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Oil and Gas Roundup — March 19

March 19, 2014
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oil and gas industry celebrates 65 years of hydraulic fracturing

The oil and gas industry is celebrating the 65th birthday of hydraulic fracturing, which has spawned a boom in U.S. energy production despite adverse economic conditions and unfriendly environmental policies.

The industry has a good reason to celebrate fracking on Monday. The drilling technique has unlocked vast reserves of oil and natural gas from underground shale formations and helped rural economies from Pennsylvania to North Dakota and Texas. On top of that, fracking has made the U.S. the world’s largest producer of oil and natural gas.

“Americans have long been energy pioneers, from the 1800’s when the first wells were drilled to today,” said Erik Milito, director of upstream and industry operations at the American Petroleum Institute.

“As part of that history, on March 17, 1949, we developed the technology to safely unlock shale and other tight formations, and now the U.S. is the world’s largest producer of oil and natural gas,” Milito added.

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Report: Efficiency driving shale production growth

Growing efficiency of horizontal drilling and fracking is driving production increases in basins across the country, the U.S. Energy Information Administration said in a new report this week.

The study isn’t exactly news — many producers have boasted of efficiency gains in recent years — but quantifies the extent to which those producers are meeting that target.

Five of six U.S. shale plays have seen boosts in per-rig oil and gas production in recent years. The Eagle Ford led the way for oil, and the Marcellus Shale led the way for natural gas.

On average, rigs in the Eagle Ford were generating 400 more barrels of oil per day in April 2014 than they were in January 2007. Production is up per rig in Marcellus by 6 million cubic feet of natural gas per day in the same time period.

The Permian Basin is the notable exception to the trend. Both oil and gas production per rig in that play has declined slightly since 2010.

See the statistics:

Marcellus to drive $70 billion in infrastructure development

Gas development in the Marcellus shale play is projected to spur almost $70 billion in gas-related infrastructure investments between now and 2035, a new study shows.

Tuesday’s report said the United States and Canada will jointly require $641 billion in midstream natural gas, natural gas liquids and crude oil infrastructure including between now and 2035, or about $30 billion per year. The study was conducted on behalf of the Interstate Natural Gas Association of America and conducted by ICF International.

The Marcellus is one of the largest reasons for the need for increased midstream infrastructure and pipelines, as production from the play continues to exceed expectations, the report said.

While new infrastructure will likely be used to connect resource-heavy areas with places in which demand for natural gas is high, not all connections will require construction of new pipelines, but rather expansions of existing infrastructure, according to the study.

“This report shows a vibrant natural gas market in the future, and it also demonstrates the need for additional midstream infrastructure to support natural gas fulfilling its potential as a foundation fuel for our energy economy,” said Don Santa, president of the INGAA Foundation.

The Northeast as a whole is projected to drive $80 billion in infrastructure growth through 2035, the study said, $70 billion of which will come from the Marcellus play. The Marcellus is expected to more than double its current daily production level of 13 Bcf per day by 2035, according to the study.

Cyberspying targets energy secrets

Take a tour of 1366 Technologies, a startup near Boston that is developing a cheaper way to make solar cells, and you will see open spaces with low cubicles, engineers at their desks, a machine shop, and testing equipment running silicon wafers through their paces.

But the tour is a bluff: it’s what you don’t see that’s really interesting. In another part of the building—one with no obvious way in—sit the engineers working on the core technology, machines that could cut the cost of silicon wafers for solar cells in half. Perhaps most important, computers used for the real work are entirely cut off from the Internet.

“We are paranoid,” 1366 CEO Frank van Mierlo says. “We’ve taken our entire engineering server offline and air-gapped it, like the Department of Defense.”

There has recently been much talk in Washington about the need to guard critical infrastructure, such as power plants, against possible enemy cyberattacks. But energy companies say that their key inventions and business data are already the target of increasingly sophisticated cyper-espionage.

“[It] quietly kept getting worse and worse,” Dana Deasy, the former chief information officer of BP, said last November during a meeting of information technology executives in Barcelona, Spain. “You finally wake up one day and you’re sitting in a world where this is a serious threat to the industry as a whole.”

Former Energy Sec.: Best response to Russia is energy security

By former N.M. Gov. Bill Richardson

Washington must leverage our energy bounty to advance our foreign policy goals.

In the short term, the key questions surrounding the crisis in the Ukraine involve whether Russia’s expansionist tendencies will continue in the Ukraine after the Crimean vote and, subsequently, the effectiveness and intensity of the American and European sanctions in the ensuing weeks.

Longer term, America and the West need to take several steps: As a starter, the U.S. should consider bringing back the anti-missile defense in Poland; additionally, it should ensure the Ukrainian defense forces are strengthened, and it should also re-evaluate increasing defense support for strong U.S.-friendly countries like Moldova, Azerbaijan, and Lithuania.

But the most powerful response from the West must come in the form of transatlantic energy security. The importance of European and Eurasian energy independence from Russia has only increased over time. Both regions have been taking measured steps to reduce their dependence on Russia, especially after the Russia-Ukraine gas disputes of 2006 and 2009, which left much of Europe under-heated in those winters.

The pace of these efforts must increase rapidly. We know how to do this. Back in the 1990s one of my main assignments when I was Secretary of Energy was creating the Baku-Tbilisi-Ceyhan pipeline, running from the Caspian Sea through Azerbaijan, Georgia, and Turkey to the Mediterranean. So I know that Europeans and Americans can work together to create strategically sound solutions to provide reliable sources of energy to Europe and Eurasia.

Transatlantic energy security has never been fully achieved, however, because Russia’s tactics in politicizing natural gas exports have worked. And they will continue to work in strengthening Russia’s influence until Berlin, Brussels, and Washington are on the same page.

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