Enemy #1 for Alaska – Cantwell ignores record of responsible drilling in Arctic. Democrats in Congress are sounding the alarm about the Interior Department’s efforts to hold an offshore oil lease sale in the Beaufort Sea next year. Sens. Maria Cantwell of Washington and Jeff Merkley of Oregon, as well as Reps. Raul Grijalva of Arizona and Jared Huffman of California, wrote a letter to Interior Sec. Ryan Zinke Tuesday, urging the department to cease plans to schedule leases in the Beaufort in 2019. Their letter says drilling there would be risky and unpopular and that there’s no effective way to clean up if a spill occurs in Arctic waters. The Bureau of Ocean Energy Management last month issued a formal call for information on which parts of the Beaufort should be open to drilling and which areas are sensitive or important to subsistence activities. That comment period ends Monday. The government has received more than 1,200 comments so far, many of them opposed to Arctic offshore drilling in general. Drilling advocates say the outer continental shelf can be safely explored and that hundreds of wells have already been drilled in Arctic waters since the 1960s.
Strong performance for oilfield service sector predicted. Rystad Energy expects a strong performance from the oilfield service sector based on the first-quarter reports of the top three players in this field, which featured an average increase in income from oilfield services sales of 21 percent. Schlumberger, Halliburton and GE Baker Hughes also reported combined revenue growth of 15 percent, in tune with Rystad’s expectations for the period. The consultancy expects the rest of the year to be strong as well, with improvement in oilfield equipment sales slower but present. “With the great surge of activity in short cycle businesses – like U.S. shale and the slower-to-respond equipment market, typically in offshore – this will also be directionally in line with what we expect the trend to be in 2018 as a whole,” said Rystad’s vice president of oilfield service research, Audun Martinsen. Rystad’s researchers are particularly upbeat about oilfield service providers with a presence in the U.S. shale patch for obvious reasons, and despite some delays in frac sand deliveries over the first quarter of the year. In fact, Rystad’s VP said, frac jobs are growing in number, hitting a high of 44 per day in February.
“Even if you’re not in oil and gas, you’re in oil and gas.” A hundred-foot oil rig pushes up amid acres of irrigated cotton fields and long dirt roads on this oil patch between Midland and Odessa, the two main towns in the Permian Basin in West Texas. Both have about 150,000 people. Tommy Taylor, director of oil and gas development at Fasken Oil and Ranch, seems to know most of them. Taylor has worked at Fasken for 33 years. He jokes that the oil business isn’t just on his resume, it’s in his blood. “My dad was a petroleum engineer, my oldest brother is a petroleum engineer, my middle brother’s a mechanical engineer,” Taylor said as he scaled the oil rig his team. “My sister’s a schoolteacher, but she married a petroleum engineer. You know, it’s just kind of in the family.” Oil prices are hovering close to a three-year high, above $68 a barrel. Much of that oil comes from the United States, which will overtake Russia as the world’s top oil producer by year’s end, according to the International Energy Agency. That trend is thanks, in large part, to production in the Permian Basin, where output has tripled in the past three years. The basin towns of Midland and Odessa depend heavily on the oil and gas industry. For families here, the price of oil makes the difference between hard times and high times. About six months ago, oil started creeping above $50 a barrel. Eighteen months earlier, it had been about half that. Taylor said Fasken went down to operating just one rig and stopped hiring. The drillers and roughnecks drifted away and found jobs elsewhere. But when oil prices fall, there are repercussions for those outside the oil industry, too. As they say in these parts, “even if you’re not in oil and gas, you’re in oil and gas.”
Shale-setting records in the Permian. The Permian shale play is all about setting records. Now, the region may even become the world’s largest oil patch over the next decade. Output in the basin is forecast to reach 3.18 million barrels a day in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. By 2023, the basin may produce 4 million barrels a day, according to the International Energy Agency. The Ghawar field in Saudi Arabia is currently the world’s biggest oil field, with capacity of 5.8 million barrels a day, according to a 2017 EIA report. This is all thanks to the size of the oil deposits, coupled with increased technology and efficiencies. “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia.”
Equipment shortage for shale wells. The intensity of oilfield equipment used in hydraulic fracturing of shale wells is wearing out parts and machinery faster than ever today and should keep the pressure pumping market tight for the rest of 2018, Halliburton’s top executive said Monday. Even as companies move to bulk up the North American pressure pumping fleet used in well completions, a large chunk of the reported additions are believed to simply replace degraded equipment, rather than expanding the overall size of the fracking fleet capacity, Jeff Miller, CEO of the giant oilfield services and equipment provider, said during the company’s first-quarter 2018 earnings conference call. Roughly 50% of additional horsepower announced does not translate into new crews, said Miller, who projected a market shortage of about 1 million to 1.5 million horsepower. “Despite incremental horsepower coming into the market, I believe this undersupply will persist as wear and tear continues to degrade equipment,” he said. “We’ve analyzed the difference between horsepower additions announced and the related number of crews produced. It means about half the newbuild equipment is being used to replace or add to crews already in the field.”
EPA working on self-reporting policy. The Environmental Protection Agency’s (EPA) office of enforcement will announce a new policy aimed specifically at helping polluters in the oil and gas industry, The Hill has learned. The new policy, which has not been finalized, will focus on offering more flexibility to oil and gas companies that choose to self-audit their emissions and report any failures to meet EPA’s regulations, according to an EPA employee with knowledge of the plan. EPA’s head of the Office of Enforcement and Compliance Assurance (OECA), Susan Bodine, has plans to announce the policy Friday at the EarthX Law and Policy symposium in Dallas. The announcement is timed with Earth Day, which is Sunday. Bodine will be speaking on a panel focused on sustainable and ethical corporate decision-making.
Rystad Upbeat About Oilfield Service Providers
Oil Price.com, Irina Slav, April 24, 2018
Midland, Texas, is booming as oil prices rise
Marketplace, Andy Uhler, April 24, 2018
Permian Basin Is Growing Into the Largest Oil Patch in the World
Bloomberg Markets, Jessica Summers and Sheela Tobben, April 24, 2018
Offshore lease schedule for Beaufort draws flak
Alaska Public Media, Liz Ruskin, April 24, 2018
‘Frac’ intensity in shale wells wears out equipment faster: Halliburton
S&P Global Platts, Starr Spencer, April 23, 2018
EPA to unveil policy aimed at avoiding legal action over oil and gas polluters: source
The Hill, Miranda Green, April 20, 2018