Oil and Gas Roundup

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

GE research center progress becoming more prominent

Just more than a year after groundbreaking, the $125 million GE Global Research Oil and Gas Technology Center is becoming part of downtown Oklahoma City’s skyline.

The construction site has become a landmark along Interstate 235, a short distance from many of the city’s top recreational, sports and cultural attractions.

The research center is expected to employ 130 people when it opens this year, with visitors arriving from all over the globe.

See photos of the project at NewsOK.

U.S. oil output still barreling toward 45-year record

U.S. oil production edged down in May and will likely continue swooning until early next year as plunging crude prices continue pummeling domestic producers, according to a new federal report.

Oil and gas companies pumped 50,000 fewer barrels per day between April and May, with major crude producing states like North Dakota reporting declines in onshore output, according to the U.S. Energy Information Administration’s monthly Short-Term Energy Outlook.

The EIA predicts the shale drilling juggernaut will continue slowing under the weight of a global oil collapse. Production is expected to fall through February as drilling becomes increasingly uneconomic in various regions spurring producers pull back from marginal plays to instead focus on the sweet spots of the nation’s largest shale plays, the government said.

“The forecast decline in U.S. monthly oil production through early 2016 is the result of low oil prices, which pushed oil companies to reduce their investment in drilling that resulted in the lowest number of rigs drilling for oil in nearly five years,” said EIA Administrator Adam Sieminski in a statement.

Still, with domestic benchmark oil slated to average about $55 per barrel this year, the core spots of the Bakken, Eagle Ford, Niobrara and Permian basins remain economically viable to support development drilling, the EIA said. As rigs and wells become more efficient and productive, and the costs to drill and complete wells continue falling, onshore production will grow again in late 2016, the EIA said.

After weeks of relative stability at $60 per barrel, domestic benchmark crude plunged again this week as investors fretted about a slew of international news from China, Greece and Iran that foreshadowed continued imbalances in supply and demand.

Read more at FuelFix.

EIA predicts natural gas output growth to resume in July despite declines

Work on a pipeline capacity expansion project slowed natural gas production in the Marcellus shale play in recent months, but output is expected to kick back into high gear in July and keep pace with a projected 5.7% increase in production from last year, the US Energy Information Administration said Tuesday in its monthly outlook.

EIA, in its July Short-Term Energy Outlook, forecast gas marketed production at 78.65 Bcf/d for the second quarter and 79.28 Bcf/d for Q3, down 130 MMcf/d and 100 MMcf/d, respectively, from the agency’s June estimate.

EIA said in the report that Northeast production dipped in May and June because of maintenance and construction in the Marcellus producing area, contributing to a 1.2 Bcf/d drop in average output between April and June.

It noted that Transcontinental Gas Pipe Line has restricted capacity on parts of the Leidy Line that delivers gas from the Marcellus to market areas from May 1 through late June for construction “on an expansion that will ultimately increase Marcellus takeaway capacity.”

“EIA expects production growth will resume in July,” the report said.

The agency left its Q4 production estimate unchanged from June at 79.66 Bcf/d and bumped up its full-year 2015 estimate 10 MMcf/d to 78.97 Bcf/d.

Read more at Platts.

New methane studies find exceedingly low leakage rates

Today researchers from a number of universities, including the University of Houston, and the Environmental Defense Fund (EDF), published eleven studies in the journal Environmental Science and Technology, which evaluated methane emissions from oil and gas production in Texas’ Barnett Shale region. The findings show that methane emissions are manageable, and in the overwhelming majority of cases, leakage rates are exceedingly low.

The reports underscore why the IPCC and many other scientists have said that natural gas provides enormous environmental advantages.  In the few cases where researchers found higher emissions, these were well-defined as outliers – the exception rather than the rule.  In other words, the studies paint a very positive picture of how the industry is continually reducing methane emissions to produce a resource that brings so many environmental and economic benefits.

Here are the top things you need to know about these new studies:

Fact #1: Researchers’ measurements show low methane leakage rates

The studies find that methane leakage rates from natural gas systems were extremely low.

Read more at Energy In Depth.

Important context on USGS’ new water use and HF study

A recent report by the U.S. Geological Survey (USGS) – which finds that water usage for hydraulic fracturing varies across different basins in the United States, and that water use has ramped up as domestic oil and natural gas production has skyrocketed – has garnered a number of articles this week that are missing important perspective and context.

The reality is that as natural gas production has increased, water use overall has plummeted, because electricity from natural gas generation requires so much less water than other energy sources.  That was actually the conclusion of a recently released report by Climate Central:

“Water withdrawals for power generation dropped by more than 1.5 trillion gallons per year in Ohio, New York, and Illinois; 10 states had decreases of 1 trillion gallons or more. Electricity generated from natural gas increased 370 percent on average in those 10 states, with the largest absolute increases coming in Alabama and New York.”

The Climate Central report continues, “[F]racking to produce gas typically requires 3 to 5 million gallons of water per fracked well, and significant concerns have been raised about local environmental impacts of fracking fluids that are a mix of water and chemicals. However, in terms of water quantity, fracking consumes a relatively insignificant volume of water…” (emphasis added)

Climate Central’s report echoes a report from the University of Texas, which found that hydraulic fracturing is actually helping to shield Texas from water shortages because it is allowing the state to move away from using more water intensive energy resources.

Read more here.

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