follow us Twitter Facebook
<< Back to News

Oil and Gas Roundup — Nov. 26

November 26, 2014
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

U.S. House to hold hearing on oil export ban

A House of Representatives panel will hold a hearing on Dec. 11 to explore whether a decades-old law that prohibits the export of crude oil makes sense in an era of domestic energy abundance.

The House subcommittee on energy and power, chaired by Representative Ed Whitfield, will hone in on the 1975 Energy Policy and Conservation Act, drafted in response to the 1973 oil crisis. The law prohibited the export of most crude oil, created the Strategic Petroleum Reserve and Corporate Average Fuel Economy rules for cars and trucks, also known as CAFE standards.

"We need to take a comprehensive look at where we came from, where we are today, and where we want to go from here," Whitfield said in a release.

The debate over whether Washington should lift its nearly 40-year crude oil export ban will come sharply into focus in January, when Republicans take over leadership of both the House and Senate.

Oil exports champion Senator Lisa Murkowski will take over as chairman of the Senate energy committee.

Read more:

Obama rolls out major EPA rule — ‘most expensive regulation ever’

The Obama administration proposed a draft air pollution rule on Wednesday that business groups charge could be the costliest regulation of all time — setting up a test of how hard the president will fight for his environmental agenda against a newly strengthened GOP.

President Barack Obama has already blinked once on the rule, which aims to limit smog-creating ozone pollution after 2020 from power plants and factories: Just before Labor Day in 2011, he forced the Environmental Protection Agency to withdraw an almost-final version of the rule, infuriating green groups that accused him of capitulating to industry pressure to ease his reelection. Obama said he was acting to “underscore the importance of reducing regulatory burdens and regulatory uncertainty.”

Now, facing a court order to issue a new proposal by next week, EPA has just issued a rule essentially as strong as the one the White House squelched three years ago — though not quite as strict as many environmental groups are calling for. It would lower the amount of ground-level ozone pollution that is considered healthy to breathe, which in turn could lead to costly new requirements for air pollution permits in much of the country.

The administration contends the health benefits would far outweigh the costs, and would include fewer deaths, hospitalizations and missed days at school or work from illnesses like asthma or bronchitis. States would have to meet the new standards between 2020 and 2037.

But Republicans are getting a second chance, too — to try to make Obama back down again on what they see as a multitrillion-dollar hit to the economy. Some think they can at least get him to bargain on ozone, an issue that seems less central to his legacy than his efforts to combat climate change.

Read more:

Shale wells become leading source of natural gas

Shale gas represented 40% of total natural gas production in the US last year, according to the Energy Information Administration (EIA).

Its latest statistics show withdrawals from shale gas wells jumped from five billion cubic feet per day (Bcf/d) in 2007 to 33 Bcf/d in 2013, surpassing production from non-shale natural gas wells.

“New technology has enabled producers to shift production to resources that are now easier to reach and have lower drilling costs”, the EIA said.

Total US natural gas withdrawals reached a new high at 82 Bcf/d last year.

In 2007, shale gas wells made up 8% of total natural gas production in the US, with 63% of shale production coming from Texas.

Last year Texas, Pennsylvania, Louisiana and Arkansas accounted for 26 Bcf/d or 79% of US shale production.

Their combined share of production from non-shale natural gas wells however fell to 41% in 2013.

Read the EIA report:

Report: Without the HF boom, oil would be at $150 per barrel

The price of oil fell from about $100 per barrel to $80 per barrel in a matter of months, bringing with it lower gasoline prices for drivers and a modest boost to the economy ahead of the holiday season.

This is all thanks to the advent of hydraulic fracturing, or fracking, and horizontal drilling in the U.S., without which gasoline prices would be nearly one dollar higher and oil would cost as much as $150 a barrel, according to a recent report.

Energy experts at ICF International estimate that “international Brent crude oil prices would have averaged $122 to $150 per barrel in 2013” without the massive increases in oil production from fracking. Instead, oil prices have fallen to around $80 per barrel and are projected to fall even further — maybe even to $60 per barrel.

“Given the international nature of U.S. petroleum product movements, ICF also estimates that 2013 U.S. petroleum product prices were between $0.29 and $0.94 per gallon lower than they would have otherwise been without” fracking, ICF reports.

Read more:

Lacking production, Mexico to be dependent on U.S. gas for years, ex-official says

According to a former Mexican government official, the refusal of the state-run PEMEX Gas y Petroquímica to invest in natural gas drilling will make the country dependent on gas imports from the U.S. for a considerable time.

Speaking at a Hart Energy conference in Houston, H. Javier Estrada Estrada, former director of energy planning for the country's secretary of energy, said Mexico is struggling to remain a net energy exporter. The biggest problem, he said, is a continued lack of natural gas production.

"I think it's key to the development of Mexico," Estrada said of increased domestic gas production. "The problem is that you have two Mexicos: One is exporting oil, and the other is importing natural gas."

The opportunity to expand gas production, Estrada said, is clear — but PEMEX has shown a lack of interest in investing the time and effort in developing a resource with lesser returns than oil.

"The country is lagging behind in natural gas production," he said. "There are plenty of 3P [proved plus probable plus possible] reserves and shale gas resources … but first, there will be a need for imports from the U.S."

Read more:
<< Back to news