REPOST: Industry in North Dakota to Cut Flared Natural Gas

A task force is assembled to capture the nature gas in teh Bakken shale oil field. Read more about this news from this New York Times article.

***

HOUSTON — Faced with growing criticism and lawsuits, an oil industry task force representing hundreds of companies in North Dakota pledged on Wednesday to make an all-out effort to capture almost all the natural gas that is being flared in the Bakken shale oil field by the end of the decade.

The gas being flared as a byproduct of a rush of oil drilling releases roughly six million tons of carbon dioxide into the atmosphere every year, roughly equivalent to three medium-sized coal plants. Because of a lack of gas-gathering lines connecting oil wells to processing plants, nearly 30 percent of the gas flowing out of the wells has been burned as waste in recent months.

The task force reported to the North Dakota Industrial Commission, the state regulator, that the industry could in two years improve the percentage of gas captured to 85 percent, from 70 percent, and to as much as 90 percent in six years.

Image Source: NYTimes.com

That would still mean more waste at the Bakken field than virtually all the country’s major oil fields. But it would represent a substantial improvement because so many new wells are being drilled. Energy experts expect a 40 percent increase in the gas produced from the Bakken field by the end of 2015.

“The industry recognizes the importance of capturing this valuable resource,” said Ron Ness, president of the North Dakota Petroleum Council, in a statement.

The task force said the industry could reach its goals by speeding the construction of gas-gathering pipelines and processing plants, and it called for stricter regulations requiring producers to create gas-capture plans before filing for a drilling permit. Failure to submit such a plan, according to the task force proposal, “may result in the denial or suspension of new drilling permits, while existing wells may be required to restrict production.”

The task force also recommended that the state support the rapid build-out of pipelines and electrical-transmission infrastructure with property tax credits, production tax credits and low interest loans along with incentives for increased local industrial use of gas for fuels, petrochemicals and fertilizers.

“It looks like a pretty good solution,” said State Senator Connie Triplett, a Democrat who has been urging stricter controls on flaring. “They actually invited regulation from the Industrial Commission, which has to be a first for the oil industry in North Dakota.”

The Bakken field is one of the fastest-growing oil producers in the country, rising from negligible production six years ago to one million barrels a day because of the technological advances in fracturing shale rocks and drilling horizontally.

North Dakota has become the second-biggest oil-producing state after Texas, and it has the lowest unemployment rate of any state thanks mostly to the oil industry. But the increase of flaring and a rash of explosive train accidents involving Bakken crude have raised concerns in North Dakota that there has been too much of a rush to increase production without adequate concern for public safety and the environment.

***
Dr. Ali Ghalambor is one of the most credible names in the field of oil and gas production and research. Know more about him by following this Facebook page.

REPOST: U.S. Oil Production Keeps Rising Beyond the Forecasts

 Oil production in the U.S. continues to rise. New York Times has the report:

***

OIL production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated this week.

“We keep raising our forecasts, and we keep underestimating production,” said Lejla Alic, a Paris-based analyst with the agency.

The increase left United States production at 7.5 million barrels a day, with both November and December production estimated to have been over eight million barrels a day.

American consumption of oil also rose last year, by 390,000 barrels a day, or 2.1 percent, to 18.9 million barrels a day. The agency increased its estimate of American oil use in the final quarter of the year, although it lowered its estimate of the increase in some other countries, including China. Over all, world consumption rose 1.4 percent, making 2013 the first year since 1999 that the use of oil in the United States rose more rapidly than in the rest of the world.

The agency said that demand was strong in the petrochemical industry in the United States, which has benefited from the fact that rising supply has left American crude oil prices lower than those in many other countries. The agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence and more sales of sport utility vehicles.

Despite the 2013 increases, oil use in most developed countries remains well below the levels of 2007, the last pre-recession year. The United States is estimated to have used 8.5 percent less oil in 2013 than it did in 2007, while demand is down by about 25 percent in Italy and Spain, European countries that were hard hit by the euro area’s problems. Germany stands out, with 2013 usage equal to that of 2007.

