Energy Tomorrow Blog
Posted June 19, 2015
Energy & Environment Daily – Supporters of ending the ban on crude oil exports are mounting a full-court press to win over wary lawmakers, while keeping a close eye on global markets and the calendar.
Export backers in recent months have cited both national security and economic arguments as they look to line up the votes to repeal the decades-old ban. Earlier this week at a speech at the U.S. Energy Information Administration annual conference, Continental Resources Inc. founder Harold Hamm warned that maintaining the ban would cause U.S. production to fall by 1 million barrels a day (Greenwire, June 16).
EIA's own data from earlier this month pegged U.S. oil production at 9.6 million barrels per day in May, but predicted that amount to "generally decline" until early 2016 before picking up again.
However, EIA's latest forecast also noted the highest average monthly price of 2015 for the global oil benchmark -- Brent crude, which rose $5 a barrel in May. At the same time, U.S. average gasoline prices rose to $2.72 last month, a 25-cent increase over April and the highest of the year so far.
Posted June 18, 2015
SNL – Accusing OPEC of manipulating crude oil prices, the founder, chairman and CEO of Bakken Shale pioneer Continental Resources Inc. on June 16 detailed arguments for lifting the U.S. ban on oil exports, saying exports would rejuvenate a flat-lining oil industry while lowering domestic gasoline prices.
Speaking to a Washington, D.C.-centric crowd at the U.S. Energy Information Administration's 2015 Energy Conference in Washington, Harold Hamm said the combination of North Dakota's Bakken Shale and Texas' Eagle Ford Shale and "new" Permian shales — "Cowboystan" — provides the nation with more than enough production and reserves to permit exporting light, sweet crude oil.
"Horizontal drilling has transformed" oil and gas production in the U.S. to where the country "reaches energy independence" by 2020 and "we can get to the point where we can produce 20 million barrels per day," more than double what the U.S. has produced in recent months, according to the EIA.
"Only in America" could Cowboystan happen, Hamm said, because of the "three Rs: rigs, rednecks and royalties."
Posted June 17, 2015
The Hill – A new Republican bill introduced Tuesday would completely repeal the federal mandate to blend ethanol into the nation’s gasoline supply.
Sen. Bill Cassidy’s (R-La.) legislation would completely do away with the renewable fuel standard, which first took effect in 2005 and now requires increasing levels of ethanol and biodiesel to be put into traditional fossil fuels.
The mandate invites frequent criticism from Republicans, the oil industry and sectors that complain the demand it creates for corn ethanol increases agricultural prices.
“Workers, refiners, producers, farmers and ranchers across the country are affected by the renewable fuel standard,” Cassidy said in a statement. “More mandates mean less jobs. It means families are paying more for gas and groceries.”
Posted June 11, 2015
NPR – There's a serious problem in the American economy: Big corporations are doing well, but real household income for average Americans has been falling over the past decade — down 9 percent, according to census data.
"That's not good for America," says Harvard economist Michael Porter. "That's not good for America's standard of living. That's not good for our ultimate vitality as a nation."
That's why Porter's excited about the deep reserves of natural gas and oil that have been made accessible by hydraulic fracturing technology, or fracking — a boon he examines in detail in a new report.
"It is a game changer," Porter says. "We have estimated that already, this is generating a substantial part of our GDP in America. It's at least as big as the state of Ohio. We've added a whole new major state, top-10 state, to our economy."
Posted June 10, 2015
BloombergBusiness – The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
U.S. oil production (green line in chart, left) rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.
“We are truly witnessing a changing of the guard of global energy suppliers,” BP Chief Economist Spencer Dale said in a presentation. “The implications of the shale revolution for the U.S. are profound.”
Posted June 9, 2015
BP Magazine – Why is natural gas the fuel of the future? Despite pressures on the industry today – with gas prices down and capital investment under pressure – longer term trends still point to the increasing significance of natural gas in the energy mix. BP Magazine looks at some of the numbers behind the story of the world’s strongest-growing and cleanest fossil fuel.
Over the next 20 years, natural gas is expected to catch up with oil and coal and emerge as the main hydrocarbon component of a more sustainable energy mix. The fastest-growing fossil fuel – which is primarily methane – is mainly used for power generation, as well as in homes, offices, shops and other commercial locations for heating and cooling. It’s also a raw material in the production of fertilizer and other chemicals – and it is sometimes used as a fuel for transport as well.
Posted June 8, 2015
Platts (The Barrel Blog) – When OPEC left production unchanged in November last year many understood it to be US or Canadian tight oil producers who would suffer, but thanks to technological advances — to paraphrase Mark Twain — the reports of the death of the tight boom have been greatly exaggerated.
After OPEC’s announcement of stable production, crude prices fell under $50/b, and the obituaries began to be written.
But lower prices forced companies to become hyper-vigilant on costs, and the result was the opposite of what may have been intended. US and Canadian production continued to grow, and E&P companies became leaner and more efficient — leading to a more competitive industry.
The savings from technological advances and more efficient internal processes, unlike the drop in rig dayrates that could rise again when the market turns, will be a more permanent feature of the North American oil market.
The numbers tell the story. The North American oil rig count dropped from its peak in early October at 1,609 to 646 for the week-ending May 29, yet productions is headed in the opposite direction — US oil output hit 9.586 million b/d, its highest daily rate since the EIA began weekly production reports in 1983. The EIA recently forecast another million b/d of oil production growth until it peaks in 2020 at 10.603 million b/d.
Posted June 5, 2015
New York Post – Six months after Gov. Andrew Cuomo banned fracking as too hazardous, the federal government released a report Thursday saying there’s no evidence the drilling practice has caused widespread harm to drinking water in the United States.
“Based on available scientific information, we found out that hydraulic fracturing activities in United States are carried out in a way that has not had widespread systemic impact on drinking-water resources,” said Thomas Burke, deputy assistant administrator of the Environmental Protection Agency.
“It is a new lens, so we can all make better decisions about public health.”
The report, issued in draft form after three years of study, cautioned that safeguards are still needed because some drinking water has been contaminated.
“The number of documented impacts on groundwater resources is relatively low,” Burke said.
Posted June 4, 2015
CNBC – The U.S. Environmental Protection Agency said in a Thursday report that it found no evidence fracking has a “widespread” impact on drinking water.
The EPA report concluded that there are above and below ground mechanisms by which fracking have the potential to impact drinking water resources, but that the number of identified cases were “small” compared to the number of fracking wells.
“We did not find evidence that these mechanisms [of potentially affecting water] have led to widespread, systemic impacts on drinking water resources in the United States,” the report said.
Posted June 3, 2015
The question posed to Dominion Energy President Diane Leopold was about “Keystonization” – referring to the tactical use of protests, process and procedural delays and legal challenges to block safe energy development and key infrastructure projects.
Leopold knows the terrain well. Despite a small but vocal group of opponents, Dominion Energy recently won federal approval to expand its Cove Point, Md., natural gas terminal to allow the export of liquefied natural gas (LNG).
At an event hosted by America’s Natural Gas Alliance (ANGA) last month, Leopold cautioned that delay of the Keystone XL pipeline for more than six years has generally helped embolden opponents of energy infrastructure (see here, here and here) – making it more important than ever for energy companies to effectively communicate their plans and the benefits of their projects while exceling in community engagement.