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Oil and Gas Roundup — Sept. 25

September 25, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count down 1; U.S. count falls by 6

Oilfield services company Baker Hughes Inc. says the number of rigs drilling for oil and natural gas in the U.S. this week declined by four to 838. Houston-based Baker Hughes said 640 rigs were drilling for oil and 197 for natural gas.

Oklahoma's rig count fell by one to 105. A year ago, there were 213 rigs operating in the state and 1,931 nationwide.

Among the other major oil- and gas-producing states, Texas fell by two to 363 and North Dakota lost one rig to 66. New Mexico was the only state to gain, up one rig to 50.

Louisiana was flat at 70, as were Colorado and Pennsylvania, both at 33. Wyoming was unchanged at 24, Ohio at 19 and West Virginia at 17.

BLM moves forward with plan to crack down on venting and flaring

An Obama administration plan to clamp down on oil companies burning or venting natural gas at wells on public land has advanced in the nation’s capital.

The measure, developed by the Interior Department’s Bureau of Land Management, was submitted to the Office of Management and Budget for review on Friday.

Although most of the details are under wraps, administration officials have long telegraphed their hope to curb the practice of venting and burning natural gas — most frequently employed at oil wells where the gas is considered a less-lucrative byproduct to crude.

The Obama administration made its intention clear when it unveiled a broad plan for cutting methane emissions last year. The Environmental Protection Agency delivered the first big piece of that methane plan in August with proposed rules to stem methane leaks from wells, processing equipment and storage facilities.

But EPA officials hinted that other agency efforts would be needed to fulfill the White House’s pledge to pare oil and gas sector methane emissions by 40 to 45 percent of 2012 levels by 2025.

During the interagency review, lobbyists for oil companies, industry trade groups and environmental organizations will try to visit OMB officials and argue for and against the rule. In particular, oil industry leaders are expected to argue the measure is not needed and perhaps too expensive to justify.

Read more at FuelFix.

U.S. Senate Democrats to unveil comprehensive energy bill

U.S. Senate Democrats unveiled a comprehensive energy bill Tuesday that lawmakers indicated could be used as part of a larger bargain with Republicans to end longstanding limits on crude oil exports.

"These are certainly the ideas that we are going to be pushing for," Senator Maria Cantwell, a Washington Democrat, said at a press conference.

When asked if the bill would be part of dealmaking over a possible change in crude export policy, Cantwell said "clearly that would be part of the discussion."

The Democrats' 437-page energy bill calls for an end to federal incentives for some oil and natural gas production, an examination of how the government's crude oil stockpile is used and a study of how oil and refined products are priced.

The bill lays out a framework of energy priorities for Senate Democrats and clearly favors increased federal investment in renewable energy sources over fossil fuels.

Senate Minority Leader Harry Reid, a Nevada Democrat, said the bill is an attempt to move away from Republican energy policies, which he said exclusively favor the oil and gas industry.

Read more at Platts.

Study calls for U.S. natural gas pipeline replacement to reduce GHG emissions

As energy industry and government officials alike wrestle with the best way to limit the release of methane into the atmosphere, a new study reveals that US cities with programs calling for the replacement of aging natural gas pipeline have 90% fewer leaks per mile than cities without such programs.

The study, led by researchers from Stanford University and published in the journal "Environmental Science & Technology Letters," demonstrates "how well pipeline replacement programs have worked," Rob Jackson, the study's author, said in an interview Monday.

Researchers studied programs to replace pipelines made of cast iron and other outdated materials in three US regions, the cities of Durham, North Carolina and Cincinnati, Ohio, and Manhattan Island in New York City.

"We identified 132, 351 and 1,050 leaks in Durham, Cincinnati and Manhattan, respectively, across 595, 750 and 247 road miles driven," the study reported.
The release of the study coincides with a series of public hearings the US Environmental Protection Agency is holding on proposed updates to the agency's air rules for the oil and gas industry.

The proposals, designed to reduce emissions of greenhouse gases and volatile organic compounds from industry sources, are part of the Obama administration's Climate Action Plan to reduce methane emissions.

Read more at Platts.

With no protections for Western bird, focus is on land-use

Before the applause faded from the U.S. government's announcement that there would be no endangered species protections for the greater sage grouse, the criticism began over wide-reaching federal conservation plans meant to protect the bird's habitat across 11 Western states.

