Bakken News: North Dakota may dethrone Alaska as the largest oil producer in the US

By implementing horizontal drilling and multi-stage fracturing in the Bakken Shale, North Dakota may well surpass Alaska in crude oil production by 2017, reported Bloomberg.

According to separate reports from both the North Dakota Pipeline Authority and the US Department of Energy, if the current trends in production continue, North Dakota may overtake Alaska as the No. 1 producer in the US by 2017.

Should the increase in drilling and production in North Dakota continue, the output in North Dakota may rise to between 450,000 and 700,000 barrels of oil a day within the next five to seven years, reported the North Dakota Pipeline Authority.

On the other hand, the production coming out of Alaska is slated to drop to 450,000 barrels a day by 2017, the DOE reported.

The Bakken Shale has sparked a drilling frenzy in North Dakota, with drilling rig counts at the highest they have ever reached. According to the Baker Hughes Inc. (NYSE:BHI) weekly rig report, there were 151 active drilling rigs in the state last week, despite the winter weather. All of the rigs are drilling for oil in the Williston Basin of North Dakota, and 93 percent of them are drilling horizontally. Read more at www.pennenergy.com

Stick a fork in it; House composting program done

Rep. Dan Lungren (R-Calif.), the chairman of the House Administration Committee, announced Monday that he was ordering the chamber’s composting program to be suspended after concluding that it cost too much and wasted too much energy.

The problem, staffers from both parties have grumbled, is that the forks break, the spoons melt and the knives don’t cut much more than a soft piece of bread. And the trash cans were replaced with a bewildering array of recycling bins that few have mastered.

That’s not why Lungren ended the program, though. He concluded that, in addition to costing $475,000 per year, it “also increased the House’s energy consumption through the use of additional electricity for the pulping process and the increased hauling distance to the composting facility.” And according to the House Inspector General, the “the program has only achieved carbon reductions equivalent to removing one car from the road each year.” Read more at voices.washingtonpost.com

Let’s get drillers back to work

By MARTY DURBIN HOUSTON CHRONICLE

The White House oil spill commission has now issued its report on the tragic Macondo well accident last spring, which took the lives of 11 men and women in the U.S. oil and natural gas industry. Though the accident was unprecedented, the industry understood that it demanded a comprehensive, fresh look at safety and a commitment to follow through with improvements. For the past eight months, that has been our top priority.

However, we strongly disagree with the report’s conclusion that the accident revealed systemic safety problems in the industry. These allegations are at odds with the facts, which show an improving offshore safety record. They also are an unfair criticism of the men and women in the offshore industry who take their own safety and that of their co-workers very seriously.

The moratorium on deep-water drilling technically ended last October. Yet not a single deep-water drilling permit has been issued since. Some deep-water rigs are leaving the Gulf. We’ve been told by the Interior Department that permitting may never get back to the levels before the accident. We’ve also learned that 2011 may see no new offshore leasing, and the department is scaling back its next five-year offshore leasing plan.

Thousands of jobs have disappeared already. Revenue and energy production will be increasingly affected. The Energy Department says that new government policies in the Gulf will produce a cumulative production drop of 482 million barrels of oil from 2011 to 2018. That’s about $50 billion of oil we will have to find elsewhere. It also translates to a decline in taxes, royalties and other revenue to government of more than $14 billion, which would cover the cost of our federal school lunch program.

We can have safety, energy production and the jobs it creates. Our vigilance on safety must and will continue. But progress has been made, we are safer today, and our commitment to safe operations and further improvements is strong. It’s clearly time for our industry to be back at work producing the energy our nation needs.

Durbin is executive vice president of the American Petroleum Institute. Read more at www.chron.com

API: US demand grows, but policies may stymie production

WASHINGTON, DC, Jan. 21 — Stronger US petroleum deliveries for all of 2010 as well as December reflected a growing US economic recovery, the American Petroleum Institute said. But its chief economist warned that Obama administration policies could restrict growth of US crude oil production to help meet higher US demand in the future.

“We continue to try to improve production, but there are challenges going forward,” John C. Felmy said in a Jan. 21 teleconference. “There was the Gulf of Mexico moratorium, and now there’s what is called the ‘permitorium.’ We’ve seen permits retracted and not moved forward onshore, which is disappointing because we have some bright prospects, particularly in North Dakota’s Bakken formation. We’ve also seen onshore natural gas prospects threatened by potential regulatory change, particularly involving hydraulic fracturing. We should have a good thorough discussion of what we can do to increase our production instead.”

US oil production rose by 1.3% in December to an average 5.52 million b/d from 5.45 million b/d a year earlier, according to API. Full-year production averaged 5.49 million b/d in 2010 compared with 5.36 million b/d in 2009. Production continued to grow year-to-year during December in the Lower-48 to an average 4.87 million b/d, 1.4% more than a year earlier, as it declined in Alaska to about 652,000 b/d, lower than December 2009’s 655,000 b/d average.

“There’s a vast amount of oil to be produced in this country,” Felmy told reporters. “In the next 2 years, we could start moving forward and get ready for the following 10 years. We can move forward by approving permits, opening up exploration, and taking other positive steps. We have in excess of 116 billion bbl of oil in the United States. We have a lot of opportunities.”

Proper government policies could lead to substantial US oil development, which would produce jobs, generate revenue for the government, and improve the US economy as well as its crude supply situation, Felmy said. “The administration’s policies so far have been focused on renewables, and most of that has involved electricity. Crude oil markets are a worldwide phenomenon, and the US should be concentrating on producing more of its own resources,” he said. Read more at www.pennenergy.com