Study: Oil, Gas Industry Needs to Step Up Water Management

The oil and gas industry needs to step up efforts to expand its use of recycled water and non-freshwater resources and implement better water management planning if shale energy production is to expand according to projections.

Research conducted by San Francisco-based CERES indicates that nearly 47 percent of wells were developed in water basins with high or extremely high water stress. Most of the hydraulic fracturing activity in the United States is occurring in Texas and Colorado, which are experiencing prolonged drought conditions.

The report is based on well drilling and water use data from FracFocus.org and water stress indicator maps developed by the World Resources Institute. The research was based on FracFocus’ data on 25,450 wells in operation from January 2011 through September 2012.

Ninety-two percent of Colorado wells analyzed in the report are in extremely high water stress regions. In Texas, which accounts for nearly half of the total wells analyzed, 51 percent of the wells were in high or extremely high water stress regions. Water use in hydraulic fracturing in some Texas counties accounted for over 20 percent of the region's total water use. Concerns over water usage for hydraulic fracturing in Texas prompted legislators to mandate water recycling in the oil and gas industry.

Seventy percent of the wells analyzed in Pennsylvania were in medium to high water stress water basins and only 2 percent were in high water stress basins.

"Given projected sharp increases in shale oil and gas production in the coming years, competition over water should be a growing concern to energy companies," CERES concluded in the report, noting that hydraulically fractured oil and gas production is expected to double in the coming years. "Shale energy development cannot grow without water, but in order to do so the industry's water needs and impacts need to be better understood, measured and managed."

The industry has made progress in increasing its use of recycled water and other alternative water sources for fracturing wells, including non-freshwater alternatives such as wastewater, saline water, seawater and acid-mine drainage. But overall water recycling and use of non-freshwater sources must rise considerably to have a significant impact.

Key recommendations by CERES for companies and regulators include:

Comprehensive mandatory disclosure by companies of how much freshwater, non-freshwater and recycled water they are using region by region as well as how much water is returning to the surface and where it is ending upRequirements for companies to set quantifiable water use targets, such as recycling and non-freshwater use targetsEnsure that companies and local regulators are conducting sufficient water management planningEnsure companies have a local stakeholder engagement process in place on water issues

The U.S. oil and gas industry's increased exploration and production of U.S. unconventional resources has increased the amount of water being used by the oil and gas industry in its operations.

Best practices for water management in unconventional exploration and production activity are still evolving as companies address water use management issues such as the cost of transporting water to drilling sites, whether to treat or dispose of water, and concerns by environmental groups, state officials and the U.S. public over the amount of water used and the impact of hydraulic fracturing on water supply in shale regions.

A number of water treatment processes are also becoming available to the oil and gas industry, including EcoLogix and EcoSphere, which Rigzone reported on last year.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

North Sea Oil Industry 'Needs UK's Stability'

The oil and gas industry is better supported as part of the UK than it would be in an independent Scotland, Coalition ministers have claimed, as they pledged to help boost investment and promote exports.

Scottish Secretary Michael Moore, Business Secretary Vince Cable and Energy Secretary Ed Davey published a long-term strategy to back the industry during a visit to Aberdeen.

Speaking to an audience of oil and gas executives, they said an independent Scotland would struggle to absorb the costs of supporting the industry, which include tax breaks for exploration and scrapping old rigs.

The claims came as a consortium of oil companies led by BP announced a GBP 330 million drilling program that could lead to further development of the giant Clair field in the Atlantic, west of Shetland.

Mr. Cable said oil and gas would continue to provide 70% of Britain's energy needs into the 2040s. He said the UK Government would provide tax certainty, supply chain support and skills development as part of its long-term plan.

Dismissing the SNP s drive for independence, he said: "A bigger country is better at absorbing shocks it's simple logic. A modest change has a significant impact on GDP. In a country 10 times smaller, the shock would be proportionally bigger."

Mr. Davey said: "Only the UK can deliver what is required over a sustained period if you are going to get the most out of the oil and gas industry. The UK is a large economy that is why we can provide the support. Smaller economies have difficulty absorbing the costs."

The SNP has put oil at the heart of its case for independence. First Minister Alex Salmond insists Scotland is on the cusp of a second oil boom, though the claim was dismissed by a think-tank earlier this week.

Fergus Ewing, Scottish Energy Minister, said: " I am delighted the UK Government is following the Scottish Government s lead in recognizing the importance of the industry by launching its own oil and gas strategy.