In the developing world, oil use has been rising steadily. Demand in China and Brazil is up more than 30 percent since 2007, and India’s consumption is 17 percent higher.

The agency estimates that in 2014, the 34 mostly rich countries in the Organization for Economic Cooperation and Development will consume less than half the oil used in the world. That would be a first: As recently as 2004, their share was over 60 percent, and in 2013, it was estimated to be 50.5 percent.

Over the same period, the United States’ share of the market fell to 21 percent from 25 percent, while China’s share rose to 11 percent from less than 8 percent. But the American share was estimated to have risen slightly in 2013, the first annual increase since 1999.

The increase in United States production in 2013 exceeded the increase of 836,000 barrels a day in 2012. The largest increase before that, of 751,000 barrels, was in 1951, according to the United States Energy Information Administration.

In percentage terms, the 15.3 percent increase in 2013 was the largest since an 18.9 percent gain in 1940.

American oil production fell steadily from the early 1990s through 2008, but has since risen for five consecutive years, largely because of increased production of shale oil. Not since the late 1960s, when production in Texas was peaking and Alaska oil was beginning to come on stream, has there been such a string of annual increases.

As a result, United States oil production climbed to the highest level since 1989, although it remains well below the record production of 9.6 million barrels a day, set in 1970.

The agency forecast that American production would continue to rise in 2014, adding 782,000 barrels, to 8.3 million barrels a day.

If that forecast proves to be accurate, United States oil production will have increased 46 percent over the three years from 2011 to 2014. There has not been a three-year increase that large since the years 1921-24, exactly nine decades earlier.

***

Be updated about the latest on oil and gas production by following this Ali Ghalambor Twitter page.

REPOST: Partners gets West Seahorse field reserves confirmed

"A final investment decision for West Seahorse is expected in the next few months." Continue reading about this topic here:

***

Oil reserves in the West Seahorse field in Bass Strait offshore Victoria have been confirmed by an independent appraisal. The assessment has provided greater certainty for the development project financing and the letting of major contracts (OGJ Online, Nov. 14, 2013).

Carnarvon Hibiscus holds 51.1% in the field and is operator; 3D Oil Ltd. holds 49.9% interest.

Gaffney, Cline & Associates estimated that, as of Dec. 31, 2013, the field’s proved and probable reserves are 6.5 million bbl. Oil in place has been put at 10.3 million bbl plus an estimated 1.5 million bbl potential in secondary reservoirs.

Four wells have been drilled in West Seahorse, including the 1981 discovery well by a group led by Beach Energy. Three wells have encountered the oil reservoir, while the fourth intersected the reservoir below the oil-water contact.

Front-end engineering and design for the development began in April 2013. The development concept centres on production via a leased mobile offshore production unit (a jack up) feeding oil at 12,000 b/d through a 1.5-km, 4-in. flexible flow line to a catenary anchor leg moored buoy. This in turn will be connected to a leased tanker serving as a floating storage and offtake facility.

Commercial life of the field is expected to be 5-6 years, but the group is also looking at the nearby exploration prospect named Sea Lion. If it too contains oil, it could be quickly tied into the planned facilities to extend production and increase the value of the project.

A final investment decision for West Seahorse is expected in the next few months. The schedule calls for the field to be brought on stream in early 2015.

West Seahorse lies in 39 m of water 14 km off the Ninety Mile Beach near Loch Sport. It lies 2 km west of ExxonMobil Corp.-BHP Billiton’s Seahorse field in the adjoining permit.

***

Get hold of the latest about oil and gas production by visiting this Dr. Ali Ghalambor blog site.

REPOST: GE Rides Oil and Gas, Aircraft to Higher 4Q Profit

General Electric Co. has stronger global sales of aircraft engines and oil and gas drilling equipment. Continue reading this news from this article:

***

General Electric Co. posted increased revenue and profit for the fourth quarter on rising sales in emerging markets, higher banking profit, and stronger global sales of aircraft engines and oil and gas drilling equipment.

