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2015

Wood Group has won a new contract worth approximately US$90 million to deliver services to a major unnamed international oil company (IOC) in Iraq.

 

 

Its subsidiary Wood Group PSN (WGPSN) will provide project management for an onshore facility under the three year contract, which is effective immediately, the company said.

 

Concept and FEED (front-end engineering design) work for future projects will also be included in the contract. The company’s personnel will be based in Wood Group offices in Iraq and Dubai.

 

"Iraq is an area where we see significant growth opportunities for our broad service capabilities and building our presence in this region is a key objective for us" - David Buchan, Wood Group PSN

 

"Iraq is an area where we see significant growth opportunities for our broad service capabilities and building our presence in this region is a key objective for us,” said David Buchan, WGPSN's Eastern Europe, Russia, Caspian and Middle East (ERC & MER) managing director. “This is reflected in our creation of another office in Dubai, which adds to our presence in the Middle East and our commitment to developing local talent, creating job opportunities and building relationships with the supply chain in Iraq.”

 

"This major contract builds on our strong partnerships with clients in Iraq. We look forward to leveraging Wood Group's international knowledge and expertise towards the continued success and development of our client's facility.”

 

Source: Pipeline

As the crude industry has been wrestling with low oil prices that declined by over 50 percent since its highest close at $107 a barrel in 2014, many exploration and production companies worldwide and in the U.S., in particular, have faced large shortfalls in revenue and cash flow deficits forcing them to cut down on capital expenditures, drilling and forego investments in new development projects.

High debt levels taken on by the U.S. oil producers in the past to increase production while oil prices soared, have come back to haunt oil and gas companies, as some of the debt is due to mature by the end of this year, and in 2016. Times are tough for U.S. shale oil producers: Some may not make it, especially given that this month, lenders are to reassess E&P companies’ loans conditions based on their assets value in relation to the incurred debt.

 

Throughout the oil price upturn that lasted until the middle of 2014, companies sold shares and assets and borrowed cash to increase production and add to their reserves. According to the data compiled by FactSet, shared with the Financial Times, the aggregate net debt of U.S. oil and gas production companies more than doubled from $81 billion at the end of 2010 to $169 billion by this June

In the first half of 2015, U.S. shale producers reported a cash shortfall of more than $30 billion. The U.S. independent oil and gas producers’ capital expenditures exceeded their cash from operations by a deficit of over $37 billion for 2014.

In July – September 2015, after a couple months of a rebound, a further slump in crude futures prices fluctuated between $39-47/bbl, thus putting more strain on the oil-and-gas producers, and making them feel an even tighter squeeze.

As The Wall Street Journal reported in August, Exxon Mobil Corp. and Chevron Corp. stated they were cutting stock-buyback programs, while Linn Energy LLC announced it would stop paying dividends to its shareholders. Meanwhile, several small U.S. oil and gas producers have filed for chapter 11 bankruptcy protection this year. Companies with persistently negative free cash flow fall into the trap of borrowing, as they have to incur more debt to repay what they have already borrowed before. This makes such companies vulnerable to default and bankruptcy.

As shared by Edward Morse, Citigroup Global Head of Commodities Research with Oilprice.com, smaller independent U.S. E&P companies are in the worst position now: they are already highly leveraged and are trying to use increased leverage while having to bear high debt pressure.

“They also are in the worst cash flow positions of all of the E&P firms per barrel of liquids production relative to the larger and even the mid-cap firms. However, they also tend to account for a much smaller share of overall production. For example, the large North American E&P companies produce around 5.0-million b/d of oil; mid-sized firms produce just short of 1-m b/d. But the small and smallest U.S. E&Ps combined produce only 500-k b/d, 100k b/d of which comes from the smallest U.S. firms,” stated Morse .

The chart from the U.S. Energy Information Administration below, based on second-quarter results from 44 U.S. oil-and-gas companies, demonstrates the rising share of the companies’ operating cash flow used to service debt.

For the previous four quarters from July 1, 2014 to June 30, 2015, 83 percent of these companies' operating cash had been spent on debt repayments, the highest since at least 2012.

DebtServiceU.S

Source: U.S. Energy Information Administration, based on Evaluate Energy
Note: Each quarter represents a rolling four-quarter sum.

Debt Worries for Small Companies

According to Forbes, among U.S. E&P companies ranking high on the verge of bankruptcy are Goodrich Petroleum (GDP), Swift Energy (SFY), Energy XXI (EXXI), Halcon Resources (HK) among others. “These companies have all lost more than 90 percent of their market value since 2014, are larded up with too much debt, and would be lucky to survive the bust,” Forbes wrote.

According to FINRA data cited by Forbes, the yield of Goodrich’s issue of 2012 bonds for U.S. $275 million jumped up to 58.66 percent from 8.88 percent during trade sessions this August. The Goodrich’s stock that previously sold at $29 in June 2014 traded at 88 cents. The company has a high leverage ratio (debt to EBITDA): in the first half of 2015, the company’s revenues amounted to U.S. $50 million while its interest expense on servicing of a long-term loan of U.S. $622 million was $27 million.

Energy XXI (EXXI) is snowed under in $4.6 billion in debt. As Forbes reported, the company was negotiating terms for extending maturities on their bonds with creditors; it also managed to find an investor who bought another U.S. $650 million worth of debt from EXXI.

Another company staggering under a heavy debt load is Swift Energy (SFY). According to Forbes, Swift’s equity market capitalization is $27 million against long-term debt of $1.1 billion. As The Wall Street Journal reported in July, the company was trying to find an investor to come up with funds to repay loans by issuing a $640 million bond.

Halcon Resources (HK) is also on the brink of insolvency. 40 percent of Halcon Resource’s revenues this year have been expended on making interest payments on its U.S. $3.7 billion debt. The company did two equity-for-debt swaps earlier this year, and sold more debt for U.S. $700 million, Forbes reported.

As Virendra Chauhan, Oil Analyst at Energy Aspects discussed with Oilprice.com, the smaller independent U.S. producers are the ones taking the most risk, particularly the ones that have been outspending cash flows quarter-on-quarter for the better part of the last three years. “The debt maturities vary, but the key factor is an over 50 percent fall in oil prices. Whilst costs have come down, they are no way near 50 percent; and so the reliance on external funding, be it through, debt, equity, asset sales or by other means, has increased, which is certainly impacting investor sentiment,” he said.

Hedges Expiring

Although quite a few U.S. shale oil producers have reported substantial increases in their productivity per well drilled, the amount of rigs drilling for oil in the U.S. has dropped by 59 percent since its peak in October 2014, according to the EIA data shared by the Financial Times.

In the Eagle Ford shale of South Texas, the volume of oil produced from new wells for every operational rig, has risen by 42 per cent over the past year, from 556 barrels per rig per day to 792, EIA reported.

“Profitability and returns in the U.S. tight oil space is a moving target – many producers claim to be profitable and generate healthy returns, yet their cash flow situation has shown no signs of improving,” pointed out Chauhan. According to the analyst, producers in the Permian are likely to be better positioned than in other areas, as this basin is the least developed of the three major basins, and Pioneer Resources (PXD), which has the largest acreage in the basin is 75 percent hedged for this year with a floor of $67 and a ceiling price of $77 per barrel.

According to the IHS Energy North American E&P Peer Group Analysis Report, the weighted-average hedged prices for 2016 are $69.04 per barrel of oil and $3.83 per thousand cubic feet (MCF) of gas. The midsize E&Ps have hedged 26 percent of estimated 2016 total production. Financially distressed companies with low hedge protection and high risk in 2016 include SandRidge Energy and Ultra Petroleum.

“The small North American E&Ps have hedged 25 percent of estimated 2016 total production and continue to have the weakest balance sheets. With high debt and little hedging, EXCO Resources and Comstock Resources are at risk of serious liquidity issues if low prices prevail,” stated Paul O’Donnell, principal equity analyst at IHS Energy and author of the report.

Liquidity Problems

Many investment banks and financial services companies are already facing losses on substantial investments in E&P companies, as they have committed hundreds of millions of dollars to lend to energy companies on top of the loans provided to them at the time when oil prices were surging.

Among such investment funds taking a hit on their positions in the financially distressed E&P companies listed above (Goodrich Petroleum Co. Energy XXI Ltd, Swift Energy, etc.) are Franklin Resources Inc., Oaktree Capital Group LLC, Lazard Ltd and others.

Financial experts and analysts point out that some E&P companies have managed to refinance their debt, however, it becomes increasingly more difficult for them to do so as their stock and bonds lose value and the high yield return they have to offer to lenders to get financing is higher than in any other business sector.

