OGJ 20130211 Feb 2013

International Petroleum News and Technology | www.ogj.
com
EDITORIAL
NEWSLETTER
STATISTICS
EDITORS PERSPECTIVE
GENERAL INTEREST
JOURNALLY SPEAKING
WATCHING GOVERNMENT
FEB 11, 2013
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International Petroleum News and Technology | www.ogj.com
EDITORIAL
NEWSLETTER
STATISTICS
EDITORS PERSPECTIVE
GENERAL INTEREST
JOURNALLY SPEAKING
WATCHING GOVERNMENT
FEB 11, 2013
|
USD 10
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7 NEWSLETTER 14 LETTERS / CALENDAR 16 JOURNALLY SPEAKING 18 EDITORIAL
30 STATISTICS 33 MARKET CONNECTION 29 ADVERTISERS INDEX
Feb. 11, 2013
|
Volume 111.2b International Petroleum News and Technology
|
www.ogj.com
26 IEA: Global oil demand
revised upwards for 2012
Conglin Xu
26 Continental nearly doubles Bakken reserves
27 Griffiths Energy eyes southern
Chad oil production start
27 WPX gauges Piceance
horizontal Niobrara gas find
Alan Petzet
28 Commercial bitumen output
approaches from Grosmont carbonate
28 EDITORS PERSPECTIVE
More gasoline price elevation due from Tier 3 regulation
20 US DOE moves carefully
on LNG export requests,
NARUC meeting told
Nick Snow
The US Department of Energy plans to move
carefully as it considers applications to export
LNG to countries that do not have free trade
agreements (FTAs) with the US, Christopher
A. Smith, deputy assistant US energy secretary
for oil and gas in DOEs fossil energy office,
said at a meeting of state utility regulators.
20 Researchers closer to
identifying LNG hazards,
NARUC panel told
Nick Snow
21 More than gas is needed to control
GHGs, NARUC committee told
Nick Snow
22 WATCHING GOVERNMENT
A surprising choice
24 Murkowski releases Energy 20/20
to start national energy dialogue
Nick Snow
25 BP: Shale gas, tight oil to reshape
global markets by 2030
Nick Snow
25 Panorama 2013: Easing
of oil price unlikely
GENERAL INTEREST
US $10
COVER
Marathon Oil Corp.s production operations near Mar-
low, Okla., represent some of the nearly 160,000
net acres the company currently holds in the
Anadarko Woodford play. Photograph from Marathon
Oil.
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Oil & Gas Journal 7
Feb. 11, 2013
GENERAL INTEREST
QUICK TAKES
Oxy reports impairment charge on gas assets
Occidental Petroleum Corp. reported a $1.1 billion aftertax
charge in the fourth quarter 2012, largely for impairments in its
Midcontinent natural gas assets, executives announced during
an earnings call on Jan. 31.
Cynthia Walker, Oxy chief financial officer, said more than
90% of the impairments were related to gas properties acquired
more than 4 years ago on average.
While the performance of the properties was generally as
expected, natural gas prices have declined by approximately
50% since the acquisitions, Walker said. Also in 2012, natural
gas prices and NGL prices used for reserve calculations were
significantly lower than prices used in 2011, resulting in de-
clines in economically feasible reserves in these properties.
Oxy, based in Los Angeles, plans a $9.6 billion budget for
2013, down nearly 6% from 2012. But Chief Executive Officer
Stephen Chazen said the company expects to boost US oil pro-
duction by 8-10% for 2013 compared with 2012.
Executives said the companys goal for 2013 is to reduce US
drilling costs by 15% compared with 2012. Oxy expects its US
rig count will average 55 rigs during 2013 compared with 64
rigs during 2012.
Bill Albrecht, Oxy president of US oil and gas operations,
said the company expects to average 25-27 rigs in the Permian
basin with one third of that program devoted to the Wolfberry
play.
Only about 15-20% or so of our wells in the Permian are
going to be true horizontals, Albrecht said. Now, having said
that, we do drill a number of highly deviated wells, but those
are still not horizontals. It is only in certain specific limited
plays where we are drilling horizontal wells.
Chazen said Oxy continues to drill at a moderate rate in the
Bakken formation as part of the companys overall plan to be
conservative on spending.
Chesapeake outlines plan for McClendons exit
Chesapeake Energy Corp. reported a succession plan for outgo-
ing Chief Executive Officer and Pres. Aubrey McClendon, who
will leave the Oklahoma City independent effective Apr. 1.
Mclendon has been CEO since the companys inception in
1989 and drove Chesapeake to become one of the largest E&P
firms in North America. His career has been tarnished though
with allegations of inappropriate behavior including running
an energy-focused hedge fund from Chesapeakes offices and
personally borrowing $1.3 billion from the companys business
partners.
Over the past 24 years, [McClendon] has created one of the
most valuable and innovative companies in the energy indus-
try, said Chesapeake Chairman Archie W. Dunham. Under
Aubreys strong leadership, Dunham said, Chesapeake has
built an unmatched portfolio of natural gas and oil assets in
creating one of the worlds leading energy companies.
Dunham continued, However, as the company moves to-
wards more fully developing the value of its outstanding assets,
Chesapeake is at an important transition in its history and Au-
brey and the board of directors have agreed that the time has
come for the company to select a new leader. The board will be
working collaboratively with Aubrey to make a smooth transi-
tion to Chesapeakes next chief executive officer.
During this interim period, McClendon will work closely
with Steven C. Dixon, chief operating officer, and Domenic J.
DellOsso, Jr., chief financial officer, to transition certain day-
to-day management responsibilities in advance of the comple-
tion of the search process for the new chief executive officer.
The company and the board are committed to its current drill-
ing program with respect to its existing $6 billion drilling and
completion budget for 2013, its ongoing asset sales program
and intention to reduce the companys long-term debt.
Last year, Chesapeake announced multiple agreements to
sell most of its Permian properties, substantially all of its mid-
stream assets, and certain noncore leasehold for total net pro-
ceeds of $6.9 billion (OGJ Online, Sept. 17, 2012).
McClendon will resign from the board at the time his suc-
cessor is appointed and will receive his full compensation and
other benefits to which he is entitled in accordance with the
terms of his employment agreement. McClendon will continue
to be an important partner with the company given his stock
ownership as well as his interests in certain of the companys
wells in connection with the Founder Well Participation Pro-
gram, which will terminate on June 30, 2014.
Feb. 2 Feb. 3 Jan. 30 Jan. 31 Feb. 1
WTI CUSHING / BRENT SPOT
$/bbl
116.00
115.00
114.00
113.00
$/bbl
117.00
116.00
115.00
114 .00
98.00
97.00
96.00
95.00
NYMEX NATURAL GAS/ SPOT GAS - HENRY HUB
ICE GAS OIL / NYMEX HEATING OIL
NYMEX GASOLINE (RBOB)
1
/ NY SPOT GASOLINE
2
ICE BRENT/ NYMEX LIGHT SWEET CRUDE
PROPANE - MT. BELVIEU / BUTANE - MT. BELVIEU
/gal
320.00
318.00
316.00
314.00
312.00
310.00
308.00
306.00
/gal
176.00
173.00
170.00
167.00
87.00
86.00
85.00
84.00
/gal
312.00
310.00
308.00
306.00
304.00
302.00
300.00
298.00
4.000
3.375
3.350
3.325
3.300
3.275
3.250
3.225
1
Reformulated gasoline blendstock for oxygen blending
2
Nonoxygenated regular unleaded
$/MMbtu
98.00
97.00
96.00
95.00
Mar. 12 Apr. 12 Nov. 12 Dec. 12 Dec. 11 Jan. 12 Feb. 12 Aug. 12 Sept. 12 Oct. 12 May 12 Jun 12 Jul. 12
1,400
2,000
1,800
2, 200
1, 600
300
500
700
100
BAKER HUGHES INTERNATIONAL RIG COUNT: TOTAL WORLD / TOTAL ONSHORE / TOTAL OFFSHORE
3,900
3, 600
3, 300
3, 000
2,700
2,400
2,100
1,800
1, 500
300
0
3,390
3,040
351
Note: End of week average count Note: End of week average count
BAKER HUGHES RIG COUNT: US / CANADA
Note: Monthly average count
625
1,764
12/30/11 12/30/11 1/27/12 1/27/12 11/18/11 11/18/11
1/20/12 1/20/12 2/3/12 2/3/12 12/9/11 12/9/11 12/23/11 12/23/11 1/6/12 1/6/12 12/21/12 1/4/13 1/18/13 2/1/13 11/23/12 11/25/11 11/25/11 12/7/12
12/28/12 1/11/13 1/13/12 1/25/13 11/16/12 11/30/12 12/14/12 12/2/11 12/2/11 12/16/11 12/16/11
710
1,997
US INDUSTRY SCOREBOARD 2/11
Motor gasoline 8,316 8,073 3.0 8,366 8,065 3.7
Distillate 3,406 3,634 6.3 3,460 3,661 5.5
Jet fuel 1,354 1,342 0.9 1,346 1,337 0.7
Residual 319 483 34.0 317 491 35.4
Other products 4,864 4,633 5.0 4,853 4,637 4.7
TOTAL PRODUCT SUPPLIED
18,259 18,165 0.5 18,342 18,191 0.8
Supply, 1,000 b/d
Crude production 7,006 5,753 21.8 7,007 5,746 21.9
NGL production
2
2,478 2,274 9.0 2,482 2,274 9.1
Crude imports 8,043 8,976 10.4 7,993 8,905 10.2
Product imports 2,042 2,076 1.6 2,033 2,097 3.1
Other supply
2 3
2,028 2,217 8.5 2,004 2,230 10.1
TOTAL SUPPLY 21,597 21,296 1.4 21,519 21,252 1.3
Net product imports 932 798 953 780
Refining, 1,000 b/d
Crude runs to stills 14,976 14,877 0.7 14,855 14,806 0.3
Input to crude stills 15,264 15,054 1.4 15,109 15,252 0.9
% utilization 87.8 86.2 86.9 86.2
4 wk. 4 wk. avg. Change, YTD YTD avg. Change,
Latest week 1/25 average year ago
1
% average
1
year ago
1
%
Product supplied, 1,000 b/d
Latest Previous Same week Change,
Latest week 1/25 week week
1
Change year ago
1
Change %
Stocks, 1,000 bbl
Crude oil 369,062 363,115 5,947 338,942 30,120 8.9
Motor gasoline 232,301 233,257 956 230,147 2,154 0.9
Distillate 130,623 132,938 2,315 145,410 14,787 10.2
Jet fuelkerosine 39,818 39,802 16 42,202 2,384 5.6
Residual 34,292 34,908 616 33,575 717 2.1
Stock cover (days)
4
Change, % Change, %
Crude 25.0 24.2 3.3 23.4 6.8
Motor gasoline 27.9 28.0 0.4 28.5 2.1
Distillate 38.4 40.4 5.0 40.0 4.0
Propane 35.7 38.7 7.8 34.5 3.5
Futures prices
5
2/1 Change Change %
Light sweet crude ($/bbl) 97.44 95.83 1.61 99.44 2.00 2.0
Natural gas, $/MMbtu 3.30 3.50 0.20 2.62 0.68 26.0
1
Based on revised figures.
2
OGJ estimates.
3
Includes other liquids, refinery processing gain, and unaccounted for crude oil.
4
Stocks
divided by average daily product supplied for the prior 4 weeks.
5
Weekly average of daily closing futures prices.
Source: Energy Information Administration, Wall Street Journal
8 Oil & Gas Journal | Feb. 11, 2013
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Caerus to buy PDC Energys noncore gas assets
Caerus Oil & Gas LLC plans to buy what PDC Energy Inc. con-
siders its noncore Colorado natural gas assets for $200 million.
The assets being sold are in northwest Colorados Piceance
basin and northeastern Colorado. The transaction is expected
to close during the second quarter, with a Jan. 1 effective date.
Assets being sold are 99% natural gas and include an es-
timated 85 bcf equivalent of net proved developed producing
reserves as of Dec. 31, 2012. Production is 42 MMcfd net to
PDC Energy.
James Trimble, PDC Energy president and chief executive
officer, said proceeds from the divestiture will enable the Den-
ver independent to accelerate its Wattenberg field and Utica
shale horizontal drilling
PDC Energys holdings in Wattenberg field include the hori-
zontal Niobrara and Codell plays. It also has assets in the Utica
Shale in Ohio and the Marcellus shale in West Virginia.
PDC Energy formerly was known as Petroleum Develop-
ment Corp.
BP appoints Townshend as senior vice-president
BP PLC has appointed Michael Townshend as senior vice-pres-
ident, BP Russia, effective Mar. 1. Currently Townshend serves
as BP regional president, Iraq.
Townshend has 32 years of experience with BP working
across a wide range of upstream locations and projects includ-
ing Azerbaijan, Indonesia, Australia, the US, and the Middle
East.
The appointment follows the decision of the current head of
BP Russia, David Peattie, to leave BP at the end of February.
EXPLORATION & DEVELOPMENT
QUICK TAKES
Barrett writes down Rockies gas values
Bill Barrett Corp., Denver, has built its production mix the past
2 years to 24% oil at the end of 2012, a year during which it
wrote down natural gas reserves values and ceased gas drilling
in two Rocky Mountain basins.
Bill Barrett said it stopped gas drilling at West Tavaputs
in the Uinta basin and Gibson Gulch in the Piceance basin in
Colorado in the 2012 second and third quarters, respectively,
as a result of low natural gas and natural gas liquids prices and
expects not to drill in either area in 2013.
A capital program of $475-525 million in 2013, 90% of
which is oil-directed, includes running six rigs in the Uinta
and Denver basins and includes 180 gross-100 net wells. The
$963 million in 2012 capital spending included drilling 288
gross-185 net wells.
