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Oil and Gas Roundup — Oct. 24

October 24, 2017
A roundup of oil and natural gas industry news from around the state, nation and world:

IEA eyes 40%-50% methane emissions cut from oil, gas sector at no net cost

About 40% to 50% of current methane emissions from the oil and gas sector worldwide could be avoided at no net cost, a new analysis by the International Energy Agency concludes.

A commentary released Monday previews the group's World Energy Outlook 2017, to be released November 14, by offering a glimpse at cost curves IEA developed to examine potential methane emissions reductions and the costs and revenues associated with mitigation globally.

"The role that natural gas can play in the future of global energy is inextricably linked to its ability to help address environmental problems," said Tim Gould, head of the WEO energy supply outlook division, and Chistophe McGlade, WEO senior analyst, in the commentary released Monday.

They find gas has a clear edge over other fossil fuels when it comes to air pollutants and CO2 emissions from combustion. On average, they find that "gas generates far fewer greenhouse gas emissions than coal when generating heat or electricity, regardless of the time frame considered."

Read more at Platts.

API: U.S. petroleum product demand hits 10-year September peak

U.S. petroleum product demand averaged more than 20.2 million b/d in September, 2.4% more than a year earlier and the highest level for the month since 2007, the American Petroleum Institute reported.

Deliveries, which API uses to measure demand, rose 2.1% year-to-year to an average of 20.4 million b/d during this year’s third quarter, and climbed 1.2% in the first 9 months to an average of 19.9 million b/d from the comparable 2016 period, API said in its latest monthly statistical report.

“Strong petroleum demand is good news for the overall economy, which grew for the 100th consecutive month, and economic activity in the manufacturing sector expanded in September,” said API Statistics Director Hazem Arafa.

September’s gasoline deliveries fell 0.8% from a year earlier to an average 9.4 million b/d, but still were the second-highest for the month on record, API said.

It said that the US Energy Information Administration reported that regular gasoline prices averaged $2.761/gal during the month, 27.6˘ more than in August and 43.4˘ higher than in September 2016. It also was the highest price for any month since July 2015 but remained the third-lowest for September since 2010, API said.

It said distillate fuel deliveries averaged more than 4 million b/d during the month, up 3.4% from a year earlier. They averaged more than 3.9 million b/d during the third quarter, up 3.7% from the same 2016 period, and more than 3.9 million b/d in 2017’s first 9 months, 2.3% higher than a year earlier.

Read more at Oil & Gas Journal.

Cash-poor Alaska eyes foreign capital to jump-start energy projects

Alaska is pursuing foreign investors for its oil and gas industry, hoping to advance recent discoveries while struggling to compete with lower-cost shale projects and reverse a decades-long output decline.

Sovereign wealth funds, banks and state-owned energy companies have met with Alaskan officials, John Hendrix, chief energy adviser to Alaska Governor Bill Walker said in an interview. China Investment Corp (CIC) and state-owned Chinese energy company Sinopec held talks with state officials last month, he said.

Alaskan crude production has fallen by three-quarters since 1988, a decline that has contributed to budget deficits and jeopardized the operation of the Trans-Alaska Oil Pipeline, which runs from the North Slope to the southern port of Valdez. This year, a state budget shortfall led the state to withhold hundreds of millions of dollars owed to small oil explorers.

The nascent investment push is mostly focused on Asian firms, which Alaskan officials believe could take roles in a proposed natural gas pipeline and in individual energy projects, said Hendrix, a former energy executive.

“It’s a wide, full-court press,” he said.

Read more at Reuters.

EPA walks back biofuels mandate changes

The Environmental Protection Agency is backing off from changes it floated to biofuels policy after significant pushback from Midwestern GOP senators and a direct intervention from President Trump.

In a letter to seven senators Thursday, EPA head Scott Pruitt pledged that he would not move forward with various ideas regarding the Renewable Fuel Standard (RFS), including lowering the biodiesel mandate and allowing ethanol exports to count toward the mandate.

“EPA has not taken any formal action to propose this idea, nor will EPA pursue regulations,” Pruitt wrote about the export idea in the letter, which Sen. Joni Ernst (R-Iowa) released publicly late Thursday.

Allowing exports to count toward obligations would have effectively lowered the amount of ethanol produced. The EPA never publicly proposed the idea, but it was rumored to be in discussions.

The EPA did not return a request for comment on the letter.

The commitment to certain regulatory outcomes — which is highly unusual in the regulatory process — came as Ernst and others raised the possibility of blocking Senate confirmation of certain senior EPA officials to protest the potential changes to the biofuels standard.

Read more at The Hill.

U.S. Midwest oil refiners boost output, cut region's dependence on Gulf Coast

U.S. refineries from Ohio to Minnesota are capitalizing on access to cheap crude from Western Canada and North Dakota oilfields, helping their region break a historic dependence on fuel from the Gulf Coast while redrawing oil trade maps.

Since the early 2000s, crude and fuel flows from the Gulf Coast into the U.S. heartland have been cut in half, as crude coming from Canada and North Dakota has pushed U.S. Midwest refining activity to record levels. In 2016, Midwest refining capacity rose to 3.9 million barrels per day (bpd) of crude, the highest annual volume on record.

Midwest refiners such as Marathon Petroleum Corp, Phillips 66, BP PLC and Husky Energy have invested billions of dollars on new units capable of turning sludgy crude from Canada into gasoline and diesel. Investments in the Dakota Access Pipeline and other avenues have helped bring in shale oil from North Dakota.

“Ten years ago, we were 1 million barrels per day short on products, with the Gulf Coast supplying the product. Today, the midcontinent is flush with products,” Marathon Petroleum Chief Executive Gary Heminger said in a recent Reuters interview at the company’s Findlay, Ohio, headquarters.

Yet analysts warned that weakening U.S. gasoline demand will make it challenging for Midwest refiners to sell their growing output. The Midwest is land-locked, making it hard to get products to new markets, especially as rival refiners defend their turf. Philadelphia area refiners are currently fighting efforts to reverse a pipeline so Midwest companies can move fuel to western Pennsylvania.

Read more at Reuters.
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