According to Marketwatch, the energy industry Liquidity Stress subindex has pointed to a high-risk debt weighing on U.S. E&P companies, as it surged up to 16.9 percent in September from 12.7 percent in August, the highest level since it reached 19.2 percent six years ago in July 2009.

As Chauhan of Energy Aspects pointed out, it is fair to say that most oil and gas companies are not generating free cash flow at current oil prices, as these prices are below full-cycle costs for most regions in the world, with the exception of the Middle East, which is the lowest cost producer globally.

Larger Companies Faring Better

“The IOC’s are likely to be better positioned during a downturn because they have higher credit ratings and therefore are more accessible to debt markets. They also have a hedge built into their business because they will benefit from downstream profitability from improved margins,” the analyst added.

As Paul O’Donnell shared in the IHS report, only six percent of the large North American E&P production volume for 2016 production has been hedged, as these companies have stronger balance sheets to withstand the low prices. “No oil-weighted large E&Ps have any significant hedging in place for 2016”, O’Donnell said.

According to Morse, the large North American E&P companies should be able to survive and thrive, given their high production base and their free cash flows as a cover for liquids production.

“They have roughly three times the cash flow coverage as the smaller companies in terms of cash flow per barrel of oil, and they are still increasing production as a group,” commented the Head of Commodity Research.

According to Ernst & Young U.S. Oil and Gas Reserves Study 2015, the total capital expenditures of 50 largest U.S. oil-and-gas companies reached $200.2 billion in 2014.

As the study reveals, some of the large E&Ps’ capital expenditures in 2014 were:

 

O’Donnell of IHS expects capital spending for the North American E&P group to drop 25 percent in the second-half 2015, as compared with the first-half of 2015, from approximately $60 billion to $45 billion.

As cited by Natural Gas Intelligence in September, “according to EIA, U.S. oil and gas E&Ps had reduced their capex budgets by $38 billion in 2Q2015 (to about $95 billion) compared to the preceding second quarter (about $130 billion), "the difference between cash from operations and capex was almost zero in 2Q2015."

 

Source: Zero Hedge

ABU DHABI  | November 25 2015 | Pipeline News

BP, Masdar and Masdar Institute have launched The Catalyst, the region’s first technology startup accelerator focused on sustainability and clean tech.

The Catalyst, which is supported by US$5 million in funding from British oil giant BP, will help startups accelerate their business through funding, training and mentorship.

Launched on the first day of Innovation Week with a high-level panel session attended by Minister of State and Chairman of Masdar HE Dr Sultan Ahmed Al Jaber, Abdulkarim Almazmi, President and General Manager for BP UAE and Dr. Behjat Al Yousuf, Interim Provost of Masdar Institute.

Dr Ahmad Belhoul, CEO of Masdar, said: “In the nine years since our inception, Masdar has transformed from a bold idea into a commercially-viable renewable energy company. We want to leverage our own experience – as well as our unique infrastructure and assets at Masdar City -- to create a platform for start-ups with similarly bold visions for sustainable technologies and turn their ideas into commercial realities.”

Catalyst will support fledgling innovators from the UAE and beyond in the fields of energy, water and clean tech with seed funding, training, mentoring, and work space. It will accept applications from start-ups that are one to five years from commercialisation and that have a potential patentable technology. Successful applicants will receive up to $50,000 funding and up to 6 months of support, training and advice to help grow their business.

Almazmi said, “BP is a corporation anchored in technological innovation. Our business relies on the ability of our brightest minds to innovate, so we are proud to support a programme that will develop innovative capacity in the UAE through training, mentorship and access to industry experts. BP is pleased to bring its proven capabilities in technology entrepreneurship to the region and help UAE developing a leading position in technology innovation.” 

The goal of the accelerator is to turn a start-up idea into a minimal viable product with commercialisation potential. These new businesses will grow into a network of innovators in sustainability that will become the future driving force behind innovation in Abu Dhabi and across the region. 

Forbes: Tim Worstall

It’s obviously extremely odd to assert that a crash in the oil price could be good for the economy of an oil producing nation. Yet, in the longer view, this could well be true, given the existence of what we call Dutch Disease. This is just a short hand for the pernicious effects upon an economy of relying upon the exports of a natural resource. Effectively, that natural resource becomes so profitable to do and everything else so unprofitable that there’s very little economy other than that natural resource. That’s not good for the long term health of a place and ending that situation could therefore be beneficial for that long term.

There’s two parts to this:

  • There is a time-lag effect. Shale cannot keep switching to high-yielding wells forever. Their hedging contracts are running out. The US energy department expects a further erosion of 600,000 b/d next year, but this is not a collapse.
  • By then Opec will have foregone another half trillion dollars. “What is winning supposed to look like for the Saudis? Can they really endure another year of this?” said Ms Croft.
  • Opec can certainly bankrupt high-debt frackers but this does not shut down US shale in any meaningful way. The infrastructure and technology will remain. Stronger players will move in. Output will bounce back as soon as oil nears $60.
  • Shale frackers will respond with lightning speed to any rebound and create a permanent headwind for Opec over years to come, or a sort of “whack-a-mole” effect, contrary to warnings by the IEA this week that Mid-East producers may regain their 1970s stranglehold once rivals are cleared out.

The strategy of using pricing power to knock out the competition just isn’t going to work. Because that sort of economic strategy depends upon being able to regain the lost money through higher prices after that competition has been vanquished. And there’s a reason why economists think this strategy is used a lot less often than politicians, anti-trust law or the general public think it is used. Because there have been very few to no successful instances of its use. Even Rockefeller’s Standard Oil kept on driving prices down after achieving that near monopoly for fear of the competition that would spring up if they didn’t. And here fracking can be turned on again in a few months, at low cost per well, as soon as the price rises again. So, the strategy of trying to destroy the competition just isn’t one that’s going to work.

Not going to work in a conventional sense that is. But there is another possibility:

 

 

 

  • Saudi Arabia’s currency regime is at risk of blowing up if oil prices fall further and the US dollar spikes higher, Bank of America BAC -0.23% has warned.
    The Saudi strategy of flooding the world with oil in a bid to drive out rivals may be hard to square with the country’s fixed dollar-peg, which is increasingly under scrutiny by currency traders as the US Federal Reserve prepares to raise interest rates.
  • “The crucial point is what happens to the Saudi riyal. Saudi Arabia’s foreign exchange reserves still provide an ample buffer, but they have been falling fast,” said Francisco Blanch, the bank’s energy strategist.
  • “Should Brent crude oil prices drop to $30, we estimate the foreign exchange reserve drain could accelerate to $18bn per month. Saudi Arabia may face a critical choice: cut oil supply, or de-peg,” he said.

And that’s where the Dutch Disease argument comes in. The current peg is an attempt to avoid some of the effects of the disease. For if you are reliant upon exports of a natural resource then the foreign currency flooding in to pay for it is going to drive up the value of your own currency. That’s exactly what happened to Holland when they found gas fields. And it’s also the reason why Norway’s oil money is always kept outside the country: to stop a high krone strangling domestic industry. For of course a high currency rate makes your exports very expensive and your imports very cheap.

But imagine that this plan goes wrong for Saudi. And they then abandon that currency peg: the guess is that this could mean, from the current rate, as much as a 30 or 40% fall in value. And that would simply do wonders for the domestic economy of Saudi Arabia. All imports would become more expensive thus driving their substitution with domestic production. And anything domestically produced would now become that much cheaper on the global market. It would be a wonderfully stimulative program for domestic industry. Heck, Saudi Arabia might actually start to have a proper domestic economy, one that actually produces stuff that people desire to consume.

OK, yes, this is all rather speculative and certainly long term. But assume that the oil price battle is one that the Saudis cannot win, and that then they have to remove the currency peg, then this would lead to a massive boom in the productive capacity of the non-oil part of the Saudi economy. To the great benefit of all those people who would rather like to get a decent job if only Saudi actually had a domestically productive economy.

The oil industry is mired in its latest bust, with thousands of jobs evaporating like flares flaming out over natural gas wells. But in Texas, education officials are preparing more young people for the oil patch, showing the state's unshakeable commitment to the energy sector despite the employment uncertainties.

The Houston school district is planning to expand its Energy Institute High School to around 1,000 students by 2017 and inaugurate a new 110,000 square-foot, $37 million facility. The three-year-old institute is the nation's only high school fully specializing in oil and energy careers.

In the oil-rich Permian Basin, two Midland high schools have begun "petroleum academies." And state officials have approved vocational classes in oil production, authorizing all schools districts across Texas to teach them.

"We are in this downturn, but as a society we have a responsibility to not let that affect our workforce and to keep ahead of the game," said Energy Institute principal Lori Lambropoulos.

