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  • W&J Energy Review | April 13 2015


Editors: Diana Stares, Jack Myint

Local Affairs

In Pennsylvania, Employment Booms Amid Oil And Natural Gas Bust | NPR, April 13 2015

Lower oil and natural gas prices have the petroleum industry laying off tens of thousands of workers. It looks like a decade-long trend of job growth in the U.S. oil business may end. But there are parts of the country where those job numbers are still rising. Pennsylvania is one of them. Randy Stroup sees evidence of that where he lives in Williamsport, Pa. "You can drive down the road and see the amount of oil and gas trucks with their names on the side," he says. Stroup recently finished the ShaleNet training program at Pennsylvania College of Technology. In the training students combine classroom time with experience on a mock drilling rig the school owns. Now Stroup is looking for work and he's optimistic about the future of the natural gas business in Pennsylvania's Marcellus Shale region. "There is a great abundance of natural gas in the area," Stroup says, "and the country needs cheap and efficient, clean-burning fuels like natural gas." More than 100 students have completed the roustabout training, according to the college, and 98 percent landed jobs right away at an average rate of $16.15 per hour.

Rise of deadly radon gas in Pennsylvania buildings linked to fracking industry | Washington Post, April 9, 2015

A new study published Thursday reported a disturbing correlation between unusually high levels of radon gas in mostly residences and an oil and gas production technique known as fracking that has become the industry standard over the past decade. Writing in the journal Environmental Health Perspective, researchers analyzed levels of radon — a colorless, odorless gas that is radioactive and has been linked to lung cancer — in 860,000 buildings from 1989 to 2013. They found that those in the same areas of the state as the fracking operations generally showed higher readings of radon. About 42 percent of the readings were higher than what is considered safe by federal standards. Moreover, the researchers discovered that radon levels spiked overall in 2004, at about the same time fracking activity began to pick up. Hydraulic fracturing or "fracking" involves drilling 6,500 to 10,000 feet below the surface, and scientists theorize that radon trapped in rocks there is released into the atmosphere."By drilling 7,000 holes in the ground, the fracking industry may have changed the geology and created new pathways for radon to rise to the surface," one of the authors, Joan A. Casey from the John Hopkins Bloomberg School of Public Health, warned.


Pennsylvania shale drillers to release monthly reports on gas production | Pittsburgh Post-Gazette, April 02 2015

Pennsylvania’s unconventional natural gas producers pulled 390 billion cubic feet of gas from the Marcellus Shale and other resource-rich rock layers in January, according to the first monthly production reports the companies filed with the Department of Environmental Protection. The numbers released by the state on Wednesday are the first of what will be regular reports of monthly unconventional gas production after Pennsylvania passed a law last year to increase the frequency of reporting from twice-yearly to monthly to better correspond with the details reported on leaseholders’ royalty checks. Shale gas production during the month of January averaged 12.6 billion cubic feet per day, or Bcf/d, an increase over the daily average during the second half of 2014, the last reporting period, when the state’s unconventional producers averaged 11.5 Bcf/d. The state does not guarantee the accuracy of the production data, which are self-reported by operators, but the January numbers appear to be in line with figures released by the U.S. Energy Information Administration, which reported that 14.4 Bcf/d was produced in January from the entire Marcellus Shale region, including West Virginia. A DEP spokeswoman said 80 percent of operators reported their January production by the March 31 deadline and the companies that submitted their reports on time represent 99.5 percent of unconventional natural gas wells in Pennsylvania. Pennsylvania’s top producing counties during the month — Susquehanna, Bradford and Lycoming — were in the northeast, followed by Washington and Greene counties in the southwest.


Are Marcellus drillers cheating the state? Agencies take a closer look | April 06 2015

People who leased their land for Marcellus Shale drilling have been complaining for several years that some companies are cheating them out of gas royalty money. It turns out the commonwealth of Pennsylvania is having the same problem. But the issue is so complex and convoluted, the state doesn’t even know how much money it’s owed. Gas drilling on state-owned land has sent hundreds of millions of dollars in royalties to Harrisburg. Private landowners have received millions more. But some companies have been accused of underpaying. Royalty disputes have led to several class action lawsuits and an ongoing investigation by the state attorney general’s office.

