Energy Tomorrow Blog
Posted May 1, 2015
API President and CEO Jack Gerard joined members of Congress and others at a Capitol Hill press conference calling for an end to the United States’ 1970s-era ban on the export of domestic crude oil. Gerard:
“We've come to the point where we have a limitation on our ability to continue to grow this renaissance, to create good-paying jobs, to help stimulate the domestic economy. Today, there are few public policy changes that would bring as much economic value to our domestic economy than lifting the ban on crude exports.”
Texas Democratic Rep. Henry Cuellar said other Democrats will support legislation to end the export ban:
“I think we are going to get there. Once we get this on the floor, you’re going to see that we’re going to get more support from the Democratic side. … I’ll continue working with my friends across the aisle to make sure that this outdated ban on oil exports is lifted.”
Posted May 1, 2015
Ravalli (Mont.) Republic: The nation’s energy future is strong, with oil and natural gas production driving the country closer to becoming a net exporter of energy, the commissioner of the Federal Energy Regulatory Commission said Wednesday.
Commissioner Norman Bay said the U.S. has ramped up its oil and gas production while slowing domestic demand for petroleum.
Growth of the nation’s electrical consumption has also slowed to 1 percent a year, and coal is playing a smaller role in U.S. power generation.
“In 2009, all that natural gas flooded the market and the share of electricity generated from coal dropped from 50 percent to 45 percent,” Bay said. “Over time, the share of generation by natural gas continues to increase and electricity generated from coal continues to decrease. It’s primarily driven by market forces.”
Posted April 27, 2015
ConocoPhillips Chairman and CEO Ryan Lance talks with Energy Tomorrow about key industry challenges ahead and details the case for ending the United States’ 1970s-era ban on the export of domestic crude oil. Lance is a petroleum engineer with 28 years of oil and natural gas industry experience in senior management and technical positions with ConocoPhillips, predecessor Phillips Petroleum and various divisions of ARCO. His past executive assignments with ConocoPhillips have included responsibility for international exploration and production, regional responsibility at various times for Asia, Africa, the Middle East and North America, and responsibility for technology, major projects, downstream strategy, integration and specialty functions. He is a member of the Society of Petroleum Engineers, and earned a Bachelor of Science degree in petroleum engineering from Montana Tech in 1984.
Q: Given the current downturn in oil prices, talk about the key decisions ahead for the industry over the next 10 years.
Lance: We foresee several key decisions ahead for companies in our industry. First they have to determine their strategic direction. Industry has transitioned from an era of limited resource access to one that, due to the productivity of North American shale and the potential for shale development elsewhere, offers a new abundance of resources. Although many of the best conventional resource areas remain off limits in traditional exporting countries, shale and other unconventional resources offer immense potential in many areas that are accessible. So companies now have an unprecedented range of options – pursuing North American shale, international shale, deepwater development, LNG, oil sands, international exploration, and so on. Companies must determine where they have or can build competitive advantages and leverage relationships with host nations, potential partners and suppliers, and identify the long-term opportunities best for them.
Posted April 27, 2015
Wall Street Journal op-ed (John Hess): While one can debate the reasons for the Organization of Petroleum Exporting Countries’ decision in November to continue flooding the oil markets, the fact is that this is squeezing many U.S. shale oil producers out of business. Oil prices have dropped by 50% in the past six months, and crude oil inventories in the U.S. have grown from 350 million barrels last year to more than 480 million barrels today.
Part of the reason inventory has ballooned is that crude produced in the U.S. is literally trapped here, because American firms are not allowed to sell it overseas. An antiquated rule bans crude oil exports from the lower 48 American states, even though producers could earn $5-$14 more per barrel by selling on the world market. At this moment the U.S. government is considering lifting sanctions on Iranian crude oil exports. Why not lift the self-imposed “sanctions” on U.S. crude exports that have been in place for the past four decades?
The export ban is a relic of a previous era, put in place around the time of the 1973 Arab oil embargo against the U.S., when Washington thought very differently about ensuring America’s energy needs. Other measures related to the 1973 embargo, such as price controls and rationing, were eliminated decades ago, as policy makers realized that they impeded, rather than aided, American energy security. But the ban on crude oil exports persists.
There is no defensible justification for the continued ban on the export of U.S. crude oil.
