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In The Oil Patch – Omar Garcia (ep. 104)

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.

Listen to the Episode Here

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USGS Haynesville/Bossier Resource Estimate Decimates The Notion Of “Peak Gas”

Hey, guess what?  There’s a bunch of natural gas out there along the Texas and Louisiana Gulf Coast!

That’s what the US Geological Survey (USGS) announced on April 13, with its assessment that the combined Haynesville and Bossier shales, sandstones and carbonates contain a gigantic volume of natural gas, which the USGS estimates at a total of 304 trillion cubic feet (tcf) in place.  That represents enough natural gas to supply country’s entire demand for natural gas for about 12 years, just from two formations, and it represents a 330% increase over the agency’s 2010 resource estimate.

As USGS noted, the formations also contain a very large volume of oil and natural gas liquids:

The Bossier and Haynesville Formations of the onshore and State waters portion of the U.S. Gulf Coast contain estimated means of 4.0 billion barrels of oil, 304.4 trillion cubic feet of natural gas, and 1.9 billion barrels of natural gas liquids, according to updated assessments by the U.S. Geological Survey. These estimates, the largest continuous natural gas assessment USGS has yet conducted, include petroleum in both conventional and continuous accumulations, and consist of undiscovered, technically recoverable resources.

The updated estimate is a part of an ongoing USGS program to re-visit many of the largest oil and gas producing basins in the country, in order to create a more accurate picture of the resource available for the nation’s use as we move into the future.  The agency previously released an updated estimate of oil contained in the Wolfcamp formation in the Permian Basin, which I analyzed last November.  This is an important exercise designed to better inform public policy decisions related to energy, especially given the amount of ridiculous mis-information that gets into the media every day, such as the always-present but never correct “peak oil” and “peak gas” theories.

Read The Rest Here

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That Uncomfortable Moment When The Pipeline Boogeyman Fails To Perform

A couple of weeks back I wrote about the shifting focus of anti-fossil fuel conflict groups in their efforts to impede the nation’s energy development in various parts of the country.  That focus, which since about 2008 had centered on the boogeyman “fracking”, has now shifted to a new, midstream boogeyman in the form of pipelines.

When conflict groups have identified a good boogeyman, they flaunt it at every opportunity, and it becomes a rationale for them and their supporting web-based media outlets for stopping whatever other activities they want to stop. Of course, what they really want to stop is all development of fossil fuels.  Thus, over the last decade, we have seen minor spills of returned fluids from hydraulic fracturing jobs blown up into a reason to halt all drilling in a given basin or state.  Now, we see the same dynamic at work, in which even the smallest event that can (at least seemingly) be attributed to a pipeline forms the rationale for halting all activity in an entire region.

That previous piece focused on an incident involving a natural gas pipeline leak in Alaska’s Cook Inlet, which is operated by Hilcorp, and the manner in which Hilcorp’s efforts to coordinate with regulators to address the issue were distorted by one of those web-based media groups, EcoWatch.  Repairs to that pipeline are underway, with no discernible impacts to surrounding wildlife or the environment, but it placed Hilcorp on these groups’ radar as a target for exploitation.

Read The Full Piece Here

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The Oil And Gas Situation: The Rigs Just Keep On Coming

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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…

 

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President Trump’s Latest Energy Executive Order Is Not Just About Coal

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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.

Some major aspects of the Order contain significant implications for the oil and natural gas industry as well.

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.
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State Dept. Approves Keystone XL, World Does Not End. Film At 11.

It’s been a very busy week for pipeline-related matters.  On Monday, I wrote about the Dakota Access Pipeline, and the latest controversy surrounding whether the state of North Dakota will receive any help in paying the huge tab it has incurred policing and cleaning up after the protesters.  On Wednesday I wrote about the fact that anti-oil and gas conflict groups are shifting their focus from an upstream boogeyman (fracking) to a midstream target (pipelines).

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.

Read The Rest Here

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Conflict Groups Find A New Boogeyman – Pipelines

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.

Read the Full Piece Here

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