Natural gas industry offers stability for Western Pennsylvania economy, experts say | TribLive, April 09 2015

The natural gas industry must become a bigger part of the Western Pennsylvania economy if the region is going to keep pace with job growth around the rest of the nation, economists said Wednesday. “Pittsburgh has not latched on to any current driving forces, economic sparks,” said Kurt Rankin, an economist at PNC Financial Services, during a roundtable discussion Downtown hosted by The Economic Club of Pittsburgh. “That spark eventually can and should come from natural resources development.” For the past decade, the Pittsburgh region's economy has been defined by stability, avoiding the boom and bust cycles of the housing market and the dramatic job losses during the recession. But more recently, the pace of growth has lagged behind other cities. Pittsburgh's seven-county region added just 9,200 jobs between February 2014 and February 2015, a 0.8 percent increase, compared to 1.5 percent growth in Cleveland and 2.2 percent in Detroit, according to Pittsburgh Today, which tracks regional economic trends. The shale industry offers the greatest promise to speed the pace of growth in the decades ahead, providing a boost to manufacturers that need cheap and plentiful energy and potentially attracting younger workers to the area, economists said. But currently, the energy industry's impact is limited. The mining and logging sector, which includes natural gas, provides 1 percent of employment here — or 12,500 jobs.

National Affairs

’15 could be a record year for the greening of U.S. energy | Washington Post, April 07 2015

In general, changes to our energy system come slowly. It’s a marathon, not a sprint. Nonetheless, 2015 is shaping up to be a pretty special year and a pretty significant 365-day shift in how we get our power, says a 2015 power market outlook released by Bloomberg New Energy Finance (BNEF). “This Research Note is more sensationalist than we typically write,” it confesses. The reason is a combination of three separate factors all moving in the same direction — an expected record for renewable energy installations, another forecast record for coal plant retirements and booming natural gas. The consequence, if these forecasts are realized, would be considerably cleaner energy and an impressive one-year drop in U.S. emissions. “There’s basically these three big shifts underway, and they result in a drop in emissions, but more important, a structural shift towards a more decarbonized power fleet,” said William Nelson, BNEF’s head of North America analysis.


Growing U.S. Energy Self-Sufficiency | Breaking Energy, April 07 2015

Statistics in the U.S. Energy Information Administration’s Monthly Energy Review for March show U.S.domestic energy production meeting about 89 percent of the country’s total energy demand. That’s up from 84 percent in 2013 and 2012 and reflects a key result of the domestic energy revolution: growing U.S. self-sufficiency.  There’s not a lot of mystery about the components of America’s energy renaissance: vast reserves of oil and natural gas, safely produced from shale and other tight-rock formations with advanced hydraulic fracturing and horizontal drilling. Shale energy has rewritten the U.S. energy narrative while boosting the economy.EIA reports that last year the U.S. enjoyed the largest volume increase in crude oil production since records started being kept in 1900, increasing 1.2 million barrels per day to 8.7 million barrels per day. It’s a story that can continue to grow – with greater access to reserves, both offshore and onshore. Planning is key, because pro-growth energy decisions must be made now for oil and natural gas production in the future.

US Business Says Hello To US Wind Energy, Goodbye To Fossil Fuels | Cleantechnica, April 10 2015

So, it looks like the Energy Department is on to something after all. Despite some doubts about the market for small-scale and distributed wind energy, the agency has been quietly pushing R&D along for high-efficiency micro wind turbines, and what do you know, the market is ready and eager to pounce. The American Wind Energy Association has just come out with a new report showing a “steady increase” in the number of US businesses investing in wind energy, either on site or through power purchase agreements with utilities. The trend is quite pronounced, with more than 23% of wind power contracts in 2014 going to a group that we’ll call “not-utilities.” That includes government and academic institutions as well as businesses.

Oil companies’ profits hit by quest for crude price exposure | Reuters, April 13 2015

The drop in big oil companies' profits in the past eight months isn't just a function of lower crude prices – it also reflects strategic choices. A Reuters examination of corporate filings by some of the biggest players in the industry, including BP, Shell and France's Total, shows the sensitivity of these companies' earnings to changes in oil prices has risen in recent years. This means that for every dollar the oil price drops, their profits sink more than they might have done five years ago. Of course, that wasn't the plan. Choices made by several oil majors that built more exposure to prices into their portfolio, mainly through the kinds of contracts they opted to sign, was aimed at enjoying prices that were historically high. "In simple terms it (oil price sensitivity) has increased and that's been a deliberate choice," Simon Henry, Chief Financial Officer at Royal Dutch Shell Plc, Europe’s largest oil group by market value, told Reuters.

