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Tulsa hosts global energy tour; Leaders from five nations are here to discuss energy options

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May 22 Tulsa World

It’s no coincidence that a group of visitors from across the globe are asking the same kinds of questions about energy that are dominating discussions about U.S. energy policy.

What are the risks of hydraulic fracturing? Is energy independence really possible or practical? And can renewable energies replace fossil fuels fast enough to keep up with a growing global economy?

“We have coal, hydroelectric and gas, and we are still asking ourselves what is the most appropriate mix of energy,” said Silvia Vlasceanu, dignitary for the Romanian Parliament. “We are trying to see what is a good example and what is a bad example and see what is good for us.”

After visits to Washington, D.C., and the rich Marcellus natural gas shale in Pennsylvania, dignitaries from China, Turkey, Nigeria, Angola and Romania are in Oklahoma this week to visit local energy companies and learn from this nation’s energy sector.

The visit was arranged by the U.S. Department of State, and the Tulsa segment was organized by the Tulsa Global Alliance.

In nations separated by thousands of miles and decades apart in terms of development, the same problems face government-run operations in Nigeria that energy-sector employees in Tulsa and policy makers in Washington, D.C., face every day.

They spent Monday touring local energy companies, such as pipeline and servicing company T.D. Williamson.

On Tuesday, they are scheduled to visit the Cushing storage hub and the controversial Keystone XL Pipeline project, which would ship millions of barrels of tar sands oil from Canada if it can get regulatory approval.

Vlasceanu is a counselor for the Industry and Services Committee for the Chamber of Deputies of the Romanian Parliament.

She said recent discoveries of natural gas in the eastern European country have sparked interest in using the fuel as an economic resource and a means to become completely energy independent, but she did have questions about the environmental impact.

Some cases in the United States have linked hydraulic fracturing to groundwater pollution and other environmental damage, but natural gas industry officials say those reports have no scientific basis.

Romania now imports about 20 percent of its energy, Vlasceanu said.

The group all represented state-run oil interests, including Ibrahim Said, deputy general manager of Botas, the petroleum pipeline company that owns all fuel pipeline operations in Turkey, the crossroads between Middle East oil and Europe.

“We had a major pipeline spill in 2005, and the government was completely responsible,” Said said.

Shen Yanping, who works with the Ministry of Land and Resources in the People’s Republic of China, said that the world’s most populous nation is now debating internally whether it should seek energy independence and what risk that would be to the country’s economy.

“We import about half of our energy,” Yanping said. “In the short term we have to import from the Middle East, but we are in discussions about energy independence.”

U.S. policymakers have been pursuing the same discussions over opening up sensitive environmental areas to oil and natural gas drilling and whether to expand drilling offshore.

Ozonoh Maxwell, a college lecturer in Nigeria, said his country has been developing energy resources in partnership with foreign producers such as Chevron. He said his nation has become a net energy exporter.

He said he was concerned that attempts by the United States and other countries to pursue energy independence could be harmful to economies such as the one in Nigeria.

“There is an energy crisis in Nigeria,” said Maxwell, a lecturer at the Enugu State University of Science & Technology.

Still, he said, the United States is a leader in energy research and technology, something he hopes will benefit his country’s industry in the coming years.

Kyle Arnold 918-581-8380

kyle.arnold@tulsaworld.com

Originally published by KYLE ARNOLD World Staff Writer.

(c) 2013 Tulsa World. Provided by ProQuest LLC. All rights Reserved.

 
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Utica shale gets infrastructure boost with new processing plant

By Peter Behr

Another link in an industrial chain Ohio hopes to see growing around the Utica Shale play was added Tuesday with the opening of a factory in Youngstown that builds natural gas processing equipment.

Houston-based Exterran Holdings Inc. said it built the 65,000-square-foot plant in northeast Ohio to be close to the Appalachian shale gas and oil plays. It has been supplying the region’s gas and oil operators from its Texas and Oklahoma plants.

“Our customers are actively participating in the development and production of oil and gas in this region, including the Marcellus and Utica shale plays, making this a natural geographic fit for us,” said Exterran President and CEO Brad Childers. The $13 million plant will ship its first completed units in about three weeks and will have 100 employees at full capacity, the company said.

Low prices for natural gas and gas liquids products, and a lack of infrastructure links to downstream processing and markets, have slowed drilling in the Marcellus and Utica plays. The latest well data from the Ohio Department of Natural Resources recorded 639 Utica wells permitted, 311 drilled but only 89 producing.

But the initial construction of gathering networks, processing and pipelines continues, as has expansion in a wide variety of supply and service industries, Ohio officials said.

“Exterran was the first win we had,” said Jacob Duritsky, managing director for research at Team Northeast Ohio, a nonprofit economic development firm that is trying to coax Gulf Coast companies to open in Ohio.

