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Oil and gas office closures continue in Denver

Pioneer_Natural_Resources_logo – Reporter-Denver Business Journal – May 4, 2014

Yet another oil and gas company is making cuts to its Colorado operations, with Pioneer Natural Resources Co. (NYSE: PXD) on Monday announcing it will close the company’s Denver office and cut the number of people working out of its Trinidad field office by nearly half.

Pioneer in a statement said the cuts were “a result of continued weakness in natural gas prices and the recent collapse of crude oil and natural gas liquids prices.”

Oil prices have slid to about half the recent peak price of $107 per barrel set in June 2014 and natural gas prices have been similarly dismal — averaging less than $3 per thousand cubic feet during 2015 compared to a peak of about $4.20 per thousand cubic feet last summer.

Pioneer said the company’s headquarters staff in Irving, Texas, a suburb of Dallas, would oversee the company’s operations in the Raton Basin, in southern Colorado, as well as in the West Panhandle field in Texas.

“The decision to close the Denver office and to consolidate the Colorado workforce was made to preserve the value of these assets and to allow for their continued development within the constraints of the current commodity pricing environment,” the company said.

Pioneer said that of its 70 employees in the Denver office, about one-third will be offered relocation opportunities to Dallas. The rest will be offered severance packages and access to outplacement services.

Continue reading story at The Denver Business Journal

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U.S. Shale Fracklog Triples as Drillers Keep Oil From Market

Untapped Well Inventory Builds Across U.S.  - Source Bloomberg Intelligence

Untapped Well Inventory Builds Across U.S. – Source Bloomberg Intelligence

 and  – Bloomberg Business – April 23, 2015

Think the U.S. is awash in crude now? Thank the fracklog that it’s not worse.

Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows. That’s almost as much as OPEC member Libya has been pumping this year.

The number of wells waiting to be hydraulically fractured, known as the fracklog, has tripled in the past year as companies delay work in order to avoid pumping more oil while prices are low. It’s kept crude off the market with storage tanks the fullest since 1930. The fracklog may slow a recovery as firms quickly finish wells at the first sign of higher prices.
“Once service costs come down and drillers begin to work through their higher-than-normal backlog, the market should start to price in that supply coming online,” Andrew Cosgrove, an energy analyst for Bloomberg Intelligence in Princeton, New Jersey, said by phone. “It may act as a cap on prices.”

Futures for U.S. benchmark West Texas Intermediate oil tumbled by more than $50 a barrel in second half of last year amid a worldwide glut of crude. They rose $1.58 to settle at $57.74 a barrel on the New York Mercantile Exchange.

Growing Fracklog

Oil production in the lower 48 states would rise 322,000 barrels a day to an average 7.485 million in the fourth quarter of 2016 if drillers start shrinking their fracklogs by 125 wells a month in October, Bloomberg Intelligence models show. The forecast assumes horizontal oil rigs fall another 10 percent through the third quarter and prices are unchanged.

Continue reading story at Bloomberg Business

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Scientists convinced of tie between earthquakes and drilling

Earthquake Fault Diagram - Courtesy USGS

Earthquake Fault Diagram – Courtesy USGS

ALICIA CHANG – Associated Press – April 23, 2015
LOS ANGELES (AP) — With the evidence coming in from one study after another, scientists are now more certain than ever that oil and gas drilling is causing hundreds upon hundreds of earthquakes across the U.S.

So far, the quakes have been mostly small and have done little damage beyond cracking plaster, toppling bricks and rattling nerves. But seismologists warn that the shaking can dramatically increase the chances of bigger, more dangerous quakes. Continue reading “Scientists convinced of tie between earthquakes and drilling” »

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Colorado joins oil-producing states’ lawsuit against BLM

1280px-Flag_of_Colorado.svgBy Bruce Finley – The Denver Post – April 24, 2015

Colorado on Friday joined a lawsuit by oil-producing states challenging the federal government’s new rules for fracking on federal public lands.

The lawsuit contends the U.S. Bureau of Land Management cannot impose regulations on hydraulic fracturing, arguing that federal law lets states regulate oil and gas operations. Wyoming and North Dakota launched the litigation.

Colorado Attorney General Cynthia Coffman issued a statement saying Colorado has robust regulations and that state regulators are doing a good job.

“It is important to test BLM’s novel assertion of regulatory authority in an area that has been traditionally, and in this case expressly, reserved for the states,” Coffman said.

The lawsuit is not about whether fracking should be regulated. “It should be. And Colorado is doing so,” she said.

Continue reading story at The Denver Post

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Noble Energy settles state, federal pollution claim, could spend $73.5 million on fines, fixes

Oil Tank Battery in Weld County Colorado with protective liner

Oil Tank Battery in Weld County

By Mark Jaffe – The Denver Post – April 22, 2015

Noble Energy, Colorado’s second-largest oil and gas driller, has agreed to a settlement with state and federal regulators over Front Range air-pollution violations that could involve as much as $73.5 million in upgrades and new programs.