Yearend estimated proved reserves were 1.04 tcf equivalent,
29% oil and 59% developed. The reserves reflect 74% growth
in proved reserves at the companys active oil programs in the
Uinta, Denver, and Powder River basins and gas drilling addi-
tions at West Tavaputs and Gibson Gulch.
Negative engineering revisions at West Tavaputs resulted from
performance of 20-acre spacing on part of the companys acreage.
January 2013 production is an estimated 220 MMcfd of gas
equivalent, 22% oil, 70% gas, and 8% NGL. Total 2012 pro-
duction was up 10% on the year as oil production rose 80%,
and the number of drilling locations targeting oil increased to
nearly 2,900 from 400.
Oil rate rising at Tuscaloosa marine shale well
A group led by Encana Corp. has observed an improvement
in the oil production rate from a horizontal Tuscaloosa marine
shale well in Wilkinson County, Miss.
The Crosby 12-H1 well continues to improve with a cur-
rent production rate of 1,250 b/d of oil equivalent and a 24-hr
average of 1,130 boe/d, comprised of 1,050 b/d of oil and 469
Mcfd of gas with 2,700 psi pressure on a 15/64-in. choke, said
Goodrich Petroleum Corp., Houston.
The well, which has recovered about 1% of its frac fluid, has
6,700 ft of usable lateral with 25 frac stages.
Encana and Contango Oil & Gas Co. each has a 25% work-
ing interest in the well, and Goodrich has 50%.
Goodrich is also participating in the Anderson 17H-2 drill-
ing well with a 7% non-operated working interest. Goodrich
plans to spud its next operated TMS well, the Smith 5-29H-1,
in the second quarter. The Ash 31H-1 and Ash 31H-2 wells, in
which the company has a 12% nonoperated working interest,
are expected to be completed in February.
Goodrich has 135,000 net acres in the play and now expects
to spend the higher end of its previously announced 2013 capi-
tal budget in the TMS of $50 million.
Second Mafumeira development phase okayed
Cabinda Gulf Oil Co. Ltd., a subsidiary of Chevron Corp., will
develop the Mafumeira Sul project offshore Angola targeting
peak production of 110,000 b/d of crude oil and 10,000 b/d
of LPG.
The project, 15 miles offshore in 200 ft of water, is the sec-
ond stage of development of Mafumeira field on Block 0. The
Mafumeira Norte project went online in 2009 and now pro-
duces 40,000 b/d of oil (OGJ Online, July 2, 2009).
The $5.6 billion Mafumeira Sul project comprises 50 wells,
two wellhead platforms, and a central processing and compres-
sion facility. It will require the laying of 75 miles of subsea pipe-
line.
Production will begin in 2015. Associated natural gas will
feed the Angola LNG plant in Soyo.
Cabinda Gulf, operator, holds a 39.2% interest in Mafumeira
Sul. Other interests are Sonangol EP 41%, Total 10%, and Eni
9.8%.
Eni group has Western Desert oil discovery
A group led by a subsidiary of Eni SPA has made a third light oil
discovery in Egypts Western Desert on the Meleiha concession,
where oil production is rising and considerable exploratory po-
tential is said to remain.
Oil & Gas Journal | Feb. 11, 2013 11
An exploratory well on the Rosa North deep prospect en-
countered a combined 80 m of oil pay in multiple sandstone
reservoirs at more than 2,200 m and flowed at commercial
rates, said participant Lukoil Overseas.
The group will drill at least two development wells this year,
and each well is expected to go on line at 2,000 b/d, Lukoil said.
Rosa North follows the groups 2010 Arcadia discovery and
2012 Emry Deep find. Meleiha produced 1.2 million tons of oil
in 2012, and the group has shot and interpreted 3D seismic on
the block.
Enis International Egyptian Oil Co. has 56% interest in Me-
leiha, Lukoil Overseas 24%, and Mitsui & Co. 20%.
Condor finds oil, gas on Precaspian block
Condor Petroleum Inc., Calgary, said its Kiyaktysai KN-E-201
well at the Zharkamys West 1 Territory in the Precaspian basin
in Kazakhstan is an oil and gas discovery, having encountered
a 136-m stacked sand-shale interval while drilling to an inter-
mediate casing depth of 1,408 m.
Based on wireline logs, the interval has 58 m of net hydro-
carbon pay consisting of a continuous 41-m light oil column
and a separate 17-m gas column. An oil-water contact has not
been penetrated.
Intermediate casing is being set to isolate the upper 58 m
of pay intervals from a higher-pressured oil zone encountered
at 1,400 m prior to drilling ahead to a total depth of 2,000 m.
Condor has a 100% interest in the exploration rights to the
2,610 sq km Zharkamys Territory.
DRILLING & PRODUCTION
QUICK TAKES
Ghanas Jubilee field sets oil production record
Jubilee field offshore Ghana was producing 110,000 b/d of oil
at the end of 2012 and recently set a new record of 112,500 b/d
following two acid stimulations and the start-up of two new
Phase 1A wells, said Anadarko Petroleum Corp.
The field, operated by Tullow Oil PLC, averaged more than
88,000 b/d in the last quarter of 2012, Anadarko said. Jubilee
came on production in November 2010.
The Tullow-operated partnership that holds the Deepwater
Tano block submitted a development plan for the Tweneboa,
Enyenra, and Ntomme field complex northwest of Jubilee to
Ghanas government in the 2012 fourth quarter.
The Sapele exploratory well is drilling southwest of the Ju-
bilee Unit, and results are expected in the first quarter of 2013,
Anadarko said. Appraisal work on the Wawa discovery is also
planned for 2013 (OGJ Online, July 18, 2012).
Meanwhile, the Okure-1 exploratory well was deemed non-
commercial and has been plugged and abandoned.
Brownfield allowance helps Thistle renewal
EnQuest PLC, London, has received a brownfield tax allowance
to support redevelopment of Thistle oil field in the northern UK
North Sea.
The allowance, which EnQuest said is among the first of-
fered by the UK government, is part of a package of measures
implemented last year to support offshore investment after a
2011 increase in tax rates on oil and gas producers (OGJ On-
line, July 5, 2011).
Enquest, formed in 2010 from UK North Sea assets of Petro-
fac Ltd. and Lundin Petroleum, is revitalizing the 60-slot steel
Thistle platform, which handles production from Thistle and
Deveron oil fields (OGJ Online, Mar. 10, 2010).
It says a 2007 seismic program identified attic oil and other
potential in the highly faulted, multilayer field.
The company expects to increase recovery by 35 million boe
and extend field life to 2025 or beyond by increasing water in-
jection volumes and drilling new targets.
In 2011, EnQuest began installing electric submersible
pumps in four wells and new power supply on the platform.
The company has refurbished and reactivated the platforms
drilling rig is upgrading topsides and the steel jacket, which
was installed in 524 ft of water 275 miles northeast of Aberdeen
in 1976.
Thistle produces light, low-sulfur oil with a low GOR. Pro-
duction moves by pipeline to the Dunlin and Cormorant plat-
forms, then to the Sullom Voe terminal in the Shetland Islands.
According to government data, Thistle produced an average
26,349 cu m/month of oil through October last year. Its peak
production year was 1982 at 598,635 cu m/month.
EnQuest holds a 99% interest in Thistle and Britoil Ltd., 1%.
Imperial commissioning Kearl oil sands mine
Imperial Oil has begun commissioning its initial Kearl oil
sands mining development in the northern Athabasca region
of Alberta and expects production of diluted bitumen from the
first froth-treatment train to begin this quarter (OGJ Online,
Jan. 19, 2012). Production will ramp up to 110,000 b/d of bitu-
men over several months.
Cost of the initial development is expected to be $12.9 bil-
lion (Can.).
An $8.9-billion expansion project sanctioned in 2011 will
boost production by a further 110,000 b/d.
Imperial said the combined projects will develop 3.2 billion
bbl of bitumen at a cost of about $6.80/bbl, an increase from
$6.20/bbl estimated earlier.
The higher cost reflects resequencing of work related to
module transportation and an early onset of winter and harsh
weather during start-up. Imperial said permitting and regula-
tory issues related to module transportation in the US required
nearly 2 years to settle.
Eni, Sonatrach start up MLE natural gas field
Eni SPA and state-owned Sonatrach have started production
of rich natural gas from Menzel Ledjmet East (MLE) field on
Algerian Block 405b, about 1,000 km from Algiers.
A plant at the field yields 9 million cu m/day of sales gas,
15,000 b/d of oil and condensate, and 12,000 b/d of LPG.
Eni and Sonatrach jointly operate MLE field.
The Italian company acquired its interest in the Berkine ba-
sin field through its 2008 acquisition of First Calgary Petro-
leum, which held a 75% stake (OGJ Online, Sept. 9, 2008).
PROCESSING
QUICK TAKES
Marathon completes BP refinery purchase
Marathon Petroleum Corp. has completed its purchase of BPs
451,000-b/cd refinery at Texas City, Tex., and will rename it
Galveston Bay Refinery (OGJ Online, Oct. 8, 2012).
The purchase price includes $598,000 cash, $1.1 billion for
hydrocarbon inventory, and an earn-out payable over 6 years of
$700,000 based on assumed future margins and throughput.
In addition to the high-conversion refinery, Marathon Pe-
troleum acquires a 1,040-Mw cogeneration facility, four light
product terminals in the US Southeast, retail marketing con-
tract assignments for 1,200 branded sites selling 61,000 b/d of
gasoline, three intrastate natural gas liquids pipelines originat-
ing at the refinery, and a 50,000 b/d allocation of BPs Colonial
Pipeline Co. shipper history.
Williams lets contract for Canadian PDH plant
Williams Cos., Tulsa, has awarded a preliminary engineering
contract for its proposed Canadian propane dehydrogenation
(PDH) plant to Fluor Corp., Irving, Tex.
The plant under study would be near Redwater, Alta. It
would use propane recovered from Williamss fractionator
there and convert it into polymer-grade propylene.
Williams announced last year it was considering the plant
(OGJ Online, July 20, 2012). At that time, Williams said the
PDH unit would have a capacity of about 1 billion lb/year and
cost $600-800 million.
TRANSPORTATION
QUICK TAKES
Genesis Energy plans Louisiana pipeline
Genesis Energy LP plans to build an 18-mile, 20-in. OD crude
oil pipeline connecting its existing Port Hudson, La., terminal
to ExxonMobil Corp.s 500,000-b/d Baton Rouge refinery via
the Maryland terminal and Anchorage tank farm. The 350,000-
b/d pipeline will also access other local refineries with capacity
totaling 140,000 b/d.
The company also plans to build a crude oil unit train termi-
nal at the Baton Rouge Maryland site. At Port Hudson, Genesis
will build 200,000 bbl of storage, complementing its 216,000 bbl
of existing capacity, and improve its barge dock and truck sta-
tion.
Genesis plans to begin construction early this year, with
Port Hudson upgrades and the crude oil pipeline expected to
be completed by yearend and the Maryland unit train terminal
to enter service second-quarter 2014. Genesis will spend about
$125 million on the projects.
The company is a 50-50 partner with Enterprise Products
Partners LP in the Southeast Keathley Canyon Pipeline Co.
LLC, expected to transport 115,000 b/d of crude oil from the
deepwater offshore Gulf of Mexico Lucius development by mid-
2014 (OGJ Online, Jan. 4, 2012).
Magellan to add crude services at Galena Park
Magellan Midstream Partners LP plans to build a pipeline and
terminal system at its Galena Park, Tex., terminal to deliver
crude from its pipeline system to refineries in Houston and
Texas City. Magellans Galena Park terminal currently handles
refined products.
The company expects the $50-million project to enter ser-
vice by mid-2014, supported by long-term committed volumes.
Blueknight Energy Partners LP earlier this week agreed to
buy 30% of the Pecos River crude oil pipeline project, which
will deliver into Houston via Magellans Longhorn Pipeline
(OGJ Online, Feb. 5, 2013). Magellans Galena Park products
terminal has 117 tanks with total storage of rough 12.5-million
bbl.
Blueknight buys into Pecos River crude pipeline
Blueknight Energy Partners LP (BKEP) has agreed with Advan-
tage Pipeline LLC to acquire 30% ownership in the 70-mile
Pecos River crude oil pipeline from Pecos, Tex., to Crane, Tex.
The 16-in. OD pipeline will allow West Texas producers to de-
liver to Gulf Coast markets through a connection to Magellan
Midstream Partners LPs Longhorn Pipeline at Crane.
BKEP will operate the pipeline under a long-term agree-
ment with Advantage. Advantage said construction will begin
promptly with initial service expected by end-May.
Magellan Midstream announced it was proceeding with the
conversion to crude service and reversal of the Crane-to-Hous-
ton segment of Longhorn in 2011. Initial capacity is 135,000
b/d, expandable to 225,000 b/d if demand warrants (OGJ On-
line, Feb. 22, 2012).
DOE approves FTA status for Pangea LNG
Pangea LNG (North America) Holdings LLC has received au-
thorization form the US Department of Energy to export LNG
to free-trade-agreement (FTA) nations from its planned South
Texas LNG Project being developed on Corpus Christi Bay.
Pangea LNG will be authorized to export as much as 8 mil-
lion tonnes/year from US gas fields for 25 years beginning on
the date of its first export. Pangea LNG has also filed with DOE
to export LNG to non-FTA countries; that application is pend-
ing.
The terminal is planned for a 550-acre complex on the 45-ft
deep La Quinta Ship Channel. South Texas LNG is subject to
federal, state, and local regulatory approvals, the company said,
with the US Federal Energy Regulatory Commission acting as
lead agency.
The company said it will begin the FERC pre-filing process
by this years second quarter and expects the project to be in
operation by at least 2018.
