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Colorado could lose 1,000s of jobs, billions with 2,000-foot oil & gas setback, CU-Leeds study warns

Leeds_School_Of_Business_CU_Logo – Reporter-Denver Business Journal – January 8, 2015

A proposal floated in 2014 to push new wells 2,000 feet away from homes and buildings could lead to a 50 percent drop in oil and gas activity across the state, which would drop Colorado’s gross domestic product by as much as $6.4 billion a year and personal income to drop by up to $4.4 billion a year.

That’s according to a study released Thursday from researchers at the University of Colorado Leeds School of Business.

U.S. Rep. Jared Polis, D-Boulder, proposed the 2,000-foot setback last year in a ballot initiative he backed and later dropped.

The CU-Leeds study says that a 50 percent cut in new oil and gas wells also would lead to 49,000 fewer jobs across the state between 2015 and 2040.

The study, finished in September 2014, was based on oil prices that were already declining, but hadn’t yet reached the depths seen in more recent months. But the study offers some insight into how lower oil prices could affect Colorado’s energy industry.

Continue reading story at The Denver Business Journal

 

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Big Oil bullish despite drop in crude prices, Keystone veto threat

American_Petroleum_Institute_logo – Washington Bureau Chief – January 6, 2015

Cheap crude oil prices are a temporary phenomenon, and the Keystone XL pipeline will be approved this year.

Those are the two big takeaways from the American Petroleum Institute’s “State of American Energy” event in Washington, D.C., Tuesday.

They’re pretty optimistic predictions given what was happening elsewhere Tuesday.

Crude oil prices continued to plummet, with West Texas Intermediate at one point falling to $47.55, its lowest level in more than five years.

Plus, the White House said PresidentBarack Obama would veto legislation approving the Keystone XL pipeline, which would transport tar sands oil from Canada to Gulf Coast refineries. Both the House and the Senate are expected to pass the bill this month.

But API President and CEO Jack Gerard remains bullish about the prospects for American’s oil and natural gas industries.

Since last year’s “State of American Energy” address, crude oil prices have fallen by more than 50 percent. That’s because, for now, the supply of oil exceeds global demand. But Gerard expects demand to grow as the U.S. economic recovery gains steam, and Europe and China get out of their funks.

Continue reading story at The Denver Business Journal

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Oil slump consumes market value of Colorado producers

OPEC LogoBy Aldo Svaldi – The Denver Post – January 3, 2015

The slump in oil and gas prices that started in June has cost Colorado’s petroleum companies billions in lost market value — enough to cover the entire state budget for the upcoming fiscal year.

Thirty public Colorado-based oil and gas companies lost $26.4 billion, or nearly a third of their value, in the second half of 2014, according to a Denver Post analysis.

That amount is on par with the $26.8 billion budget that Gov. John Hickenlooper has proposed for the 2015-16 fiscal year.

The spot price for a barrel of West Texas Intermediate crude, which hit a recent peak of $107.26 a barrel June 20, closed Friday at $52.69.

Flattening global demand, increased domestic production and Saudi Arabia’s decision to no longer control supply to keep prices above $100 per barrel have all combined to push oil prices sharply lower.

As a group, the Colorado petroleum companies lost nearly a third of their total market value in the second half of the year, according to figures from Bloomberg.

Per company, the losses averaged closer to 50 percent, on par with the drop in oil prices since June.

Smaller companies, which often carry more debt and lack the financial backing to outlast a long stretch of depressed prices, were hit the hardest.

Continue reading story at The Denver Post

 

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DCP Midstream’s DJ Basin bet doubles its Colorado pipeline capacity

DCP_Midstream_LogoBy Mark Jaffe The Denver Post – December 28, 2014

Wouter van Kempen arrived at Denver-based DCP Midstream LLC, the country’s largest natural gas processor and liquefied natural gas producer, just as the shale drilling boom took off in 2010.

While drillers scrambled across Colorado’s Denver-Julesberg Basin, boosting the state’s oil and gas production to levels not seen in decades, DCP set about putting in the infrastructure to get the gas and liquids out of the state.

During that time, van Kempen worked his way up the corporate ladder, becoming CEO in 2013.

In the past four years DCP has spent about $1 billion on plants and pipelines in Colorado, van Kempen said.

“We put a lot of capacity in the DJ Basin and have an opportunity to put more plants in the next 18 months,” said van Kempen.

The company has doubled its natural gas processing capacity to 600 million cubic feet a day and liquid natural gas capacity to 50,000 barrels a day.

It projects spending up to another $1.5 billion in Colorado by 2016, according to an RBC Capital Markets investor presentation.

Continue reading story at The Denver Post

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Domestic oil production surges in last part of year despite tumbling prices

EIA Map Showing 7 most prominent shale plays

EIA Map Showing most prominent shale plays

by Adam Wilmoth – December 24, 2014

Oil production in recent weeks has blown past 1985 highs, but that trend is likely to change soon as companies are beginning to announce plans to cut their 2015 drilling budgets.

