News From The Oil Patch 4/11/2014

The Ohio Department of Natural Resources says it has a "probable link" connecting hydraulic fracturing to seismic activity.  Drilling was suspended last month at the site in question, where two quakes southeast of Cleveland reached magnitude 3.0.   ODNR announced new rules that require producers to install seismic monitors if fracking occurs within three miles of a known fault or an area with recent quakes.  Ohio regulators had previously linked other earthquakes to wastewater disposal wells, but opinion is divided about whether fracking itself can cause quakes.  The Interstate Oil and Gas Compact Commission called the direcives "a sensible response to a serious issue," and said regulators across the country are closely examining that response.
They called it the Rally for the Rigs: about 1,000 people gathered on the south Plaza of the Oklahoma State Capitol, in the first rally ever staged by the oil and gas industry in Oklahoma.  Third-generation Oklahoma oil man Mike Cantrell they weren't there to protest anything, just to remind lawmakers of the 31,000 companies and almost 400,000 workers in the Oklahoma patch.  Cantrell still supports the gross production tax cut on horizontal wells.  That tax cut was intended to spur horizontal drilling, which is now fairly standard, and some would like to restore the tax to previous levels or higher.
Bloomberg reports on what it calls a rift in the oil and gas industry about how to measure crude oil trapped within rock formations thousands of feet below the earth's surface.  The industry has historically relied on the so-called Arps equation, developed long before the shale revolution.  Now An engineering professor in Houston, John Lee, is calling for an industry conference to address what he calls inconsistent approaches.  Lee insists that billions of barrels are being counted by relying on limited drilling history and tweaks to Jan Arps' original 70-year-old formula.
A small but important first step in opening US oil sales to global markets.  Alaska Republican Senator Lisa Murkowski says the Commerce Department can simply redefine crude oil to exclude gases that condense into petroleum condensates outside the well.  Some big players want to lift the current ban on oil exports, in place since the Arab oil embargo forty years ago.  Supporters say it would add domestic jobs, strengthen oil security abroad and help counter aggression by Russian President Vladimir Putin.
The State of Texas set a record in wind power generation.  The region covering most of the state recently received more than 10-thousand megawatts of electricity from windmills.  That's one third of the power on the grid, and the most ever generated through wind in any state ever in the US.  The EIA reports Texas produced 34% of the oil in the US last year, up from 30% the year before.  That's about 934 million barrels of crude, more than double the production of 2010.  If Texas were a country, it would be the 15th largest oil producer in the world.
Analysis by Wood Mackenzie indicates North Dakota's Bakken and Three Forks oil plays still hold close to $118 billion in value.  World Oil dot com reports that translates to about 1.1 million/bpd this year, growing to 1.7 million/bpd by 2020 and a total production of more than 20 billion bbl of oil through the life of the play.  The analysts say $15 billion will be spent on drilling and completion there.
Royal Dutch Shell could be laying the groundwork for a return to the Arctic, where they had such disastrous results last time around.  Upstream Online reports Shell has hired a US firm to offer advice on its relevant management systems.
Shell is cutting costs in its North American shale business by switching to Asian suppliers.  The company's CEO tells the Financial Times about "Project Mosaic," a strategy designed to cut costs by using more standardised and modular equipment.  Chief Executive Ben vanBeurden says they can get tanks made 40% cheaper in China than they can in the US or Mexico.
The LA Times calls it the largest oil shale reservoir in the US.  It's near Shafter, California, and the problem is many producers have NOT been able to tap into it.  The government says there are 15 billion barrels of recoveragle oil trapped in what's known as the Monterey Shale, 1,750 acres from Bakersfield to Fresno.  But the earth under the play has undergone a fairly constant seismic reshaping, trapping oil in "accordion pleats" of hard rock at 12,000 foot depths.
The Federal Railroad Administration hopes to require two-person crews on freight trains carrying crude oil, and establish minimum crew sizes for most trains.  The government will also will pursue a rule on transportation of hazardous materials and on safely securing trains that are not in use.
The State of North Dakota broke ground this week on two truck bypasses made necessary, and paid for, by the boom in the Bakken Shale. They're spending $190 million to keep all that truck traffic out of Williston and nearby Alexander, in northwestern North Dakota.
"The industry wants to see an end to illegal dumping, too."  So says Kari Cutting, Vice President of the North Dakota Petroleum Council.  Cutting is backing new rules intended to crack down on the illegal dumping of radioactive oil filter socks, the tubular nets that strain liquids during the oil producion process.