SAVE THE DATES! July 23-25, 2013

Calgary Telus Convention Centre | Calgary, Alberta
www.OilSandsTechnologies.com
WORKING FOR TOMORROOWS ENERRGY
The conference will cover the full spectrum of technologies crucial to production,
processing, and environmental remediation, with plenary sessions on nontechnical
issues and specifc projects. The exhibition will feature technologies, products, and
services vital to some of the worlds most important oil work.
PRESENTED BY: OWNED AND PRODUCED BY:
2013-2014 EVENT CALENDAR
Denotes new listing or
a change in previously
published information.
FEBRUARY 2013
International Pipeline
Pigging and Integrity
Management Confer-
ence, Houston, web-
site: www.clarion.org/
ppim/ppim13/index.
php. 11-14.
Russia Offshore Con-
ference & Exhibition,
Moscow, website: www.
theenergyexchange.
co.uk. 12-15.
PLCA Annual Conven-
tion, Scottsdale, Ariz.,
1 (214) 969-2700,
e-mail: plca@plca.org,
website: www.plca.org.
12-16.
OGIS Florida, Fort
Lauderdale, Fla,
website: www.ipaa.org/
meetings-events. 13.
North Africa Technical
Conference and Exhibi-
tion, Cairo, (972) 952-
9393, (972) 952-9435
(fax), e-mail: spedal@
spe.org, website: www.
spe.org/events. 17-20.
ME-TECH Forum,
Dubai, website:
www.conferen-
cealerts.com/show-
event?id=108306.
18-20.
Shutdowns & Turn-
arounds Forum, Aber-
deen, website: www.
shutdownsandturn-
arounds.com/Events.
aspx?id=840968&mac
=OGIQ_Events. 18-20.
SPE Reservoir Simula-
tion Symposium, The
Woodlands, Tex.,
(972) 952-9393, (972)
952-9435 (fax), e-
mail: spedal@spe.org,
website: www.spe.org/
events. 19-21.
MTB Oil and Gas
EMEA, Muscat, web-
site: www.gcaptain.
com/event/mtb-oil-
gas-emea-oman-2013.
19-22.
Australasian Oil &
Gas Exhibition and
Conference (AOG),
Perth, website: www.
aogexpo.com.au.
20-22.
Subsea Australasia
Conference, Perth,
website: www.aogexpo.
com.au/aog-subsea-
conference.aspx.
20-22.
Russia & CIS Executive
Summit Downstream
Oil & Gas, Dubai, web-
site: www.europetro.
com/en/summit13.
21-22.
Oil and Gas Pipelines
in the Middle East
Conference, Abu
Dhabi, website: www.
theenergyexchange.
co.uk. 24-27.
Society of Plastics
Engineers Inter-
national Polyolefin
Conference, Houston,
website: www.4spe.
org/conferences/2013-
spe-international-
polyolefins%C2%AE-
conference. 24-27.
Corrosion UAE Confer-
ence, Abu Dhabi,
+44 (0) 207 067
1800, e-mail: a.neri@
theenergyexchange.
co.uk, website: www.
theenergyexchange.
co.uk. 24-27.
Utica Shale Develop-
ment and Growth
Forum, Columbus,
Ohio, website: www.
uticashalesummit.
com/?mac=OGIQ_
Events_Title_
Listing_2011&utm_
source. 25-27.
Water Management
for Shale Plays Event,
Houston, website:
www.infocastinc.com/
watershale4. 25-27.
Offshore Support
Vessels Asia Pacific
Summit, Kuala Lumpur,
website: www.offshore-
supportvesselsasia.
com/Event.aspx?id=
842982&mac=OGIQ
_ Events_... 27-28.
Process Safety Man-
agement for Oil & Gas
Brazil Summit, Rio de
Janeiro. Website: www.
processsafetyforoil
andgas.com/ Event.
aspx?id= 863024
&mac=OGIQ_Events_T.
27-28.
MARCH 2013
CERAWeek 2013,
Houston, 1 888
271 5313, e-mail:
ceraweekmedia@ihs.
com, website: http://
ceraweek.com/2013.
4-8.
Black Sea Oil and Gas
Forum 2013, Sofia,
Bulgaria, website:
www.blackseaoilgas.
com. 5-7.
European Fuels Confer-
ence, Amsterdam,
website: www.wracon-
ferences.com. 5-7.
Subsea Tieback Forum
and Exhibition, San An-
tonio, (918) 831-9160,
(918) 831 9161 (fax),
e-mail: registration@
pennwell.com, website:
www.subseatiebackfo-
rum.com/index.html.
5-7.
APPEX Expo, London,
+44 (0)207 434 1399,
+44 (0)207 434 1386,
e-mail: Europe@aapg.
org, website: www.ap-
pexlondon.com/2012/
index.cfm. 5-7.
SPE Digital En-
ergy Conference, The
Woodlands, Tex., 1
(972) 952-9393, 1
(972) 952-9435 (fax),
e-mail: spedal@spe.
org, website: www.spe.
org/events. 5-7.
SPE/IADC Drilling Con-
ference and Exhibition,
Amsterdam, (972) 952-
9393, (972) 952-9435
(fax), e-mail: spedal@
spe.org, website: www.
spe.org/events. 5-7.
Annual
Nitrogen+Syngas
Event, Estrel Berlin,
website: www.nitrogen-
syngas.com. 5-8.
Offshore Asia Confer-
ence and Exhibition,
Kuala Lumpur, (918)
831-9160, (918) 831
9161 (fax), e-mail:
registration@pennwell.
com, website: www.
offshoreasiaevent.com/
index.html. 6-8.
SPE Middle East Oil
and Gas Show and
Conference, Manama,
(972) 952-9393, (972)
952-9435 (fax), e-
events. 10-13.
API Spring Committee
on Petroleum Measure-
ment Standards Meet-
ing, Dallas, (202) 682-
8000, (202) 682-8222
(fax), e-mail: registrar@
api.org, website: www.
api.org. 10-14.
AAPG Asia Pacific
Deepwater Plays Explo-
ration and Production
Event, (918) 584-2555,
(918) 560-2665 (fax),
website: www.aapg.org.
12-15.
GPAE Spring Confer-
ence, Paris, website:
www.gpaeurope.com/
events/event/27. 13-15.
AFPM Annual Meeting,
San Antonio, (202)
457-0480, (202)
457-0486 (fax), e-mail:
meetings@afpm.org,
website: www.afpm.
org/Conferences.
17-19.
HIS Purvin & Gertz In-
ternational LPG Seminar,
Houston, website: www.
purvingertz.com/calen-
dar.cfm. 17-20.
Rice Global Interna-
tional Engineering &
Construction Forum,
Paris, (832) 596-6500,
e-mail: globalforum@
rice.edu, website:
www.forum.rice.edu/
upcoming-events/inter-
national-forum-2013.
18-19.
Pipeline Technology
Conference, Hannover,
website: www.clarion.
org/index.php. 18-20.
SPE Americas E&P
Health, Safety,
Security and Environ-
mental Conference,
Galveston, Tex., 1
(972) 952-9393, 1
(972) 952-9435 (fax),
e-mail: spedal@spe.
org/events. 18-20.
Offshore Safety
Summit, Aberdeen,
website: www.
offshoresafetysummit.
com/?mac=OGIQ_
Events_Title_
Listing_2011&utm_so.
18-20.
Annual Nibrara Infra-
structure Development
Summit, Denver, web-
site: www.infocastinc.
com/niobrara13.
18-20.
CIPPE Exhibition,
Beijing, website: www.
cippe.com.cn/2013/en.
19-21.
Offshore West Africa
Conference and Ex-
hibition, Accra, (918)
831-9160, (918) 831
9161 (fax), e-mail:
registration@pennwell.
com, website: www.off-
shorewestafrica.com/
index.html. 19-21.
OMC Offshore Mediter-
ranean Conference &
Exhibition, Ravenna,
website: www.
omc.it/2013/home.
php?Lang=en. 20-22.
SPE Production and
Operations Confer-
ence, Oklahoma City,
1 (972) 952-9393, 1
(972) 952-9435 (fax),
e-mail: spedal@spe.
org/events. 23-26.
AFPM International
Petrochemical Confer-
ence, San Antonio,
(202) 457-0480, (202)
457-0486 (fax), e-mail:
meetings@afpm.org,
website: www.afpm.
org/Conferences.
24-26.
SPE/CoTA Coiled Tub-
ing and Well Interven-
tion Conference and
Exhibition, Houston,
1 (972) 952-9393, 1
(972) 952-9435 (fax),
e-mail: spedal@spe.
org/events. 26-27.
International Petroleum
Technology Conference
(IPTC), Beijing, +60
3 2182 3000, +60
3 2182 3030 (fax),
e-mail: iptc@iptnet.org,
2013-2014 EVENT CALENDAR
2018 (fax), e-mail:
info@ilta.org, website:
www.ilta.org. 3-5.
PIRA Canadian Energy
Conference, Calgary,
AB, website: www.pira.
com. 4.
AAPG Profits & Pitfalls
of Shallow Seismic
Anomalies Event, Kuala
Lumpur, (918) 584-
2555, (918) 560-2665
(fax), website: www.
aapg.org. 4-5.
European Gas
Production Forum &
Exhibition, Dusseldorf,
website: www.egpfe.
com. 5-6.
SPE Conference &
Exhibition on European
Formation Damage
Conference and
Exhibition, Noordwijk,
events/calendar. 5-7.
OGA Asian Oil, Gas
and Petrochemical
Engineering Exhibi-
tion, Kuala Lumpur,
+603 4041 0311,
+603 4043 7241 (fax),
e-mail: enquiry@me-
sallworld.com, website:
www.oilandgas-asia.
com. 5-7.
SPEE Annual Meeting,
Coeur dAlene, Idaho,
713 651 1639, 713
951 9659 (fax), e-mail:
info@spee.org, website:
www.spee.org. 8-11.
PIRA Scenario Plan-
ning Conference,
London, website: www.
pira.com. 10.
EAGE Conference and
Exhibition Incorporat-
ing SPE EUROPEC,
London, +31 88 995
5055, +31 30 634
3524 (fax), e-mail:
eage@eage.org,
website: www.eage.org/
events. 10-13.
World Fuel Oil Summit
VI, Marsa, Malta, (212)
749-1902, (212) 666-
4341 (fax), e-mail: gen-
eral@axelrodenergy-
projects.com, website:
www.worldfueloilsum-
mit.com. 16-18.
AAPG Annual Conven-
tion and Exhibition,
Pittsburg, (918) 584-
2555, (918) 560-2665
aapg.org. 19-22.
Middle East Down-
stream Week, Abu
Dhabi, website: www.
wraconferences.com.
19-22.
SPE Artificial Lift
Americas Conference,
Cartagena, website:
www.spe.org/events/
calendar. 21-22.
AFPM Reliability &
Maintenance Confer-
Orlando, (202) 457-
0480, (202) 457-0486
(fax), e-mail: meet-
ings@afpm.org, web-
site: www.afpm.org/
Conferences. 21-24.
AFPM Annual Meeting,
Orlando, (202) 457-
0480, (202) 457-0486
(fax), e-mail: meet-
ings@afpm.org, web-
site: www.afpm.org/
Conferences. 21-24.
Produced Water Man-
agement Event, Kuala
Lumpur, website: www.
producedwaerevent.
com. 22-23.
CIS Oil & Gas Summit,
Paris, website: www.
theenergyexchange.
co.uk 22-24.
JUNE 2013
ILTA Annual Inter-
national Operating
Conference and Trade
Show, Houston, (703)
875-2011, (703) 875-
meetings@otcnet.org,
website: www.otcnet.
org. 6-9.
IADC Dual Gradient
Drilling Seminar, Hous-
ton, 1 713 292 1945,
1 713 292 1946 (fax),
e-mail: info@iadc.org,
website: www.iadc.org/
events. 9.
Annual Offshore
Production Technol-
ogy Summit, London,
website: www.offshore-
summit.com. 13-15.
AFPM National Oc-
cupational & Process
Safety Conference
and Exhibition, The
Woodlands, Texas,
(202) 457-0480, (202)
457-0486 (fax), e-mail:
meetings@afpm.org,
website: www.afpm.
org/Conferences.
14-15.
SPE Oilfield Water
Management Confer-
Kuwait City, website:
www.spe.org/events/
calendar. 14-16.
European Gas Process-
ing Conference and
Exhibition, Dusseldorf,
+44 (0) 203 180 6517,
e-mail: gavinsutcliffe@
dmgevents.com,
website: www.europe-
angasprocessing.com.
15-16.
Unpiggable Pipeline
Solutions Forum, Hous-
ton, website: www.
clarion.org/index.php.
15-16.
IADC Drilling Onshore
Conference & Exhibi-
tion, Houston, 1 713
292 1945, 1 713 292
1946 (fax), e-mail:
info@iadc.org, website:
www.iadc.org/events.
16.
SPE European HSE
Conference and Exhibi-
tion, London, website:
www.spe.org/events/
calendar. 16-18.
International Confer-
ence and Exhibition on
Liquefied Natural Gas
(LNG17), Houston, +44
207 978 0770, e-mail:
ajordan@thecwcgroup.
com, website: www.
LNG17.org. 16-19.
IADC/SPE Managed
Pressure Drilling and
Underbalanced Opera-
tions Conference & Ex-
hibition, San Antonio,
(713) 292-1945, (713)
292-1946 (fax), e-mail:
www.iadc.org/confer-
ences. 17-18.
ISA Calgary Show and
Conference, Calgary,
Atla., 403 209 3555,
403 245 8649 (fax),
website: www.isacal-
gary.com. 17-19.
SPE European Well
Abandonment Seminar,
Aberdeen, 01224
495051, e-mail: spe@
rodgerandco.com,
website: www.spe-uk.
org. 18.