Posted April 24, 2015
The Hill Op-ed (U.S. Reps. Calvert and Israel): These days there doesn’t seem to be many things Democrats and Republicans can agree on, but after a recent bipartisan Congressional Delegation trip to Ukraine, we came back in agreement on one thing. Visiting Kiev, and speaking with Ukraine’s leaders it is clear that while their economy is faltering, there are steps that we can take, in addition to sanctions, that will hamper Russia’s economy and future border advances. …
… It has become clear to us, and many others, that the U.S. is sitting on a unique opportunity to advance our economic and national security goals. By increasing our ability to export natural gas – in the form of liquefied natural gas or LNG – to Europe, the U.S. can weaken Russia’s strategic stronghold while boosting our domestic economy by increasing energy exports.
Posted April 17, 2015
BloombergBusiness: The U.S. pumped crude last month at the fastest pace since February 1973, sending March inventories to the highest level in 85 years.
Crude output climbed 13 percent from a year earlier to 9.32 million barrels a day in March, the American Petroleum Institute said in a monthly report Thursday. Production of natural gas liquids, a byproduct of gas drilling, climbed 9.1 percent to 3.05 million, a record for March. The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies from shale formations in the central U.S.
“Production of both crude oil and natural gas liquids last month remained at the highest levels in decades even as rig counts reached a five-year low,” John Felmy, chief economist at the API in Washington, said in an e-mailed statement.
Posted April 16, 2015
The Wall Street Journal: A former White House economic adviser is calling for changes to a 2005 law mandating increased use of alternative fuels in the nation’s transportation supply, adding a key voice to a growing chorus of people who say the policy is not working.
In a report published Thursday, Harvard University professor Jim Stock, who served on President Barack Obama’s Council of Economic Advisers in 2013 and 2014, proposes several reforms to the biofuels mandate, known as the renewable fuel standard, including some requiring congressional approval.
The report adds to a growing body of politicians and experts who are questioning the law’s effectiveness amid regulatory uncertainty and lower oil prices.
Posted April 8, 2015
NOLA.com: Five years after the BP oil spill in the Gulf of Mexico, the oil and gas industry can respond and contain well blowouts offshore faster than ever before, said Don Armijo, CEO of the Marine Well Containment Co. But he said work remains to make sure containment equipment keeps pace with industry's push to drill in deeper waters.
Armijo, who spoke Tuesday (April 7) at a business lunch at The Roosevelt Hotel in downtown New Orleans, said Marine Well Containment Co. has the equipment to respond to oil gushers in up to 10,000 feet of water. The industry will outgrow that equipment, he said.
"We know there has been drilling proposed in areas much deeper than 10,000 feet of water," Armijo said. "That's the big thing. How do we actually get the technology put together so we can be deeper? These are the kind of things that are on our minds all the time."
Posted April 7, 2015
Following on yesterday’s post on increased domestic energy production that is backing out imports, we see that the U.S. remained No. 1 in the world in the production of petroleum and natural gas hydrocarbons last year, according to the U.S. Energy Information Administration (EIA).
The government agency responsible for quantifying all things energy says that U.S. oil and natural gas production has been trending higher than the output of Russia and Saudi Arabia, the second- and third-largest producers:
Since 2008, U.S. petroleum production has increased by more than 11 quadrillion British thermal units (Btu), with dramatic growth in Texas and North Dakota. Despite the 50% decline in crude oil prices that occurred in the second half of last year, U.S. petroleum production still increased by 3 quadrillion Btu (1.6 million barrels per day) in 2014. Natural gas production—largely from the eastern United States—increased by 5 quadrillion Btu (13.9 billion cubic feet per day) over the past five years. Combined hydrocarbon output in Russia increased by 3 quadrillion Btu and in Saudi Arabia by 4 quadrillion Btu over the past five years.
Posted March 25, 2015
Amid the continuing public discussion over improving the safety of crude oil delivered by rail, it’s important that everyone – the energy industry, railroads, regulators, policymakers – stay focused on the facts and the science. This is key to making meaningful improvements to freight rail transportation – which already delivers 99.998 percent of materials like crude oil without incident. We say meaningful improvements because, as with everything we do, the oil and natural gas industry’s safety goal is zero incidents.
First, the science. A new Energy Department report found no data showing correlation between crude oil properties and the likelihood or severity of a fire caused by a train derailment. Also from the report:
No single parameter defines the degree of flammability of a fuel; rather, multiple parameters are relevant. While a fuel with a lower flashpoint, wider range of flammability limits, lower auto-ignition temperature, lower minimum ignition energy, and higher maximum burning velocity is generally considered more flammable, the energy generated from an accident has the potential to greatly exceed the flammability impact of these and any other crude oil property based criteria.
That last point highlights the importance of preventing derailments in the first place because, according to the department’s report, the kinetic energy created by a derailment can play a bigger role in the size of a fire than the commodity the train is hauling.