East Texas, Haynesville Production Stable Despite Wildfires

- East Texas, Haynesville Production Stable Despite Wildfires

Friday, September 09, 2011
Rigzone Staff
by Karen Boman

The wildfires plaguing East Texas have not impacted natural gas production volumes in the region, including Haynesville shale play production, but evacuations and fire-related damage have negatively impacted demand, BENTEK Energy reports.

Over the last three days, evacuations and fire-related damage in Texas have led to a near 1.0 Bcf total demand loss. BENTEK expects demand recovery to be gradual, though some demand should return due to rising temperatures. The Texas gas demand forecast, based on temperatures, shows power burn increasing by nearly 1.0 Bcf in the coming week, BENTEK said.

The Haynesville shale, one of the largest gas shale plays in the U.S., straddles the Texas and Louisiana border. Haynesville shale production from both states totals just above 5.0 Bcf/d, with about half of that production coming from the Texas side, BENTEK reports.

“BENTEK’s sample of production receipts from East Texas and Haynesville has not yet shown a distinct decline in production receipts that could be directly attributable to the fires,” BENTEK said in a report today. However, some of the fires have erupted around the perimeter of Haynesville shale counties, raising concerns about safety and disruptions in the fields.

Wildfires have burned acres in Harrison County, Texas, a core Haynesville production area in the state, and four non-core Haynesville production counties in Texas, Gregg, Marion, Nacogdoches and Rusk.

“If fires were to erupt in more developed areas of the shale, operations would undoubtedly have to be shut in, restricting production,” BENTEK said. “Even without a fire, downed power lines or disruptions in power transmission could also impact operations of pump jacks and compressor stations.”

To date, 26 large fires have burned nearly 114,000 acres in Texas, and are threatening oil and gas operations in the East Texas region as well as Louisiana and Oklahoma. An estimated 1,700 homes were either evacuated or lost, and more are threatened by fires.

“Much of East Texas is experiencing the highest level of drought conditions, and the fire danger in the East Texas Basin remains high to very high,” BENTEK said. Tropical Storm Nate will likely spare Texas from high winds but also withhold chances for rain.

Louisiana’s Department of Natural Resources (DNR) on Sept. 6 issued an advisory calling on oil and gas operators to monitor conditions closely and take necessary steps in case of fire, including shutting in wells, production facilities and pipelines if necessary.

“As drought conditions persist in many areas of our state, so does the risk of wildfire and the potential for wildfires to grow quickly out of control once they start,” said DNR’s Commissioner of Conservation Jim Welsh. He reminded operators that state regulations require combustible vegetation, trash and debris should always be kept at least 100 feet away from wellheads, production equipment, storage tanks and other exploration and production site structures.

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Despite Criticism, Canadian Oil Key to U.S. Demand

- Despite Criticism, Canadian Oil Key to U.S. Demand

Monday, July 25, 2011
Rigzone Staff
by Karen Boman

Despite criticism by environmental groups, U.S. imports of Canadian oil will continue to play a critical role in meeting U.S. energy needs, according to a recent report by the Calgary-based Fraser Institute, In America's National Interest-Canadian Oil.

In recent years, environmental groups have campaigned against the extraction of oil from Canada's tar sands. In advance of planned protests next month near the White House, U.S. actor Danny Glover and Canadian environmentalist David Suzuki are arguing that tar sands development has wrecked large sections of Alberta and disrupted the way of life of indigenous communities in the province.

In 2009, Greenpeace USA launched its "Stop the Tar Sands" campaign, which claimed that northern extraction of oil from Alberta's oil sands has "created a literal hell on earth" because land is visibly scarred by oil sands development, which takes place above ground. Amnesty International also has campaigned against oil sands development, wanting it to end until "no more development without human rights".

Environmental activists attempts to restrict U.S. imports of Canadian oil "ignore the reality of U.S. dependence on foreign oil and could force America to buy oil from repressive governments that restrict civil, political, and economic freedoms," according to the study by the public policy think-tank.

Canada now provides more oil to the U.S. than all the Persian Gulf countries combined, even though America imports 5.5 million more barrels of oil daily than it did in 1973. "Thus, the question is not whether or not the U.S. will import oil, but which country will supply that oil to American consumers, businesses and government," said study author and Fraser Institute director of Alberta policy Mark Milke.

Canada ranks sixth among the world's top oil producers at 3.3 million b/d. Unlike other countries that produce more oil such as Russia, Saudi Arabia, Iran and China, Canada scores well on measurements of civil, political and economic rights, as well as on proxy measures indicating quality of life, such as literacy rates, post-secondary education, and misogynist practices. With the exception of Norway, Canada is the only major oil-exporting country that scores highly on all measurements of civil, political and economic freedom.

Fraser cites the recent forecast by the International Energy Agency (IEA) that oil will remain "the dominant fuel in the primary energy mix to 2035," with global demand for crude oil reaching 99 million barrels daily by that time. IEA also forecasts that unconventional oil, such as oil extracted from Canada's oil sands, will play an increasingly important role in world oil supply through at least 2035, regardless of what government's do to curb demand.