SPE/AAPG Western
Regional Meeting,
Monterey, Calif.,
MAY 2013
Natural Gas
Odorization Interna-
tional Conference and
Exhibition, Houston,
website: www.clarion.
org/NGOC/NGOC-
2013/index.php. 1-2.
OTC Offshore Tech-
nology Conference,
Houston, 1 (972) 952-
9494, 1 (972) 952-
9435 (fax), e-mail:
e-mail: spedal@spe.
org/events. 8-10.
European Regional
Conference, Barcelona,
+44 (0)207 434 1399,
+44 (0)207 434 1386,
e-mail: Europe@aapg.
org, website: www.
europe.aapg.org/1807
8-10.
SPE Unconventional
Resources Conference,
The Woodlands, Tex.,
NAPE East, Pittsburgh,
1 (817) 847-7700, 1
(817) 847 7704 (fax),
e-mail: info@napeexpo.
com, website: www.
napeexpo.com. 10-12.
AAPG Code-Cracking
of Asias Ultra-Low
Permeability Reservoirs
Event, Bali, (918) 584-
2555, (918) 560-2665
aapg.org/gtw/bali2013/
index.cfm. 15-16.
OGIS New York,
website: www.ipaa.
org/meetings-events.
15-17.
AFPM Security Confer-
San Antonio, website:
www.afpm.org/confer-
ences. 15-17.
SPE North Africa
Technology Conference
and Exhibition, Cairo,
+971 4 457 5800.
+971 4 457 3164 (fax),
e-mail: spedal@spe.
org/events. 15-17.
Water Management for
Shale Argentina Event,
Buenos Aires, website:
www.infocastinc.com.
16-17.
website: www.iptcnet.
org. 26-28.
SPE EOR Conference
at Oil and Gas West
Asia, Muscat, +971
4 457 5800. +971
4 457 3164 (fax), e-
events. Mar. 31-Apr. 2.
APRIL 2013
IADC Drilling HSE
Asia Pacific Confer-
ence & Exhibition,
Singapore, +66 2 664
2552, +66 2 664
2190 (fax), e-mail:
info@iadc.org, web-
site: www.iadc.org/
events. 3-4.
PESA Annual Meeting,
San Diego, website:
www.pesa.org/index.
php/page/c/upcoming-
events/P4. 3-6.
GPA Annual Conven-
tion, San Antonio,
(918) 493-3872, (918)
493-3875 (fax), e-mail:
pmirkin@gpaglobal.
org, website: www.
gpaglobal.org. 7-10.
ACS National Meeting
& Exposition, New
Orleans, (202) 872-
4600, (614) 447-3713
(fax), e-mail: interna-
tional.symposium@
symposiumnews.com,
website: www.portal.
acs.org. 7-11.
IADC Environmental
Conference & Exhibi-
tion, New York, 1 202
293 0670, 1 202 872
0047 (fax), e-mail:
www.iadc.org/events.
8-9.
SPE International
Symposium on Oilfield
Chemistry, The
Woodlands, Tex., 1
(972) 952-9393, 1
(972) 952-9435 (fax),
JOURNALLY SPEAKING
PAULA DITTRICK
Senior Writer
Shale gas best practices
Det Norske Veritas AS has outlined a recommended
practice (RP) for shale gas risk management. DNV
executives note that no uniform approach exists for
policymaking toward shale gas development world-
wide although some organizations have proposed
regional guidelines.
The RP was developed during an 18-month
period, and DNV seeks comments from industry,
regulators, nongovernment organizations, and
other interested parties. The document, entitled
DNV-RP-U301, can be downloaded from http://
www.dnv.com/shalegas.
An independent foundation, DNV wants the RP
to promote dialogue and feedback toward develop-
ment of a globally recognized standard for safe and
sustainable shale gas development and production.
Shale gas is a controversial topic, and DNV is
used to dealing with controversial topics, Remi
Eriksen, chief executive officer of DNV Maritime
and Oil & Gas, told reporters during a briefing in
Houston last month.
DNV currently has 68 RPs for the oil and gas
industry based on joint industry projects or co-
operation within industry. For instance, DNV has
class standards that cover floating production,
storage, and offloading vessels and drillships as
well as LNG terminals.
A complete framework for the safe and respon-
sible development of shale gas does not exist,
Eriksen said. We believe a unified standard will
help build the trust and confidence between the
shale gas industry and the public at large.
Public opinion polarized
The North American gas revolution has awakened
many shale-gas nations around the world, Eriksen
said. But, the shale-gas industry is also at the cen-
ter of a political debate with public opinion polar-
ized.
He believes shale gas exploration and produc-
tion only can gain widespread public acceptance
by implementing operational best practices.
Various organizations already developed rec-
ommendations and guidelines. The American
Petroleum Institute has guidance documents
on hydraulic fracturing operations and on water
management associated with fracing. The Appa-
lachian Shale Recommended Practices Group is-
sued its comments last year.
DNV said its RP takes an integrated approach
to risk management with the intention of bridging
differences of opinion among various stakehold-
ers such as operators, service companies, drilling
contractors, suppliers, local communities, regula-
tors, and insurance companies.
The RP recommends baseline surveys be done
before any shale gas activity, and that those survey
results are openly distributed to all stakeholders,
including the general public.
Communication needs to be early and fre-
quent, and choice of the messenger is as important
as the message itself, said Steinar Thon, associate
director of DNV risk management solutions.
The RP seeks to cover risk management issues
specific to shale gas, such as high density of wells,
the use of surface and high-pressure equipment
for fracturing, water use, possible seismic activity,
and the handling of chemicals.
Integrated risk management
The shale gas RP focuses on eight aspects from well
design to decommissioning: management systems;
health, safety, and the environment; well integrity;
management of water and energy; infrastructure
and logistics; public engagement; stakeholder com-
munication; and permitting.
Eriksen noted that DNVs objective is not to
take a stand for or against shale gas development.
Instead, DNV is presenting what he calls sys-
tematics for a complex picture, quality assurance
based on risk management principles combined
with an objective third-party view.
DNV intends for the RP to serve as a reference
document for independent assessment or verifica-
tion.
Regarding health and safety issues, the RP lists
the following as the predominant health and safe-
ty risks associated with shale gas activities:
Potentially large numbers of wells and well
pads with high-density distribution and the as-
sociated infrastructure and logistical operations.
Equipment for hydraulic fracturing, which
involves fracturing fluids at high pressure.
Vehicle traffic.
Waste management issues related to residu-
als handling, storage, transport, treatment, recy-
cling, reuse, and disposal.
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EDITORIAL
An energy field manual
Republicans in the US Senate have produced a field
manual that would be useful in political battles
over energy if anyone had time to read it. Energy
20/20: A Vision for Americas Energy Future, deliv-
ered by Sen. Lisa Murkowsky of Alaska, covers all
forms of energy from many angles in 121 pages of
readable but lengthy analysis and lavish graphics.
Its prescriptions are sound, its educational value
high. But it addresses the wrong war.
By 2020, the document recommends, achieve
independence from OPEC imports.
Of course, Energy 20/20 is a political docu-
ment, and independence from OPEC imports is
a handy rallying cry in American politics. Here,
though, an otherwise sophisticated document
plays to the cheap seats. It has an important point
to make: that recent changes in domestic and
nearby supply and steady improvement in energy-
use efficiency make a formerly unimaginable trade
development worthy of serious contemplation. But
should that development be a stated goal of Ameri-
can policy?
Monolithic threat?
Contrary to the usual rhetoric, OPEC is not uni-
formly hostile to the US. The United Arab Emir-
ates is not Venezuela. Qatar is not Iran. Saudi Ara-
bia, OPECs most important member, has mostly
friendly relations with the US. If OPEC represented
a monolithic threat to US security, the US would
have to respond accordingly, accommodating en-
ergy policy to priorities of national defense. But
OPEC is not a monolithic threat. Its an important
force in the oil market, subject to its own internal
conflicts, sometimes aligned with US interests and
sometimes not. Energy policy must take it into ac-
count without compromising other priorities, such
as the economy and foreign relations. US energy
policy improves to the extent it concentrates on US
needs and capabilities and grounds itself in inter-
national realities, thoroughly considered. The use
of OPEC as a foil to generate urgency too often leads
to reactionary mistakes.
Its also unnecessary. US reliance on OPEC oil
already is diminishing. With consumption stag-
nant and supply increasing in North America and
elsewhere in the Western Hemisphere, notably
Brazil, the trend will continue. If nothing impedes
development of the unconventional resources now
reshaping the geography of oil and gas supply,
OPEC producers in the Eastern Hemisphere in-
creasingly will depend on growth markets of Asia
and the Middle East for sales. The US does not
need to take official action to make this happen. It
simply needs to let it happen.
But will it? The biggest threat to US energy in-
terests is not OPEC but the systematic misappre-
hension that too frequently steers policy. For rea-
sons including but not limited to concern about
climate change, US officialdom has developed
a bias against hydrocarbon energy. It has imple-
mented regulations that deliberately discourage
the burning of coal to generate electric power.
And it continually proposes tax and other mea-
sures aimed at promoting costly renewable energy
sources, not as supplements to hydrocarbon fuels
but rather as replacements of them.
This orientation to energy policy-making
promises cost escalation and energy shortage, a
formula for economic decay. It represents a much
larger threat to US interests than OPEC ever will.
It, not OPEC, is the menace against which Senate
Republicans should be preparing to do battle.
Central foe
Energy 20/20 addresses the problem by implica-
tion. Its suggestions for regulatory reform, elimina-
tion of subsidies for politically preferred forms of
energy, and streamlining of project permitting, for
example, show appreciation of the perils inherent
in current approaches to energy policy-making.
But the document never hoists its intellectual self
high enough to specify the central foe: governmen-
tal orchestration of energy behavior in markets that
should be free.
The Republican document is an impressive col-
lection of information that can, if anyone reads it,
help correct the misunderstanding underlying US
energy politics. But the problem goes beyond er-
rors of fact. The real fight is over core beliefs about
what governments should and should not do. On
energy, thats the high ground Republicans need
to conquer.
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GENERAL INTEREST
Nick Snow
Washington Editor
US DOE moves carefully on LNG
export requests, NARUC meeting told
The US Department of Energy plans to move carefully as it
considers applications to export LNG to countries that do
not have free trade agreements (FTAs) with the US, Chris-
topher A. Smith, deputy assistant US energy secretary for
oil and gas in DOEs fossil energy office, said at a meeting of
state utility regulators.
This is a tremendously important decision, he told the
National Association of Regulatory Commissioners Gas
Committee during NARUCs 2013 winter meeting. Our ap-
proach is to make sure weve done all the proper ground-
work and analysis to create a transparent process that with-
stands public scrutiny.
Federal law stipulates that LNG agreements with coun-
tries that are US free trade partners must be processed im-
mediately, but applications involving other nations have to
be reviewed to determine if they would be in the national in-
terest. DOE has 16 such applications pending, and recently
opened a reply period to comments it received about a gen-
eral policy, Smith said.
We received about 30,000 comments, he indicated. I
thought that was a lot until Gina McCarthy [the US Envi-
ronmental Protection Agencys assistant administrator for air
and radiation] told me they sometimes get several million. I
suggested to my staff soon after that they shouldnt complain
about feeling overworked.
Smith disputed the idea that Natural Gas Regulatory Ac-
tivities Office in DOEs Oil and Gas Global Supply Security
Office had outsourced its LNG export analysis. We com-
missioned an independent study from National Economic
Research Associates that we are using along with earlier re-
search by the Energy Information Administration and the
comments weve received, he said.
An advocate and an opponent debated whether US LNG
exports should be permitted after Smith spoke. Diane Leo-
pold, a senior vice-president at Dominion Transmission
Inc.which itself is seeking DOE approval to turn its Cove
Point, Md., LNG terminal from an import into an export fa-
cilitysaid NERAs and other studies show exports would
create more benefits than problems.
The US attraction
It is likely that manyif not mostof the projects that
have been announced wont be built, Leopold told the com-
mittee. Liquefaction costs here would be high. Countries
which would be interested are likely those that want to di-
versify their sources. They also appreciate our stability and
approach to contracts and agreements.
But Paul N. Cicio, president of the Industrial Energy
Consumers of America, said the US needs to be cautious.
When a terminal gets approved, it locks in demand for 20-
30 years, he said. These are public policies which could
affect US supplies during that period. The price risk is be-
ing shifted to consumers because we dont know what actual
supplies and demand will be.
Cicio conceded some increase is needed from the current
$3/MMbtu price, but warned that a big jump would discour-
age additional manufacturing investments.
Some state utility regulators on the committee admitted
they were torn on the question. Low gas prices obviously have
brought some manufacturing back to this country, observed
G. ONeal Hamilton, a member of South Carolinas Public Ser-
vice Commission. Todd A. Snitchler, chairman of Ohios Pub-
lic Utilities Commission and co-chairman of NARUCs Gas
Committee, said his states oil and gas potential needed to be
weighed against its current manufacturing rebound.
The committee also heard from Michael Hightower, a
technical staff member at Sandia National Laboratories in
Albuquerque, who summarized his presentation a day earli-
er to NARUCs Gas Staff Subcommittee about Sandias recent
LNG vessel safety research.
Researchers closer to identifying
LNG hazards, NARUC panel told
Nick Snow
Washington Editor
A 12-year partnership between the US Department of Ener-
gy and the National Association of Regulatory Utility Com-
missioners is dispelling exaggerated preconceptions about
LNG hazards as it identifies possible real problems state pol-
icymakers should address.
States will need solid information because LNG is poised
to play a bigger role in the US as a less-expensive alternative
to diesel fuel in barges, ferries, and 18-wheeler, long-haul
trucks, according to Michael Hightower, a senior technical
specialist at Sandia National Laboratories.