The company’s tank batteries were emitting thousands of tons of volatile organic chemicals a year, contributing to the region’s ozone pollution problem, according to an analysis by regulators

Houston-based Noble agreed to evaluate its 3,400 tank batteries in the Denver-Julesburg Basin and make needed upgrades.

The basin stretches from Denver to the Wyoming border.

Noble produced the equivalent of 21 million barrels of oil and gas in 2014 from the basin. Only The Woodlands, Texas-based Anadarko Petroleum produces more, according to state data.

“It is a precedent-setting settlement because it takes a basinwide approach,” assistant U.S. Attorney General John Cruden said Tuesday. “It is a systemic solution.”

The complaint and the settlement were set to be filed in U.S. District Court in Denver on Wednesday morning, Justice Department officials said. There will be a 30-day public-comment period before the settlement is final, they said.

Continue reading story at The Denver Post

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Oil prices: What goes down can go up, API economist says

American_Petroleum_Institute_logoCathy Proctor Reporter – Denver Business Journal – April 22, 2015

The factors that led to the bust in the nation’s oil and gas industry could just as easily switch, sending oil prices upward again, according to John Felmy, the chief economist for the American Petroleum Institute, a Washington, D.C.-based national trade group representing the oil and natural gas industry.

Felmy was in Denver on Wednesday to make a presentation to state legislators about the downturn in the oil and gas industry due to the slide in commodity prices.

In an interview with the Denver Business Journal, Felmy listed several factors that led to the downturn, with the biggest one being that the United State’s oil industry produced more and more oil during the last five years, taking the place of other suppliers on the international market.

But when those other countries, including Sudan, Libya, and Iraq, started pumping out more oil last summer, the international market was glutted with too much oil and not enough demand, he said.

Continue reading story at The Denver Business Journal

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Hyperbolic Decline

Carrizo Decline Curve - Source: Global Hunter GHS 100 Energy Conference Presentation - June, 27, 2014

Carrizo Decline Curve – Source: Global Hunter GHS 100 Energy Conference Presentation – June, 27, 2014

Wells extracting oil from dense shale rock experience “hyperbolic decline rates,” Pitts said by telephone.

Shale Output Is Falling Faster Than Expected

by Joe Carroll – Bloomberg Business – April 14, 2015

Shale drillers will see production drop sooner than expected under a U.S. government forecast, a momentum change that hints at an eventual price rally.

Just five months after Saudi Arabia put the market into a tailspin by refusing to cut supply despite a global glut, the shale oil industry will record its first monthly dip since U.S. officials began weighing output in 2013.

The projected production drop is small, just 1 percent. Yet investors took note, pushing oilfield stocks to the top five spots in the Standard & Poor’s 500 Index on Tuesday, led by rig operators Ensco Plc and Diamond Offshore Drilling Inc. The decline lags the idling of rigs because of a backlog of already-drilled wells that have gradually been coming online.
“OPEC’s plan is playing out and price is correcting the oversupply,” said Michael Scialla, an analyst at Stifel Nicolaus & Co. in Denver, in a telephone interview.

West Texas Intermediate crude, the U.S. benchmark, climbed 3 percent to $53.47 a barrel at 2:03 p.m. in New York, extending the rising streak to a fourth trading session.

Shale fields make up about half of total U.S. production, which will continue growing this year and next, rising to 10.3 million barrels a day in 2025, according to a new longterm forecast by the Energy Department Tuesday.

Crude lost almost 60 percent of its value since late June, making some shale fields unprofitable to develop and forcing companies to cut back exploration prospects. Oil explorers were forced to shut down more than half the rigs drilling for crude in the U.S. since the Saudi statement in November, and canceled expansion plans to conserve cash.

‘Hyperbolic Decline’

“The question on everyone’s mind was would we see it in the second or third quarter, and I’m not surprised it’s happening in the earlier part of that range,” said David Pitts, chief financial officer at Houston-based producer Carrizo Oil & Gas Inc.

Continue reading story at Bloomberg Business

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Wyoming oil and gas drilling setback increase heads to vote

WyomingApril 14, 2015 – Associated Press

CASPER, Wyo. (AP) — Wyoming oil and gas regulators are set to decide whether the state should require oil and gas drilling to take place farther away from homes and businesses.

The current minimum distance is 350 feet. The Wyoming Oil and Gas Conservation Commission will consider Tuesday whether to expand that to 500 feet.

The petroleum industry says it can live with a 150-foot increase even though that will limit their options for drilling and cost more.

Others say a 500-foot setback distance is not enough to protect people from noise and air pollution. Environmental groups say the distance should be at least a quarter of a mile.

The proposal follows an oil boom that put drilling closer to homes in eastern Wyoming.

Read article at PennEnergy

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