If you want to keep current on what’s happening in oil and gas in Texas, the “Inside the Oil Patch” program airs every Sunday evening on AM 740 KTRH in Houston, and AM 550 KTSA in San Antonio. The show is sponsored by Shale Magazine, for which I am an associate editor. I do a ten minute segment on most of the shows. The hosts, Kym Bolado and Alvin Bailey, do a great job of putting together high quality guests and very informative shows.
Some thoughts on the domestic oil and gas situation as we move into April…
The rigs just keep on coming…: The industry activated more than 70 additional drilling rigs during the month of March, bringing the total new rigs activated during the first quarter of 2017 to more than 200. My “bold” prediction as the year began was that it would take four months, not three, for the U.S. industry to bring that number of new rigs onto the market. So, ok, I was too timid.
Interestingly, more than a dozen of these newly-active rigs have moved into the Haynesville Shale region, which is experiencing a somewhat surprising resurgence of activity, even in the seemingly interminable weak price market for natural gas. The play’s abundance of pipeline takeaway capacity and proximity to major export facilities are two of the main reasons for this uptick in activity, as detailed by Forbes contributor Jude Clemente in his piece of March 25.
March’s increase in rigs drilling for oil was also less focused on the Permian Basin than in prior recent months, with other basins like the Eagle Ford, the SCOOP/STACK and the DJ Basin also seeing significant upticks in activity. How much longer this rising rig count can last is anyone’s guess, but it was a major reason why…
An interesting facet of the news media’s coverage the past couple of days about President Trump’s Executive Order on Promoting Energy Independence and Economic Growth (hereinafter referred to as “Order”) is that the coverage focused mostly or entirely on the Order’s impacts on the U.S. coal industry and coal-related jobs. Granted, the Order was cast as the President’s effort to essentially rescind major parts of former President Obama’s “Clean Power Plan”, which most recognize was an effort by his Administration to damage the nation’s coal industry. But just as the “Clean Power Plan” had impacts and produced major regulatory efforts that reached far beyond the coal industry, President Trump’s newest executive order also impacts other segments of the nation’s energy sector.
Here is a review of several of them:
- Section 2 of the Order directs all relevant agencies to “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” This is a very broad-ranging mandate that, when combined with other aspects of the Order, is likely to create a vast array of proposed regulatory rescissions and reforms.
Hope I didn’t say anything too stupid…
Today, the pipeline-related topic moves to the grandaddy of all the conflict lobby’s boogeymen – the Keystone XL pipeline – and the Trump Administration’s announcement that the State Department has issued the cross-border permit necessary for Trans-Canada to proceed with completion of the northern leg of the Keystone system. Friday’s announcement states that the State Department “considered a range of factors including, but not limited to, foreign policy; energy security; environmental, cultural and economic impacts; and compliance with applicable law and policy.”
The decision by the State Department comes as no surprise, given that it follows an executive order issued by President Trump in January, which instructed State to make a decision on whether to issue the permit after a study period to last no more than 60 days. It is also in line with Trump’s “America First Energy Plan” which focuses on ways to make the U.S. less dependent on imports of oil from the Middle East. Keystone XL, if completed, will carry large volumes of Canadian oil sands crude into the United States to be refined and consumed.
As their decade-long effort to demonize hydraulic fracturing – or “fracking” as they like to call it – lost its previous steam over the last couple of years, anti-fossil fuel conflict groups who raise money by stoking public fears related to the oil and gas industry have gradually shifted their main focus over to the pipeline segment of the business. Encouraged by the temporary victory given them by the Obama Administration related to the Keystone XL pipeline project, these conflict groups have become engaged in protests related to numerous midstream projects in the Northeast, in North Dakota (the Dakota Access Pipeline) and in West Texas (the Trans-Pecos Pipeline).
While their high-profile “wins” to date have been either temporary or, as with the Dakota Access Pipeline, illusory, the conflict industry obviously sees this coordinated attack on the midstream segment as a money-makernevertheless. Thus, they have chosen to engage in a constantly-increasing number of pipeline-related construction projects and incidents.
“May you live in interesting times,” goes the old Chinese curse. It’s a curse that we all would like to avoid in our lives, since history tells us the most interesting times we experience tend to be ones of conflict and chaos of one form or another.
Jeff Miller, the President and Chief Environment, Health and Safety Officer for Halliburton, knows better than most what it means to live through such times. Having spent the last two decades serving in a variety of leadership roles for one of the world’s largest oilfield service firms, he has experienced all manner of interesting times in an array of locations across the globe.
For Miller, who spent his younger years as a PRCA calf roper, this is not his first rodeo. But the last two years, as the price of crude oil has crashed on the world market, have been especially interesting for him, and for Halliburton.
“There are many, many times when we sit around a table and I’m the only one in heels. And it doesn’t go unnoticed. So I always wanted to be very confident of the facts and prepared in what I was going to say, because you don’t want to be dismissed. That’s true in any meeting, in any setting; however, it was very true in my earlier years. I think that once you prove your muster, you are given equal time and equal confidence. But it is true: You do have to prove it; you do have to earn it, not unlike in anything else.”
So says Karen Harbert, President and CEO of the Institute for 21st Century Energy at the U.S. Chamber of Commerce. She’s discussing some of the challenges of being a woman in what has been a mostly male-dominated world of energy, a world that she has played a significant role in shaping throughout an accomplished career that began with an assignment at the Republican National Committee (RNC) upon her graduation from Rice University in 1988.
“And I think things are beginning to change in the energy industry: We certainly see more women in the C-suite,” says Harbert. “On the other hand, I don’t think we see enough women on boards. That’s probably across all business areas, but particularly in the energy industry, and I hope that does continue to change over time. But it is less about bringing people in from the rigs and up the headquarters ladder; the industry becomes more open to women as it evolves into more of a high-tech industry. So, it’s changing, and for me it meant doubling down and making sure I was well-prepared. But also, it’s about kicking the tires a little bit and letting them know us women can do this too.”
A U.S. Court of Appeals ruling rejecting the latest appeal by the Standing Rock Sioux and Cheyenne River Sioux Tribes on Saturday means that oil could begin flowing through the completed Dakota Access Pipeline (DAPL) this week. Once fully operational, the 30-inch pipeline will carry more than 400,000 barrels of crude oil per day out of the Bakken region in North Dakota to market, mitigating the current process of carrying the oil out of the basin via trucks and rail cars.
The commencement of flow through the DAPL represents the closure, of sorts, to one of the most hotly-contested pipeline construction projects in U.S. history, although a number of protesters remain in the area, presumably in the hopes of mounting efforts to disrupt operations in the future. But all is quiet on the protest front for now, and the announcement early in March that cleanup of the huge mess the protesters left behind at the Oceti Sakowin protest site is complete also represents a sort of closure.
But as one source of controversy has closed, another has opened. The question now is, with the State of North Dakota estimating that it and local authorities have incurred more than $38 million in costs related to the policing of the protesters and cleanup of the massive mess they made at Oceti Sakowin and other protest camps, who is ultimately going to pay the bill?