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Gulf of Oman Attacks Underscore Stability of US Oil

Earlier this week, explosions aboard two oil tankers traveling through the Gulf of Oman forced crews to evacuate ship and leave the vessels floating, abandoned. The attacks mark a third such instance of violence in the region in recent months. Those worried the tense situation would upset the price and availability of oil and gas throughout the world, however, have noticed little longterm fluctuation in oil prices, thanks in large part to the stability of the US energy industry.

‘Nobody Wants to See War in the Gulf’

On Thursday, the Norwegian-owned Front Altair or the Japanese-owned Kokuka Courageous experienced explosions while traveling through the Gulf of Oman. The United States wasted little time in accusing Iran of the attacks. A source inside the UK Foreign Office told the BBC, “We strongly agree with the US assessment.”

Iran has, predictably, denied any involvement with either attack.

Those declarations aside, the attacks mark a temporary disruption in the international oil trade. As to further escalation, several nations, including China, have declared that war isn’t in anyone’s best interest.

The International Oil and Gas Highway

Long-term disruption in the Gulf of Oman has severe implications for oil; around 16 million barrels move through the area each day. The area is also a hotspot for liquefied natural gas shipping, as well. If oil and gas is unable to move quickly through the Gulf of Oman, every energy industry in every country in the world is affected. 

Thursday’s attack alone drove up oil prices 4 percent almost immediately.

Fortunately for general consumers, however, this increase in oil prices was much more muted than it would have been in previous years. “The rally is not particularly impressive. In other years, this would be a 5% to 10% move,” said energy analyst Tom Kloza.

Experts agree that the abundance of readily available refined oil continues to outweigh any concerns about the overall safety in the Gulf of Oman. 

A Concerted Communal Effort

With the global need for oil sated thanks to a consistent US effort, the companies and countries with interests in the Gulf can turn their attention to security. This third round of attacks has spurred several nations to partner with businesses in the region to heighten security measures throughout the Gulf of Oman. 

As one Saudi official explained, “The key thing now is to find a way to deal with those type of attacks in the future and assure everyone that those routes are still safe.”

Varodrig / Wikimedia Commons

United States Methane Emissions Aren’t as Drastic as Previously Reported

On Thursday, a new study from the National Oceanic Atmospheric Administration (NOAA) revealed that the levels of United States’ methane emissions are nowhere near as high as they were previously reported. The bombshell study casts doubt on years of attacks from anti-energy protestors and could undercut new legislation from Democrats in the US House of Representatives.

The Fight Against Methane

Anti-oil and gas activists have long used methane as one of their primary weapons in the fight against US energy output. The general claim was simple: oil and gas operations expel methane into the environment, and methane is the second biggest contributor to climate change. Take, for example, a study published in Science last June that revealed US oil and gas methane emissions were 60 percent higher than the numbers reported by the EPA.

Environmental Defense Fund Chief Scientist Steven Hamburg (and co-author of the study) proclaimed, “Scientists have uncovered a huge problem.”

No matter what your opinion of the oil and gas industry, that information sounds terrifying. Opponents of domestic energy have done little to squash that fear, too, painting a picture of an industry that pumps clouds and clouds of methane into the atmosphere with gleeful ignorance. 

Thursday’s study, however, portrays the oil and gas industry in another light entirely. 

A Groundbreaking Study

After examining methane emissions results at 20 US drilling sites for the better part of a decade, researchers at NOAA reported, “Our estimated increases in North American [methane emissions] are much smaller than estimates from some previous studies and below our detection threshold for total emissions increases …”

Put plainly, US oil and gas production has increased by 46 percent in the last decade; in roughly the same period, US methane emissions have increased “approximately 3.4 ± 1.4 % per year,” approximately 10 times lower than some previous studies

Nobody Likes Escaped Methane

Two days before the release of the NOAA report, two Democrat Representatives introduced the Methane Waste and Prevention Act of 2019, a proposal that would use federal law to compel oil and gas companies to cut methane emissions to the bone.

Never mind the fact that earlier this year, Erik Milito, a rep from the American Petroleum Institute revealed that between 1990 and 2017, natural gas production rose an astounding 50 percent. Meanwhile, methane emissions from natural gas projects dropped 14 percent. In Milito’s words, “During a period of significant production growth … methane emissions went down.”

Getting on the Same Page

In their conclusion to the report, NOAA researchers explained that it was a single incorrect mathematical assumption that led prior researchers to their inflated conclusions. It wasn’t a political ploy (like the grandstanding that comes after the publication of a report of this kind), it was a simple mistake.

The NOAA report also serves as further proof that in spite of the repeated attempts to hold up oil and gas as the nation’s biggest climate offenders, the industry itself is committed to creating a cleaner, more environmentally-friendly product year after year.