I expect natural gas and LNG to become increasingly
dominant in the US over the next 10 years, he told the staff
subcommittee on gas during a Feb. 3 presentation as NA-
RUCs 2013 winter meeting got under way.
NARUC and DOE formed the LNG research partnership
soon after a tanker originally bound for Boston was rerouted
to Elba Island, Ga., following the Sept. 11, 2001, terrorist at-
tacks in New York and Washington.
About 40% of the gas used in New England from Nov.
1 to May 1 each year was regasified imported LNG, noted
Christopher J. Freitas, a senior program manager in DOEs
Fossil Energy Office who specializes in LNG. We wanted to
know if a vessel could explode if an airliner was flown into
it, he said.
When a February 2007 Government Accountability Of-
fice report identified several LNG safety research priorities,
Congress provided more funding for DOE to expand its pro-
gram. From May 2008 to May 2011, Sandia Labs conducted
a series of large-scale LNG and cryogenic damage tests, as
well as detailed, high-performance computer models and
simulations of vessel damage resulting from large LNG spills
and fires on water.
Turns to peanut butter
In a May 2012 report to Congress, DOE said as much as 40%
of the LNG spilled from a cargo tank would remain with-
in the vessel, leading to extensive cryogenic fracturing and
damage to its structural steel. Basically, it turns to peanut
butter, Hightower said. Heat fluxes from an LNG pool fire
would severely damage the vessels inner and outer hulls,
making it sink, the report added. Other traffic in ports and
inland waterways could be disrupted for some time, High-
tower said.
Researchers also found from the studys large-scale pool
fire tests that the minimum safe public distance actually was
2-7% less than previous studies indicated. Hightower said
this suggests the US Federal Energy Regulatory Commis-
sions requirement that an LNG terminal be at least a mile
from any public place is sound.
Current LNG vessel and cargo tank design, materials,
and construction practices are such that simultaneous, mul-
ticargo tank cascading damage spill scenarios are extremely
unlikely, though sequential multicargo tank cascading dam-
age spill scenarios may be possible, the report continued.
Should sequential cargo tank spills occur, they are not
expected to increase the hazard distances resulting from an
initial spill and pool fire; however, they could increase the
duration of the fire hazards, it said.
Hightower said more research is needed because LNG
operations have moved away from a single import terminal
served exclusively by large vessels to smaller, more mobile
systems which distribute LNG along interstate highways for
long-haul trucks to refuel and on inland waterways to be re-
gasified for nearby power plants.
Options include offshore deepwater regasification, 10,000
gal LNG import barge isotainers, and 10,000 gal LNG trail-
ersnone of which have received the level of safety research
large terminals and tankers have, he indicated. State and lo-
cal policymakers will need to manage risks and emphasize
prevention more than simply trying to develop responses to
possible accidents, Hightower said.
More than gas is needed to control
GHGs, NARUC committee told
Nick Snow
Washington Editor
Growing natural gas use has clearly helped reduce US car-
bon emissions, but it cant be expected to bring greenhouse
gases to desired lower levels, three experts told two National
Association of Regulatory Utility Commissioners commit-
tees on Feb. 4.
The question is not whether gas is more effective than
cap-and-trade or other carbon pricing programs, but what
we can do in total to achieve the goal of not allowing glob-
al temperatures to rise 2 C. by 2035, said Kelly Speakes-
Bachman, a member of Marylands Public Service Commis-
sion.
Gas is responsible for a 31% drop in GHG emissions in
Maryland the eight other Mid-Atlantic and New England
states that comprise the Regional Greenhouse Gas Initiative
(RGGI), she said during a panel discussion at NARUCs 2013
winter meeting.
But it may not be enough, Speakes-Bachman continued.
RGGIs allowances also are producing economic as well as
environmental benefits, and other steps may be needed. Ba-
sically, Im saying all-of-the-above. If were going to focus
on GHG reductions, we need to set our goals accordingly.
More advanced nuclear and carbon capture and storage
(CCS) research is needed to accelerate GHG reductions, add-
ed Armand Cohen, executive director of the Clean Air Task
Force. We need to get CCS costs down to about the level
of scrubbers, which China is finally adopting, he told NA-
RUCs Gas and Energy & Environment committees. One
of the ironies of gass predominance in carbon reduction is
that its scaring a lot of research investment from CCS and
advanced nuclear.
WATCHING GOVERNMENT
NICK
SNOW
Washington Editor
|
Blog at www.ogj.com
A surprising choice
Sally Jewells nomination on Feb. 6 to
succeed Ken Salazar as US Interior
secretary was indisputably a surprise.
Conventional predictions had US
President Barack Obama turning to
a western governor or senator to lead
the department during his second
term. The chief executive of one of the
nations leading outdoor equipment
retailers wasnt even mentioned.
The choice obviously pleased
environmental organizations because
Jewell has been an active public land
conservationist. Oil and gas groups
that may have been very concerned
werent because she also began her
professional career as an engineer at
Mobil Oil Corp.
One question now is whether she
will try to balance competing interests
at Interior as aggressively as Salazar
says he has.
Jewells solid business experience
(which includes commercial banking)
could work in her favor as she runs
DOI, particularly if Deputy Sec. David
J. Hayes is there to help her. Its no
guarantee that shell be politically ef-
fective, however.
Salazar took DOIs helm in early
2009 having completed 4 years as a
US senator from Colorado and a term
as the states attorney general. His
legal background led him to try and
reduce legal challenges to agency
decisions by increasing earlier public
involvement as regulations were being
developed.
Robert V. Abbey, who was US
Bureau of Land Management director
for much of Salazars tenure at DOI,
told OGJ that no one expected this to
eliminate lawsuits protesting policies.
The idea was to build a stronger legal
foundation so judges would be likelier
to rule for the federal government, he
explained.
Advocacy challenge
Jewells biggest challenge probably
will be to develop the kind of political
expertise needed to represent DOIs in-
terests and requirements at the White
House. Early indications are that she
would be a good team player. She also
would need to be an effective advocate
within Obamas cabinet.
Congressional energy leaders reac-
tions to her nomination were mixed.
US Senate Energy and Natural Re-
sources Committee Chairman Ronald
L. Wyden (D-Ore.) called it an inspired
choice. Her experience leading a
nearly $2 billion outdoor recreation
company, combined with her years of
work in the financial sector, puts her
in a position to bring a new vision to
[DOI], he said on Feb. 6.
Sen. Lisa Murkowski (R-Alas.), the
committees ranking minority mem-
ber, was more reserved. So many
of the decisions made by the Interior
secretary have a profound impact on
Alaska and other western states, she
said. The livelihoods of Americans
living and working in the West rely on
maintaining a real balance between
conservation and economic opportu-
nity.
Others said they looked forward to
learning more during Jewells confirma-
tion hearing.
Set targets
The US could export CCS technology
to other countries if it decides to be-
come that technologys leader, Cohen
said. But it has to get serious about
R&D, he maintained. A lot of suc-
cessful technological innovation has
come from setting targets. Thats how
were reducing pollution from cars. But
its not the only way.
Many manufacturers have switched
to gas from coal because of its low
price, said Francis OSullivan, execu-
tive director of MITs Energy Sustain-
ability Challenge Program. That price
is making some producers shut wells
in and discouraging more develop-
ment, he added.
The sooner we see some price sta-
bility$5 gas is about equal to $30
oilthe sooner well see some stabil-
ity, OSullivan said. But its not cer-
tain whether the switch to gas from
coal can be sustained in a moderate
price scenario.
Matthew Most, vice-president of de-
mand development and policy at En-
cana Natural Gas Inc., said GHG emis-
sions have been dropping since 2007.
It reached an inflection point around
2011, when gas prices dropped to the
$2 range and gas began to take a big-
ger power generation market share,
he said. Weve seen announced retire-
ments by 2025 of about 50 Gw out of
the 250 Gw coal fleet.
Gas penetration into transportation
presents further GHG reduction op-
portunities, he told the committees.
Encana Corp.s oil and gas divisions
have begun to run more of their rigs
with gas instead of diesel fuel, and the
company is involved in a pilot train
project from Albertas oil sands at Fort
McMurray, Most said. Unlike what
the Waxman-Markey bill proposed,
these emissions reductions are being
accomplished at low or no costs, he
indicated.
Costs and climate
Some state utility regulators at the
committees joint session clearly were
concerned about carbon reduction
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with a simple proposition: Energy should be abundant, af-
fordable, clean, and secure.
It is not a term sheet for a comprehensive energy bill,
Murkowski emphasized. It provides the basis for advanced
civilization and improved standards of living. It allows us
to live comfortably. It allows us to transport ourselves and
cargo around our neighborhood and around the world. It
allows us to produce food in the quantities necessary to
feed the worlds population. It allows us to manufacture and
communicate, and enables every aspect of modern life, she
said, adding, Too often, we forget these crucial facts. De-
spite what many argue, affordable, abundant energy is not
the problem. It is exactly what we should strive for.
Production, productivity
Many federal energy policies are outmoded because theyre
based on growing scarcity, Murkowski asserted. Instead of
absence, we find ourselves on the verge of abundance, she
said. There may never have been a time when we have had
more potential for energy productionor for energy pro-
ductivity. We can bring more energy to market, and we can
also use that energy more wisely than ever before.
At the same time, the US is in a bit of a rut, policy-wise,
Murkowski added. On paper and in words, most of us agree
that an all-of-the-above energy policy is the best path. Yet
our discussions of such a policy are anything but consis-
tent, she said. And in the absence of a proper balance be-
tween energy production and environmental regulation, our
nation is too often hamstrung by burdensome regulations,
delayed permits, and overzealous litigation.
Murkowskis recommendations included promptly ap-
proving the proposed Keystone XL crude oil pipeline proj-
ects cross-border permit, opening the Arctic National
Wildlife Refuges coastal plain for leasing, and reforming
permitting processes for energy, natural resources, and in-
frastructure projects.
But she also called for using increased government rev-
enue from more leasing to create an Advanced Energy Trust
Fund for clean energy research and to pay down the na-
tional debt. Murkowski also recommended addressing cli-
mate change by funding basic research, lowering the cost of
financing for especially promising technologies, providing
prudent and temporary subsidies that are fully offset, and
reducing regulatory burdens for deployment.
A Natural Resources Defense Council official was critical
of Murkowskis effort. Her energy blueprint for the future
reads more like a cut-and-paste job from the fossil fuel in-
dustrys playbook of the past, said Franz Matzner, NRDCs
associate director of government affairs. It relies extensively
on policies and incentives for increased oil and gas drilling,
while ruling out many of the policy tools most likely to re-
duce carbon pollution and bring cleaner energy technologies
into the marketplace.
programs potential costs to manufacturers, businesses, and
consumers.
Texas Railroad Commission Chairman Barry T. Smith-
erman, who also chairs NARUCs Gas Committee and who
organized the session, said that manufacturers expressed
concern when the US House passed Reps. Henry J. Wax-
man (D-Calif.) and Edward J. Markeys (D-Mass.) bill which
would have established a domestic cap-and-trade program
in 2007.
Paul J. Roberti, a member of Rhode Islands Public Utili-
ties Commission, said the budget for energy efficiency in the
state now exceeds what is spent for pipeline safety there.
Were the onesnot [the US Federal Energy Regulato-
ry Commission]who face consumers when they cant pay
their bills, he observed.
But Jeanne M. Fox, a member of New Jerseys public
utilities board who chairs NARUCs Energy & Environ-
ment Committee, said Superstorm Sandy and other unusual
weather events during 2012 in her state show that more seri-
ous work needs to be done to address climate change.
Murkowski releases
Energy 20/20 to start
national energy dialogue
Nick Snow
Washington Editor
US Sen. Lisa Murkowski (R-Alas.) announced a set of policy
proposals that she said is designed to begin a national dia-
logue about energy.
I believe there must be a new conversationa better
conversationand I intend to start it today, she said in a
Feb. 4 address to the National Association of Regulatory
Utility Commissioners 2013 winter meeting.
New technologies are emerging, changing the facts as
so many thought they knew them, and our nations energy
discourse is not keeping up, the Senate Energy and Natural
Resources Committees ranking minority member contin-
ued. It is time, despite some vastly different perspectives, to
come together to address crucial and difficult issues.
She said she worked with the committees staff to prepare
the report, Energy 20/20: A Vision for Americas Energy Fu-
ture, as a starting point for a broad discussion that begins
GENERAL INTEREST
but also from consumers, Finley said. Basically, they put the
Hummer brand out of business as fuel prices have climbed,
he observed.
Gas is expected to make only modest transportation in-
roads through 2030 due to limited refueling infrastructure
and uncertain price prospects which will discourage major
investments, according to Finley.
The key questions for renewables will be whether their
growth can be sustained with greatly reduced, or no, gov-
ernment subsidies, and how soon economies of scale will
make those subsidies unnecessary, he said.
Relative prices matter, Finley maintained. A higher oil
price drives development of more alternatives. Check back
in a couple of years.
Panorama 2013: Easing
of oil price unlikely
With futures markets anticipating a price of Brent crude oil
of $110/bbl this year, an easing to $90/bbl appears possible
in three unlikely cases, according to Panorama 2013, an an-
nual review by IFP Energy Nouvelles (IFPEN) of Paris:
A strongly deteriorated economic situation with
growth worse than projected by the International Monetary
Fund in its base-case World Economic Outlook.
Greater stability and less tension than prevail now in
North Africa and the Middle East.
Faster-than-forecast growth in US production of oil
from shales and other low-permeability formations.
Such scenarios, unlikely today, must not be excluded in
principle, wrote the Panorama 2013 author, Guy Maison-
nier. Surprises are a common occurrence in the oil market.
IFPEN calls $110/bbl an unstable balance threshold,
changing according to geopolitical and financial vicissi-
tudes.