"It highlights the positive future of the industry, the extent of reserves, and the benefit to the balance of payments and production taxes. I welcome the view there will be a long-term future for the oil and gas industry well beyond 2055."

Meanwhile the BP-led consortium including Shell, Conoco-Phillips and Chevron said drilling had already begun on the first of five wells planned over the next two years at Clair.

Up to 12 wells could be drilled, depending on initial results.

The field, holding eight billion barrels, was discovered 35 years ago but production only started in 2005 owing to the difficulty of extracting and bringing the oil ashore.

BP North Sea regional president Trevor Garlick said: "This is a major milestone and a further big commitment to the west of Shetland by BP and its co-venturers. If successful, the appraisal program could pave the way for a third phase of development at Clair. This is now a real possibility."

Copyright 2013 Newsquest Media Group All Rights Reserved

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Malaysia's Oil, Gas Worker Needs to Rise amid Ambitious Growth Plans

Oil and gas production has been central to Malaysia's growth ever since oil was first drilled in Sarawak at the start of the 20th century. Given Malaysia's prolific hydrocarbon resources, it comes as no surprise to industry watchers that the government's focus will continue to be placed on developing the country's oil and gas sector moving towards 2020.

Global oil and gas production has grown by around 1.5 percent per year in the last decade driven by rising demand from developing countries, notably China, India and Southeast Asia, according to a report by the International Energy Agency (IEA) released in July 2012.

Oil demand in the developing world, said the IEA, will overtake that in industrialized countries for the first time this year, a tipping point in oil demand geography.

"Strong economic growth in Asia, the former Soviet Union and the Middle East has pushed up demand in these regions, while the Eurozone and the U.S. remain weak," the IEA report noted.

Meanwhile, a tighter balance of supply and demand is expected in both oil and gas markets by the middle of the decade, as demand growth catches up with supply infrastructure. Beyond 2014, the momentum for deepwater exploration – especially among emerging economies – is expected to markedly increase as easy plays among shallow waters become rarer, research group Douglas Westwood revealed in a July 2012 presentation.

Against Asia's structural shortage for hydrocarbons, in particular oil, it is no surprise that Malaysia – a country famed for its light, sweet crude produce – is placing a renewed interest on developing its oil and gas industry.

Malaysia's oil and gas policy, which historically has focused on maintaining its reserve base, has evolved in recent years. A roadmap published by the Malaysian government in July last year states that the country aims to achieve the following oil and gas-related goals:

Rejuvenate existing fields through enhanced oil recoveryDevelop small fields through innovative solutionsIntensify exploration activitiesBuild a regional oil and gas trading hub by 2020Unlock premium gas demand in the PeninsulaAttract multi-national corporations to bring a sizable share of their global operations to the country

The Malaysian government noted that in order to deliver on its long-term oil and gas goals, it needs to develop its manpower infrastructure. In its report, the government disclosed that the country, alongside with state-owned and private enterprises, will be looking to hire over 60,000 workers by 2020.

"A significant proportion of these jobs will be highly-skilled jobs, with an estimated 21,000 (40 percent) for qualified professionals such as engineers and geologists, with monthly salaries in the range of $1,618 to $3,236 (MYR 5,000 to MYR 10,000)," the report revealed.

The Malaysian government pointed out that the bulk of its hiring efforts will be targeted at the country's oilfield services segment, liquefied natural gas (LNG) exploration and trading sector and its small field development strategy.

In the case of the country's oilfield services sector, the Malaysian government remarked that no other country in the world comes as a close second to challenging Malaysia as an oilfield services hub.

"While there are dispersed pockets of activity, there is no clear hub elsewhere in the world. With a burgeoning domestic oil and gas industry, proximity to oil fields and a cost-competitive workforce, there is potential for Malaysian companies to first become domestic champions and then subsequently regional champions as they capture a larger share of the market," the report said.

As part of its transformation initiative, Malaysia is aiming to focus on attracting international oilfield service companies to relocate their global operations to the country and enter into joint ventures to move up quickly on the technological curve.

In line with its aim to grow the oilfield services sector, Malaysia anticipates that around 40,000 additional workers will need to be employed to support the industry.

The Malaysian government also laid out an equally strong mandate for the country's LNG sector. An intricate long-term employment blueprint has been weaved by Malaysia's leadership as the country looks to position itself as Asia's LNG hub for storage, trade and transportation for the commodity.