Other oil and gas states, including North Dakota, Louisiana and Wyoming, offer technical training for high school students interested in the oil industry, but Texas' program is more extensive, despite questions about whether there will be jobs in the near future for its graduates.

Layoffs began last year when crude prices plummeted from over $100 a barrel to about $45 now. According to the Bureau of Labor Statistics, oil and gas extraction jobs fell from 201,500 nationwide in October 2014 to around 187,000 this past October. In Texas alone, the economic sector including energy jobs contracted by an estimated 28,000 through a year-long period ending in September.

"Fourteen months ago it was fracking forever," said Robert Gilmer, head of the University of Houston's Institute for Regional Forecasting. "And now we're here."

But the booms, like the last six-year-long one, provide rich paydays when they happen. And many in Texas insist things will rebound, although no one knows when. It took nearly two decades for oil prices to fully recover from the bust in the 1980s.

Energy Institute High School students choose between focusing on geosciences, offshore technology or alternative energy, but can also tackle blue-collar areas like welding, vital to the oilfield, or piloting remotely operated underwater vehicles used in offshore exploration.

Trista Litong, a 16-year-old sophomore, said she's not sweating falling oil prices because she believes her training will be useful regardless.

"The skills you learn here, how to talk to people, how to present in front of an audience and working in groups, it really helps you in the future," said Litong, who wakes up at 4:55 a.m. and braves a 90-minute bus ride to reach Energy Institute's temporary campus in a scruffy section of downtown Houston.

A record 1,200 students applied for about 250 Energy Institute slots last fall. Oil industry donations have helped supplement public funding for the school's costs, which are high because of the technology and teacher training required.

There are no sports teams, so the hallways are lined with artwork featuring pump jacks and oil platforms. Industry veterans appear as guest lecturers and the school's advisory board includes executives from firms like Exxon-Mobile and Shell.

In Midland, home to more than half a dozen top energy firms, companies have helped the school district create the new petroleum academies for about 110 students. Classes address the basics of drilling, production and pipeline maintenance, and students work toward safety certifications. They also take traditional high school courses.

Oil industry leaders say training starting in high school is good investment since students will eventually find opportunities replacing the sector's aging workforce.

"I don't think it's that different than the tech industry where there was a time a decade and a half ago where it had a big downturn," said Barry Russell, president of the Independent Petroleum Association of America, which helped found the Energy Institute High School.

But those who hung with tech, Russell added, "then saw the opportunities explode."

Source: ABC News / AP

If elected president, Democrat Hillary Clinton says she can create enough green energy to power every home in America by the end of her second term.

 

“By the end of my first term, we will have installed a half a billion more solar panels, and by the end of my second term, enough clean energy to power every home in America,” Clinton said at the Blue Jamboree in Charleston, S.C., on Saturday.

 

The Democratic presidential front-runner said her plan to subsidize alternative sources of energy would not entail a middle-class tax hike.

 

 

 

In fact, Clinton said she would reduce taxes for working-class families.

 

“And people say, well, can you do that without raising taxes on the middle class? Absolutely,” she said. “That’s why I’m going to be fighting for tax cuts that help hard-working families get ahead.”

 

The former secretary of State also addressed her plan to reform healthcare, saying her plan would bring costs down without raising taxes.

 

“Other candidates want to increase taxes for working people in the middle class as part of their healthcare plans,” she said. “Well, I don’t want to see your taxes go up, I want to see your healthcare costs go down, and we can manage to do that.”

 

Clinton accused Republicans who want to repeal the Affordable Care Act of being driven by “political ideology,” rather than a desire to “take care of people.”

 

The former first lady also said she would be willing to hold senior-level executives of companies accountable.

 

“I am willing to break up the big banks if they need to be broken up, and I am more than willing to hold executives accountable when they make decisions that cause the rest of the economy the troubles that we saw,” she said.

 

Source: The Hill; Image: Getty

From Bloomberg

 

Threatened by surging production from North America, the Organization of Petroleum Exporting Countries has been pumping above its quota for 17 months as it seeks to take market share from higher-cost regions. The resulting 60 percent price crash is hitting Alberta harder than Texas.

Canadian producers are struggling to cut the cost of extracting bitumen from the oil sands, and their other wells are failing to match the efficiency gains of U.S. rivals, a Bloomberg Intelligence analysis shows. While output keeps rising in the Permian Basin, the largest U.S. shale play, companies are slowing output from wells in Alberta and have shelved 18 oil-sands projects during the downturn, according to ARC Financial Corp.

“OPEC wants to hinder shale from its strong growth trajectory but there are higher-cost producers, such as in the oil sands of Canada, that are in the line of fire,” said Peter Pulikkan, an analyst at BI in New York. “Shale will eventually be impacted but it’s not the first on the list.”

New Policy

In a policy shift a year ago, the 12-nation cartel decided against propping up oil prices, keeping its output target at 30 million barrels a day even as the supply glut worsened. It has exceeded that ceiling since June 2014 and pumped 32.2 million barrels a day in October, according to data compiled by Bloomberg.

In Alberta, high extraction costs and oil price discounts relative to global benchmarks are poised to continue crimping output, Pulikkan and BI analysts Michael Kay, Gurpal Dosanjh, Andrew Cosgrove, Rob Barnett, Cheryl Wilson and William Foiles said in research published Wednesday. Production, excluding bitumen extraction, dropped about 13 percent this year through July, That compares with a roughly 19 percent increase in output from Permian wells over the same period.

“We are one of the highest-cost basins in the world,” said Rafi Tahmazian, a Calgary-based fund manager at Canoe Financial LP. He predicted more job losses as Canadian producers try to save money and stay profitable with low prices. “We’re constantly working to bring down those costs.”

U.S. crude has plummeted from a $107.26 closing high in New York on June 20 of last year to just above $40 a barrel. The Canadian heavy-oil benchmark is trading at about $15 less than that.

Slower Rebound

Parts of Canada’s energy industry have been resilient. Existing oil-sands projects have kept production flowing and the weaker Canadian currency has helped exporters. Still, Canadian production is poised to be slower to rebound than U.S. shale in a market recovery.

New oil-sands projects require long investment lead times and the Canadian dollar will strengthen along with oil prices, eroding the currency advantage, according to Manuj Nikhanj, co-head of energy research at ITG Investment Research in Calgary. Investors are shying away from financing Alberta producers because of an increase in provincial levies, Nikhanj said in an e-mail.

There’s a risk that the U.S. eats all of Canada’s lunch, according to BI’s Pulikkan. Producers have been awaiting higher prices to turn on a backlog of U.S. shale wells that have been drilled and capped. Once they come on stream, they could push prices back down, rendering Canadian output uncompetitive yet again, he said.

“Before they even have a chance to get off the ground, shale will likely beat them to the punch,” Pulikkan said.

November 19, 1927 – Birth of “Phillips 66” Gasoline

petroleum history november

Originally promoted as a dependable “winter gasoline,” by 1930, Phillips 66 gasoline is sold in 12 states.

petroleum history november

The Phillips Petroleum Company Museum in Bartlesville opened in 2007.

After a decade as an exploration and production company, in 1927 Phillips Petroleum Company enters the highly competitive business of refining and retail gasoline distribution.

The Bartlesville, Oklahoma, company introduces a new line of gasoline – “Phillips 66” – at its first service station, which opens in Wichita, Kansas.

The gasoline is named “Phillips 66” after it propels company officials down U.S. Highway 66 at 66 mph in route to a meeting at their Bartlesville, Oklahoma, headquarters.

Route 66 becomes the backbone of Phillips marketing plans for the new product – which boasts “controlled volatility,” the result of a higher-gravity mix of naphtha and natural gasoline.

Because the composition makes Phillips 66 gas easier to start in cold weather, advertisements entice motorists to try the “New Winter Gasoline.”

Acquisition of service stations adds 50 new retail outlets each month to the company. By 1930, Phillips 66 gasoline is sold at 6,750 outlets in 12 states. Read more in ConocoPhillips Petroleum Museums.

From: American Oil and Gas Historical Society

I wanted to share a recent talk show I did with Shale’s In The Oil Patch.  I was flattered they invited me back on the show to talk about my company, The Energy CFO, what is going on in the industry, and what prompted me to want to found the South Texas Chapter of the Women’s Energy Network.  I want to recognize Kimberly Wilson  and Haley Curry for their efforts in helping found the chapter.  Kimberly believed in us and helped us get the seed money to do it.  Haley Curry was one of the amazing 8 women who served in our founding board and helped spread the word upstream. 

 

The interview begins @15:30 if you run it using the soundcloud link at the bottom of the page.   The South Texas WEN story begins @50:00.