It identified Iran as a sword of Damocles hanging over
the market as international concern over the Islamic Re-
publics nuclear program raises chances for military conflict.
In a report written in November, the industry-research
group identified the general election in Israel last month as
one of two events important to Iranian tensions, saying the
outcome would determine the freedom to act by the Israeli
prime minister. While Benjamin Netanyahu, the incumbent,
held office in the election, he will have to form a ruling co-
alition after the political alliance through which he has gov-
erned lost support.
The other important event is an election in June that will
determine the successor to Iranian President Mahmoud Ah-
madinejad, whose outspoken hostility toward Israel has am-
plified worry about Irans nuclear ambitions.
BP: Shale gas, tight oil to
reshape global markets by 2030
Nick Snow
Washington Editor
The North American shale gas and tight oil revolution will
reshape global markets, changing economic expectations
and rebalancing trade flows, BP PLC said in its BP Energy
Outlook 2030.
As the US becomes 99% self-sufficient by 2030, oil im-
ports share of its trade and services deficit will approach
zero, said Mark Finley, general manager for global energy
markets and US economics at BP America Inc.
North America will continue to dominate shale gas and
tight oil production growth during that period because so
much of its resource base is privately owned, and drilling
contractors, service and supply companies, and other sup-
port industries are heavily concentrated there, he said dur-
ing a Feb. 5 presentation at the Center for Strategic and In-
ternational Studies.
Activity matters, in addition to rig fleet size, Finley said.
Our research indicates North America will remain the driv-
ing force in unconventional resource development. US un-
conventional oil and gas production now equals Argentinas
total oil and gas output (but with significantly more wells),
and North America is expected to still dominate production
by 2030, even while other regions gradually adapt to develop
their resources, he added.
BPs latest energy outlook, which it released on Jan. 16
in London, said that worldwide, there are an estimated 240
billion bbl of technically recoverable tight oil resources and
200 trillion cu m (tcm) of shale gas. Asias resources total an
estimated 50 billion bbl of tight oil and 57 tcm of shale gas,
compared with North Americas 70 billion bbl of tight oil
and 47 tcm of shale gas, it indicated.
While technology and policies will continue to influence
the global energy mix, Finley said prices will be the biggest
factor. Crude oils share of total markets has declined for
13 consecutive years, and average annual real oil prices in
2007-11 were 220% than their 1997-2001 average, he noted.
BP expects oil to continue losing market share through 2030
as gas and renewable energy show gains, he said.
Transportation trends
In transportation, oil has a virtual monopoly, with 94% of
the global market, Finley said. We expect its share to be
around 80% by 2030. Where it has competition, however,
oil is losing its market share.
BP expects transportation energy demand growth to
fall to 1.2%/year through 2030 from 1.9%/year from 1990
through 2010, primarily from accelerating fuel economy
gains. This will come not just from government standards,
GENERAL INTEREST
lion boe of yearend 2011 proved reserves. The company
brought the percentage up despite two crude oil concentrat-
ed divestitures in 2012.
Through acquisitions and leasing, Continental increased
its Bakken leasehold by 24% to 1,139,799 net acres at the
end of 2012 from 915,863 net acres a year earlier.
Continentals 2012 proved reserves in the Bakken totaled
564 million boe, almost double proved reserves in the play
at the end of 2011.
Other main components of yearend 2012 proved reserves
included the South Central Oklahoma Oil Province, with
proved reserves of 63 million boe, and the Williston basin
Red River units, where proved reserves increased in the past
year to 78 million boe.
Exploration and development were the main drivers of
the companys 2012 proved reserves growth, adding 234
million boe of proved reserves in the year, of which 27%
were proved developed producing and the remainder proved
undeveloped. Acquisitions added 82 million boe, and revi-
sions accounted for 50 million boe.
Continental produced 35.7 million boe in 2012, 58%
more than in 2011.
Fourth quarter 2012 production was an estimated 9.8
million boe, or 106,831 boe/d, 42% more than fourth quar-
ter 2011 output. The quarter was the 19th straight in which
Continental has increased production from the immediately
previous quarter.
The company deferred some fourth quarter well comple-
tions to stay within its 2012 capital budget.
Pipe and rail capacity out of the basin are more than ade-
quate presently, Continental said. The company has a 5-year
plan to triple production and proved reserves by the end of
2017.
Continental in 2012 for the first time booked proved re-
serves in lower benches of the Three Forks formation, with
the recognition of three PDPs and 11 PUDs in 2012. The
company has completed two wells in the Three Forks sec-
ond bench and one well in the third bench. Traditionally
operators targeted the Middle Bakken zone and only the first
bench of the Three Forks.
Continental has two major exploratory and appraisal pro-
grams planned for 2013. The company is testing productiv-
ity of the lower Three Forks benches with a widespread 14-
well program.
It also has initiated the first of four increased density pilot
programs that will involve multiple wells in the Middle Bak-
ken and the first three benches of the Three Forks zone to
test the appropriate density for full development. Successful
results from these programs would prove commercial pro-
ductivity and could greatly impact future reserve bookings,
the company said.
IEA: Global oil demand
revised upwards for 2012
Conglin Xu
Senior Editor-Economics
Global oil demand estimates for 2012 were revised upward
to 89.8 million b/d based on stronger than expected fourth-
quarter data, according to the International Energy Agencys
latest monthly Oil Market Report.
This adjustment was underpinned by an uptick in oil de-
mand seen in China, the US, and Brazil in last years final
quarter, IEA said. Worldwide demand for oil is forecast to be
90.8 million b/d in 2013, a 1% increase over 2012.
In December, global supplies fell by 170,000 b/d to 91.2
million b/d, with oil production from member countries in
the Organization of Petroleum Exporting Countries down to
the lowest level in a year.
However, the annual oil output of OPEC in 2012 has
reached the highest level ever in the wake of continued
global demand growth and despite exceptional increases in
North American supplies. Non-OPEC supplies are estimated
at 54.1 million b/d in the fourth quarter, 870,000 b/d higher
than the previous year.
Commercial oil inventories in (OECD) Organization for
Economic Cooperation and Development countries fell by
18.8 million bbl to 2,693 million bbl in November.
The deficit in the OECD Europe inventories widened to
56.4 million bbl despite the above 5-year average stocks in
OECD Americas and OECD Asia Oceania.
In December, the West Texas Intermediate price rose by
$1.50/bbl to average $88.25/bbl while Brent fell about 35/
bbl to average $109.20/bbl. Prices by mid-January were
above December levels, with Brent at $110.75/bbl and WTI
at $95.15/bbl.
Global refinery runs in the fourth quarter rose by 1.5 mil-
lion b/d year on year to about 75.9 million b/d, lifted by the
growth in China, India, and the US.
Continental nearly
doubles Bakken reserves
Continental Resources Inc., Oklahoma City, the top produc-
er and leaseholder in the Williston basin Bakken play, said it
increased its yearend 2012 proved reserves 54% to 785 mil-
lion bbl of oil equivalent, 72% oil.
With the 2012 increase, Continental said, it has grown its
proved reserves 45%/year since the end of 2009.
Crude oil accounted for 64% of the companys 508 mil-
GENERAL INTEREST
export terminal to the COTCO/TOTCO line. Right-of-way
clearing and pipeline stringing is under way, and the line
is expected to be completed and commissioned in the first
quarter of 2013.
The other segment is 95 km of oil and gas pipelines from
Mangara field to the blending and export terminal. Right of
way is being cleared, and the oil pipeline is on schedule to be
completed and commissioned in the second quarter of 2013.
A modification agreement that addresses modifications
required to the export pipeline to transport Badila and Man-
gara crudes has been executed by TOTCO and Griffiths and
approved by COTCOs board and awaits COTCOs signature.
Griffiths Energys production sharing contracts on 26,103
sq km in two basins.
WPX gauges
Piceance horizontal
Niobrara gas find
Alan Petzet
Chief Editor-Exploration
WPX Energy Inc., Tulsa, has revealed a horizontal Niobrara
shale gas discovery in the Piceance basin of Colorado that
the company said has the potential to ultimately more than
double its current 18 tcf equivalent of proved, probable, and
possible reserves.
The company initially gauged the Garfield County well at
16 MMcfd at 7,300 psi flowing pressure. Choked substan-
tially to optimize reservoir performance and ensure maxi-
mum recovery, it has averaged 12 MMcfd the past 30 days.
WPX will drill at least two more horizontal Niobrara
wells in the basin this year, pending permits, starting within
a 6-mile radius of the first well. Other operators are delineat-
ing the resource on the basins eastern and western margins.
The discovery well produces from a 4,600-ft horizontal
lateral with 17 frac stages at 10,200 ft true vertical depth. It
is on the companys Piceance Valley acreage. WPX has lease
rights to 180,000 net acres of the Niobrara/Mancos shale
play.
A vertical Niobrara well that WPX drilled in late 2011
gave the company the impetus to drill the formation hori-
zontally. WPX spudded the horizontal well last August and
recovered 535 ft of continuous core.
WPX has drilled more than 4,000 wells in the basin,
mostly in tight sandstones of the Williams Fork formation at
6,000-9,000 ft. The Niobrara and Mancos shales, to which
WPX holds an average 66% working interest, are generally
at 10,000-13,000 ft.
Substantial gathering and processing facilities are in
Griffiths Energy eyes
southern Chad oil
production start
Griffiths Energy International Inc., Calgary, said it could be-
gin pipeline shipments of oil from wells in southern Chad in
the third quarter of 2013.
Oil production from the Badila and Mangara discoveries
could begin in the second quarter, the company said (see
map, OGJ, June 4, 2012, p. 44).
Griffiths Energy has executed an interconnection agree-
ment that addresses physical access to the 250,000 b/d
COTCO/TOTCO oil pipeline from southern Chad to Kribi,
Cameroon. The company also secured 111 km of pipeline
right-of-way to connect Badila and Mangara fields to the ex-
port pipeline.
Connection to the export pipeline is on schedule to be
completed and commissioned in the second quarter of 2013.
The company said it expects to have enough information
to review the reserves potential of the Cretaceous light oil
in Badila field in mid-2013 when it will have data from the
Badila-2 and 3 wells, 3D seismic over Badila field, and an
estimated 2 months production from the Badila-1, 2, and 3
wells.
The company reentered Badila-1 in May 2012 and de-
clared it a discovery after it accessed 23.5 m of net oil pay in
Cretaceous C sands and achieved constrained test flow rates
of as much as 4,025 b/d.
Earlier this month the company completed Badila-2,
drilled to 2,075 m, which logs indicate cut 101 m of net oil
pay in five Lower Cretaceous C sands, 92 m in eight Lower
Cretaceous D sands, and 2.5 m in Lower Cretaceous E sands.
Griffiths Energy spudded Badila-3, projected to 2,110 m, in
late January.
Griffiths Energy expects to commission the Badila pro-
duction facility, including tie-in of the Badila-1 and 2 wells,
in February 2013. The company let a contract for a 300 sq
km 3D seismic survey over Badila field and the adjacent Bi-
tanda ridge.
One rig is drilling, and the company expects to mobilize
two more in 2013.
Civil work continues toward development drilling at
Mangara field, 95 km northwest of Badila. Wellsites for the
Mangara-4 and 5 development wells are complete. A prior
operator drilled three wells at Mangara between 1978 and
2007, each of which encountered oil in multiple stacked
reservoirs. The wells were flow tested at 300-1,875 b/d.
Griffiths reentered one well in March 2012 and achieved a
natural flow rate of 800 b/d.
The pipeline connection consists of two segments. One is
a 16-km line to connect the companys Badila blending and
GENERAL INTEREST
THE EDITORS PERSPECTIVE
(From the Subscribers Only area of www.ogj.com)
More gasoline price
elevation due from
Tier 3 regulation
by Bob Tippee, Editor
An unseasonal but temporary increase
in the price of gasoline has captured the
attention of news media in the US, but
regulations under development that could
boost the price permanently have escaped
notice.
The mid-winter price rise for gasoline is
unusual but not unprecedented. It occurred
because the price of crude oil has increased
by about $10/bbl since mid-December. And
that happened because of optimism about
the global economy and worry about unrest
in North Africa and Iran.
Without those upward influences, crude
prices would be lower. The market has
plenty of oil.
What Americans should be hearing
more about is imminent regulation that
would raise the cost of making gasoline
and, by association, the price of buying it.
The hyperactive Environmental Protec-
tion Agency has sent the Office of Manage-
ment and Budget its Tier 3 regulation for
final review. In this program, EPA proposes
to toughen standards for gasoline volatility
and sulfur content. It hopes to publish a
final rule in March.
The Tier 3 initiative, motivated by a
presidential memorandum in 2010 and an
antibacksliding measure in the Energy
Independence and Security Act of 2007,
follows a dangerous assumption: that if
some environmental regulation is good,
more must be better.
Tier 3 mostly addresses ground-level
ozone, an air pollutant that has plummeted
nationwide but remains a problem in large,
sunny cities. In those areas, Tier 3 stan-
dards will have marginal effect.
In fact, says the American Petroleum
Institute, the fully implemented standards
would boost emissions of a different type,
greenhouse gases, by increasing energy
consumption in refining.
And the costs? By APIs reckoning, the
new standards will raise the cost of making
gasoline by 25/gal if EPA keeps the pro-
posed volatility cut in the final rule or by as
much as 9/gal if it only addresses sulfur.
Those are large prospective costs for
environmental benefits quite likely to be
very small.
More environmental regulation is, in
fact, not always good. Increasingly, its just
more expensive.
ONLINE FEB. 1 , 2013 | bobt@ogjonline.com
ducing day cycle rates of about 270
b/d.
The second well pair, 1C, also
drilled in 2010, went on production
in the second quarter of 2011 and has
produced more than 800 b/d with av-
erage producing day rates exceeding
445 b/d in the first and second cycles.