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What Does the US Rig Count Mean for the Oil and Gas Industry?

At noon on Friday, the last day of the work week, Baker Hughes will continue a tradition began in 1944 when they release their weekly US rig count. Week after week, month after month, year after year, this metric is used by journalists, financial experts, and academics as the pulse of the domestic oil and gas industry. 

But what does the Baker Hughes rig count truly measure, and what do its rise and fall mean for the industry at large?

The Baker Hughes Rotary Rig Count

For 75 years, Baker Hughes, an oilfield products and services company owned by GE, has published a weekly count of the nation’s active rotary rigs. 

A rotary rig is the bit of machinery that “rotates the drill pipe from [the surface] to drill a new well (or sidetracking an existing one) to explore for, develop and produce oil or natural gas.” Hughes doesn’t take into account rigs with low production in this number, but the company will include specific non-rotary rigs in the US rig count under certain circumstances.

In other words, Baker Hughes believes the active rig count to be an accurate measurement of the future demand for oilfield products and services. In a very real sense, the US rig count is used by Baker Hughes to indicate how profitable their company (and other oilfield services companies) may be in the future.

Academics also use Baker Hughes’ count as a means to study long-term fluctuations in the industry.

How Important Is the Rig Count, Really?

In today’s oil and gas sector it would be easy to make the mistake of discounting the importance of the US rig count. Advancements in technology and improvements in the efficiency of extraction, for example, have created an industry that can flourish even when rig counts fall. As such, it has become impossible to judge the overall health of the domestic oil and gas industry using the Baker Hughes rig count alone.

In spite of the changes to the oil and gas industry, the US rig count remains a vital measurement, because it measures physical investment. Unlike other metrics which measure potential, the Baker Hughes count represents the genuine faith that investors have in oil and gas.

President Donald J. Trump . (Official White House Photo by D. Myles Cullen)

Trump Uses Houston Summit to Loosen the Reigns on Oil and Gas

On Wednesday, Donald Trump visited Houston, Texas, the nation’s energy capital, to continue the fight for American energy dominance. 

On a hard-charging tour of the Lone Star State, the President took the time to speak to a room filled with oil and gas professionals. In his speech, Trump reasserted his commitment to the nation’s oil and gas industry, praising their past success while paving the way for future prosperity.

Building the Infrastructure of Tomorrow

While signing the pair of executive orders, Donald Trump spoke to an enthusiastic crowd about his administrations intentions.

“My action today will cut through destructive permitting delays and denials,” explained the President, “so that you can get to work producing the energy and the infrastructure our country needs to thrive and compete and to win. All over the world, we’re winning. Our country is respected again.”

In more practical terms, Trump’s latest executive orders will set about a robust program of infrastructure-building that will focus on erecting new pipelines. In the executive order itself, Trump wrote

“To fully realize [its] economic potential … the United States needs infrastructure capable of safely and efficiently transporting these plentiful resources to end users.  Without it, energy costs will rise and the national energy market will be stifled; job growth will be hampered; and the manufacturing and geopolitical advantages of the United States will erode.”

The Ongoing Battle

Donald Trump’s latest gesture is a step in the right direction for the United States’ embattled oil and gas industry. Even as the President takes strides to relieve the regulatory and legal pressure placed on the shoulders of the country’s oil producers, forces are at work to undo Trump’s work.

At the tail end of March, US District Judge Sharon Gleason determined that Trump’s attempt to revoke a ban on drilling in the Arctic and Atlantic oceans wasn’t legal.

In spite of the President’s repeated attempts to turn the tide for American oil and gas, it seems like the nation is destined to keep taking one step forward and one step back until everyone can get on the same page.

Jeffrey Beall/Flickr.com

Colorado Supreme Court Decision Ends the So-Called ‘Children’s Crusade’

Just like to tragic historical happening for which it was named, the modern day “Children’s Crusade,” as it was dubbed, has concluded in defeat. Frankly, it’s about time.

Martinez v. COGCC

For those unacquainted with the long-running battle, the COGCC has been under attack since 2013, when Xiuhtezcatl Martinez filed a petition with the Colorado Oil and Gas Conservation Commission (or COGCC) that demanded the regulatory agency suspend all new projects until they could prove conclusively that oil and gas development was not harmful to the environment. For nearly six years, the national oil and gas industry has been threatened by anti-fracking activists whose primary selling point is that they’re too young to go into a bar.

Sure, on the surface, that sounds like a noble quest. The fact that Martinez was a kid also made for stylish headlines, as well. Regardless of the long-running debate surrounding it, Martinez’s petition never amounted to more than a poorly-executed ploy designed to shame one of the hardest working regulatory bodies in the country.