The company's shares fell 2.3 percent Friday, though, because GE failed to increase its profit margin as much as it had predicted.

The company's profit for all of 2013 rose, though revenue fell slightly, as GE continues its transformation from a sprawling conglomerate to a more focused industrial company that builds and services complex equipment such as CT-scanners, locomotives and gas-fired turbines.

GE reported that its net income rose 5 percent to $4.2 billion, or 41 cents per share, for the October-December period on revenue of $40.38 billion. That's up from $4.01 billion, or 38 cents per share, on revenue of $39.16 billion in the fourth quarter of 2012.

Adjusted to remove the effects of one-time items and discontinued operations, GE earned 53 cents per share in the latest period. That matches what analysts polled by FactSet expected, on average.

But a manufacturing problem that has affected the quality of some wind turbine blades and poor performance by the company's small energy management division prevented the company from meeting its goal of improving profit margin in its industrial divisions by 0.7 percent. Instead, it improved 0.66 percent.

Christian Mayes, an analyst at Edward Jones, said that failing to hit the profit margin target unsettled investors even though the company hit its earnings and revenue targets. Mayes said GE had implied that the target would be easily hit, and that even if things didn't go perfectly at the end of the year, they'd still be able to reach it.

"They've been telling everyone that was an important target for them and they missed it," said Christian Mayes, an analyst at Edward Jones.

GE shares fell 62 cents, or 2.3 percent, to close at $26.58 Friday.

GE CFO Jeffrey Bornstein said in an interview Friday that the company's biggest goal is to improve industrial profit margins during company's transformation. The target is 17 percent or higher by 2016, up from 15.7 percent in 2013.

"The piece we need to deliver on is world-class operating margins that reflect the fact that we have world-class products and world-class distribution," he said. "This is what we've got the whole company laser-focused on."

For the year, GE net income rose 3 percent to $14.06 billion and revenue slipped less than 1 percent to $146.05 billion. GE has been scaling back its financial division, called GE Capital, and it has shed non-industrial divisions such as NBC Universal. It plans to spin off its large consumer credit card business this year.

GE Capital profit surged 38 percent in the quarter to $2.49 billion, helped in part by the sale of assets in Switzerland.

GE's fourth quarter results were also helped by profit growth of 20 percent or more in its aviation, oil and gas, and appliances divisions.

"We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe," GE CEO Jeff Immelt said in a statement.

GE said its backlog — a measure of orders taken but not yet filled — grew to a record $244 billion in the fourth quarter, up $15 billion from the third quarter.

***

Want to read more news about the oil and gas industry? Follow this Ali Ghalambor Google + account. 

REPOST: Camac secures rig for Oyo drilling

Camac Energy Inc. has signed a long-term drilling contract with Northern Offshore Ltd. Read more from this news bit: 

***

Camac Energy Inc. has signed a long-term drilling contract with Northern Offshore Ltd. for the Energy Searcherdrillship, covering an initial period of a year, with an option to extend the contract for an additional year.

The rig is slated for delivery in this year’s first half for drilling activity in Oyo field in OML 120 offshore Nigeria.

The Energy Searcher is capable of drilling to 25,000 ft in as much as 2,500 ft of water. Oyo field, which started production in 2009, is in 650-1,600 ft of water.

Camac and partner Allied Energy PLC in October encountered oil and gas in the producing Pliocene reservoir in the Oyo-7 well on OML 120 (OGJ Online, Oct. 16, 2013). A month later, the partners confirmed the presence of oil in Miocene (OGJ Online, Nov. 13, 2013).

Block interests in Oyo field are Allied 70% and Camac 30%.

***

Be updated about the world of oil and gas from around the world by following this Dr. Ali Ghalambor Facebook page.

REPOST: SPD begins exploratory drilling in Bazhenov field

News about Salyn Petroleum Development NV's current drilling project from this OGJ.com article.