 

http://shalemag.com/in-the-oil-patch-40/

Houston Chronicle | November 17, 2015

Olson and Green: Improving hiring of inspectors is key to pipeline safety - Houston Chronicle

 

Pipelines are among the safest and most efficient ways to transport energy. But as we have recently seen, accidents happen. We believe an indispensable prerequisite to maintaining pipeline safety and efficiency is a robust inspection regime. Inspectors are the "cops on the beat" and the better we train our inspectors, the better we can mitigate risks associated with pipeline transportation. As members of the House Energy and Commerce Committee we've introduced, alongside Brian Babin and Janice Hahn on the Transportation and Infrastructure Committee, a bill to get more inspectors on the job.

 

Texans know our state is crisscrossed with hundreds of thousands of miles of pipelines. Oil and gas lines reach every major city and connect the refineries and petrochemical sites that dot our state, safely passing under neighborhoods and riverways in the process.

The cornerstone of our success is a careful balance between the state Railroad Commission and the federal Department of Transportation (DOT). The DOT's Office of Pipeline Safety is responsible for setting pipeline standards and laying the ground rules for inspections and upgrades.

In recent years, flaws in the system have been exposed. In 2010, the horrific pipeline explosion in San Bruno, Calif., prompted Congress to pass the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. This important bill created needed safety measures and put in place penalties for bad actors. In Washington, we know there are many stakeholders playing important roles, but the federal government is in charge of setting the rules of the system. That's why Congress' 2011 bill created pipeline safety rules and set a deadline for DOT to improve safety standards. Unfortunately, their response has been slow and uncertain. Congress created 42 regulatory requirements for DOT to implement; regrettably, more than a dozen critical items have slipped past their deadline for action.

At the same time, DOT remains woefully short of pipeline safety inspectors - inspectors tasked with enforcing the rules the agency does update. Congress has allocated new funds to bulk up the number of inspectors, but only half of the new positions have been filled.

As a result, Congress now has an opportunity to step in to keep our communities safe, and keep the economy moving.

In the short term, we need more inspectors in the field. One reason why DOT has had such a hard time hiring new pipeline inspectors is the lengthy hiring process for the federal government to fill vacant positions. DOT is required to rank, test and measure candidates throughout the process. These metrics have a deterrent effect on applicants who may easily find other positions in the private sector.

That's why a bipartisan group of members from both the Energy and Commerce and Transportation and Infrastructure Committees have written a bill designed to cut the red tape for hiring inspectors. By giving DOT the ability to expedite the hiring process, we can spur on a "surge" of inspectors to enforce the new rules. The process will be structured to encourage the hiring of women, veterans and minorities, many of whom are underrepresented and possess unique skills in this field.

In the long term, we intend to keep pressure on DOT to fully implement critical rules. The Energy and Commerce Committee held an important oversight hearing earlier this year on regulatory delays. We also questioned pipeline operators and trade associations to hold them accountable. We must also reauthorize pipeline safety rules, and this presents us with an excellent opportunity for more oversight.

As we continue to work toward making our infrastructure more reliable, this legislation will provide a critical boost to ensure Texas and our nation's energy economy operate at a safer level, reducing the risk of accidents. No single rule will make our pipeline network completely secure. Accidents have happened before but working together, through a multipronged approach, we can keep making our infrastructure safer and our economy stronger.

Olson, a Republican, represents the 22nd Texas Congressional District in the House and is vice chairman of the House Energy and Power Subcommittee. Green, a Democrat, represents the 29th Texas Congressional District in the House and is a senior member of the House Energy and Commerce Committee.

Film company seeks to empower, mentor women - Houston Chronicle  

One day after a business meeting, Donna Cole and Alicia Goodrow were casually talking about changing the world.

The two shared their dreams of impacting millions with positive messages about women. Because they both loved movies, they came up with the idea to start a film company, Pantheon of Women, to produce independent films that celebrate strong women and supportive men.

It's a bit of a departure from their high-powered careers. Cole is the CEO and founder of Cole Chemicals, a chemical-supply-chain management firm that she started in 1990. Goodrow is an attorney who has worked with Cross Creek Pictures, which has produced films such as "Black Swan." They also recruited Deborah Kainer, a longtime certified public accountant, to the team.

"If you have a great movie, you can empower millions and mentor thousands. We can change the way men and boys treat women and how women and girls see themselves," Cole said.

At 7:30 p.m. Sunday, their first film - "I Dream Too Much" - will be shown at the Museum of Fine Arts, Houston as part of the annual Cinema Arts Festival; the film's showing is sold out.

The movie, which stars Diane Ladd and Eden Brolin, daughter of actor Josh Brolin, is written and directed by Houston native Katie Cokinos. Danielle Brooks of Netflix's "Orange Is the New Black" also stars, and "Boyhood" director Richard Linklater is the executive producer.

Already it has been shown at South By Southwest and at the New Orleans Film Festival. The film focuses on recent college graduate Dora (Brolin), who finds herself caring for her reclusive aunt (Ladd) in upstate New York.

Cole said the movie cost about $1 million to make, and her group is its largest investor.

"I think the movie will translate to everyone because it's about three generations of women who make dreams come true," Cole said. "Normally, dreams don't come true on your own, you need help - mentors and other women."

According to a report by the Geena Davis Institute on Gender in Media, about 30 percent of speaking roles in films are held by women in the United States, which lags last globally, behind countries such as Brazil and Korea. The report, drawn from data gathered from the Motion Picture Association of America, also said that of 1,452 filmmakers, only 20 percent are female.

The report also said that female characters, between ages 13 and 39, were likely to be shown in sexy attire, partially or fully naked, and/or referred to as "beautiful."

Those statistics are among the many reasons Pantheon is needed, Goodrow said.

"Women were the keeper of stories, until men figure out they could make money in the business," Goodrow said.

By the 1980s and 1990s, there was a resurgence of women in film, with Nora Ephron's "When Harry Met Sally" and "Sleepless in Seattle," but big-blockbuster films eventually became the norm, Goodrow said.

"It's a lot riskier to make a movie for a smaller audience than one that will translate to many, but it's really our calling as women to tell stories and transmit wisdom," she said.

Pantheon of Women's next film is "Daughter of a Daughter of a Queen," about Cathay Williams, the first African-American female to enlist and serve in the U.S. Army and the only female Buffalo Soldier. They hope to shoot the film in Texas; it is expected to cost $6 million to make.

"The industry is terrified of films about black people, about Westerns and about women, and this is a Western about a black woman," Goodrow said.

While the Pantheon team members know they are industry newbies, they believe their business expertise and their passion for films work in their favor.

"We're all proven businesswomen and spend time mentoring and paying it forward," Goodrow said. "We've spent time observing the gender bias in the media, and I want to do something different. If it's a great movie, people will go see it."

Kainer said that after years working as an accountant, she didn't realize the extent to which gender bias still existed in Hollywood.

"I thought after 40 years of working, things had changed. I just plowed ahead, so I was shocked to find out that there's work to still be done."

The Pantheon of Women is also actively involved in getting out the word about their film projects.

"It's one thing to make a movie and another thing to get it marketed and getting it in film festivals," Cole said. "Social media is really important. I'm tweeting now."

Joy Sewing

Joy Sewing

Fashion & Beauty Editor, Houston Chronicle

Film company seeks to empower, mentor women - Houston Chronicle

This is why I am afraid to work in the industry. They can come after you for anything--I'm referring to the Feds. For me, as a reservoir engineer, I would be most afraid of the SEC, followed by the DOJ. Reading the article, I was thinking, "How can they do this?!" How can we do this to our own brethren? Someone has to take the fall in a major disaster like Macondo. I am happy that Kurt finally came out and wrote about his experiences. He lived in my neighborhood.

 

What do you think?

 

The article below is from the WSJ.

---

I Was an Oil Spill Scapegoat

I helped to cap the Deepwater Horizon well. The Justice Department then turned my life into a legal nightmare.

                         

By  Kurt Mix Nov. 8, 2015 4:47 p.m. ET  

     

At 6:30 a.m. on April 24, 2012, federal agents, wearing Kevlar vests and with guns drawn, raided my home in Katy, Texas, with a warrant for my arrest. This was as shocking to me as it would be for any normal, law-abiding citizen.

 

I’m not a drug dealer, violent criminal or money launderer. I’m an engineer. In 2010 I helped stop the  BP   BP   -2.04       %             oil spill after an explosion on the Deepwater Horizon drilling rig left a damaged well spilling crude directly into the Gulf of Mexico.

 

On the morning of the raid I left early for work, so I was not at home when it occurred. My wife was alone and had to deal with the shock of a squad of FBI agents ripping through our home. We’ve seen it a hundred times on “Law and Order.” They raced through our house and badgered and interrogated my wife.