"For the first phase, which is to be commissioned by this year, a capacity of 3.5 million tonnes of LNG per annum has been planned (actual capacity, cost and timing will be determined by Petronas). Petronas will execute all elements of the end-to-end gas delivery including partial marketing of this imported gas," the report stated.

Like its oilfield services sector, Malaysia is banking on its cost advantage – over that of neighbor Singapore – to realize its LNG potential. The Malaysian government projected in its 2020 vision that the rise of country's LNG industry would provide the foundation for some 27,000 new jobs; the bulk of which is concentrated to support the construction of the fixed and floating elements of gas regasification and processing projects in Johor and Sabah-Sarawak.

In the small field development area, the spotlight is on developing the country's small risk contracts. The Malaysian government noted that a significant proportion of Malaysia's remaining petroleum resources are sited in fields with less than 30 million barrels of recoverable oil.

"Developing these fields in an economically attractive manner is often challenging, as they need the same expensive infrastructure as large fields, while the expected revenue streams are smaller due to the smaller reserve sizes," the government admitted.

As such, despite the relatively high price of crude, the small risk contract industry is characterized by smaller employment growth numbers when compared to the oilfield services and LNG regasification sectors.

While small risk contracts have much interest among international oil exploration companies, the industry's development has been slow amid strong differing viewpoints between Petroliam Nasional Berhad (Petronas) and international oil corporations.

Back in 2011, Petronas noted that it aimed to award four marginal fields per year. However, thus far, only the Kapal-Banang-Meranti and Balai fields have been dished out. This offers a plausible explanation for the country's conservation employment growth rate; the industry is expected to generate slightly below 400 new jobs by 2020.

But development in the small risk contracts sector could evolve rapidly in the near-term. Industry watchers agree that Petronas could ramp up its efforts on the small risk contracts front and look to award more contracts this year as it seeks to compensate for the shortfall of its development target in the previous years.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Malaysia's Oil, Gas Worker Needs to Rise amid Ambitious Growth Plans

Oil and gas production has been central to Malaysia's growth ever since oil was first drilled in Sarawak at the start of the 20th century. Given Malaysia's prolific hydrocarbon resources, it comes as no surprise to industry watchers that the government's focus will continue to be placed on developing the country's oil and gas sector moving towards 2020.

Global oil and gas production has grown by around 1.5 percent per year in the last decade driven by rising demand from developing countries, notably China, India and Southeast Asia, according to a report by the International Energy Agency (IEA) released in July 2012.

Oil demand in the developing world, said the IEA, will overtake that in industrialized countries for the first time this year, a tipping point in oil demand geography.

"Strong economic growth in Asia, the former Soviet Union and the Middle East has pushed up demand in these regions, while the Eurozone and the U.S. remain weak," the IEA report noted.

Meanwhile, a tighter balance of supply and demand is expected in both oil and gas markets by the middle of the decade, as demand growth catches up with supply infrastructure. Beyond 2014, the momentum for deepwater exploration – especially among emerging economies – is expected to markedly increase as easy plays among shallow waters become rarer, research group Douglas Westwood revealed in a July 2012 presentation.

Against Asia's structural shortage for hydrocarbons, in particular oil, it is no surprise that Malaysia – a country famed for its light, sweet crude produce – is placing a renewed interest on developing its oil and gas industry.

Malaysia's oil and gas policy, which historically has focused on maintaining its reserve base, has evolved in recent years. A roadmap published by the Malaysian government in July last year states that the country aims to achieve the following oil and gas-related goals:

Rejuvenate existing fields through enhanced oil recoveryDevelop small fields through innovative solutionsIntensify exploration activitiesBuild a regional oil and gas trading hub by 2020Unlock premium gas demand in the PeninsulaAttract multi-national corporations to bring a sizable share of their global operations to the country

The Malaysian government noted that in order to deliver on its long-term oil and gas goals, it needs to develop its manpower infrastructure. In its report, the government disclosed that the country, alongside with state-owned and private enterprises, will be looking to hire over 60,000 workers by 2020.

"A significant proportion of these jobs will be highly-skilled jobs, with an estimated 21,000 (40 percent) for qualified professionals such as engineers and geologists, with monthly salaries in the range of $1,618 to $3,236 (MYR 5,000 to MYR 10,000)," the report revealed.

The Malaysian government pointed out that the bulk of its hiring efforts will be targeted at the country's oilfield services segment, liquefied natural gas (LNG) exploration and trading sector and its small field development strategy.

