Likes Low Oil Prices
As expected, OPEC’s decision to stick to its ‘high’ production levels in its December 4th meeting in Vienna didn’t go down well with the markets as oil prices plunged after the announcement. It is also quite evident that there is now a growing resentment within OPEC as members like Venezuela, Libya, Algeria and Angola were hoping for a production cut, which could have helped their ailing economies.
Editor's Notebook: Winners, Losers and Keystone XL Debacle
I have some final thoughts about the Keystone XL debacle, because that’s what it was. That project never should have been the line in the sand in the debate over climate change, because as we all know, any environmental effect would have been negligible at worst.
Oil Price-Dependent Alaska Looks at First Income Tax in Decades
JUNEAU, Alaska (AP) — Alaska Gov. Bill Walker has proposed instituting a personal income tax for the first time in 35 years as the oil-dependent state looks to plug a multibillion-dollar budget deficit amid chronically low prices. In laying out his budget plan Wednesday, Walker also proposed using the fund that provides annual checks to most Alaskans to generate a stream of cash to help finance state government. The plan would change how dividends are calculated and mean lower checks, at least initially — 2016 payouts would be about $1,000 less than this year's.
Oil Industry Cutting Again, But It Still Might Not Be Enough
Chevron announced on Dec. 10 its decision to slash capital expenditures even further for 2016, cutting spending down to $26.6 billion, or 24% below 2015 levels. "Our capital budget will enable us to complete and ramp-up projects under construction, fund high return, short-cycle investments, preserve options for viable long-cycle projects, and ensure safe, reliable operations," Chevron Chairman and CEO John Watson said in a statement. "Given the near-term price outlook, we are exercising discretion in pacing projects that have not reached final investment decision."
Former Energy Secretary Says OPEC Evolving
As far as one-time Energy Secretary Spencer Abraham is concerned the rumors of OPEC’s demise have been greatly exaggerated. “People who say OPEC is dead are dead wrong. They are evolving,” Abraham told about 100 guests of The Economist’s World in 2016 Breakfast, held Wednesday in Houston. Abraham, who is also a former Republican senator from Michigan, said the energy industry is facing a starkly different set of circumstances now than when he served in the George W. Bush administration from 2001 until early 2005.
Judge Rejects Bid to Block Alberta Clipper Pipeline Upgrade
MINNEAPOLIS (AP) — A federal judge rejected the key parts of a lawsuit brought by tribal and environmental groups that sought to block a capacity expansion on the Alberta Clipper crude oil pipeline, saying the courts don't have the authority to intervene at this stage. U.S. District Judge Michael Davis concluded Wednesday that the letters the State Department sent to Canadian-based Enbridge Energy weren't the kinds of final decisions that courts have jurisdiction to review.
ARM Midstream Plans Infrastructure in Oklahomas Stack Play
Asset Risk Management’s wholly owned subsidiary. ARM Midstream, is partnering with Highbridge Principal Strategies, LLC to build a cryogenic processing plant, natural gas gathering system, and crude oil gathering system in Oklahoma's STACK play. Plans for the Kingfisher Midstream system include over 100 miles of low- and high-pressure gas gathering pipelines, over 15,000 hp of compression, and a new cryogenic processing facility with initial processing capacity of 60 MMcf/d.
EPA Proposes New Methane Regulations for Midstream Operations
The federal Environmental Protection Agency recently proposed new regulations for methane and volatile organic compound (VOC) emissions from the oil and gas sector that place time-consuming and expensive new requirements on midstream businesses. These regulations would not apply to pipelines, but would require ongoing emissions monitoring and equipment replacements at compressor stations and natural gas processing plants built, “modified,” or “reconstructed” after Sept. 18, 2015.
Oil Prices Seen Staying Low Next Year as Demand Weakens
PARIS (AP) — The head of the International Energy Agency expects oil prices to remain low next year as demand weakens and supply remains high. The price of oil fell this week to its lowest since early 2009, when the global economy was deep in crisis. The U.S. benchmark recovered 1.6% at $38.08 on Wednesday. Fatih Birol, executive director of the IEA, which represents oil-consuming nations, told a news conference on the sidelines of the U.N. climate conference in Paris, said, "When we look at 2016, I see very few reasons why we can see growth in the prices."