 

Later that morning, after a frantic call from my wife, I drove to a local police station to surrender. As bad as that day was, I had no idea what was about to happen. I didn’t realize I had become a central focus of the Justice Department’s investigation into the BP oil spill. For the next three and a half years, a Justice task force was dedicated to putting me in jail.

 

What had I done to merit this? I had worked as hard as I knew how for nearly 90 straight days to help stop the Deepwater Horizon spill. Plugging the well, as fast as possible, was the focus of my life.

 

Looking back now at the Justice Department’s conduct, I realize that I made one egregious error: I naïvely believed that the task force simply wanted the truth. I was certain that once it had the full record of my actions, everything would be fine, and the trauma my family and I had gone through would end.

 

I was in for a rude awakening. Facts were not what the investigators wanted. They wanted a conviction. They wanted to prove to the public that their lengthy, expensive investigation was successful. And success meant conviction. I had banked on the truth saving me, but the truth was not enough.

 

I grew up fishing and duck hunting with my father in the marshes and coastal waters of Louisiana. I knew from the time I was in the eighth grade that I wanted to be an engineer. So when I was asked to help stop the spill, I was honored and deeply motivated. This was what I had prepared my whole life to do. I believed I could make a difference for my industry and home state.

 

And we succeeded. Lost in the aftermath of recriminations and lawsuits is the fact that the team charged with stopping the biggest offshore oil disaster in history did its job as fast and effectively as it knew how. This doesn’t in any way minimize the tragedy or the mistakes that allowed the spill to happen.

 

Nearly two years after the successful capping of the well, I was charged in May 2012 with two felony counts of obstruction of justice—potentially exposing me to up to 40 years in federal prison. My only previous exposure to the judicial system had been a speeding ticket. I didn’t even know what a grand jury was.

 

My case centered on the fact that I had deleted from my iPhone two extended text-message conversations, one of which was almost entirely personal; the other included personal texts as well as material related to our efforts to kill the well. I acknowledged from day one that I had deleted the texts. Any information related to our work, including flow-rate simulations, was fully addressed in the thousands of emails and documents I gave investigators. I was proud of my work, and I wanted anyone who was interested to have the full record of everything I did. I turned over more than 10,000 records, including files, memos and emails.

 

With the help of a forensic expert, I succeeded in recovering nearly all of the deleted text messages. I then voluntarily gave them to the Justice Department in September 2011, long before the indictment was returned. I certainly had meant no harm and thought that would be the end of it. I was wrong.

 

More challenges awaited. In spring 2013 my defense team discovered that prosecutors had failed to turn over evidence supporting my innocence. All three members of the Justice Department task force who had pursued me so relentlessly then withdrew from the case. So we started over in August 2013 with a new Justice Department team.

 

In late 2013 the case finally went to trial and I was acquitted on one charge of obstruction of justice. Although I was found guilty on the other charge, my attorneys and I soon learned that the jury forewoman had committed misconduct by introducing into the jury deliberations prejudicial, extraneous information overheard in a courthouse elevator about other BP cases. Based on this misconduct, a federal judge threw out the corrupted verdict and an appeals court affirmed that the verdict could not stand. The verdict was set aside and a new trial was ordered.

 

The case continued to grind on for two more years. Then to my surprise this fall, on the eve of my new trial, prosecutors offered a way to end the madness. They would drop all felony charges and acknowledge that I was not guilty of obstruction of justice. I would not pay a dollar in fines or serve a day in jail. I would plead guilty to a minor misdemeanor for deleting a set of text messages without BP’s permission—something I had acknowledged doing from the very beginning.

 

My initial instinct was to decline the offer. As minor as the misdemeanor charge may be, it is dispiriting that I should have to accept anything other than an apology. I did my job with honor and professionalism. I served the public’s best interests. For this, I was hounded for four years and threatened with up to four decades in a federal penitentiary. I agreed to this resolution on Friday to put this matter behind me—to protect myself and my family from any further entanglement with the criminal-justice system.

 

The dangers of a misguided, out-of-control Justice Department task force go far beyond my case. My life was turned upside down, but I will recover. What worries me more is the chilling impact this type of government overreach could have on first responders to future disasters. Will they rush in to help as I did? Or will they decline to get involved for fear of prosecution years later? If they do engage, will they spend all of their energy trying to solve the problem? Or will they be looking over their shoulders and building a record to protect themselves for the day the Justice Department comes calling? 

 

Mr. Mix was a BP project engineer from 2006-12.

By Paula Waggoner-Aguilar

Shale Oil & Gas Magazine Sep/Oct 2015

 

There are times when navigating our businesses in this industry can feel like you are driving blindly in a torrential downpour.  This article focuses on four business planning tools that owners and executives can use right now to weather the storm:  the Cash Report, the Flash Report, the Cash Flow Forecast, and the Monthly Operational and Financial Review.  Surviving in this industry starts with good blocking and tackling and flawless execution of the fundamentals.  For more information, check out Paula's latest article at:   

 

http://shalemag.com/navigating-businesses-down/

Bloomberg Business

November 11, 2015

Major Oil Companies Have Half-Trillion Dollars to Fund Takeovers - Bloomberg Business

 

The world’s six largest publicly traded oil producers have more than a half-trillion dollars in stock and cash to snap up rival explorers.

Exxon Mobil Corp. tops the list with a total of $320 billion for potential acquisitions. Chevron is next with $65 billion in cash and its own shares tucked away, followed by BP Plc with $53 billion, according to data from corporate filings compiled by Bloomberg.

Merger speculation was running high after Anadarko Petroleum Corp. said Wednesday it withdrew an offer to buy Apache Corp. for an undisclosed amount. Apache rebuffed the unsolicited offer and wouldn’t provide access to internal financial data, Anadarko said. Both companies are now takeover targets, John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone.

Royal Dutch Shell Plc has $32.4 billion available, almost all of it in cash. That said, The Hague-based company is unlikely to go hunting for large prey given plans announced in April to take over BG Group Plc for $69 billion in cash and stock.

At the bottom of the pack are ConocoPhillips with $31.5 billion and Total SA with $30.5 billion. More than 90 percent of ConocoPhillips’ stockpile is in the form of shares held in its treasury. Total’s arsenal is 85 percent cash.

Chevron spokesman Kurt Glaubitz declined to comment on the company’s mergers and acquisitions strategy. Shell spokeswoman Natalie Mazey also declined to comment. Voice messages left for Exxon, BP, ConocoPhillips and Total weren’t immediately returned.

Even with its lowest cash balance in at least a decade, Exxon still wields a mighty financial stick. The Irving, Texas-based company has $316 billion of its own shares stockpiled in the company treasury that it could use for an all-stock takeover. The world’s biggest oil company by market value made its two largest acquisitions of the last 20 years with stock -- the $88 billion Mobil deal in 1999 and the $35 billion XTO transaction in 2010.

by Dan Murtaugh, Bloomberg

 

Andy Hall and Daniel Yergin think oil prices are bottoming out. Hedge funds agree.

Money managers’ net-long position in West Texas Intermediate crude rose 20 percent in the week ended Nov. 3, the most in seven months, according to data from the U.S. Commodity Futures Trading Commission. Bets on rising prices increased to the highest level since June.

U.S. onshore oil production fell for the fifth month in a row in August and supplies grew at the slowest pace since September in the week ended Oct. 30. Inventory data don’t indicate a surplus in the crude market and prices are set to rise, said Hall, one of the world’s best-known oil traders. Global supply and demand will begin to move into balance by late 2016 or 2017, according to Yergin, a Pulitzer Prize-winning oil historian.

“The fundamentals are starting to play out,” said David Pursell, a managing director at investment bank Tudor Pickering Holt & Co. in Houston. “You’ve got greater recognition that U.S. supply is falling and maybe falling faster. Inventories are building, but the pace of that build is more manageable.”

WTI jumped 11 percent in the report week to a four-week high of $47.90 a barrel on the New York Mercantile Exchange. The contract declined 42 cents Monday to settle at $43.87.

Onshore Output

Onshore production excluding Alaska fell to 7.25 million barrels a day in August, down 334,000 barrels a day from March, according to Energy Information Administration data. U.S. oil inventories grew by 2.8 million barrels a day the week ended Oct. 30, the smallest gain since Sept. 18.

U.S. output will retreat by about 10 percent in the 12 months ending April, according to Yergin, vice chairman at IHS Inc. and author of the award-winning book “The Prize.” Prices may rise to $70 to $80 a barrel by the end of the decade, he said in an interview in Tokyo Oct. 30.

