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Oil and Gas Roundup — April 10

April 09, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Oil analyst forecasts recovery to begin by mid-year

For those in the Permian Basin oil and gas industry going through the financial pain of a 50 percent decline in oil prices may see relief ahead.

“Our view is things will look a lot better next year,” said J. Marshall Adkins, director of energy research at Raymond James.

The Houston resident spoke to the media before addressing an audience invited by the Van Pearcy Wealth Management Team, which provides securities through Raymond James Financial Services. The luncheon was held at the Petroleum Club.

“Our view is there will be a solid recovery begin in the second half of 2015 and really kick in in 2016,” he said. He said the current price level was unsustainably low. A healthy price range to bring supply and demand into balance is $65 to $70, he said.

He forecast that the rig count would begin rebounding in the second half of the year. It won’t reach 2014 levels but will be better than current levels, he said.

While acknowledging the pain oilfield service companies, and specifically the employees who have lost jobs, are enduring, Adkins said the positive aspect was that the downturn was wringing excess out of the industry.

Read more: Oil analyst forecasts recovery to begin by mid-year - Oil & Gas

Earthquake insurance exec doubts connection to hydraulic fracturing

Over the past decade, huge improvements in hydraulic fracturing techniques used to unlock natural gas deposits have lowered energy prices and boosted the economy. They’ve been great for the environment, too. While it’s not pollution-free, gas produces almost none of the particulates and much less of the greenhouse gas that comes from burning coal.

Portions of the environmental left, apparently unhappy with cleaner, cheaper energy, have looked for ways to attack hydraulic fracturing, and one of their most promising ideas has been that fracking causes earthquakes. Since the procedure involves injecting fluid deep into the Earth, nearly all seismologists agreed that such quakes were possible. When experiments confirmed that small quakes had actually resulted from hydraulic fracturing, left-wing environmental blogs and groups like the Center for American Progress reacted with barely restrained glee.

But a new letter from the California Earthquake Authority—a government-run, privately financed entity that’s by far the nation’s largest provider of residential earthquake insurance—should give pause to anybody who wants to say that damaging hydraulic fracturing-related earthquakes are a menace. In response to questions from Republican assemblyman Scott Wilk, CEA chief executive officer Glenn Pomeroy says that he is “not aware of any claims having been submitted .  .  . in which human activity [has] caused or [been found] to have contributed to damaging ground movement.” This is true even though nearly all of California’s hydraulic fracturing activity is concentrated in its very densely populated, earthquake-prone southern portion.

It’s probably impossible to prove that hydraulic fracturing could never cause a major earthquake. But the CEA’s letter does show that the burden of proof ought to remain on those making the claims.

— The Weekly Standard

Report: U.S. gas resource base reaches a record 2,515 tcf

Unconventional natural gas production is proving to be more durable than many people expected, officials said as the Potential Gas Committee released its 2014 yearend report indicating that the US has a record 2,515 tcf technically recoverable gas resource base.

They said the 131-tcf increase from yearend 2012 came from reevaluations of onshore shale gas resources in the Atlantic, Midcontinent, Gulf Coast, and Rocky Mountain areas, and conventional and tight gas resources in the Midcontinent and the Rockies. The growth was in addition to 53 tcf of US-marketed gas production the US Energy Information Administration estimated for the 2 years since the PGC’s last assessment.

“We have never seen any reason to back down on our numbers,” said John B. Curtis, a professor emeritus at the Colorado School of Mines geology and geological engineering department, and director of the school’s Potential Gas Agency, which provides guidance and technical assistance to the PGC.

“Wells are being drilled and gas is being produced, even in this low-price environment,” he told reporters during an Apr. 8 briefing at the American Gas Association where the report was released. “Of the 2 years, drilling didn’t start to slow down until the latter half of 2014. If there’s any long-term impact, it will show up in the next report.”

Of the 2014 yearend technically recoverable gas resource base, nearly 2,357 tcf was “traditional” resources and 158 tcf was coalbed methane. The addition of 338.3 tcf of proved dry gas reserves EIA estimated at yearend 2013 brought the nation’s future gas supply to 2,853 tcf at yearend 2014, PGC said.

Read more at Oil & Gas Journal

U.S. DOE buys 4.3 bbls of oil to replenish strategic reserve

WASHINGTON, D.C. — The U.S. Department of Energy on Thursday announced it has awarded BP Products North America and Noble Americas contracts to deliver nearly 4.2 million barrels of crude oil for the Strategic Petroleum Reserve to replenish oil it sold last year.

The DOE will buy 2.2 million barrels of sweet crude oil from BP Products and 2 million barrels of crude from Noble Americas to replenish the country's SPR to replace oil it sold in a test sale last March.

The DOE astonished oil markets with that test sale of 5 million barrels, which some observers saw as a subtle message to Russia after its aggression in Ukraine.

The DOE used the $239.2 million in funds it raised in last year's sale for the new contracts. Deliveries are expected to be completed by July 31.

Word of oil find excites Britain

LONDON — Oil fever gripped Britain on Thursday after a small company announced the discovery of what it described as “a possible world-class potential resource” in the Surrey countryside south of London near Gatwick Airport.

The company, UK Oil and Gas Investments, said an evaluation by an American company, Nutech, of a well drilled by the British company late last year indicated that there were 158 million barrels of oil per square mile in the terrain around it.

Investors and others noted that with UK Oil and Gas Investments and its partners holding licenses covering 55 square miles in what is known as the Weald Basin, they could be sitting on almost nine billion barrels of oil, a giant field if anything could be coaxed to the surface.

“We are pretty confident that this is a system that is comparable to the big things” in the United States, David Lenigas, the chairman of UK Oil and Gas, said by telephone.

Mr. Lenigas mentioned large American shale oil finds like the Bakken in North Dakota and Wolf Camp in Texas or the Bazhenov Shale Formation in Russia as possible analogs.

Read more at the New York Times

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