Direct employment in shale gas and oil production is still a fraction of the state’s total workforce. But investment and job growth related to the hydrocarbon development continue to climb. Cleveland Plus, another state economic promotion nonprofit, cites the $650 million expansion of V&M Star’s pipe production plant in Youngstown, a $310 million modernization at Timken Co.’s Canton plant and a $64 million Baker Hughes Inc. well drilling services plant in Massillon as examples.

Other projects proposed or underway include a $300 million natural gas liquids processing plant by affiliates of NiSource Inc. and Hilcorp Energy Co.; a $400 million gathering and processing plant by M3 Midstream LLC, Access Midstream Partners LP and EV Energy Partners LP; and a $1.2 billion-plus pipeline from Ohio to Detroit and Canada, planned by DTE Energy Co., Spectra Energy Corp. and Enbridge Inc.

While well permits in Ohio’s Utica Shale formation have climbed above 600, drilling has not yet taken off. “If you look at what’s producing — 89 wells — that’s still pretty low, largely due to the midstream infrastructure that’s not in place yet,” Duritsky said.

“It would probably take about three years before a lot of that processing and gathering infrastructure is in place, and then you really start to see that activity,” he added.

Ethane cracker dreams

Ohio’s biggest dreams remain for the gas liquids production to grow large enough to justify construction of a multibillion-dollar ethane cracker in the region, to turn Utica-Point Pleasant production into petrochemical feedstocks for the state’s large polymer-related producers.

Royal Dutch Shell PLC has a potential cracker facility site in Pennsylvania close to the Ohio border but has not said when or whether the plant will be built.

Asked about the outlook for the Shell cracker, Duritsky said, “Cautiously optimistic is maybe even a little too strong.”

“The last time we were in Houston, the sentiment was it’s probably a little more likely to happen than not, but it still might be a 60-40 [percent] proposition,” he added.

“We just don’t know. But we do have the [plastics production] assets in place in the state, particularly in northeast Ohio, that can make a compelling case on the demand side for these products.”

Long term, the outlook for a cracker in the region may depend on the strength of demand for feedstocks from the region’s consumers, he said. “They … have to say we can’t afford to keep bringing this in from overseas” or the Gulf Coast.

 
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Huge Boost In U.S. Oil Output Set To Transform Global Market

NatGas&Worldby

U.S. oil production is rising sharply and increased output from shale will be a “game changer” in global energy markets in the coming years, according to a new report out Tuesday by the International Energy Agency.

“U.S. shale oil will help meet most of the world’s new oil needs in the next five years, even if demand rises from a pick-up in the global economy,” the Paris-based agency said in its five-year outlook, called the Medium-Term Oil Market Report.

“North American supply is an even bigger deal than we thought. A real game changer in every way,” said Maria van der Hoeven, the IEA’s executive director.

She said that North American production has set off a “supply shock that is sending ripples throughout the world” and urged the United States to dismantle the Export Administration Act of 1979, which bans the sale of U.S. crude abroad, except to Canada and Mexico.

“This issue is on the table. I think it has to be addressed because if there are no export licenses for crude, then the industry will find different ways, as they are looking for now already with processed, half-processed products, things like that,” van der Hoeven said.

The IEA report forecasts:

“North American supply to grow by 3.9 million barrels per day from 2012 to 2018, or nearly two-thirds of total forecast non-OPEC supply growth of 6 [million barrels per day]. World liquid production capacity is expected to grow by 8.4 [million barrels per day] – significantly faster than demand – which is projected to expand by 6.9 [million barrels per day]. Global refining capacity will post even steeper growth, surging by 9.5 [million barrels per day], led by China and the Middle East.”

As NPR’s Tom Gjelten reports:

“Petroleum engineers have always known about the untapped underground oil in the United States, but it was unreachable, trapped in tight shale rock. Then the engineers figured out how to crack the rock. Hydraulic fracturingfracking — got that ‘tight oil’ finally flowing in places like North Dakota.”

Canada, one of the world’s largest petroleum exporters, has also gotten oil from tar sands.

Those combined factors have resulted in a “steeper than expected” rise in North American production.

On the demand side, Gjelten reports, it’s no longer the big industrialized countries such as the United States that are also the biggest oil users. The IEA predicts countries such as China and India will need more oil than the industrialized counties at “some point” in the future.

“But it’s happening. And it’s happening fast. It’s faster than expected,” van der Hoeven says.

One big reason for rising supply is that energy consumers are expected to look more toward natural gas to fill their needs. Antoine Halff, head of the IEA’s Oil Industry Division, says trucks and trains, for example, will turn away from oil.

“In fact, we’re now expecting that we’re going to see some transition of transport demand from oil to natural gas before the end of the forecast period,” Halff says.

Meanwhile, The Daily Ticker, quoting Gasbuddy.com, says the average U.S. gas price is now $3.58 a gallon, down from nearly $3.75 a year ago.