Given that oil will remain a chief component of the global energy mix for the next several decades, America can either continue to embrace oil imports from Canada or resort to importing increasing amounts of oil from governments "that regularly violate human rights as a matter of policy, and in some cases, are state sponsors of terrorism," said Milke.

Milke noted that the perfectionism exhibited by Greenpeace and other environmental groups ignores the reality of actual energy needs and capabilities. "Long-lasting positive reforms are necessarily based upon how human beings actually live, behave, and work, and within the physical limitations they themselves face."

Canadian gas also provides an alternative supply as geo-political events, such as the Iranian Revolution of 1979 and the invasion of Kuwait by Iraq sharply curtailed oil imports on the world market, as well as insurance against disruption in OPEC supply. The study found that claims that oil sands crude does not lower prices because non-conventional oil is more expensive are mistaken, noting that the "final price of oil is determined not only by the initial cost of production but also by demand.

"Reduced supply on the international market from any source creates upward pressure on prices; in reverse, more oil on the market from any source acts to dampen upward pressure on prices. This is straightforward supply and demand."

The study does not recommend that governments restrict oil imports from jurisdictions based upon their relatively poor record for civil, political and economic freedoms. However, just as it is ill-advised for governments to restrict trade for matters unrelated to national security, "it is also ill-advised to allow misleading assertions from lobbyists about Canadian oil to go unchallenged," Milke said.

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Range Production Up Despite Barnett Sale

- Range Production Up Despite Barnett Sale

Wednesday, July 20, 2011
Fort Worth Star-Telegram, Texas
by Jack Z. Smith

Despite selling virtually all its Barnett Shale properties in North Texas in April, Range Resources expects to "have fully replaced all of the Barnett production" by the end of the third quarter, CEO John Pinkerton said in an update released in advance of the company's second-quarter earnings report.

Pinkerton said the Fort Worth-based natural gas and oil producer can boost production because of "excellent drilling results in the Marcellus Shale and Mid-Continent regions."

The company has been among the leading producers in the Marcellus natural gas field in Pennsylvania and has benefited from robust oil and gas production in the Mid-Continent region, which includes Texas and Oklahoma.

Range lost production equivalent to more than 100 million cubic feet of natural gas per day by selling its Barnett Shale properties effective April 29. But Range said its second-quarter production volume still averaged the equivalent of 508 million cubic feet of natural gas per day, an 8 percent increase over the second quarter of 2010.

Production for the second quarter of this year was 76 percent natural gas, 17 percent natural gas liquids and 7 percent crude oil, Range said in the operations update issued late Monday. The company is scheduled to report second-quarter results Monday.

Range said it received an average price equivalent to $5.63 per 1,000 cubic feet of natural gas for its second-quarter production, an 11 percent increase over a year earlier. Average prices were $4.63 per 1,000 cubic feet for natural gas, $50.07 per barrel for natural gas liquids and $80.42 per barrel for oil.

Pinkerton said Range is on track to achieve its goal of achieving net production equivalent to 400 million cubic feet of natural gas per day in the Marcellus Shale by year's end.

Based on the performance of 103 Marcellus Shale horizontal wells that began producing in 2009 and 2010, Range is projecting that the estimated ultimate recovery, or lifetime production, from these wells will average the equivalent of 5.7 billion cubic feet of natural gas per well, including about 4 billion cubic feet of gas and 281,000 barrels of liquids (natural gas liquids and crude oil).

The estimated recovery per Marcellus horizontal well is two to three times the estimated lifetime production of many typical wells in the Barnett Shale.

Copyright (c) 2011

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Ahmadinejad to Run Oil Ministry Despite Legal Ban

- Ahmadinejad to Run Oil Ministry Despite Legal Ban

Monday, May 23, 2011
Knight Ridder/Tribune Business News
by Farshid Motahari, dpa, Berlin

Iranian President Mahmoud Ahmadinejad will run the Oil Ministry despite a legal ban, his legal deputy said Sunday.

Ahmadinejad last week dismissed oil minister Massoud Mirkazemi and took over the ministry himself, which would have also made him rotating chairman at June's OPEC meeting in Vienna.

But Iran's constitutional watchdog, the Guardian Council, rejected the plan as illegal and said that Ahmadinejad could not run the Oil Ministry as caretaker.

The president's legal deputy, Fatemeh Bodaghi, told ISNA news agency that the decision has already been made, as the Guardian Council could only decide on decisions to be made but not on those already been made. Therefore, Ahmadinejad would remain caretaker of the ministry, she said.

Ahmadinejad had argued that he planned to trim the cabinet, and one of his decisions was to abolish the Oil Ministry and merge it with the Energy Ministry. The plan led to wide-spread criticism in Parliament.

Ahmadinejad is involved in a row with Iran's clergy and conservative factions over his reform plans, which include reducing the cabinet from 21 to 17 ministries.

As caretaker of the Oil Ministry, Ahmadinejad would also chair the OPEC meeting next month in Vienna, where protests against the Iranian president are reportedly being planned.

Copyright (c) 2011, dpa, Berlin

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