The land-use plans were released Tuesday after Interior Secretary Sally Jewell said additional federal protections weren't needed for the ground-dwelling bird that's seen its habitat shrink due to oil and gas drilling, grazing and other human activity.

The U.S. Bureau of Land Management plans outline measures to help sage grouse across 67 million acres of public lands throughout the West, including 12 million acres of prime habitat where strict limits on oil and gas limits will be enforced.

Federal lands make up more than half the bird's habitat.

Many of the same state officials who cheered Jewell's announcement have previously said the new BLM conservation plans were overly restrictive, particularly with oil and gas drilling. Their next step is to try to bring those federal conservation plans in line with their own.

"This doesn't end the discussion of where we're going to be," Montana Gov. Steve Bullock said after Jewell's announcement.

In Wyoming, where the biggest concentrations of sage grouse are found, the plans would limit disruptions like oil and gas drilling as far as six-tenths of a mile away from any sage-grouse breeding area.

Mines and oil and gas drilling pads would need to be spaced no closer than every square mile. Also, drilling would be prohibited for three and a half months each spring during breeding season.

Those restrictions apply only to designated "priority habitat" for the birds, not everywhere they are found. And they are far more permissive than the three-mile limit on breeding sites that scientists recommended.

Oil and gas activity can bring breeding to a halt if it gets too close to the birds, said Steve Holmer, a senior policy adviser with the American Bird Conservancy.

States and the BLM came up with their own proposals on how to protect sage grouse habitat on the lands they manage. The resulting plans are credited with staving off the Endangered Species Act protections that state officials feared would cause even greater harm to the economies across the 257,000-square-mile region where the chicken-sized bird ranges.

Read more at Associated Press.

New architecture needed to ensure success of 'Internet of Things' implementation

The oil and gas industry can reap multiple benefits from Internet of Things (IoT) technology, but will need to implement new infrastructure to fully take advantage of these benefits. The industry needs to adopt a new model that allows data to go directly to the enterprise system, rather than collecting data with conventional sensors and then placing data into a process control network with SCADA, distributed control systems (DCS) and then a firewall.

This existing model is not feasible for IoT, as consumers of data are increasingly third parties, not just the operator, said Dave Lafferty, president of Scientific Technical Services. Lafferty served as chairman at the Energy Connection Network’s inaugural IoT in Oil and Gas Conference.

The solution in the past would be to put data into a corporate network protected by additional firewalls. If one wall goes out, the whole thing can break, Lafferty told attendees at the event, held last week in Houston. Instead, oil and gas companies should use an IoT provider with a polling or subscription model to know who has access to what data and where that data should be placed. Analytics to make sense of data, security in place so data can go around the DCS, and a backhaul network that takes data from the field, are also necessary.

An example of a company actually following this model is San Antonio-based WellAware, which monitors wellhead data on a subscription basis, and backhauls and stores data in the cloud for analytics before delivering that data to a desktop or a mobile device. The company also offers 55,000 square miles of coverage, and covers all major shale plays in North America and in Alaska, said Lafferty.

Read more at Rigzone.

OPEC focuses on rival mega projects, lives with shale swing output

DUBAI (Reuters) — After almost a year of painfully low oil prices, OPEC members are beginning to believe they are winning against upstart U.S. shale producers in a short-term market share contest.

Yet insiders and experts say OPEC is looking for a longer-lasting impact on other high-cost production oil field plans, many in deep oceans, with bigger time scales, even if that means a period of cheap oil prices lasting for years.

Privately, OPEC's core Gulf members say they have resigned themselves to the idea that the U.S. shale industry's high-tech flexibility means it will respond quickly when prices start rising again, making the United States the new swing producer in world oil, the role held for so long by Saudi Arabia.

"The oil surplus is slowly being drawn from the market. U.S. oil production is expected to fall to less than 9 million barrels per day by the end of this year or early next year," said an OPEC delegate from a Gulf oil producer.

"But there is one point that no one is looking at which is the delay in the longer-term oil projects, these are 4-5 year projects. The postponement of these projects will impact the overall supply in the market."

The short investment cycle of U.S. shale, where it takes about few months before returns are seen, make it the most sensitive to oil price fluctuation -- either way.

Thus the spike in oil prices in June where U.S. crude was trading above $60 a barrel drew out more shale output but the price drop in August will reverse that, OPEC sources say.

Read more at Reuters.
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