The Weekly Oil & Gas Follies

Posted: Jan 5 2014, 1:01pm CST | by


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The Weekly Oil & Gas Follies
Photo Credit: Forbes

The Weekly Oil and Gas Follies – Volume 27, January 6, 2014


In which we drill down into the @GDBlackmon Twitter feed to briefly chronicle the week’s silliness, foibles, fake news and real news related to the oil and natural gas industry.


Oil Patch Photo of the Week, Courtesy of  @DouglasBerkley:

Winter drilling in Ohio

Well, it’s a new year, so let’s start with some good news for 2014:  A Domestic Energy Revolution is Underway in the U.S.A – Across America (and on its coastal borders), a domestic energy revolution is underway — one that is providing our nation with a genuine economic “stimulus” built on the free market pillars of innovation and hard work.  Even more encouraging, this victory is being achieved despite efforts by eco-radicals in Washington, D.C. to shut down energy production on federal lands.

Our God Bless Texas Link of the Week shows that the Lone Star State is at the tip of that revolution’s spear:  Texas Oil Production Highest in Three Decades – Texas crude oil production has reached its highest level since the U.S. Energy Information Administration started tracking it in the early 1980s. In July, Texas produced around 2.602 million barrels daily.  By October, that daily crude production was 2.752 million barrels.  The last time crude production was anywhere close to that level was in January 1981, when the state produced 2.6 million barrels of oil per day. (That’s also the first month included in the EIA data).

That Energy Revolution also includes the discovery of massive new natural gas resources all across the U.S., which is leading to its own happy results for the country:  Thank Natural Gas, Not Hybrids, For Carbon Emissions Declines – Carbon dioxide emissions are indeed lower than at any time since 1994, according to data recently released by the U.S. Energy Information Administration. But if you think that the rise of the hybrid car, our embrace of public transit, walking, biking and those new windows on the house are behind the trend, think again. According to the EIA, the key driver has been the swapping out of coal at power plants and industrial facilities across the country for cleaner-burning and now more abundant natural gas. The reason so much natural gas is around is the rise of hydraulic fracturing (“fracking”), a technique whereby drillers inject water and chemicals into underground shale rock deposits to free up otherwise trapped natural gas.

This story indicates that other countries, like the U.K., would do well to let a similar energy revolution take place on their own soil:  As U.K. ‘Fuel Poverty’ Rates Begin to Soar, Green Policies Come Under Attack -  In some areas of Stoke-on-Trent, the hub of the once-prosperous manufacturing region of the English Midlands known as “the Potteries” because of its long-cherished ceramics industry (think Wedgwood and Royal Doulton), more than half of the households live in fuel poverty. Until last month, “fuel poverty” was defined as spending more than 10 percent of household income on paying energy bills. This may be just the beginning of an increasingly ugly political issue. The government places much of the blame for increased energy prices at the feet of so-called green policies.

All of which leads to our Totally, Completely, 100% Self-Serving Link of the Week:  Fearless Oil & Gas – Related Predictions for 2014 – Prediction #10:  Gasoline prices will go up in the spring, as EPA regulations requiring refiners to start making a wide variety of “summer blends” kick in.   Anti-oil and gas members of congress will call for hearings on allegations of “price fixing”.   Gasoline prices will ease in the fall, as refiners are allowed by EPA regulations to stop making “summer blends”.  No members of congress will call for hearings as the prices at the pump go down.  (Ok, this one’s too easy, since it happens every year.)  Prediction #11:  C- and D-list celebrities desperate for attention will continue to issue really dumb, fact-devoid statements and appear in sophomoric advertisements in opposition to “fracking”.  (Ok, this one’s too easy, too, but I had to throw it in.)

In other news, it’s amazing what a little scrutiny into costs/benefits will do to producers of a heavily-subsidized product with no socially-redeeming valueEthanol Producers in a Panic as Mandate Loses Support – Ethanol producers are panicking amid speculation that the ethanol mandate could be drastically reduced or scrapped entirely this year as the biofuel loses its allure and bipartisan allies and former friends team up against it.  December saw California Democrat Dianne Feinstein—a renewable fuel champion–coordinate efforts with Oklahoma Republican Tom Coburn to come up with a Senate bill to get rid of ethanol from the Renewable Fuel Standard (RFS), citing fears that corn-based fuel production mandates will harm livestock producers.

The Sierra Club hates this one:  Fracking Causes Gonorrhea (and other economic myths) – Fracking was an issue in 2013 and this generated perhaps the most bizarre response.  My colleague Kenneth Green and I wrote about how by approving fracking for oil and gas, some provinces might generate extra dollars for their provincial coffers (Quebec and Atlantic Canada in particular). We also, importantly, noted how risks from fracking are low, this according to U.S. National Academies of Science. And the response from someone at the Halifax chapter of the Sierra Club? That fracking has caused “a 62 per cent increase in sexually transmitted infections (chlamydia and gonorrhea) in rural communities linked with unconventional resource development.”  So fracking for natural gas and oil causes the clap. Who knew?

Our Not Sure if Serious Link of the Week:  Are Natural Gas Producers Intentionally Over-Producing? – By pursuing horizontal drilling and hydraulic fracturing technology as rapidly as possible, gas suppliers have successfully lowered the price at which they are selling their fuel to a level that is unprofitable for most of their less heavily capitalized competitors. Since most gas extractors also extract oil, they have been able to finance their unprofitable gas operations from the healthy profits obtained by selling liquid petroleum at prices that are five times as high today as they were a dozen years ago. Other gas extractors have financed overproduction by convincing others that their newly discovered resources are worth paying five to ten times as much for leases as before the boom.

Why yes, yes they do.  So does everyone else:  Environmentalists Face Day of Reckoning on Keystone Pipeline – Here’s something to watch in 2014: the collective psyche of the green movement. If President Obama green-lights the Keystone pipeline, the movement will face questions about its tactics and goals at a level unseen since major climate-change legislation collapsed on Capitol Hill in 2010.  “If the pipeline is approved, it’s a defeat for, Sierra Club, et al, with no real strategy for what comes next,” said Alex Trembath, a policy analyst with the Breakthrough Institute, an environmental think tank whose founders have often criticized movement tactics.  Whatever the decision, it will be a defining moment for a movement that has had its ups and downs under Obama.

Finally, here a Peak Oil Cultist accuses others of perpetuating energy myths.  Talk about projection…:  7 things everyone knows about energy that just ain’t so – Mark Twain once said, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” And, there are many, many things that the public and policymakers know for sure about energy that just ain’t so.  That list is very long indeed and getting longer as the fossil fuel industry (which has little interest in intellectual honesty) continues its skillful manipulation of a gullible and sometimes careless media.  Below I’ve listed seven whoppers that it would be charitable to call misleading. Longtime readers will recognize that I’ve addressed them before in various pieces. But I thought that it would be useful to review the worst of the worst of 2013 as the year ends.

That’s plenty for now – see you next week!

Follow me on Twitter at @GDBlackmon

Source: Forbes

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