In the case of the country's oilfield services sector, the Malaysian government remarked that no other country in the world comes as a close second to challenging Malaysia as an oilfield services hub.

"While there are dispersed pockets of activity, there is no clear hub elsewhere in the world. With a burgeoning domestic oil and gas industry, proximity to oil fields and a cost-competitive workforce, there is potential for Malaysian companies to first become domestic champions and then subsequently regional champions as they capture a larger share of the market," the report said.

As part of its transformation initiative, Malaysia is aiming to focus on attracting international oilfield service companies to relocate their global operations to the country and enter into joint ventures to move up quickly on the technological curve.

In line with its aim to grow the oilfield services sector, Malaysia anticipates that around 40,000 additional workers will need to be employed to support the industry.

The Malaysian government also laid out an equally strong mandate for the country's LNG sector. An intricate long-term employment blueprint has been weaved by Malaysia's leadership as the country looks to position itself as Asia's LNG hub for storage, trade and transportation for the commodity.

"For the first phase, which is to be commissioned by this year, a capacity of 3.5 million tonnes of LNG per annum has been planned (actual capacity, cost and timing will be determined by Petronas). Petronas will execute all elements of the end-to-end gas delivery including partial marketing of this imported gas," the report stated.

Like its oilfield services sector, Malaysia is banking on its cost advantage – over that of neighbor Singapore – to realize its LNG potential. The Malaysian government projected in its 2020 vision that the rise of country's LNG industry would provide the foundation for some 27,000 new jobs; the bulk of which is concentrated to support the construction of the fixed and floating elements of gas regasification and processing projects in Johor and Sabah-Sarawak.

In the small field development area, the spotlight is on developing the country's small risk contracts. The Malaysian government noted that a significant proportion of Malaysia's remaining petroleum resources are sited in fields with less than 30 million barrels of recoverable oil.

"Developing these fields in an economically attractive manner is often challenging, as they need the same expensive infrastructure as large fields, while the expected revenue streams are smaller due to the smaller reserve sizes," the government admitted.

As such, despite the relatively high price of crude, the small risk contract industry is characterized by smaller employment growth numbers when compared to the oilfield services and LNG regasification sectors.

While small risk contracts have much interest among international oil exploration companies, the industry's development has been slow amid strong differing viewpoints between Petroliam Nasional Berhad (Petronas) and international oil corporations.

Back in 2011, Petronas noted that it aimed to award four marginal fields per year. However, thus far, only the Kapal-Banang-Meranti and Balai fields have been dished out. This offers a plausible explanation for the country's conservation employment growth rate; the industry is expected to generate slightly below 400 new jobs by 2020.

But development in the small risk contracts sector could evolve rapidly in the near-term. Industry watchers agree that Petronas could ramp up its efforts on the small risk contracts front and look to award more contracts this year as it seeks to compensate for the shortfall of its development target in the previous years.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

EPA Needs to Fix Air Emissions Proposal

Howard Feldman, API director of scientific and regulatory affairs, spoke with reporters today about proposed rules for oil and natural gas air emissions.  This is what he had to say.

EPA's proposed rules for the oil and natural gas sector, which address sources of air emissions including those associated with hydraulic fracturing, are due to be finalized in the first week of April. The rules are important because they would over time affect hundreds of thousands of natural gas development operations.

A new study conducted by Advanced Resources International, which we are releasing today projects the rules as proposed would significantly slowdown drilling, resulting in less oil and natural gas production, lower royalties to the federal government, and lower tax payments to state governments.

Unless EPA makes changes to the proposal, the study found that between the time these rules are implemented and 2015:

Overall drilling for natural gas using hydraulic fracturing would be reduced by up to 52%, reducing drilling by as much as 21,400 wells;Natural gas production from hydraulically fractured wells would decline by up to 11% compared to what would otherwise have been developed;Oil production from hydraulically fractured wells would decline by up to 37% compared to what would have otherwise been developed;The federal government would not collect up to 8.5 billion dollars in royalties due to reduced drilling and production;State governments would not collect up to 2.3 billion dollars in severance taxes due to reduced drilling and production.

This analysis does not even attempt to estimate the lost jobs and decline in other economic benefits that would result from reduced drilling and reduced oil and gas supply services.

As we suggested in our comments on the proposal, EPA must make changes to this rule and allow for reduced emissions while not impeding the massive job creation and economic revitalization that we’ve seen in states like North Dakota and Pennsylvania due to the shale boom.

