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June 27, 2016

Petro Index: Balancing global supply and demand

‘Low prices are the cure for low prices’

Unemployment in the upstream oil and gas business continues to push beyond 100,0000 lost jobs, in spite of three months of consecutive price hikes in crude oil prices, according to an economist for the Texas Alliance of Energy Producers.

Average crude oil prices rebounded significantly from February to May – from $27.08 to $43.38 – but other key indicators continued to deteriorate, according to the Alliance’s Texas Petro Index (TPI), created by its economist Karr Ingham.

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By Polly Ross Hughes


June 24, 2016

DMN: Why Energy Transfer Equity can escape Williams Cos. deal

Delaware judge gives ETE escape hatch from largest pipeline merger

For now at least, Dallas billionaire Kelcy Warren’s  Energy Transfer Equity has a legal out from its pending $33 billion merger with the Williams Cos., which had been set to be finalized this summer. Here’s a quick take from the Dallas Morning News:

By Texas Energy Report


June 23, 2016

Oil and gas business signs pledge supporting LGBT-friendly Texas

‘It is absolutely critical to the long-term economic success of Houston and Texas’

The global natural resources company BHP Billiton on Thursday became the 1,000th entity and first upstream oil and gas business to sign a pledge saying Texas must welcome lesbian, gay, bisexual and transgender people as an economic imperative.

The pledge is the brainchild of Texas Competes, which launched in April 2015 with 79 Texas employers and chambers of commerce supporting the pledge. The group cites data indicating that states with a negative image on LGBT issues have difficulty competing for talent, tourism, corporate investments and business relocations.

“BHP Billiton actively supports inclusion and diversity in the workplace, and we’re proud to be the first company in the upstream petroleum business to sign the Texas Competes Pledge,” BHP Billiton’s Steve Pastor, president of petroleum operations, said in a statement announcing the milestone.

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By Polly Ross Hughes


June 23, 2016

Politico: Energy bill to stop Clean Power Plan could fall short

Republicans’ early adjournment delays bill as veto threat surfaces

One possible casualty of the Democrats’ House floor sit-in to demand a vote on gun control legislation is a bill key to mounting a successful challenge to the Obama administration’s Clean Power Plan, Politico’s Morning Energy reports.

The Separation of Powers Restoration Act is among bills delayed at least until July 5 because the Republicans responded to the Democrats’ highly unusual protest by recessing two days earlier than planned.

If the act were to pass, judges would no longer need to give deference to reasonable interpretations of ambiguous statutes by federal agencies, namely the Environmental Protection Agency (EPA). The EPA has successfully used the so-called Chevron deference (named for the 1984 Supreme Court case Chevron v. Natural Resources Defense Council) in defense of its rules.

Wednesday night, Politico reports, the bill attracted a veto threat from the White House. So, for now, it appears on the endangered list.

By Texas Energy Report


June 22, 2016

Rep. Bill Flores hails Wyoming court’s fracking decision

Affects rules for drilling on federal lands’ appeals court still to rule

U.S. Rep. Bill Flores, R-Texas, reacted to a federal court striking down rules for hydraulic fracturing on public lands Wednesday, calling the decision “a big win against bureaucratic overreach.”

The rules, which were set to go into effect this Friday, had little effect on Texas, a state with little in the way of federal public lands or native lands that would be subject to oil and gas drilling.

However, some advocates of the oil and gas industry in Texas have paid close attention to the executive branch’s first attempts to subject hydraulic fracturing (fracking) to federal regulation via the U.S. Department of Interior.

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By Polly Ross Hughes


June 21, 2016

Craddick directs RRC staff to review, reduce regulatory burdens

Asks for report back on Aug. 9, says initiative will aid ailing oil, gas industry

Texas Railroad Commissioner Christi Craddick introduced a streamlining initiative Tuesday to relieve the financially troubled oil and gas industry of unnecessary regulatory red tape and to perhaps save state money.

During the commission’s open meeting, Craddick directed staff to take a look at rules, reporting requirements and other oil and gas regulatory requirements and find ways to increase efficiency and reduce administrative burdens. She instructed Executive Director Kim Corley to report back in time for commissioners to launch the effort at its Aug. 9 open meeting.

Craddick and the commission declined to share (beyond a handful of industry advocates) an unofficial, starter list of streamlining candidates that drew brief discussion at the publicly broadcast meeting.  

Texas Energy Report, however, learned that the unofficial document is titled “Railroad Commission of Texas Oilfield Relief Initiative.” One listed item would review regulations and reporting requirements of marginal stripper wells, a priority for smaller oil and gas concerns.

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By Polly Ross Hughes


June 20, 2016

TER: Energy movers, shakers & newsmakers

DOE picks renewable energy leaders; Ryan Sitton names public affairs chief

Kathleen Baireuther of Austin Technology Incubator (ATI) is among 22 leaders nationally chosen to participate, starting this week, in a renewable energy leadership program run by the Department of Energy.