New Legislation Affects U.S. Strategic Petroleum Reserve
Two recently enacted laws authorize significant sales of crude oil from the Strategic Petroleum Reserve (SPR) over the next decade. The Bipartisan Budget Act authorizes the sale of 58 MMbbls of SPR oil from 2018 to 2025 for deficit reduction purposes and an estimated 40 to 50 MMbbls of oil in the fiscal period 2017-2020 for SPR modernization.
Marathon Abandons $270 Million Ultra-Deepwater Project
Marathon Oil announced on Dec. 2 its decision to abandon a key deep-water oil project in the Gulf of Mexico. The well that Marathon had been drilling had already caused the company some problems. Drilling the well took seven months, and mechanical problems delayed the project’s completion. Marathon said last week that upon completing the project, drilled at 34,600 feet, that it had plugged the well and released its rig. Marathon says that it has no further plans for the block.
What's New: December 2015
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Pipeline Rush in Upper Midwest: Gas to Replace Coal
Nine- and even 12-figure numbers don’t phase Paul Copello, a petroleum engineer and president of IIR Energy, a capital projects tracking company that globally compiles and analyzes information for over 95,000 energy projects worldwide, collectively representing potential capital investment of $13.7 trillion. Among those projects, the natural gas pipeline sector is one of the surest bets for consistent increased capital spending, Copello told an energy meeting in Chicago last September.
Improving Lost and Unaccounted for Levels by Embracing Innovation
Across many industries, companies showing a reluctance to embrace new technology are in danger of losing any competitive edge. In the oil and gas industry, where even the smallest error can have a major long-term effect, embracing innovation in the form of data analytics has become a necessity for companies striving to reach the highest levels.
Oil Sands Producers Can Live with Albertas New Carbon Taxes
If business is good at anything, it is pragmatism. Take a hostile takeover for example. After weeks or months of trading insults and accusations in and out of the media, a deal is struck and the warring CEO’s shake hands and call the final deal a stroke of genius. Whatever they may really feel, they put the past behind them and move forward, ostensibly in the best interests of shareholders. After all, it’s just business.
World News: Cross-border Project Expected to Produce 40,000 Bopd
Chevron Corporation’s subsidiary, Chevron Overseas (Congo) Limited, has begun oil and gas production from the Lianzi Field, located in a unitized offshore zone between the Republic of Congo and the Republic of Angola. Located 65 miles offshore in 3,000 feet of water, Lianzi is Chevron’s first operated asset in the Congo and the first cross-border oil development project offshore Central Africa. The project is expected to produce an average of 40,000 bopd.
Report: Oil Bust Kills 19 Million Barrels Per Day of Future Oil Production
The collapse in oil prices have led to severe cuts in spending and investment from oil producers, and a new report by Tudor, Pickering, Holt & Co. finds the combined cuts will lead to a daily 19 million barrels of potential future oil production taken off the table. The report said oil companies have either canceled or suspended final investment decisions on 150 oil projects, which account for about 125 billion barrels of oil.
NGSAs 2015-2016 Winter Outlook for Natural Gas
Strong natural gas production and storage inventories approaching a new record have positioned the nation’s gas industry well to meet winter demand, the Natural Gas Supply Association (NGSA) said in its 15th annual Winter Outlook assessment of the natural gas market.
Start-Up Oilfield Services Firm Rubicon Nets $300 Million Equity Line
Rubicon Oilfield International, a start-up oilfield services company, announced Warburg Pincus, a global private equity firm, agreed to a line-of-equity investment of up to $300 million in the company. Houston-based Rubicon’s strategy is to build a global enterprise in the oilfield products and equipment sector through acquisitions and organic re-investment. The company said it will acquire, integrate and enhance small and medium-sized businesses in the upstream oilfield technology sector, focusing on proprietary downhole tools, products and technologies.
House Backs Sweeping Energy Bill to Boost Oil, Natural Gas
WASHINGTON (AP) — Defying a White House veto threat, the Republican-controlled House on Thursday approved a sweeping bill to boost U.S. energy production, lift a four-decade ban on crude oil exports and modernize the aging electric grid. The first major energy legislation in nearly a decade, the bill would also speed natural gas exports and hasten approval of natural gas pipelines across public lands. It also would advance cross-border projects such as the Keystone XL oil pipeline, which lingered for more than seven years before being rejected last month by President Barack Obama.