***

Salym Petroleum Development NV (SPD) has begun drilling its first horizontal appraisal well in the Bazhenov formation in Upper Salym. Four more horizontal appraisal wells are scheduled to be drilled with multifrac technology in 2014-15 as part of the pilot project.

SPD in the last 3 years has drilled three vertical exploration wells in Upper Salym, shot 3D seismic, and conducted coring and well logging.

“Results of preliminary studies demonstrated that the approach taken by SPD can enable the company develop hard-to-recover resources in an environmentally safe and efficient manner,” said Oleg Karpushin, SPD chief executive officer.

“We hope that the pilot project will allow us and our shareholders to make decision about moving to a large-scale development of Bazhenov formation in the Salym fields,” Karpushin said.

SPD is a joint venture of Shell Salym Development BV and Gazprom Neft.

***

More news about the oil and gas industry can be found on this Ali Ghalambor Twitter page.

EIA posts optimistic outlook for the US energy industry in 2014

Image Source: sonoraninstitute.org

The Energy Information Administration previously released an early version of its Annual Energy Outlook 2014, which contains its analysts’ predictions on the future of the nation’s energy production and consumption until 2040. Given the uncertainties inherent in any projection of the energy market, however, data in the reference should not be viewed in isolation and should instead be compared to alternative projections.

Nonetheless, the projections for growth in the energy industry are nothing short of reassuring. The EIA traces how domestic oil production, strengthened by new shale developments in key areas like North Dakota and Texas, will continue to grow at roughly 0.8 million barrels per day until 2016. By then, EIA researchers predict that domestic production will reach 9.6 MM bbl/d, a historical high that was achieved only in 1970.

Image Source: nebb.com

However, nearly all of the growth in the oil sector is expected to come from shale oil. As for other conventional sources in the lower 48 states and Alaska, things are expected to remain static or in decline. Meanwhile, U.S. oil imports patter due to lowered consumption brought about by improvements in fuel efficiency and less driving.

The EIA projects natural gas production to increase by 56 percent between 2012 and 2040 to 37.6 trillion cu. ft. a year thanks to fracking. By mid 2030s, natural gas is expected to finally replace coal as the biggest source of U.S. electricity.

Image Source: imsa-search.com

Dr. Ali Ghalambor is the former director of the Energy Institute of the University of Louisiana and Head of the Department of Petroleum Engineering. Find more updates on the energy industry through this Twitter page.

A look back at the work of George Mitchell and the development of fracking

Image Source: insential.com

George Mitchell is not the inventor of hydraulic fracturing but earned the fond title “father of fracking” after pioneering the economic extraction of shale gas. The method was first used in the late 1940s and it was further developed in the 1970s in cooperation with the Department of Energy. Before Mitchell’s innovation, however, no other company used the method to free natural gas from shale.

It was in 1981 when Mitchell, already one of the most influential businessmen in Texas, decided to explore for gas in an unlikely area. He had set his sights on the Barnett Shale, which was located deep under a thick layer of rock around Fort Worth. Previously, other oil and gas companies had already brought up fuel from above and below the shale. That time, Mitchell drilled into the shale and fractured it with highly pressurized fluids to free natural gas and draw it to the surface.

Image Source: sonoraninstitute.org

Many of his peers thought that the decision to use fracking was a mistake. For Mitchell, however, it was a necessary risk because his wells in North Texas were drying up. Mitchell Energy struggled for 15 years to prove that producing reliable and economical gas was possible with fracking.

Image Source: nebb.com

It was only in 1997 that one of the company’s shale gas wells, which drilled in water, sand, and chemical mixture, finally established that fracking can be financially viable over the long term. That time, fracking was building momentum in resurrecting the nation’s oil and gas industry.

Today, credit is given to Mitchell, his perseverance amid 15 years of failure and his courage to look beyond common knowledge for the widespread commercial use of hydraulic fracturing.

Dr. Ali Ghalambor is the author, co-author, and editor of several books and more than 160 technical articles and manuals on hydraulic fracturing and related topics. For more articles about the development of the natural gas industry, visit this Facebook page.