Bakken Production Expected to Decline

April 14, 2015 Elizabeth Alford

For the first time since the Energy Information Administration (EIA) began tracking drilling productivity, the agency reported on Monday that oil and gas production will decrease for the Bakken and other shale formations across the country.

Shale production has been a major player in boosting US output to more that 4 million bpd and has played a key role in the collapse of oil prices worldwide in 2014.

Production from the Bakken formation has increased 28% year-over-year despite declining rig counts across the area.

The EIA estimates that the Bakken will experience a decline of 23,000 barrels of oil a day to 1.3 million in May. Natural gas will also decline by 21 million cubit feet per day.

“Speaking with Bloomberg, Carl Larry, head of oil and gas for Frost & Sullivan LP said, “We’re going off an inevitable cliff because of the shrinking rig counts. The question is how fast is the decline going to go. If it’s fast, if it’s steep, there could be a big jump in the market.”

PHMSA Offers Pipeline Safety Grants

April 13, 2015 Elizabeth Alford

As oil pipeline safety concerns escalate across the country, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is ramping up its efforts to meet the growing demand for innovation.

In addition to hiring more that 100 new safety inspectors this year, the PHMSA will also be awarding $2 million in grants for students and faculty to research pipeline safety solutions. These grants designed to expose new engineers and scientists to the technical side of the energy transportation sector.

“We’re not simply offering grants through the CAAP; we’re demonstrating to engineering and technical students that their disciplines are in demand in the energy pipeline sector,” said PHMSA Acting Administrator Timothy Butters. “PHMSA provides safety oversight for the country’s 2.6-million-mile pipeline network, and we need out-of-the-box thinkers.”

Grant proposals will be evaluated on scientific merit, quality, management plans, work tasks, budgets and schedules. The PHMSA is specifically seeking projects that address technical gaps in the following areas:

Preventing and Mitigating Pipeline Corrosion
Developing Locatable Plastic Pipelines
Developing Inspection Tools to Quantify Pipe Strength and Toughness

“U.S. Senator for North Dakota John Hoeven, commented“As we work towards building a comprehensive ‘all-of-the-above’ energy plan for our country, it’s important to ensure that we build the right kind of infrastructure to support our energy needs, now and into the future,” Hoeven said. “We must ensure that our infrastructure is reliable, safe and efficient, and this grant will enable universities to do the innovative research that will do just that.”

The debate around the safety of cruse pipelines has heated up since the shale oil boom in 2008. Most recently, President Obama delayed the Keystone pipeline when he vetoed bill saying he wants to hold off a final decision until further environmental reviews are complete.

ConocoPhillips Reveals Plan to Stay Flexible

April 9, 2015 Elizabeth Alford

ConocoPhillips announced yesterday the company's strategic plans through 2017 that are designed to increase flexibility and returns while reducing costs.

In what the ConocoPhillips calls their “disciplined approach for the new world” the company will shift capital allocations to unconventional shale plays because of the low supply costs and flexibility for growth. The long range plans set out in a recent company presentation include:

Spending 50% more over the next three years
Focusing on the Eagle Ford, Bakken and Permian basins
Capital spending will stay at $11.5B/year through 2017 but shift from long-term, expensive projects into relatively cheap and immediate shale wells
Boosting production by 6.3% to 1.7M bbl/day by 2017.
Cost reduction programs to source $1B of reductions in 2016 compared to 2014

“Ryan Lance, chairman and chief executive officer noted “The energy landscape has changed dramatically as a result of the recent decline in commodity prices, but we responded quickly to position the company as a core energy holding in a lower, more volatile price environment.”

ConocoPhillips’ strategy for the Bakken includes tapping into the highest value part of the play, increasing drilling and completion efficiencies and optimizing field development through pilot programs for the following:

Testing fluids, proppant loading and cluster spacing
2 pilots in execution testing Middle Three Forks well placement
5 pilots underway testing tighter spacing

Bakken Crude by Rail Under Attack

April 8, 2015 Elizabeth Alford

On Tuesday, the Swinomish Indian Tribal Community filed a lawsuit in federal court against BNSF Railway to restrict the movement of crude oil by rail through their reservation. They are seeking a permanent injunction that requires the company to live up to a 1991 agreement to limit the number of trains on its land to two per day.

The Tribal Community is located in Washington State, but the train tracks that run across its land bring crude from the Bakken region of North Dakota. Many believe that this oil is more dangerous.

Related: Is Bakken Oil More Flammable?

“Experiences across the country have now shown us all the dangers of Bakken Crude,” Swinomish Indian Tribal Community Chairman Brian Cladoosby said in a statement. “It’s unacceptable for BNSF to put our people and our way of life at risk without regard to the agreement we established in good faith,” he said.”

Recent reports have crude by rail transport up 1700% over the last five years and accidents at a near-tenfold rise since 2008. With oil production currently at all time highs many fear that the number of accidents will increase and add to recent incidents:

3/8/15:Train carrying crude oil derails in northern Ontario more

3//7/15 Train carrying crude oil derails in Canada more

3/6/15: Oil train carrying Bakken crude explodes in Illinois more

2/14/15 Train carrying crude oil derails in Canada more

2/17/15: WV derailment carries Bakken crude in more

Related: Bakken Oil Safety

Halliburton to Merge With Baker Hughes

April 7, 2015 Elizabeth Alford

Shareholders from Halliburton and Baker Hughes recently gave overwhelming approval for a mega-merger that would combine the two companies in a deal estimated at $35 billion.

Once the merger is approved by antitrust regulators, the new entity will surpass Texas-based Schlumberger as the world’s largest oil drilling company. Officials announce that the deal that was initiated in November should close during the second half of 2015.

“We are extremely pleased Halliburton and Baker Hughes stockholders have shown overwhelming support by approving the pending transaction,” said Dave Lesar, chairman and chief executive officer of Halliburton. “We are more confident than ever that this combination will create a stronger, more diverse organization with an unsurpassed depth and breadth of services benefitting our stockholders, customers, employees and other key stakeholders of both companies.”

Combined, Halliburton and Baker Hughes employ almost 2000 workers in North Dakota, but have already begun strategic layoffs including a recent closure of a facility in Minot. State officials have predicted that 3,000 to 4,000 oilfield jobs will be cut due to low oil prices.