The partners tested steam-solvent
coinjection in the fourth cycle, which
is currently on production.
The third well pair, 2C, was drilled
in the first quarter last year and stimu-
lated before start-up. The 2C well pair
has achieved production as high as
1,200 b/d, with average producing day
rates in the first and second cycles of
470-660 b/d.
In the second cycle, the 2C well pair
had a steam-oil ratio (SOR) below 3.5,
which is in the commercial range for
SAGD projects. The well pair is back
on steam injection.
Laricina said 2C work included
successful implementation of under-
balanced drilling, a linerless horizon-
tal section, and well stimulations.
It said the pilot has shown the Gros-
mont can produce at commercial rates,
describing productivity per meter of
well length as best in class. It also
said oil has been mobilized quickly,
with seismic and observation well data
demonstrating heat remains near the
well bore with limited fracture ther-
mal leak-off.
Laricina said the pilot enhanced
understanding of the communica-
tion between wells and across the C-D
marl. And it said the steam-production
cycling process provides understand-
ing on optimized well start-up.
Cyclic SAGD
Osum said the choice between
SAGD and cyclic SAGD as the core
process at Saleski is not expected to
materially impact project returns.
Savings in capital and operating costs
resulting from the use of cyclic SAGD,
which uses one instead of two hori-
zontal wells, is largely balanced by
the potential effects of a higher SOR,
it said.
place to accommodate additional gas
volumes from the area, as is take-away
capacity from the basin. Gas produced
from the Niobrara and Mancos shales
can be processed without modification
to existing plants, WPX said.
WPX said it is seeing hydrocarbon
saturation across tremendous thick-
ness in a highly overpressured envi-
ronment in the Piceance.
Commercial
bitumen output
approaches from
Grosmont carbonate
Partners in a pilot development of the
Late Devonian Grosmont formation in
Alberta report progress toward com-
mercial production of bitumen, which
would be the first for the expansive
carbonate.
Laricina Energy Ltd., the operator
with 60% interest of the Saleski proj-
ect in the Athabasca region, recently
amended its application for first-phase
development to focus on the Grosmont
C zone with development via cyclic
steam-assisted gravity drainage (OGJ
Online, Nov. 13, 2012).
In separate presentations recently,
Laricina and the other partner, Osum
Oil Sands Corp., reported new details
of results of the pilot project, from
which total bitumen production has
been as high as 1,800 b/d. Both com-
panies are based in Calgary.
The Alberta Energy Resources Con-
servation Board estimates the Gros-
mont, from which commercial produc-
tion hasnt yet been established, holds
406 billion bbl of bitumen in place un-
der 1.766 million hectares.
Pilot results
In its presentation, Osum said the first
Saleski pilot well pair, 1D, drilled to
800 m in 2010 and stimulated after
initial start-up, has produced at rates
as high as 700 b/d with average pro-
353 Pages/Hardcover/2007
ISBN13 : 978-1-59370-070-6
$129.00 US
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Baker Hughes 9
www.webaddress.com
Cameron Digital Edition Cover
www.webaddress.com
Deep Offshore Technology International 23
www.deepoffshoretechnology.com
Flexsteel Pipeline Technologies, Inc. 6
www.flexsteelpipe.com
Oil Sands Heavy Oil Technologies 13
www.OilSandsTechnologies.com
PennEnergy Equipment 17
www.pennenergyequipment.com
Pennwell Corporation 19, 29
www.pennwell.com
PennWell Reprints 35
pennwellreprints@fosterprinting.com
SPE 4
www.spe.org
Target Logistics 2
www.targetlogistics.net
COMPANY NAME PAGE
ADVERTISERS INDEX
This index is provided as a service. The publisher does not
assume any liability for errors or omission.
STATISTICS
Additional analysis of market trends is available
through OGJ Online, Oil & Gas Journals electronic
information source, at http://www.ogj.com.
OGJ CRACK SPREAD
2-1-13* 2-3-12* Change Change,
$/bbl %
SPOT PRICES
Product value 128.96 124.84 4.13 3.31
Brent crude 115.21 111.23 3.98 3.58
Crack spread 13.75 13.60 0.15 1.09
FUTURES MARKET PRICES
One month
Product value 128.08 124.25 3.83 3.1
Light sweet
crude 97.44 97.81 -0.37 0.4
Crack spread 30.63 26.43 4.20 15.9
Six month
Product value 128.73 123.77 4.96 4.0
Light sweet
crude 99.28 99.50 0.22 0.2
Crack spread 29.45 24.28 5.18 21.3
*Average for week ending.
Source: Oil & Gas Journal
Data available at PennEnergy Research Center.
IHS PURVIN & GERTZFEB. 1, 2013
Liquefaction plant
Receiving Algeria Malaysia Nigeria Austr. NW Shelf Qatar Trinidad
terminal $/MMbtu
Barcelona 12.32 9.06 11.26 8.95 9.79 11.17
Everett 7.50 5.00 7.04 5.08 5.66 7.85
Isle of Grain 9.12 6.55 8.33 6.44 7.23 8.37
Lake Charles 0.88 1.20 0.62 0.99 0.75 1.55
Sodegaura 8.30 10.91 8.52 10.57 9.69 7.41
Zeebrugge 10.91 8.28 10.12 8.15 9.04 10.20
Defnitions, see OGJ Apr. 9, 2007, p. 57.
Source: IHS Purvin & Gertz
CRUDE AND PRODUCT STOCKS
Motor gasoline
Blending Jet fuel, Fuel oils Propane-
Crude oil Total comp. kerosine Distillate Residual propylene
District 1,000 bbl
PADD 1 ..................................... 11,163 55,191 45,912 9,381 41,312 9,005 4,196
PADD 2 ..................................... 117,884 53,370 28,957 7,138 30,303 1,492 17,182
PADD 3 ..................................... 166,109 82,098 64,917 13,379 40,347 19,423 35,286
PADD 4 ..................................... 18,407 6,705 2,666 512 3,544 216
1
1,231
PADD 5 ..................................... 55,498 34,938 31,095 9,408 15,119 4,156
Jan. 25, 2013 ........................... 369,061 232,302 173,547 39,818 130,625 34,292 57,895
Jan. 18, 2013 ............................ 363,115 233,257 175,658 39,802 132,938 34,908 60,884
Jan. 27, 2012
2
........................... 338,942 230,147 167,766 42,202 145,411 33,575 48,989
1
Includes PADD 5.
2
Revised.
Source: US Energy Information Administration
REFINERY REPORTJAN. 25, 2013
REFINERY REFINERY OUTPUT
OPERATIONS Total
Gross Crude oil motor Jet fuel, Fuel oils Propane-
inputs inputs gasoline kerosine Distillate Residual propylene
District 1,000 b/d 1,000 b/d
PADD 1 .............................................. 1,063 999 2,647 71 390 55 71
PADD 2 .............................................. 3,288 3,342 2,201 222 987 53 270
PADD 3 .............................................. 7,504 7,361 2,199 736 2,144 206 754
PADD 4 .............................................. 560 554 315 22 206 10
1
143
PADD 5 .............................................. 2,370 2,225 1,524 342 537 83
Jan. 25, 2013 ...................................... 14,785 14,481 8,886 1,393 4,264 407 1,238
Jan. 18, 2013 ...................................... 14,539 14,206 8,667 1,386 4,311 353 1,212
Jan. 27, 2012
2
..................................... 14,507 14,217 8,476 1,387 4,522 458 1,116
17,400 Operable capacity 85.0utilization rate
1
Includes PADD 5.
2
Revised.
IMPORTS OF CRUDE AND PRODUCTS
Districts 1-4 District 5 Total US
1-25 1-18 1-25 1-18 1-25 1-18 1-27*
2013 2012 2013 2013 2013 2013 2012
1,000 b/d
Total motor gasoline ............. 623 418 0 12 623 430 1,045
Mo. gas. blending comp. ..... 537 375 0 11 537 386 831
Distillate ............................... 211 218 0 0 211 218 192
Residual .............................. 136 363 0 0 136 363 392
Jet fuel-kerosine .................. 96 0 0 1 96 1 7
Propane-propylene .............. 128 148 (56) (90) 72 58 102
Other ................................... 320 510 141 196 461 706 (141)
Total products ...................... 2,051 2,032 85 130 2,136 2,162 2,428
Total crude ........................... 7,110 6,809 958 921 8,068 7,730 8,880
Total imports ........................ 9,161 8,841 1,043 1,051 10,204 9,892 11,308
*Revised.
STATISTICS
OGJ GASOLINE PRICES
Price Pump Pump
ex tax price* price
1-30-13 1-30-13 2-1-12
/gal
(Approx. prices for self-service unleaded gasoline)
Atlanta .......................... 292.9 340.7 354.0
Baltimore ...................... 293.8 335.7 352.4
Boston ........................... 318.8 360.7 349.9
Buffalo .......................... 288.3 355.7 351.6
Miami ............................ 294.3 347.7 356.6
Newark .......................... 300.8 333.7 343.2
New York........................ 298.3 365.7 361.6
Norfolk........................... 291.4 329.6 346.8
Philadelphia .................. 295.0 345.7 354.1
Pittsburgh ..................... 293.0 343.7 351.6
Wash., DC ...................... 299.8 341.7 353.9
PAD I avg .................. 297.0 345.5 352.3
Chicago ......................... 347.7 405.0 380.2
Cleveland ...................... 278.2 324.6 327.2
Des Moines .................... 282.2 322.6 338.2
Detroit ........................... 268.9 326.7 339.9
Indianapolis .................. 270.4 327.7 337.6
Kansas City ................... 268.8 304.5 325.5
Louisville ....................... 279.2 325.4 332.2
Memphis ....................... 284.8 324.6 335.2
Milwaukee ..................... 280.8 332.1 340.2
Minn.-St. Paul ............... 289.5 336.0 343.5
Oklahoma City ............... 262.4 297.8 312.5
Omaha .......................... 275.1 321.1 326.5
St. Louis ........................ 271.7 307.4 323.5
Tulsa ............................. 267.1 302.5 306.7
Wichita .......................... 276.4 319.8 323.5
PAD II avg ................. 280.2 325.2 332.8
Albuquerque .................. 278.5 315.8 325.4
Birmingham .................. 281.5 320.8 339.4
Dallas-Fort Worth .......... 266.4 304.8 322.0
Houston ......................... 269.5 307.9 324.4
Little Rock ..................... 279.7 319.9 336.4
New Orleans .................. 287.4 325.8 334.7
San Antonio ................... 280.4 318.8 328.1
PAD III avg ................ 277.6 316.3 330.1
Cheyenne....................... 257.4 289.8 302.6
Denver ........................... 267.2 307.6 307.7
Salt Lake City ................ 264.9 307.8 303.6
PAD IV avg ................ 263.1 301.7 304.6
Los Angeles ................... 293.9 360.9 377.4
Phoenix.......................... 300.5 337.9 341.1
Portland ........................ 300.5 349.9 366.1
San Diego ...................... 283.9 350.9 358.1
San Francisco................ 305.9 372.9 384.1
Seattle........................... 289.0 344.9 362.4
PAD V avg ................. 295.6 352.9 364.9
Weeks avg. .................. 285.2 331.3 340.0
Jan. avg......................... 281.6 327.7 333.5
Dec. avg........................ 287.4 333.5 324.9
2013 to date ................. 280.7 326.8
2012 to date ................. 288.1 334.8
*
Includes state and federal motor fuel taxes and state
sales tax. Local governments may impose additional taxes.
Source: Oil & Gas Journal.
BAKER HUGHES RIG COUNT
2-1-13 2-3-12
Alabama............................................ 5 6
Alaska ............................................... 9 8
Arkansas ........................................... 16 34
California .......................................... 34 44
Land................................................ 33 44
Offshore .......................................... 1 0
Colorado ............................................ 55 72
Florida ............................................... 2 1
Illinois ............................................... 2 2
Indiana.............................................. 1 0
Kansas .............................................. 29 33
Kentucky............................................ 0 1
Louisiana .......................................... 106 135
N. Land ........................................... 21 57
S. Inland waters .............................. 16 16
S. Land............................................ 18 26
Offshore .......................................... 51 36
Maryland ........................................... 0 0
Michigan ........................................... 1 1
Mississippi ........................................ 10 11
Montana ............................................ 11 17
Nebraska ........................................... 1 1
New Mexico........................................ 79 81
New York............................................ 0 0
North Dakota ..................................... 180 183
Ohio................................................... 28 17
Oklahoma .......................................... 196 205
Pennsylvania ..................................... 69 114
South Dakota..................................... 1 1
Texas ................................................. 826 914
Offshore .......................................... 0 6
Inland waters .................................. 0 0
Dist. 1 ............................................. 140 125
Dist. 2 ............................................. 88 81
Dist. 3 ............................................. 34 40
Dist. 4 ............................................. 31 54
Dist. 5 ............................................. 18 48
Dist. 6 ............................................. 30 48
Dist. 7B ........................................... 13 13
Dist. 7C ........................................... 72 76
Dist. 8 ............................................. 272 289
Dist. 8A ........................................... 43 35
Dist. 9 ............................................. 24 28
Dist. 10 ........................................... 61 71
Utah .................................................. 28 36
West Virginia ..................................... 24 27
Wyoming............................................ 47 49
OthersNV-3; OR-1 ......................... 4 4
Total US ........................................ 1,764 1,997
Total Canada ................................ 625 710
Grand total ................................... 2,389 2,707
US oil rigs.......................................... 1,332 1,245
US gas rigs........................................ 428 745
Total US offshore ............................... 53 42
Total US cum. avg. YTD ..................... 1,758 2,001
Rotary rigs from spudding in to total depth.
Defnitions, see OGJ Sept. 18, 2006, p. 42.
Source: Baker Hughes Inc.