New U.S. Offshore Oil and Gas Drilling Rules Seen Imminent | WSJ, April 11 2015

The Obama administration is expected to propose in the coming days an offshore oil and natural gas drilling regulation aimed at preventing the kind of explosion that erupted five years ago on BP’s Deepwater Horizon rig, killing 11 people and causing the biggest offshore oil spill in U.S. history. The Interior Department draft rule, which has long been expected by the industry, would impose tougher standards on that blowout preventers, which are designed to seal off oil wells in emergencies. This equipment failed in the April 2010 disaster, which helped lead to the explosion on the BP rig in the Gulf of Mexico. An Interior Department spokeswoman on Saturday wouldn't say when the administration would issue the rule. But oil-industry officials say it could come imminently. The spokeswoman said the department has issued two major regulations on drilling safety since 2010, including tougher requirements on well casings and cementing practices of wells. She stressed the latest rule would be a continuation of the administration’s policy response to the spill.

How To Reenergize The Hard-Hit Oil And Gas Industry | Forbes, April 1 2015

Here’s a piece of legislation the Republican Congress should pass pronto: end the decades old, misbegotten ban on the export of crude oil, as well as the stifling bureaucratic restrictions on the export of natural gas. Astounding advances in technology and new discoveries of oil and natural gas reserves have skyrocketed U.S. energy production. America is drilling and refining more oil than it has in decades. Gas is so abundant that electric utilities can’t build or retrofit plants fast enough to absorb it all. These barriers were put in place to help American businesses and consumers by keeping the stuff at home rather than letting foreigners get their hands on it. Back in the 1970s people thought we were running out of both resources because nominal prices were going up. The real cause was the weak dollar. When President Ronald Reagan and Paul Volcker’s Federal Reserve ended the terrible inflation of the 1970s, commodity prices crashed. Oil fell from almost $40 a barrel to $10 before stabilizing in the $20-to-$25 range. In the early part of the last decade the Fed, with the connivance of the Treasury Department, weakened the greenback, with the same consequences: Commodity prices zoomed up, with oil reaching a peak of more than $140. Now that the dollar has strengthened—something the Fed didn’t intend, which says something about its competence—commodities such as oil have taken a hit, just as they did in the 1980s. The price of natural gas was already low because of the surplus generated by fracking.


API says Obama should address U.S. energy trade barriers | The Bakken, April 08 2015

Responding to a report released by the Obama Administration on lifting overseas trade barriers, the American Petroleum Institute said outdated American trade policies create barriers to energy exports that would create U.S. jobs. The report from U.S. Trade Representative Michael Froman released last week highlights the administration’s successes in eliminating “unwarranted barriers to selling our world-class goods and services abroad.” According to the report, “Made-in-America exports unlock economic opportunity for the American people, support 11.7 million well-paying jobs across the United States, and strengthen the middle class.” However, Louis Finkel, API executive vice president, said, “The U.S. trade representative says that exports are central to the president’s economic agenda, but some policymakers seem to have a blind spot when it comes to energy.” He noted that 1970s-era policies limit the export of liquefied natural gas (LNG) and crude to overseas markets. “The White House is focused on trade barriers overseas, but some of the worst limits on U.S. exports are imposed by our own outdated policies,” Finkel said. “We can’t call for our allies to open their doors to trade while closing our own.” He referred to studies which show that free trade in oil would promote the creation of U.S. jobs, put downward pressure on fuel costs, and strengthen America’s diplomatic influence overseas.


International Affairs

The U.S. opportunity in Cuba | EnergyWire, April 10 2015

Since President Obama said he would try to undo the 50-year-old economic lockdown on Cuba, many have speculated on how it could galvanize industries from tourism to telecommunications. But how about the energy sector? Experts say the end of trade restrictions could mean a sizable new market, only 90 miles away, for all sorts of supplies and services from the United States' energy industries. They encompass offshore oil exploration to natural gas turbines to electric infrastructure to solar panels to biofuels. The lifting of U.S. sanctions could rehabilitate Cuba's dilapidated power grid and lead to higher standards of living for Cubans, whose energy use could skyrocket. And an infusion of natural gas and renewables could lower the carbon emissions of an island that runs on oil. "If the country wants to grow economically, one of the first things you have to do is guarantee that it has a reliable electric power system," said Jorge Piñon, a native of Cuba and director of the Latin America and Caribbean Energy Program at the Jackson School of Geosciences at the University of Texas, Austin.


