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Oil and Gas Roundup — July 5

July 05, 2017
TOPICS: OIPA, In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

Rig count flat in Okla., off 1 nationwide

The number of rigs exploring for oil and natural gas in Oklahoma was flat at 132 at the end of last week, while the U.S. count fell by one to 940.

Nationwide, 756 rigs were exploring for oil and 184 for natural gas. A year ago, 431 rigs were active nationwide and 58 in Oklahoma.

Of the other major oil- and gas-producing states, Texas climbed one to 461; Colorado lost one to 36; standing flat were Louisiana (67), New Mexico (60), North Dakota (52), Pennsylvania (34), Ohio (27) and Wyoming (25).


Baker Hughes, GE oil and gas business complete merger

General Electric’s new oilfield services behemoth is poised to capitalize on a recovery from the worst crude crash in a generation — except no one is sure when that will actually happen.

The merger of GE’s oil and gas business with Baker Hughes Inc. officially closed Monday, creating a provider of services and equipment that’s second in size only to Schlumberger Ltd. While Lorenzo Simonelli, the GE oil executive who will lead the new Baker Hughes, says his company carries built-in advantages over its rivals, the launch comes at a time of growing risks and uncertainty in the oil market at large.

Shale explorers have been leading a fresh drilling boom, boosting budgets 10 times faster in the U.S. than the rest of the world. Whether that growth continues, though, is far from certain. After almost six months of growth, the number of rigs targeting oil fell last week and production declined. That hints at growing caution among producers for next year.

“I think they need a little more time over the course of this year to make those decisions,” Simonelli said in an interview Friday before finalizing the merger Monday. He’s also not ready to make any new predictions on the profit outlook for his company in 2018. “It’s a little early to say.”

The new company begins trading under the ticker BHGE on Wednesday. Simonelli said his initial focus is on how he can reap the most savings as he stitches together the two businesses without sacrificing market share. To do that, he’s touting how the merger brings together strengths that can’t be matched by competitors such as Halliburton Co., Schlumberger or Weatherford International.

Read more at The Tulsa World.


Appeals court orders EPA to proceed with emissions rule

A federal appeals court in Washington has ruled that the head of the Environmental Protection Agency overstepped his authority in trying to delay implementation of a new rule requiring oil and gas companies to monitor and reduce methane leaks.

In a split decision Monday, the three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit ordered the EPA to move forward with the Obama-era requirement that aims to reduce planet-warming emissions from oil and gas operations.

EPA Administrator Scott Pruitt announced in April that he would delay by 90 days the deadline for oil and gas companies to follow the new rule, so that the agency could reconsider the measure. The American Petroleum Institute, the Texas Oil and Gas Association and other industry groups had petitioned Pruitt to scrap the requirement, which had been set to take effect in June.

Last month, Pruitt announced he intended to extend the 90-day stay for two years. A coalition of six environmental groups opposed the delay in court, urging the appeals judges to block Pruitt's decision.

In a detailed 31-page ruling, the court disagreed with Pruitt's contention that industry groups had not had sufficient opportunity to comment before the 2016 rule was issued. The judges also said Pruitt lacked the legal authority to delay the rule from taking effect.

Read more from the Associated Press.


IEA chief: Oil market to rebalance in second half of 2017

The global oil market is expected to rebalance in the second half of 2017, but further output increases among key producers such as Nigeria and Libya could hamper this process, International Energy Agency chief Fatih Birol said on Tuesday.

He said some key producers including Libya and Nigeria had significantly increased output in recent months.

"In the current context we see the market rebalancing in the second half of the year. But if production increases in some of the key producers this may change the picture," Birol told Reuters on the sidelines of an Energy Institute event.

"Whatever OPEC do, if the prices go up, there will be a response from shale oil producers," he said.

— Reuters.


Independence Day gasoline prices lowest since 2005, thanks to hydraulic fracturing

Americans hitting the road this extended Fourth of July weekend are doing so on the cheap, thanks to the lowest Independence Day gas prices since 2005. GasBuddy, a nationwide price monitoring site, has projected a gallon of gas will cost drivers an average of $2.21 over the holiday.

That’s good news for the record 37.5 million expected to hit the roads over the Fourth of July and strong proof that America’s renewed shale boom is having positive impacts across the economy.

These low prices at the pump — well below the 10-year average of $3.14 — can be traced directly to America’s newfound ability to export oil and influence the global Brent price standard for which refined products, such as gasoline, are based on.

Since the 40-year-old crude oil export ban was lifted in 2015, crude exports are now happening at double the rate they were in 2016. Considering more than half of the U.S.’s near-record oil production comes from shale formations — and these formations typically produce a lighter crude than the heavy crude most U.S. refineries are set up to process — this has helped alleviate some of the supply glut that drove down domestic oil prices (West Texas Index).

In turn, this influx of American oil onto the global market has driven down the Brent price and resulted in savings at the pump. Equally important, this new American oil in the global energy market has yielded considerably less power for OPEC, which traditionally had a dominant place and so was able to manipulate the marketplace and drive up prices for consumers at the pump in years past.

Read more at Energy In Depth.
 
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