SMITH RIG COUNT
2-1-13 2-3-12
Proposed depth, Rig Percent Rig Percent
ft count footage* count footage*
0-2,500 249 0.4 251 3.9
2,501-5,000 64 42.1 73 56.1
5,001-7,500 113 19.4 127 18.8
7,501-10,000 267 1.1 284 2.1
10,001-12,500 423 3.3 487 5.1
12,501-15,000 278 1.0 318
15,001-17,500 132 1.5 146
17,501-20,000 106 116
20,001-over 64 72
Total 1,696 4.2 1,874 5.6
INLAND 17 21
LAND 1,636 1,812
OFFSHORE 43 41
*Rigs employed under footage contracts.
Defnitions, see OGJ Sept. 18, 2006, p. 42.
Source: Smith International Inc.
US NATURAL GAS STORAGE
1
1-25-13 1-18-13 1-25-12 Change,
bcf %
Producing region ................ 1,013 1,060 1,105 8.3
Consuming region east ...... 1,391 1,520 1,500 7.3
Consuming region west ...... 398 416 399 0.3
Total US ............................. 2,802 2,996 3,004 6.7
Change,
Nov. 12 Nov. 11 %
Total US
2 ............................
3,799 3,843 1.1
1
Working gas.
2
At end of period.
Source: Energy Information Administration
REFINED PRODUCT PRICES
1-25-13 1-25-13
/gal /gal
Spot market product prices
Motor gasoline
(Conventional-regular)
New York Harbor ......... 290.40
Gulf Coast .................. 268.90
Motor gasoline
(RBOB-regular)
No. 2 heating oil
No. 2 Distillate
Low sulfur diesel fuel
Gulf Coast .................. 305.00
Los Angeles ................ 312.80
Kerosine jet fuel
Gulf Coast .................. 311.30
Propane
Mont Belvieu .............. 85.80
Source: DOE Weekly Petroleum Status Report.
US CRUDE PRICES
2-1-13
$/bbl*
Alaska-North Slope 27 ......................................... 99.49
South Louisiana Sweet .......................................... 118.75
California-Midway Sunset 13 .............................. 105.55
California Buena Vista Hills 26 ........................... 115.00
Wyoming Sweet ..................................................... 90.27
East Texas Sweet ................................................... 96.50
West Texas Sour 34 .............................................. 89.25
West Texas Intermediate ........................................ 94.25
Oklahoma Sweet.................................................... 94.25
Texas Upper Gulf Coast ......................................... 87.25
Michigan Sour ....................................................... 86.25
Kansas Common ................................................... 93.25
North Dakota Sweet ............................................... 75.31
*Current major refners posted prices except N. Slope lags 2
months. 40 crude unless differing gravity is shown. Source: Oil &
Gas Journal. Data available at PennEnergy Research Center.
OGJ PRODUCTION REPORT
1
2-1-13
2
2-3-12
1,000 b/d
(Crude oil and lease condensate)
Alabama ................................. 25 25
Alaska .................................... 542 605
California ............................... 580 586
Colorado ................................. 123 116
Florida .................................... 6 6
Illinois .................................... 27 26
Kansas ................................... 122 119
Louisiana ............................... 1,282 1,249
Michigan ................................ 18 18
Mississippi ............................. 65 62
Montana ................................. 70 65
New Mexico ............................. 240 210
North Dakota .......................... 769 550
Oklahoma ............................... 257 224
Texas ...................................... 2,555 1,987
Utah ....................................... 84 77
Wyoming ................................. 165 154
All others ................................ 65 68
Total .................................. 6,995 6,147
1
OGJ estimate.
2
Revised. Source: Oil & Gas Journal.
WORLD CRUDE PRICES
$/bbl
OPEC reference basket Wkly. avg. 2-1-13 112.62
Mo. avg., $/bbl
Nov. 11 Dec. 12
OPEC reference basket....................... 106.86 106.55
Arab light-Saudi Arabia ....................... 108.47 108.35
Basrah light-Iraq ................................. 105.45 105.04
Bonny light 37o-Nigeria ........................ 110.91 111.19
Es Sider-Libya ...................................... 109.01 109.29
Girassol-Angola.................................... 108.91 108.92
Iran heavy-Iran..................................... 106.80 106.56
Kuwait export-Kuwait ........................... 106.82 106.19
Marine-Qatar........................................ 107.12 106.25
Merey-Venezuela .................................. 93.28 91.68
Murban-UAE ......................................... 109.69 108.90
Oriente-Ecuador ................................... 97.15 98.68
Saharan blend 44o-Algeria ................... 109.36 109.89
Other crudes
Minas 34o-Indonesia ............................ 108.26 108.96
Fateh 32o-Dubai ................................... 107.22 106.34
Isthmus 33o-Mexico ............................. 99.37 99.03
Tia Juana light 31o-Venezuela .............. NA NA
Brent 38o-UK ........................................ 109.11 109.29
Urals-Russia ........................................ 108.23 108.21
Differentials
WTI/Brent ............................................. 22.52 21.06
Brent/Dubai.......................................... 1.89 2.95
Source: OPEC Monthly Oil Market Report.
STATISTICS
WORLDWIDE CRUDE OIL AND GAS PRODUCTION
11 month average Change vs.
Nov. Oct. production previous year Nov. Oct. Cum.
2012 2012 2012 2011 Volume % 2012 2012 2012
Crude, 1,000 b/d Gas, bcf
Argentina ............................ 528 550 548 551 3 0.6 100.8 106.0 1,179.79
Bolivia ................................. 48 48 47 45 3 5.9 53.0 53.0 571.00
Brazil .................................. 2,045 2,011 2,057 2,095 38 1.8 53.0 51.0 536.25
Canada ............................... 3,269 3,155 3,109 2,881 228 7.9 402.0 407.0 4,481.61
Colombia ............................ 970 960 940 914 26 2.9 30.0 30.0 329.00
Ecuador
1
............................. 480 480 484 497 14 2.7 1.0 1.0 11.00
Mexico ................................ 2,577 2,542 2,544 2,549 5 0.2 218.9 193.7 2,190.22
Peru ................................... 67 65 117 152 36 23.3 24.9 36.9 377.80
Trinidad .............................. 79 80 82 93 11 11.8 121.4 112.9 1,304.66
United States ...................... 6,764 6,820 6,352 5,622 730 13.0 2,112.7 2,172.5 23,167.75
Venezuela
1
.......................... 2,470 2,480 2,491 2,476 15 0.6 60.0 60.0 658.00
Other Latin America ............ 86 86 87 86 1 0.7 4.6 4.9 56.84
Western Hemisphere .......... 19,382 19,277 18,857 17,962 894 5.0 3,182.3 3,233.7 34,868.77
Austria ................................ 14 16 16 17 1 5.3 4.3 5.5 57.95
Denmark ............................. 203 202 202 225 23 10.2 14.0 15.5 170.32
France ................................ 16 16 16 18 2 10.3 2.2 2.2 24.38
Germany ............................. 50 52 51 53 2 3.6 31.0 30.5 347.16
Italy .................................... 97 106 102 98 4 3.7 26.0 26.0 270.40
Netherlands ........................ 20 20 22 22 1 3.0 230.0 217.0 2,393.51
Norway ............................... 1,517 1,549 1,613 1,762 148 8.4 353.8 290.0 3,644.38
Turkey ................................ 46 45 44 45 1 2.2 1.6 3.50
United Kingdom .................. 829 669 888 1,032 145 14.0 108.8 86.0 1,264.92
Other Western Europe ......... 10 4 4 4 1 19.1 0.4 0.4 9.52
Western Europe ................. 2,801 2,682 2,959 3,275 316 9.7 772.0 673.4 8,186.41
Azerbaijan ........................... 824 880 876 917 41 4.5 81.2 85.0 876.20
Croatia ................................ 11 11 11 12 -1 5.6 4.5 4.6 53.41
Hungary .............................. 14 15 14 14 1.0 6.0 6.3 61.42
Kazakhstan ......................... 1,648 1,600 1,579 1,602 23 1.4 124.0 110.0 1,239.00
Romania ............................. 82 82 82 84 -2 2.2 20.0 20.0 220.00
Russia ................................ 10,413 10,506 10,422 10,326 96 0.9 2,023.5 1,770.0 20,246.53
Other FSU ........................... 349 300 324 355 31 8.7 512.0 400.0 4,762.00
Other Eastern Europe .......... 50 50 50 47 3 6.0 20.9 21.0 227.23
Eastern Europe and FSU ..... 13,391 13,444 13,359 13,358 1 2,792.2 2,416.9 27,685.79
Algeria
1
............................... 1,180 1,120 1,164 1,275 111 8.7 230.0 230.0 2,495.00
Angola
1
............................... 1,800 1,730 1,754 1,628 125 7.7 4.0 4.0 44.00
Cameroon ........................... 61 61 62 59 3 5.2 2.0 2.0 11.61
Congo (former Zaire) ........... 28 28 28 28
Congo (Brazzaville) ............. 290 290 290 290
Egypt .................................. 660 660 668 668 105.0 105.0 1,174.00
Equatorial Guinea ................ 255 255 255 255 0.1 0.1 0.66
Gabon ................................. 260 260 259 245 14 5.8 0.3 0.3 3.34
Libya
1
................................. 1,450 1,420 1,385 438 947 216.3 25.0 25.0 286.00
Nigeria
1
............................... 1,880 1,980 2,098 2,187 89 4.1 70.0 70.0 770.00
Sudan ................................. 470 470 470 470 --
Tunisia ................................ 72 67 67 69 2 3.1 9.5 9.5 96.61
Other Africa ........................ 315 315 315 292 23 7.9 9.1 9.1 98.60
Africa ................................ 8,721 8,971 8,813 7,903 910 11.5 455.0 464.1 5,007.12
Bahrain ............................... 41 40 41 37 4 10.0 25.5 37.0 332.88
Iran
1
................................... 2,700 2,720 3,027 3,591 564 15.7 465.0 465.0 5,190.00
Iraq
1
................................... 3,210 3,200 2,914 2,656 257 9.7 28.0 28.0 288.00
Kuwait
1 2
............................. 2,780 2,820 2,755 2,494 261 10.5 40.0 40.0 427.00
Oman ................................. 947 935 916 884 31 3.6 94.0 93.0 988.00
Qatar
1
................................. 730 730 745 818 74 -9.0 350.0 350.0 3,875.00
Saudi Arabia
1 2
.................... 9,600 9,500 9,868 9,300 568 6.1 250.0 250.0 2,715.00
Syria ................................... 170 170 168 328 160 48.8 14.0 14.0 164.00
United Arab Emirates
1
......... 2,650 2,670 2,650 2,498 152 6.1 165.0 165.0 1,795.00
Yemen ................................ 210 210 182 195 14 7.0
Other Middle East ............... 1 1 1 4.1 9.3 9.8 87.54
Middle East ....................... 23,038 22,995 23,266 22,804 462 2.0 1,440.8 1,451.8 15,862.42
Australia ............................. 601 601 450 405 46 11.3 163.0 162.1 1,606.69
Brunei ................................ 168 136 143 152 8 5.5 38.0 36.3 400.23
China .................................. 4,243 4,145 4,112 4,082 30 0.7 345.7 305.8 3,503.78
India ................................... 771 763 773 780 7 0.9 115.2 125.0 1,400.81
Indonesia ............................ 850 853 864 905 42 4.6 250.0 250.0 2,760.00
Japan ................................. 13 12 14 14 1 4.0 8.7 8.0 101.36
Malaysia ............................. 490 490 506 506 198.8 196.2 1,950.10
New Zealand ....................... 32 34 40 45 5 11.1 11.1 13.9 146.85
Pakistan .............................. 76 72 70 64 6 9.7 119.4 130.0 1,432.29
Papua New Guinea ............. 30 30 30 30 -- 1.0 1.0 11.00
Thailand ............................. 250 239 238 225 13 5.7 129.5 127.9 1,342.18
Vietnam .............................. 330 330 330 304 26 8.5 26.7 20.0 225.69
Other Asia-Pacifc ............... 39 39 40 47 7 14.2 112.3 103.7 1,119.30
Asia-Pacifc ....................... 7,891 7,744 7,609 7,558 51 0.7 1,519.4 1,480.0 16,000.26
TOTAL WORLD .................... 75,225 75,114 74,864 72,861 2,003 2.7 10,161.6 9,719.8 107,610.78
OPEC .................................. 30,930 30,850 31,334 29,860 1,474 4.9 1,688.0 1,688.0 18,554.00
Offshore Europe .................. 2,577 2,450 2,731 3,050 318 10.4 545.5 456.6 5,797.04
1
OPEC member.
2
Kuwait and Saudi Arabia production each include half of Neutral Zone. Totals may not add due to rounding.
Source: Oil & Gas Journal. Data available at PennEnergy Research Center.
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A|| tonh: cert|hed c|eon w|th h|:tory
ondenq|neer|nqdoto
5e||ltrode com|ete foc|||ty on|y
V|deo-hoto: ss9-1-1s4s
389,000 Gallon Carbon
Steel Tank Farm
FOR SALE:
Use reprints to maximize your marketing initiatives and strengthen your brands value.
CUSTOM REPRINTS
REPRINTS ARE IDEAL FOR:
New Product Announcements Sales Aid For Your Field Force Direct Mail Enclosures
PR Materials & Media Kits Customer & Prospect Communications/Presentations
Trade Shows/Promotional Events Conferences & Speaking Engagements
For additional information, please contact Rhonda Brown at Foster Printing Service,
the official reprint provider for Oil & Gas Journal.
Call Rhonda at 866.879.9144 ext. 194 or pennwellreprints@fosterprinting.com
Hiring? Selling Equipment? Need Equipment? New Business Opportunity?
Contact: Grace Jordan, 713-963-6291 or gracej@pennwell.com

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