IFR Announces Mexico Oil and Gas Initiative | CNW, April 13 2015

International Frontier Resources Corporation ("IFR" or the "Company") onApril 13th, 2015 is pleased to announce that it has formed a Mexican subsidiary, Petro Frontera S.A.P.I de CV (Frontera) that will allow for (i) the study of, and bidding on, assets in Mexico's initial oil and gas Energy Reform bid round in 2015; (ii) the acquisition and participation in services contracts that are currently migrating to exploration and production contracts; (iii) and the development of other petroleum and natural gas assets in MexicoMexico's historic energy reform announced in 2014 has established a new legal framework for Mexico's energy industry and is expected to attract billions of dollars in foreign investment.  In August 2014, SENER (Secretaria de Energia de Mexico) announced that Round One will include: (i) 169 blocks, comprised of 109 exploration blocks and 60 production blocks and (ii) 14 blocks under joint ventures with PEMEX.  The tender process commenced in the first quarter of 2015, and production-sharing agreements are expected to be awarded through out 2015. Mexico is the ninth largest producer of oil in the world and the eleventh largest in terms of net exports.  It is the third largest oil producer in the Western Hemisphere behind the United States and Canada.


The Hidden Effects of Cheap Oil | The Atlantic, March 31 2015

What do Russia, Exxon Mobil, and ISIS have in common? Not much, except that they’re all grappling with an inconvenient but incontrovertible truth: a sudden, significant, and prolonged shift in the price of oil changes the world.  That truth was on display in 1974, and it’s on display again now. Over the course of just a few months in 1973-1974, the price of oil surged from $3 to $12 per barrel. The new price created new global economic powers: oil-producing countries primarily in the Middle East and North Africa. It also dealt a severe blow to the economies of the United States, Europe, Japan, and other oil importers. The oil shock altered power relations between the world’s main geopolitical players and created new ones. Higher oil prices had many unexpected consequences—from breeding oil wars to fueling the international spread of Islamic fundamentalism thanks to funding from newly super-rich countries like Saudi Arabia. Today’s drop in crude-oil prices, which began in the summer of 2014, may be as disruptive as the quadrupling of oil prices that created the oil shock of 1974. Some of the effects of this decline in oil prices have been clear and immediate; picture happy Americans at gas stations and frantic government officials in oil-exporting countries forced to cut public budgets and consequently risk social and political turmoil.

IEA: Central Asia, Eastern Europe need to open energy doors | April 13 2015

A more liberalized energy sector in Eastern Europe and Central Asia is necessary for regional energy security, a report Monday from the IEA said. The IEA published a 476-page report on the region's energy sector, stating that, while countries like Azerbaijan and Kazakhstan are emerging as oil and gas powerhouses, their reserves are under "rigid" and mostly government control. The European market relies in part on Russian natural reserves and many of those reserves run through Eastern European markets, where crises like Ukraine's expose vulnerabilities. Apart from Norway, the European community has looked outside of the region for a diverse source of energy. "The EU's energy security increasingly depends on the production in and safe transit of energy goods through our neighboring countries," European Director of Energy Policy Mechthild Worsdorfer said in a statement Monday. The IEA report was funded in part by the European Union. The report said countries in Eastern Europe and Central Asia need to open their doors more to European markets as a way to promote sustainable development.

FACT SHEET: U.S.-CARICOM Summit – Deepening Energy Cooperation | April 09 2015

Today, President Obama met with Caribbean leaders in a U.S.-CARICOM Summit in Kingston, Jamaica.  President Obama reaffirmed the importance of our relationship with the region, and the United States’ commitment to partner with Caribbean countries to advance economic development, security, and good governance.  Leaders discussed a broad range of issues, from our important trade and investment linkages to security cooperation. The leaders’ discussion focused on the importance of improving energy security, reducing energy costs, and fighting climate change.  This follows robust engagement on these issues over the last year, including the White House Caribbean Energy Security Summit hosted by the Vice President in January 2015 and the launch of the Caribbean Energy Security Initiative (CESI) coordinated by the Department of State.

