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Energy Matters - November 11, 2015
November 11, 2015
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While production in most major shale plays continues to fall, Permian Basin output grows
Oil production in the Permian Basin could exceed 2 million barrels per day (bpd) in November, according to the U.S. Energy Information Administration’s recent Drilling Productivity Report, which projects an increase in output of 17,000 bpd in November and another 11,000 bpd in December. Growth is also projected for the Utica shale play over the next two months. However, despite the anticipated increase, these figures – when combined with estimated output from the five other major shale plays – put overall year-end output down by 560,000 bpd from the April 2015 peak of 5.51 million bpd.
Obama rejects proposed Keystone XL pipeline
President Barack Obama has ended the long-running debate over Keystone XL, rejecting the proposed pipeline on the heels of TransCanada Corp’s recent State Department request to delay review of the $8 billion border-crossing project. “The pipeline would not make a meaningful long-term contribution to our economy,” said Obama, citing that the proposed project would have little impact on job creation, gas prices, and U.S. energy security.
Banning flaring of natural gas suggested as possible concession for support of U.S. oil exports
Winning Democratic support to lift the 40-year-old ban on oil exports will likely require a concession – one that acknowledges the environmental harm that could result from enabling an increase in U.S. oil production. This is according to Rice Institute’s Jim Krane, who says the ban on U.S. oil exports should be replaced with a ban on natural gas flaring, an issue that has grown more problematic for the industry since 2009 as a result of the shale gas boom.
Commentator calls Keystone XL the “ultimate contradiction”
The President’s move to reject the proposed Keystone XL pipeline represents the “ultimate contradiction and extreme hypocrisy,” according to a commentary published in Fuel Fix. The critic says the decision – despite its support from organizations that view the action as an important marker for the upcoming climate change meeting in Paris – will have no impact on production and use of Canadian oil.
Oman oil and gas minister calls low oil price environment a “man-made crisis”
The tone of the annual Abu Dhabi International Petroleum Exhibition and Conference further underscores the conflicting views surrounding today’s low oil price environment – and the path toward price recovery and global growth. Shortly after officials from the United Arab Emirates laid out plans to increase oil production in light of current global prices, Oman oil and gas minister Mohammed bin Hamad al-Rumhy issued these words, “This is (a) man-made crisis in our industry we have created. …And I think all we’re doing is irresponsible.”
Analysts say Southern Gas Corridor could support regional stability
Commentators are calling the Southern Gas Corridor (SGC) – the $40 billion project to deliver gas from the Caspian Sea to Europe – a “framework to promote cooperation” in political and diplomatic relations among the six countries involved in the 2,000 mile network of pipelines. In addition to driving multilateral cooperation, the SGC is also expected to bring a host of other short and long-term economic contributions, creating a powerful shared interest that could significantly transform regional stability.
Asia will fuel oil demand, says Saudi Minister
Oil demand in Asia – which is expected to rise to almost 46 million barrels a day in the next 25 years – will play a critical role in driving economic growth, said Saudi Oil Minister Ali al-Naimi. He says demand will soon reflect the “attractiveness” of today’s oil price environment, and if it keeps pace with current projections, 40 million barrels a day of crude oil and refined products imports will likely be required to fuel the region by 2040.
Resource development in Southern Ohio’s Wayne National Forest moves closer to approval
Public hearings on November 17 through 19 will provide the Bureau of Land Energy Management with another opportunity to consider the voices of Southern Ohioans who support shale development in the Wayne National Forest. The hearings serve as a sign of progress for many local residents who view a ban on resource development in the area is an infringement on property rights.
Youngstown rejects anti-fracking “Community Bill of Rights” for fifth consecutive time
For the fifth consecutive time, voters in Youngstown, Ohio rejected the Community of Environmental Legal Defense Fund’s “Community Bill of Rights” in a move that underscores the region’s support of resource development. The anti-fracking measure, which lost with 51.47 percent of voters against the amendment, is seen as an “economically crippling” action that could cut jobs and opportunity from the region.
Sierra Club admits fracking, increased use of natural gas is playing key role in lowering CO2 emissions
In a report released last week, the Sierra Club attempts to give all the credit to its “Beyond Coal” campaign, which the organization has touted as the primary driver behind the nation’s dramatic reduction in greenhouse gas emissions. But even the Sierra Club can’t escape acknowledging the reality that every other credible organization – from the International Panel on Climate Change to the International Energy Agency – knows to be true: fracking and natural gas – the very resource in which the Beyond Coal campaign seeks to end consumption – have played a pivotal role in bringing U.S. CO2 emissions to its current 27-year low.
Colorado State University report finds fracking has caused “no evidence of water-based contaminants”
Colorado State University researchers have concluded a new study, providing further evidence that fracking is not contaminating the water supply. “Water Research” is the second in a series of studies examining the impact of resource development on water quality. Ken Carlson, a CSU civil and environmental engineer professor, said in the Denver Post, “There isn’t a chronic, the sky-is-falling type of problem with water contamination.”
China again puts added pressure on crude, global growth outlook
Signals of added economic weakness are emerging this week as China’s trade surplus of crude widens to achieve a new record high. Underscoring this point is the Organization for Economic Cooperation’s latest economic growth report, reducing its outlook to 2.9% for 2015 and 3.3% for 2016.
Apache shares climb amid talks of possible takeover
Apache Corp. shares surged upwards on Monday after the Houston-based oil company rejected an acquisition offer. The company – worth $25 billion in enterprise value on Nov. 9 – has since retained Goldman Sachs to mitigate the risk of a hostile takeover.
Marathon Oil to shed aging Gulf fields interests
In a move that further underscores the company’s focus on development in U.S. shale plays, Marathon Oil announced it will shed its interests in aging Gulf of Mexico fields for $205 million. The transaction, which is expected to close by the end of the week, includes the Gulf fields it operates in the Ewing Bank blocks as well as two non-operated interests. The company will maintain certain interests, including its stake in the Gunflint project and Anadarko Petroleum Corp.’s Shenandoah discovery.
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