Paris Climate Talks Point to Boon for Energy Storage
As the world leaders come together in Paris to tackle the hot issue of climate change, there is one market that not only remains crucial for growth of renewable energy sources; but also remains the most talked about market in the global investment circles: the energy storage market.
Manslaughter Charges Dropped for BP Supervisors in Oil Spill
NEW ORLEANS (AP) — The Justice Department launched a sweeping and costly criminal investigation after BP's rig explosion in the Gulf of Mexico killed 11 workers and caused the nation's worst offshore oil disaster. For roughly two years, a task force of FBI agents and prosecutors occupied an entire floor of a high-rise building across from the federal courthouse in New Orleans.
Data Shows Most Crude Produced in Lower 48 Light Oils
U.S. Energy Information Administration (EIA) data show that for the first nine months of 2015, most (50.8%) of the crude oil produced in the Lower 48 states were light oils with an API gravity above 40 degrees. The largest share of production was in the 40.1 to 45 degree API gravity range.
In the News: Duke Energy to Acquire Piedmont Natural Gas for $6.7 Billion
Duke Energy Corp. announced Oct. 26 it will acquire Piedmont Natural Gas Co. Inc. for $4.9 billion in cash. Duke will also assume $1.8 billion in Piedmont existing net debt. Piedmont began operations in 1951 in Charlotte, NC and is primarily engaged in distributing natural gas to over 1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee. Duke and Piedmont are key partners in the $5 billion Atlantic Coast Pipeline that will be the first major natural gas pipeline serving eastern North Carolina.
Oil and Gas Research Eyeing Future, Bridging Gaps
In the gridlock of first-quarter 2015 earnings conference calls last spring, Doug Suttles, CEO at Alberta-based Encana Corp., talked bullishly about the Canadian energy company’s production growth prospects. This while in the midst of reporting a $1.7 billion loss for the quarter tied to a $1.2 billion impairment charge brought on by last year’s global oil price crash and another $500 million of red ink coming from a foreign exchange loss. Regardless, Suttles couldn’t have been more upbeat when he talked to analysts in mid-May.
South Dakota Regulators Grant Dakota Access Pipeline Permit
PIERRE, S.D. (AP) — South Dakota regulators approved a construction permit Monday for a pipeline that will cross through the state as it carries North Dakota oil to Illinois. The South Dakota Public Utilities Commission voted 2-1 to approve the permit for the Dakota Access Pipeline, and construction on the roughly 270-mile leg could begin early next year.
EPA Boosts Amount of Ethanol in Gasoline Supply
WASHINGTON (AP) — The Obama administration is boosting the amount of corn-based ethanol and other renewable fuels in the U.S. gasoline supply despite sustained opposition by an unusual alliance of oil companies, environmentalists and some GOP presidential candidates. The Environmental Protection Agency (EPA) Monday issued a final rule designed to increase production of ethanol to be blended with gasoline through 2016, a decision that could reverberate in Iowa's crucial presidential caucuses.
Kinder Morgan, Brookfield Buying Majority Interest in NGPL
Kinder Morgan and Brookfield Infrastructure Partners agreed to jointly acquire, from Myria Holdings, the 53% equity interest in Natural Gas Pipeline Company of America (NGPL) not already owned by them for $242 million. KMI will pay $136 million and increase its ownership interest from 20% to 50%, while Brookfield will pay $106 million, increasing its ownership from 27% to 50%. The transaction values NGPL at a total enterprise value of $3.4 billion, including existing debt.
U.S. Oil, Natural Gas Reserves Both Increase in 2014
U.S. crude oil and lease condensate proved reserves increased by 9% to 39.9 billion barrels, and natural gas proved reserves increased by 10% to 389 Tcf in 2014, according to Energy Information Administration's (EIA) U.S. Crude Oil and Natural Gas Proved Reserves report. U.S. crude oil and lease condensate proved reserves reached the highest level since 1972, and natural gas proved reserves surpassed last year's record level.
Passenger Travel Accounts for Most of World Transportation Energy Use
The transportation of people and goods accounts for about 25% of all energy consumption in the world. Passenger transportation, in particular light-duty vehicles, accounts for most transportation energy consumption – light-duty vehicles alone consume more than all freight modes of transportation, such as heavy trucks, marine, and rail.