First, reduced emission completions requirements should be less prescriptive and limited to circumstances that are cost-effective and technically feasible. A one-size-fits-all approach will not work.

EPA should also allow more time to implement the requirements once they are final. The equipment prescribed to conduct reduced emission well completions will simply not be available in time to comply with the current final rule schedule.

Manufacturers and industry need two to three years to design, manufacture and certify a sufficient number of control devices and train personnel.

We also think the system of notifications, monitoring, recordkeeping, performance testing and reporting requirements for compliance assurance must be simplified. Taken as a whole, these requirements would be overly burdensome for the small and/or temporary facilities that EPA is regulating. They would waste time and resources for the industry and EPA.

The benefits of shale energy development are indisputable. Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report. Natural gas prices have fallen by half from their level three years ago. That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.

Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas as a raw material, and that is encouraging businesses to locate new facilities in America rather than overseas.

The president has called for his administration to reign in burdensome regulations. At a time when the government is desperate for revenue, and America’s gasoline prices are high, applying overly burdensome regulations would be bad public policy and could place an even bigger burden on Americans in the form of higher energy costs.

EPA can fix these rules so they reduce emissions yet are still compatible with oil and natural gas development that creates jobs, government revenue and improves our energy security. We ask them to keep these recommendations in mind as they finalize the rule.

View the original article here

EPA Needs to Fix Air Emissions Proposal

 

Howard Feldman, API director of scientific and regulatory affairs, spoke with reporters today about proposed rules for oil and natural gas air emissions.  This is what he had to say.

EPA's proposed rules for the oil and natural gas sector, which address sources of air emissions including those associated with hydraulic fracturing, are due to be finalized in the first week of April. The rules are important because they would over time affect hundreds of thousands of natural gas development operations.

A new study conducted by Advanced Resources International, which we are releasing today projects the rules as proposed would significantly slowdown drilling, resulting in less oil and natural gas production, lower royalties to the federal government, and lower tax payments to state governments.

Unless EPA makes changes to the proposal, the study found that between the time these rules are implemented and 2015:

Overall drilling for natural gas using hydraulic fracturing would be reduced by up to 52%, reducing drilling by as much as 21,400 wells;Natural gas production from hydraulically fractured wells would decline by up to 11% compared to what would otherwise have been developed;Oil production from hydraulically fractured wells would decline by up to 37% compared to what would have otherwise been developed;The federal government would not collect up to 8.5 billion dollars in royalties due to reduced drilling and production;State governments would not collect up to 2.3 billion dollars in severance taxes due to reduced drilling and production.

This analysis does not even attempt to estimate the lost jobs and decline in other economic benefits that would result from reduced drilling and reduced oil and gas supply services.

As we suggested in our comments on the proposal, EPA must make changes to this rule and allow for reduced emissions while not impeding the massive job creation and economic revitalization that we’ve seen in states like North Dakota and Pennsylvania due to the shale boom.

First, reduced emission completions requirements should be less prescriptive and limited to circumstances that are cost-effective and technically feasible. A one-size-fits-all approach will not work.

EPA should also allow more time to implement the requirements once they are final. The equipment prescribed to conduct reduced emission well completions will simply not be available in time to comply with the current final rule schedule.

Manufacturers and industry need two to three years to design, manufacture and certify a sufficient number of control devices and train personnel.

We also think the system of notifications, monitoring, recordkeeping, performance testing and reporting requirements for compliance assurance must be simplified. Taken as a whole, these requirements would be overly burdensome for the small and/or temporary facilities that EPA is regulating. They would waste time and resources for the industry and EPA.

The benefits of shale energy development are indisputable. Nationwide, shale gas development was supporting 600,000 jobs in 2010, according to a December IHS-Global Insight report. Natural gas prices have fallen by half from their level three years ago. That is benefiting families that heat their homes with natural gas, as well as businesses and consumers that buy their electricity from utilities that generate it with natural gas.

Low natural gas prices are also benefiting chemical manufacturers and other businesses that use natural gas as a raw material, and that is encouraging businesses to locate new facilities in America rather than overseas.

The president has called for his administration to reign in burdensome regulations. At a time when the government is desperate for revenue, and America’s gasoline prices are high, applying overly burdensome regulations would be bad public policy and could place an even bigger burden on Americans in the form of higher energy costs.

EPA can fix these rules so they reduce emissions yet are still compatible with oil and natural gas development that creates jobs, government revenue and improves our energy security. We ask them to keep these recommendations in mind as they finalize the rule.

View the original article here