The Top 10 Stories You Need to Know About Oil & Gas Today | OilPro

  • Fire Erupts At Rosneft Refinery In Siberia, One Worker Killed.
    A fire erupted out at Rosneft's Angarsk refinery in east Siberia on Friday, resulting in the death of one worker, Rosneft said in a statement. The company added that the blaze had erupted at a pipeline that was undergoing maintenance during repairs. Rosneft added that the firm had initiated a probe into the incident. [Oilpro]

  • BP & Noble Energy Chosen To Replenish The US SPR.
    The US Department of Energy has awarded contracts for delivery of crude oil to the Strategic Petroleum Reserve. BP Products North America, Inc., will deliver 2,197,500 barrels and Noble Americas will deliver 2,000,000 barrels to the Reserve’s Bryan Mound site in Freeport, Texas. Deliveries are expected to be completed by July 31, 2015. [Oilpro]

  • Statoil Strikes Oil In The Gulf Of Mexico.
    Statoil said Thursday that it has made an oil discovery in its Miocene Yeti prospect in the Gulf of Mexico, about 9 miles south of the Big Foot Field. The Yeti discovery was made in the Walker Ridge block 160 area in the GOM, located about 9 miles south of the Big Foot Field, and roughly 7 miles from the Cascade field. Statoil said all of the blocks comprising Yeti were accessed by the current owners in recent years. [Oilpro]

  • Reliance Drillship Faces Reliability Questions After Riser Seal Failure.
    While operating in the Gulf of Mexico, the Rowan Reliance drillship has experienceda loss of seal in the riser connection system. The high spec ultra-deepwater drillship was working for Cobalt International Energy. The rig commenced drilling the North Platte #2 appraisal well in about 4,850 ft. of water on February 1st. The well was being drilled with the Rowan Reliance at a depth of 20,701 feet when the problem with the riser was detected. [Oilpro]

  • The UK-Argentina Falklands Row Is Getting More Intense.
    Government leaders of the UK and Argentina have summoned their respective ambassadors as the UK strengthens its defenses of the Falkland Islands and as Argentina files criminal charges against oil companies operating in the region. The Argentine Foreign Ministry said it called in the UK ambassador to explain the ramped up defense spending and revelations by former US NSA contractor Edward Snowden that the UK had spied on Argentina's government since 2009. [Oilpro]

  • Brent Edges Up Towards $57, Heads For Weekly Gain As Iran Supports.
    Oil edged higher towards $57 a barrel on Friday, heading for a weekly gain,supported by an easing of concerns that the interim accord over Iran's nuclear work will lead to a rapid rise in Iranian oil supplies. Brent crude was up 23 cents at $56.80 a barrel by 0725 ET, remaining on track for its third weekly gain in four weeks. WTI was down 15 cents at $50.64 a barrel. [Reuters]

  • PetroChina Catches ExxonMobil As World's Most-Valuable Oil Company.
    PetroChina Co. passed Exxon Mobil Corp. on Thursday as the biggest energy company by market value for the first time since 2010. As the chart in this article shows, Exxon's capitalization was $352.6 billion through Wednesday, compared with PetroChina's $352.8 billion as of 1:36 p.m. on Thursday in Shanghai. [Oilpro, Bloomberg]

  • It Is Still Unclear What Exactly Happened Last Week In Lausanne, Switzerland.
    An Iranian delegation is in Beijing this week to discuss the possibility of more oil sales to the Asian giant, as well as potential Chinese investment in Iran's ailing oil and gas sector. Among the delegation is Oil Minister Bijan Zanganeh, whose comments added to an already seething diplomatic cauldron following the announcement of the framework agreement between the P5+1 and Iran last Thursday. [Oilpro]

  • Report Alleges Hillary Clinton Changed Tone On Colombia Human Rights Because Of Connection To Oil Firm.
    A report alleges that Clinton, the presumed Democratic front-runner for the 2016 presidential election, changed her tone on Colombia human rights at a time “when her family was forming a financial relationship” with Frank Giustra, president and CEO of Fiore Financial Corp. and the founder of Pacific Rubiales Energy Corp. [Financial Post]

  • China To Build $2bn Iran-Pakistan Pipeline.
    China will reportedly finance the so-called ‘Peace Pipeline’ natural gas pipeline from Iran, home to the world’s second largest reserves, to energy-deprived Pakistan. The project was delayed due to US dissent. The final deal is to be signed during the long-sought visit of Chinese President Xi Jinping to Islamabad in April, the Wall Street Journal reported on Thursday. []