Hall, the crude trader who gained notoriety in 2009 after being paid about $100 million while at Citigroup Inc., said Saudi Arabia is producing close to capacity while Iraq is struggling to maintain output, while U.S. rig counts will continue to decline.

“We think the degree of negativity is unwarranted,” Hall, who runs $2.6 billion hedge fund Astenbeck Capital Management, said Nov. 4 at the Invest for Kids conference in Chicago.

Economic Growth

The U.S. economy added 271,000 jobs to nonfarm payrolls last month, the biggest increase of the year, a Labor Department report showed on Nov. 6. China’s biggest stock market rallied into a bull market this week and the government will lift a five-month freeze on initial public offerings by the end of the year.

“The economy is on the rebound, China is coming out of a bear market, people are saying let’s get long oil,” said Carl Larry, head of oil and gas for Frost & Sullivan LP. “We’re near the bottom at $40, and there’s a potential upside that’s much higher.”

Speculators’ net-long position in WTI increased by 28,761 contracts to 172,052 futures and options, CFTC data show. Shorts shrank by 17,395 contracts while longs increased by 11,366.

In other markets, net bearish wagers on U.S. ultra low sulfur diesel contracted 13 percent to 32,496 contracts. Diesel futures rose 9.9 percent in the period to $1.566 a gallon. Net bullish bets on Nymex gasoline rose 48 percent to 17,879. Futures rose 12 percent in the report period to $1.4455 a gallon.

For the second week in a row, traders missed a reversal in prices. Crude fell the three days following the end of the CFTC report period. The previous week, oil rallied after hedge funds boosted short bets.

“They’re kind of chasing the price,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We’re really seeing some very choppy trade flows to go along with some choppy price action.”

The world is no longer at risk of running out of oil or gas, with existing technology capable of unlocking so much that global reserves would almost double by 2050 despite booming consumption, BP has said.

When taking into account all accessible forms of energy, including nuclear, wind and solar, there are enough resources to meet 20 times what the world will need over that period, David Eyton, BP Group head of technology said.

"Energy resources are plentiful. Concerns over running out of oil and gas have disappeared," Mr Eyton said at the launch of BP's inauguralTechnology Outlook.

Oil and gas companies have invested heavily in squeezing the maximum from existing reservoirs by using chemicals, super computers and robotics. The halving of oil prices since last June has further dampened their appetite to explore for new resources, with more than $200bn-worth of projects scrapped in recent months.

By applying these technologies, the global proved fossil fuel resources could increase from 2.9 trillion barrels of oil equivalent (boe) to 4.8 trillion boe by 2050, nearly double the projected 2.5 trillion boe required to meet global demand until 2050, BP said.

With new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, Mr Eyton said.

"We are probably nearing the point where potential from additional recovery from discovered reservoir exceeds the potential for exploration."

The world is, however, expected to reduce its reliance on fossil fuels in favour of cleaner sources of energy as governments introduce policies limiting carbon emissions in order to combat global warming.

"A price on carbon would advantage certain resources," Mr Eyton said.

Governments are expected to agree on a framework to limit global warming by limiting carbon emissions at the United Nation's climate summit in Paris starting this month. European oil companies have urged policy makers to introduce a global price on carbon that will favour the use of less dirty natural gas at the expense of coal.

"Ultimately, national and international policies will determine how much of and which resources will be produced."

"We envisage increasing competition between energy resources," he said. "This will likely result in increased competition in the energy market and disruption for the incumbent."

In North America, a price of $40 per tonne of carbon would make gas turbine power plants more cost-effective than coal, BP said.

However, an $80 per tonne price on carbon would make onshore wind technology competitive with gas-fired power and would also make carbon capture and sequestration with gas-fired power economic.

And while oil is expected to be the main source fuelling the transport sector by at least 2035, electric vehicles could approach cost-parity with the internal combustion engine, due to advances in battery technology, BP said.

BP, the largest operator of solar and wind power among its peers, will see its investment portfolio evolve over time in line with government policies, Mr Eyton said.

The Canadian company behind the proposed Keystone XL pipeline on Monday asked the U.S. government to suspend review of the $8 billion project that sparked a political war between environmentalists and the oil industry, a move that could put its fate in the hands of the next U.S. president.

 

TransCanada Corp's (TRP.TO) move was seen by many as an attempt to avert a rejection from an increasingly environmentally focused President Barack Obama and postpone the decision until after the November 2016 presidential election.

 

Democratic front-runner Hillary Clinton has said she opposes the pipeline while many Republican candidates support the project for making America less reliant on the Middle East.

 

Calgary-based TransCanada said it had sent a letter to the U.S. State Department to suspend its application while the company goes through a state review process in Nebraska.

 

The State Department was reviewing TransCanada's request but still assessing the project, a representative said. The nearly 1,200-mile (2,000-km) pipeline would carry 830,000 barrels a day of mostly Canadian oil sands crude to Nebraska en route to refineries and ports along the U.S. Gulf Coast.

 

Green groups issued a blizzard of statements describing TransCanada's move as a desperate attempt to avoid a "no" decision, and urging the president to kill the project anyway. Democrats hours after the move sent an email urging supporters to sign an online petition to fight climate change.

 

In addition to political headwinds, U.S. crude prices CLc1 have plunged to $50 a barrel from almost $150 when TransCanada filed a federal application in 2008. The project also faces several lawsuits.

 

In the past year a global rout has slashed oil prices by more than 60 percent, prompting drillers to curtail spending and rein in new projects. Companies operating in Canada's oil sands where production costs are high have been hard-hit by the market conditions. Further postponing Keystone deals an additional blow to these producers who have limited pathways to bring their oil to U.S. markets.

The request for a delay came on the eve of TransCanada issuing an earnings report, and shortly after the White House said it still expected Obama to make a decision on whether to grant the permit before he leaves office in January 2017.

 

Asked if TransCanada was asking for a delay because of concerns Obama may block the pipeline, TransCanada spokesman Mark Cooper said the company was not going to speculate on what the decision may be or when it may come.

 

 

KEYSTONE A SYMBOL

 

TransCanada's request provoked a sharp reaction from environmental groups, which have made Keystone a symbol of their battle to keep crude oil in the ground. Canadian oil sands have long been under fire from environmentalists because of their carbon-intensive production process.

 

"TransCanada acknowledged the writing on the wall by requesting to suspend the review of its permit application," said a statement issued by Tom Steyer, the billionaire green activist who heads NextGen Climate. "Today, tomorrow or next year, the answer will be the same: Keystone XL is a bad deal for America, our climate, and our economy."

 

The pipeline's defenders tried to rally on Monday. North Dakota Senator Heidi Heitkamp, a Democrat, said "halting a basic infrastructure expansion project will not make this country more energy efficient or independent, but it does set a foreboding precedent about our ability to achieve those goals.”

 

Republican candidates Ben Carson, Marco Rubio and Jeb Bush have said they support the pipeline. Donald Trump said in October that the United States needed a "better deal" from the pipeline's developer. In the past, he said he would approve the project immediately if he wins the election.

 

But environmental groups argued that TransCanada was simply playing for time - and the hopes that might come with a new president.

 

“TransCanada rightly sensed that the tide has turned against Keystone XL and now they’re trying to delay any decision in the hopes that they can get a Republican president to approve it,” said Valerie Love with the environmental group Center for Biological Diversity. She urged Obama to reject the appeal and the pipeline.

 

Even investors were caught by surprise.

 

"Though I didn't see this coming it would seem to me to be an admission that they are giving up on the Obama administration," Ryan Bushell, a portfolio manager with Leon Frazer & Associates, which owns a significant position in TransCanada. "Not sure what this means for the stock if anything, but it's disappointing for the industry."

 

TransCanada's stock was little changed in after-hours trading.

 

 

 

 

(Writing by Bruce Wallace; Additional reporting by Euan Rocha in Toronto and Jessica Resnick-Ault in New York; Editing by Jeffrey Hodgson, Peter Henderson and Lisa Shumaker)

Reuters

By Jim Crane; Forbes

The debate over US crude oil exports provides a long-overdue chance to throw off the shackles of political gridlock.

The Republican-dominated House voted last month to lift the 40-year-old ban on oil exports. President Obama vowed to veto the bill if it reaches him.

However, the Obama administration and Congressional Democrats are showing signs of disillusionment with the increasingly indefensible ban, which rewards US refiners at the expense of oil producers and the motoring public.

Still, a favor to the oil industry won’t be possible without a concession, probably one that recognizes the environmental harm from enabling more US oil production.

Some Democrats would back an export bill if it contained support for renewable power generation, such as the renewal of expiring federal tax incentives that would promote continued build-out of wind and solar power.