“Analysts speculate that this is the result of a rise in crude oil production and a decrease in consumer demand. ‘We have seen rising crude oil inventories playing a role in lower gasoline prices,’ Patrick DeHaan, senior petroleum analyst at Gasbuddy.com, tells The Daily Ticker. ‘Last year there were a few major refinery incidents. Really we’ve had a lack of unexpected refining problems and that’s kept pressure at the gas pump down.’”

 
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Dearing Compressor and Pump Growing With Shale Development

IMG_0169-300x225by: Shawn – Director, Corporate and Community Affairs Energy InDepth

Dearing Compressor and Pump is seeing a rejuvenation in their business since shale development has begun in the Utica and Marcellus.  The company makes compressor packages for the oil and gas industry, which help transport natural gas and liquids through pipelines to utilities and processing plants across America.  Within the past four years, business has taken on a whole new life thanks to shale development.

With a flurry of projects happening in our region, Dearing is keeping busy filling orders for their customers.  In 2004, Dearing Compressors and Pumps employed around 45 people.  Today, they are employing around 180  and are still looking for more qualified workers to help weld, fabricate, and assemble their compressor packages.  The company, which has been has been servicing industrial and energy customers at its Youngstown location, is a family business that has based their reputation on service, reliability, integrity, and innovation fueled by customer confidence since 1945.

With strong reliance on innovation, Dearing saw the opportunity shale development would bring and began building and supplying compressor packages to customers in Pennsylvania.  The average compressor station puts out anywhere from 1,500 to 5,000 horsepower costing $1 million plus.  During our tour, there were 7 compressor stations being built in the bays of their 50,000 square feet facility with each one ranging from $1.2 million to $3.4 million.

IMG_0172-300x225As their compressor station began to increase in size, Dearing found their 36,000 square foot facility wasn’t nearly large enough to handle all of their new business.  As a result, in 2010 they started building a 50,000 square foot manufacturing and assembling area next to the existing 36,000 foot space to accommodate the growing business.  Today, only two years later, they are looking to expand to over 125,000 foot workspace while remaining at the same location.

Each compressor package is built from scratch at the Youngstown facility, minus the engine and compressor, which are bought from companies like CAT and Ariel Corporation.  From the skids where the station sits, to all of the fittings, pulse bottles and scrubbers, each component is fabricated on site.

The operation is amazing as compressor stations are built in multiple bays, each one made to the customer’s unique specifications.  Their customers range from utilities, natural gas processing plants like the M3 project, to pipelines responsible for getting our natural gas to heat our homes.

As Dearing Compressor and Pump continues to grow, they will continue to need qualified employees to help them supply the oil and natural gas developers not only in our region, but across the United States.  Luckily for Ohio, we have a manufacturer like Dearing employing Ohioans and supplying companies developing resources in our state.  It is success stories like these that show the true potential for Ohio as oil and gas development continues to increase.

 
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Gulfport steps up drilling plans in Utica Shale

gulfportBy Shane Hoover

Delays in the construction of pipelines and processing plants have put Gulfport Energy’s Utica Shale drilling four months behind schedule, but the company plans to accelerate exploration this year.

Most of Gulfport’s wells are in Harrison County, followed by Belmont and Guernsey counties, according to the latest numbers from the Ohio Department of Natural Resources.

The Oklahoma City-based company released its first quarter results Wednesday, posting a $44.6 million net income, up from $26.9 million during the same quarter last year.

Officials said the company produced 575,543 barrels of oil equivalent in the first quarter, with 72,134 BOE from the Utica Shale.

Gulfport has 128,000 acres under lease in the Utica Shale region of Ohio. State statistics show Gulfport has 50 wells in various stages of development, second to Chesapeake Energy’s 401 wells.

This year, Gulfport will spend about $500 million on exploration in Utica Shale, six times what the company has budgeted for any other region. Gulport plans to drill up to 60 Utica wells as it increases to seven horizontal rigs, from the current three rigs.

Although production has been challenged by a delay in connecting wells to pipelines, results indicate “now is the time to accelerate our drilling,” CEO James Palm said.

The company reported that its first 14 Utica wells averaged an initial rate of 3,055 BOE per day, with a mix of 36 percent natural gas, 28 percent natural gas liquids and 36 percent heavier condensate.

“Gulfport’s position in the heart of the Utica wet gas window could yield performance results on par with the most attractive shale plays,” according to the company’s investor presentation.

The company said it has nine wells flowing into the sales pipeline, with plans to add four more wells by mid-June. Denver-based MarkWest Energy PartnersMarkWest Energy Partners is developing pipelines and processing facilities for Gulfport.

Near Cadiz in Harrison County, MarkWest and Texas-based Energy & Minerals Group are building a facility to gather and process liquid natural gas. The facility already has agreements with four drilling companies to process their product.

 
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