Continental Resources Inc., BP Plc., ConocoPhillips Inc. and Laredo Petroleum Inc. this week all announced plans to slow drilling activity in the first quarter. Others are likely to follow.

How deep the production cuts go is likely to depend on how low prices fall and how long they stay there.

But as companies curb their drilling activity, production will fall quickly, said Will Reagan, CEO of Oklahoma City-based Reagan Resources.

“Horizontal wells have prolific initial production, but they rapidly fall off,” he said. “By pulling back on the rig count, you’re going to suddenly see a decline in supply. It’s not going to take long for supply and demand to get back into sync.”

Rig counts already are falling. Eighteen fewer rigs were searching for oil and natural gas throughout the country last week than in the previous week, according to the latest numbers from Baker Hughes. The numbers represent the third decrease in four weeks, but the Dec. 19 U.S. rig count of 1,875 still was up 107 from one year ago.

Wunderlich analysts Irene Haas and Jason Wangler last week cut their price targets for several oil producers.

Continue reading story at The Oklahoman

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Aurora passes updates to regulations for fracking in city limits

City_of_AuroraBy Megan Mitchell – YourHub Reporter – December 23, 2014

AURORA — City Council on Monday night approved new regulations that will govern the way oil and gas companies run their hydraulic fracturing well pad sites in the city.

Changes to the city’s existing ordinance from 2012 first came up when some residents complained that oil and gas giant ConocoPhillips was violating the existing regulations by building 30 foot tall vapor recovery tanks on the site pads.

The new rules use language that limits storage tanks to 20 feet, but will allow structures used for environmental quality control — like the recovery tanks — to be as tall as necessary.

Other proposed ordinance changes require landscaping and fencing around well pad sites within 1,500 feet of a platted development. Those sites will also need to be 500 feet away from an existing development, per state regulations.

Council deferred to state regulations for setbacks from homes, spill containment and noise limits.

The resolution was approved 8-2 with council members Renie Peterson and Molly Markert voting no. Councilwoman Sally Mounier was absent.

Related Stories:

ConocoPhillips plans to spend less in 2015 as crude slides

ConocoPhillips digs into Aurora drilling and fracking controversy

View article at The Denver Post

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Oil prices likely to rebound in second half of 2015: Reuters poll

oil-drop-dollarsignBy Koustav Samanta and Vijaykumar Vedala, Reuters, December 22, 2014

(Reuters) – Crude oil prices are likely to bottom out in the first half of 2015, until a possible slowdown in U.S. shale production counters a supply glut exacerbated by OPEC’s decision not to cut output, a Reuters monthly survey showed.

The Organization of the Petroleum Exporting Countries’ agreement last month to stand pat on output meant the onus for any supply cutbacks was now on non-OPEC producers, primarily led by U.S. shale oil, analysts said.

“Oil prices will be lower, making shale oil production less attractive for investments, which are necessary to keep shale oil production growing,” Commerzbank’s Carsten Fritsch said.

Oil is seen recovering in the second half as non-OPEC production responds to lower prices, while demand picks up in the course of the year, the poll showed.

The survey of 30 economists and analysts projected Brent to average $74.00 a barrel next year and $80.30 in 2016.

The forecast for 2015 is $8.50 below the average projection in the previous Reuters poll. The November poll number was down $11.20 from October, marking the biggest downgrade in average forecasts since the 2008 economic downturn.

Continue reading story at Reuters

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Want to ban fracking? Be ready to pay up under Colorado Legislature bill

Hydraulic Fracturing Illustration - Idealized

Hydraulic Fracturing Illustration – Idealized

 – Reporter – Denver Business Journal – December 19, 2014

Counties that enact a ban on fracking would have to compensate the owners of mineral rights under a bill Rep. Perry Buck, R-Windsor, plans to introduce during the 2015 legislative session.

Senator-elect Jerry Sonnenberg, R-Sterling, will sponsor the bill in the Senate, Buck said.

“It’s only fair, if you have an asset like mineral rights, that you’re allowed to receive the value for it,” Buck said.

Last summer, Sonnenberg, as a state Representative, backed a ballot proposal called Initiative 121 along with Rep. Frank McNulty, R-Highlands Ranch. The initiative called for barring cities and counties that banned fracking from receiving state severance-tax funds.

The proposal was among four pulled from the ballot in August as part of a deal between Gov. John Hickenlooper and Boulder’s U.S. Rep. Jared Polis (D).

Buck’s bill may have a tough slog in Colorado’s House of Representatives, which is controlled by the Democrats by a 34-31 margin. Republicans will have a one-seat majority in the Senate, where there is an 18-17 split with the Democrats.

Continue reading story at The Denver Business Journal

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