As I (and many others) have argued elsewhere, a carbon tax would better encourage low-carbon generation. Since the political radioactivity of the word “tax” rules this out, we are left to pick winners, and wind and solar are the best of these.

However, renewable electricity generation has no connection to oil production or export. Oil is a transportation fuel. Barring an exponential increase in the size of the US electric vehicle fleet, boosting wind or solar capacity won’t reduce demand for oil, or the associated carbon emissions.

A better bill would directly target carbon emissions from US oil production. Fortunately, this is easy. Congress should allow US producers to export crude oil – as long as they capture and market the associated natural gas they produce, rather than waste it.

In other words: Let’s replace the ban on crude exports with a ban on natural gas flaring.

The flaring, or burning off of natural gas at the wellhead, has become an increasing problem since 2009; a side effect of the shale oil boom.

Flaring methane is better than the now-banned practice of venting it, since methane is flammable and, in the short run, 84 times more powerful a greenhouse gas than carbon dioxide. Still, flaring in North Dakota spewsthe yearly carbon equivalent of a million additional cars.

But unlike carbon emissions from driving, flaring is flat-out waste – about $1 billion a year in US natural gas that could have generated electricity, heated homes, or kept chili simmering on the nation’s stovetops.

largest US source

Much of the flaring in the United States – about 45% of it – is concentrated in North Dakota’s Bakken shale basin, where 28% of gas produced in 2014 was burned at the wellhead.

That is a far bigger proportion than in states like Texas, where flaring and venting has increased by 400% in four years but remains at around 1% of production; and in New Mexico, Wyoming and the US portion of the Gulf of Mexico, where it is under 2%.

For North Dakota, 28% is an improvement on years when it flared a third or more of its gas. At those levels, the Peace Garden State is in dubious company: tied withRussia, which also flares a third; and ahead of chaoticNigeria, which flared a quarter of gas production in 2012. In volume terms, those countries flare far more gas. Still, North Dakota’s waste, captured memorably insatellite imagery, amounts to about 4% of the global total.

Bakken flaring

(Flaring in the Bakken, PennEnergy)

Why is North Dakota so profligate? Mostly because investors in the Bakken are seeking oil, not gas. Since the state doesn’t force them to capture associated gas, they can avoid the cost of gathering and transporting it, which may outweigh revenues from selling it. Major gas markets lie far away from North Dakota, a state that generates almost all of its electricity from coal.

north dakota electricity

There are other reasons for North Dakota’s flares, including the fast decline in flow rates typical of shale wells, which can incentivize building of more initial gas takeaway capacity than is ultimately needed for a group of wells. Other factors include bad weather, private or tribal ownership of land, and an influential coal industry and power sector built around poor quality lignite. With so much coal, there is little room for natural gas in North Dakota.

But North Dakota’s lax regulations are the enabling factor. Producers are allowed to flare off an unlimited amount of natural gas for a full year after completion. Afterward companies which can demonstrate “economic infeasibility” are granted extensions.

As my colleague Ken Medlock writes, flaring is a “source of demand directly associated with oil production, but it serves no purpose other than allowing firms to avoid the cost of installing gathering infrastructure.”

A ban on flaring would add about $180,000 to the cost of the average well, according to the American Petroleum Institute, which opposes such restrictions. A flaring ban would also provide producers with an increase in revenue from marketed gas that could offset some or all of the expense. Using the API estimate, Medlock found that a typical producer’s cost of a flaring ban over two years would average less than 4 cents per thousand cubic feet (mcf) of gas that was captured and sold rather than flared. At the time of writing, gas was available to North Dakota utilities for $2.87 per mcf, which is slightly higher than the value of gas at the wellhead.

 

Last year, North Dakota approved a plan to reduce flaring to 5% of production by 2020. But in light of recent drop in oil prices, the plan has been delayed. Even at 5% of production, North Dakota would still be flaring at rates more than double those of other oil and gas states.

Alaska, which produces mainly conventional oil, managed to reduce flaring to 0.2% of production – despite harsh weather and low population density – byrestricting flaring to one hour, emergency-only periods. Wyoming and Colorado already require flare-less green completions. In Pennsylvania’s Marcellus formation, where gas is the main event, very little is flared off.

Texas allows flaring for 10 days after completion, butgrants extensions. In practice, Texas’ anti-regulation bent has regulators looking the other way when producers flare without permission or go beyond their allowances. Texas’ leniency has exacerbated air pollution and potentially cost mineral rights holders thousands of dollars per day in lost royalties.

FLARING DAY 1 KMH 6

Flaring in the Eagle Ford (San Antonio Express-News)

Banning flaring could actually assist oil exports. As the Congressional Research Service has shown, different grades of crude oil have different carbon intensities. This is the crux of the opposition to the Keystone XL pipeline, which would enable imports of very high-carbon crude oil from Canada to the Gulf coast. Eliminating US flaring would make US crudes morecompetitive on a carbon intensity basis.

A simple way of enacting a flaring ban would be to extend the US Environmental Protection Agency’s green completions rules to prohibit flaring by a given date after completion of an oil well, other than in an emergency. As in Alaska, any flaring or venting should be accompanied by a written report.

Of course, the US oil industry would probably oppose tightening a rule that raises oil production costs in a low-price environment. However, the firms urging Congress to overturn the ban on crude oil exports recognize that ending the ban would raise the value of US shale oil. Numerous academic, think-tank and government studies have reached similar conclusions.

If US producers want to export their crude and capture higher world prices, why not make sure that some of the increased revenue is invested in capturing the natural gas now being squandered? Otherwise, allowing US crude exports would encourage increased oil production, along with more pollution and resource waste.

Furthermore, shale oil producers which are already gathering and marketing their associated gas rather than flaring, would be rewarded with higher prices for their crude. Their practices already incorporate gas capture costs without the environmental damage associated with flaring.

By predicating a lifting of the export ban on an end to flaring, the Obama administration would be in the enviable position of having it both ways: creating an immediate environmental benefit while supporting economic activity in the US oil sector.

Jim Krane is the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy.

Follow him on Twitter on @jimkrane

Emily Wilkinson, Print Editor, Houston Business Journal

Nov 2, 2015

 

Houston, meet your most influential energy leaders.

 

Houston Business Journal's 2015 Who's Who in Energy honorees, listed below, were nominated by their peers and selected by the newsroom. They represent all sectors of the energy industry, and those that service the industry such as lawyers, financial advisers and more.

 

The leaders below — as well as those selected in Denver, Dallas, Pittsburgh and San Antonio — will be featured in a special publication in the Nov. 27 issue of the Houston Business Journal available to print and digital subscribers.

 

Click here to see last year's honorees.

 

Here are HBJ's 2015 Who's Who in Energy:

 

Alternatives

  • Michael Skelly, president and founder, Clean Line Energy Partners

 

Analysts

  • Bill Herbert, managing director and co-head of securities, Simmons & Company International
  • Maynard Holt, co-president, head of E&P Investment Banking, Tudor, Pickering, Holt & Co.

 

Chemicals

  • Pete Cella, president and CEO, Chevron Phillips Chemical Company LP
  • Donna Cole, CEO and president, Cole Chemical and Distributing Inc.
  • Peter Huntsman, president and CEO, Huntsman Corp.

 

Downstream companies

  • Martin J. Houston, chairman, Parallax Energy LLC
  • Roy Lipski, CEO, Velocys
  • Craig Stone, senior counsel, intellectual property, Phillips 66

 

Engineering

  • Lisa Davis, member of the managing board, Siemens AG
  • Kevin McEvoy, CEO, Oceaneering International Inc.
  • Michele McNichol, CEO, Wood Group Mustang

 

Finance, insurance and accounting

  • William (Bill) Aimone, managing director, Trenegy
  • Brian Baumler, director, Pannell Kerr Forster of Texas, P. C. (PKF Texas)
  • Deborah Byers, U.S. Oil & Gas leader, Houston office managing partner, EY
  • Charles Dewhurst, international liaison partner and global head, Natural Resources practice, BDO USA LLP
  • John England, vice chairman, U.S. Oil & Gas leader, Deloitte LLP
  • Mitch Fane, principal, Southwest Region Oil & Gas transactions leaders, EY
  • Gerrad Heep, audit partner and Houston Energy industry leader, Grant Thornton LLP
  • John Kunasek, national managing partner, KPMG LLP
  • Jeanne Jankowski, executive vice president, head of energy and marine, Zurich North America
  • Regina Mayor, U.S. national sector leader - Energy and Natural Resources practice, KPMG LLP
  • Niloufar Molavi, U.S. vice chair, U.S. energy leader, Greater Houston market managing partner, PwC
  • Sam Pitts, managing director, EnCap Flatrock Midstream
  • Bob Schwartz, senior advisor, Cascadia Capital
  • Evans Swann, senior vice president, group manager, energy lending, Comerica Bank
  • Shane Torkelson, director, BKD LLP