Building an Industry While Handcuffed

In the ruling, Justice Richard L. Gabriel pointed out that the primary role of the COGCC is to “foster the development” of Colorado oil and gas. Ceding economic growth to niche environmental concerns comes a clearly defined second. Even then, the COGCC mandate states that addressing environmental concerns should come, “only after taking into consideration cost-effectiveness and technical feasibility.”

Meanwhile, the COGCC finds themselves operating under regulations that are both wildly restrictive and self-imposed. 

In a statement from President & CEO of the Colorado Oil & Gas Association Dan Haley, the exec wrote, “The plaintiffs in the Martinez v. COGCC case ignored, and attempted to disrupt, decades of regulatory precedent and legal oversight. The Colorado Oil and Gas Conservation Act (Act) directs the COGCC to consider multiple factors in making its decisions, including environmental priorities. Following the Act, which is existing Colorado law, the COGCC has enacted the most extensive and stringent regulations for the oil and natural gas industry in the country.” 

Still, however, Colorado oil and gas finds a way to thrive.

The Battle the Continues

The Supreme Court ruling handed down early this week is an undeniable victory for the state’s energy companies. That said, there’s little time for Colorado oil and gas to revel. Opponents of hydraulic fracturing, including the newly elected governor of Colorado, have voiced their disapproval at the decision. In short, it’s only a matter of time before the state’s, and the nation’s energy interests are threatened once more.

Office of Congressman Jared Polis/Wikimedia Commons

What Does Jared Polis Mean for Oil and Gas in Colorado?

When he took the podium for a victory speech in his decisive victory over Republican Walker Stapleton, Jared Polis was ebullient when he declared that Colorado was “an inclusive state that values every contribution.” Polis was referring to his place as history’s first openly gay state governor, but he may as well have been talking about the future of his state. Even as the Centennial State gains notoriety for its progressive social politics, the backbone of the state is built on its businesses.

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President Barack Obama holds a press conference in the James S. Brady Press Briefing Room of the White House, Dec. 19, 2014. (Official White House Photo by Lawrence Jackson)

No President Can Take Credit for the Success (or Failure) of the Oil and Gas Industry

Speaking to students and guests at Texas’ Rice University earlier in the week, former President Barack Obama overflowed with self-congratulatory statements, particularly when it came to his “success” with the oil and gas industry. When the former POTUS took credit for the energy industry’s current boom, he didn’t mince words. 

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Colorado Ballot Initiative 97 Is Headed to the Ballot, But Don’t Lose Hope Just Yet

Over the last several weeks, anti-fracking protestors from around the country have flocked to Colorado to gather signatures for controversial ballot Initiative 97. Much to the dismay of the state’s energy sector, it appears as though the activists may have won a significant victory in the fight to turn Initiative 97 in the law of the land. 

But hope isn’t lost just yet.

The Aforementioned Victory

To turn an initiative into a measure, supporters of the legislation need to gather 98,492 verified signatures. Initial estimates indicate that proponents of Initiative 97 handed over 170,000 signatures at the deadline.

In years past, that’s been something of a challenge for any attempts to get anti-oil-and-gas legislation on the ballot. In 2018, however, the (ahem) climate surrounding the energy industry is especially turbulent, a factor that no doubt played into the success of Initiative 97. Unfortunately for those people who have been lulled into the belief that they’re saving their state, a growing number of experts believe that the passage of Initiative 97 could prove catastrophic for the state’s economy.

The Fallout From 97

Though it’s being sold as a salute to the state’s environment, Initiative 97 could prove costly. Over the first decade, the state could lose up to 150,000 jobs. What’s more, a best-case scenario puts the loss to Colorado’s economy at $170 billion over the first decade.

That loss isn’t restricted to the oil and gas industry, either. Construction, healthcare, hospitality, and government jobs would fall under the axe of Initiative 97.

Why It’s Not as Bad as It Sounds

Just because Initiative 97 is in the race doesn’t mean it’s a sure thing. First, the ballot initiative has some competition right out of the gate, and it’s a doozy. The Colorado Farm Bureau banded together to introduce Initiative 108, a measure that would penalize the government for taking or devaluing landowners across the state. The passage of such legislation would make it harder for anti-fracking activists to pass restrictive laws in the future.

Then, there are the numbers in question. One hundred seventy thousand signatures sounds like one heck a lot, right? It isn’t. In 2016, Colorado ballot initiatives received roughly 2 million votes on either side. In 2014, the last midterm year, ballot measures still clocked about 1.8 million votes per. In other words, 170,000 signatures in the pro column is just a drop in the bucket when it comes to election day.

Of course, the most prominent opponent of Initiative 97 is its supporters, who lean largely Democrat. In midterm years, Republicans vote. Democrats may be outraged, but Republicans show up to cast their votes, and that is bound to make the biggest difference when election day finally rolls around.