 

Legal

  • Douglas Atnipp, co-chair, Global Energy & Infrastructure practice, Greenberg Traurig LLP
  • James Barkley, partner, Baker Botts
  • Gregory M. Bopp, partner, Bracewell & Giuliani LLP
  • Geoffrey H. Bracken, partner, Gardere Wynne Sewell LLP
  • Rick Burleson, partner, Burleson LLP
  • Thomas Campbell, partner, Pillsbury Winthrop Shaw Pittman
  • Andrew Calder, partner, Kirkland & Ellis LLP
  • Buddy Clark, partner, Haynes and Boone LLP
  • Louis Davis, partner, chair of North America Oil & Gas practice, Baker & McKenzie LLP
  • Phillip Dye, partner, Vinson & Elkins LLP
  • William Garner, chair, Renewable Energy practice, Greenberg Traurig LLP
  • John Goodgame, partner, Akin Gump Strauss Hauer & Feld LLP
  • Gillian Hobson, partner, Vinson & Elkins
  • W. Garney Griggs, partner, Strasburger & Price LLP
  • Richard B. Hemingway Jr., partner, Thompson & Knight LLP
  • Donald Hueske, of counsel, Steptoe & Johnson PLLC
  • Michael P. Irvin, U.S. head of Energy Transactions, Norton Rose Fulbright
  • Daniel Johnson, partner-in-charge, Sutherland Asbill & Brennan LLP
  • Gary Johnson, partner, Reed Smith LLP
  • John R. Keville, Houston office managing partner, Winston & Strawn LLP
  • Jeremy Kennedy, partner, Baker Botts LLP
  • Chris LaFollette, partner in charge of the Houston office, Akin Gump Strauss Hauer & Feld LLP
  • Glenn R. Legge, partner, Legge, Farrow, Kimmitt, McGrath & Brown LLP
  • James Loftis, partner, Vinson & Elkins LLP
  • Mark Metts, partner, Sidley Austin LLP
  • W. James McAnelly III, partner, Bracewell & Giuliani LLP
  • Rodney Moore, corporate partner, Weil, Gotshal & Manges LLP
  • Tom Paterson, partner, Susman Godfrey LLP
  • David Patton, partner, Locke Lord LLP
  • Michael Pearson, partner, Jackson Walker LLP
  • Alfredo Ramos, partner, Gardere Wynne Sewell LLP
  • Carlos Sole, partner, Baker Botts LLP
  • Craig Stahl, partner, Andrews Kurth LLP
  • Bill Swanstrom, partner, Locke Lord LLP
  • Hugh Tanner, partner, Morgan Lewis
  • Bob Thomas, partner, Porter Hedges LLP
  • Cliff Vrielink, partner, Sidley Austin LLP
  • Sean T. Wheeler, vice chair of Global Corporate department and global co-chair, Energy – Oil & Gas industry group, Latham & Watkins LLP

 

Midstream companies

  • Dorothy Ables, chief administrative officer, Spectra Energy
  • Gary Conway, president and CEO, Vaquero Midstream
  • Kimberley Dang, vice president and CFO, Kinder Morgan Inc.
  • Steven Kean, president and CEO, Kinder Morgan Inc.
  • Ken Owen, president and CEO, Moda Midstream LLC
  • Jim Teague, COO and future CEO, Enterprise Products Partners

 

Oilfield equipment and construction services

  • Holli Ladhani, CEO and president, Rockwater Energy Solutions
  • Chaden Lassoued, CEO, Kinetics Energy Services
  • Daniel Molinaro, CFO, DistributionNOW Inc.
  • R. Scott Rowe, president and CEO, Cameron International Corp.
  • Peter Shaper, CEO, Greenwell Energy Solutions
  • Cindy Taylor, CEO and president, Oil States International Inc.
  • Robb Voyles, executive vice president, general counsel and secretary, Halliburton Co.
  • Robert Workman, CEO and president, DistributionNOW Inc.

 

Staffing/HR

  • Susan Pye, president and founder, Pye Legal Group
  • Tobias Read, CEO, Swift Worldwide Resources
  • June Ressler, CEO and founder, Cenergy International
  • Tom Simmons, manager, Spencer Stuart
  • Chad Hester, managing director of Houston office, Korn Ferry

 

Upstream companies

  • John Christmann IV, CEO, Apache Corp.
  • Helene Harding, vice president, ConocoPhillips
  • Leon Hirsch, vice president of land and business development, Woodside Energy (USA) Inc.
  • Vicki Hollub, president, Oxy Oil and Gas
  • Sylvia Kerrigan, executive vice president, general counsel and secretary, Marathon Oil Corp.
  • Matt McCarroll, CEO, Fieldwood Energy
  • Alan Morgan, president and founder, Remora Oil Co.
  • Jeanine Piskurich, manager, BP America Production Co.
  • Alan Smith, CEO, Rockcliff Energy
  • Candice Wells, vice president, general counsel and corporate secretary, Linn Energy LLC
  • John Walker, CEO, EnerVest Ltd.

 

Utilities

  • Kiki Dikmen, managing partner, Choice Energy Services Retail LP
  • Bob Flexon, CEO and president, Dynegy Inc.
  • Tom Gilpin, CEO, Entrust Energy
  • Elizabeth Killinger, NRG
  • John Ragan, NRG
  • Jeff Starcher, chairman and CEO, MP2 Energy LLC

 

Emily Wilkinson leads the weekly edition of the Houston Business Journal, including special publications, centerpiece stories, Focus sections and the Deal of the Week. Follow her on Twitter for more.

By DAVID KOENIG, AP Business Writer

Exxon Mobil Corp. posted its worst third quarter in 12 years due to low oil prices but still earned $4.24 billion, beating Wall Street expectations.

Exxon's earnings from exploration and production continued to slide, especially in the United States. However, profit doubled in the refining end of its business on stronger margins, and the chemicals segment was steady.

Exxon Mobil is dealing with oil prices that have dropped by half since June 2014 and have remained lower for longer than most industry experts expected. With production outstripped modest demand growth, it's unclear when prices will start rising.

CEO Rex Tillerson pledged a "relentless focus" on controlling costs. The company slashed capital and exploration spending by about one-fifth from a year ago, but it spent more on shareholder dividends.

The oil giant reported Friday that third-quarter profit slid 47 percent from the same period last year and was the smallest third-quarter gain since 2003, when oil prices were around $30 a barrel.

The earnings worked out to $1.10 per share. That beat the average estimates of analysts surveyed by Zacks Investment Research and FactSet, who predicted 89 cents per share.

Revenue dropped 37 percent to $67.34 billion. The FactSet analysts had expected $61.71 billion.

Exxon's profit from exploration and production dropped from $6.5 billion to $1.4 billion, including a loss of $442 million in the U.S. Production rose due to new projects in the U.S., Canada and elsewhere.

So-called downstream earnings from refining and selling petroleum products jumped from $1 billion to $2 billion on higher refining margins.

GE Oil & Gas announced Friday it will acquire Advantec as it looks to improve the company’s capabilities of offering cost-efficient production and services.

 

The company said the move is part of its wider efforts to address the challenges faced by its customers operating the growing number of mature subsea fields.  Advantec will operate under its existing name and management team as part of GE Oil & Gas’ subsea services and offshore division. It will also continue to supply products and services directly to new and existing clients.

 

Rod Christie, chief executive of GE Oil & Gas, Subsea Systems & Drilling said: “With the acquisition of Advantec, we are expanding our comprehensive portfolio of services, so we can provide added value to our customers at a time when the industry requires more effective solutions.

 

“The acquisition will enable us to accelerate growth in our subsea services operations by helping us build a leading well intervention equipment supply and rental business alongside accelerating our integrated solutions offering.

 

“We are excited to announce our agreement with GE, which we believe is the right company to help us realize the full potential of our well intervention controls technology to support existing and new clients in the offshore oil and gas industry.”

 

GE did not disclose the terms of the agreement to acquire the company but the transaction is expected to be completed by the end of the year.

 

Since Advantec was established in 2005, the company has grown from 20 to 370 employees with facilities in Norway, the UK, Lithuania, and the US.

 

The Advantec acquisition will provide GE Oil & Gas with an integrated global supply chain to address the surging demand for IWOCS and associated technology, complementing GE’s existing subsea production equipment and services portfolio.

 

GE stock closed at 28.92, down 0.42 (1.43%) on the closing of the bell on Friday.