DOE’s 2016 Executive Energy Leadership Program (Energy Execs) is run by its National Renewable Energy Laboratory (NREL) to give non-technical business, governmental and community leaders the chance to learn more about renewable energy and energy efficiency technologies.

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By Polly Ross Hughes


June 20, 2016

Marathon pays $888 million for PayRock Energy Holdings LLC

Purchase expands portfolio in one of U.S.’s ‘best unconventional oil plays’

Houston-based Marathon Oil Corp. announced Monday an agreement to buy PayRock Energy Holdings LLC, an energy portfolio company, for $888 million.

PayRock holdings include 61,000 surface acres and current production of 9,000 barrels of oil equivalent per day in the oil window of Oklahoma’s Anadarko Basin STACK play.

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By Polly Ross Hughes


June 17, 2016

High court says no to giant sales tax refund for oil, gas producers

Southwest Royalties didn’t prove case, but issue unlikely to die

The Texas Supreme Court ruled unanimously Friday in a much-watched case that oil and gas companies are not owed $4.4 billion in sales tax refunds, rejecting an argument that certain hydrocarbon mining involves “processing” and qualifies for a manufacturing exemption.

Texas budget writers, public schools and others eagerly anticipated the outcome of “Southwest Royalties Inc. v. Glenn Hegar, Comptroller of Public Accounts” as they prepare for tighter purse strings in the 2017 legislative session, partly because oil and gas tax revenues have fallen steeply during an ongoing oil price slump.

“We are pleased with the court’s unanimous decision, which applies the manufacturing exemption as the Legislature intended,” Hegar said.  “This is a positive ruling for the state of Texas and our fiscal health.”

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By Polly Ross Hughes


June 17, 2016

Texas Supreme Court rules against Southwest Royalties

Oil companies not owed multi-billion dollar sales tax refunds

“Southwest did not prove that the equipment for which it sought a tax exemption was used in “actual manufacturing, processing, or fabricating” of hydrocarbons within the meaning of Tax Code section 151.318(2), (5), or (10). Thus, Southwest is not entitled to an exemption from paying sales taxes on purchases of the equipment. Our conclusion makes it unnecessary to address any other issues the parties present,” court says.

More as story develops.

By Polly Ross Hughes


June 16, 2016

Dallas Fed: Bank risks mount, pay drops amid energy slump

Houston, oil capitol of the world, grinds to halt

Energy loans pose rising risks for banks in Texas, northern Louisiana and southern New Mexico as the oil slump continues with prices staying lower for longer, according to the Federal Reserve Bank of Dallas’ quarterly publication, Southwest Economy.

Banks in these three areas, making up the Eleventh Federal Reserve District, have increased their “provision expense” – the money they set aside to ensure against possible loan losses – because they’re concerned about energy-related loans, write financial industry analyst Kelly Klemme and business economist Edward C. Skelton in the cover story, illustrated with a row of dominoes, one falling into the next.

Their article, “Risks Mount for Eleventh District Banks amid Energy Weakness,” also notes an uptick in the percent of loans no longer current. Part of the increase is attributed to commercial and industrial loans (including loans to oil and gas companies). The percentage of such loans no longer current rose from 19 percent in 2014 to 32 percent at yearend 2015.

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By Polly Ross Hughes


June 15, 2016

Replacing oil & gas reserves poses big challenge for global industry

Deloitte study estimates $3 trillion investment needed in 2016-2020

Just treading water could be tough for the oil and gas companies in replacing reserves worldwide now that the industry has slashed capital spending by half in 2015 and 2016 combined, a leading accounting firm said Wednesday.

“The embattled crude oil and natural gas industry worldwide has slashed capital spending to a point below the minimum required levels to replace reserves,” according to a study released by Deloitte, which provides audit, consulting, tax and advisory services.

At risk in the “lower for longer” scenario of oil prices around $50 is available oil and gas supplies for the future, notes the study, “Short of Capital? Risk of underinvestment in oil and gas is amplified by competing cash priorities.”

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By Polly Ross Hughes


June 15, 2016

Fossil fuel foes issue oil, gas ‘threat map’ for Texas

Industry groups question motives, accuracy of critics

Earthworks, a group that aligned itself with Denton’s passage of a fracking ban, issued what it calls an “Oil & Gas Threat Map” Wednesday, that tracks the proximity of nearly 399,000 active oil & gas operations in Texas with populations, schools and hospitals.

The group’s interactive map can locate whether facilities are located and people live within one-half mile of oil and gas wells, compressors and processors. The group and its organizer in North Texas contend that those who live or work close to such operations can lead to negative health impacts, such as fetal defects or respiratory ailments.

Two Texas oil and gas industry groups, however, dismissed the “threat map,” contending the state’s industry is highly regulated to protect health and safety, and questioning the group’s motives.

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By Polly Ross Hughes


June 14, 2016

EY: “Era of Abundance’ transforms oil-gas E&P industry

Companies aggressively cut capital spending in 2015

Revenues and capital expenditures plunged 41 percent at the nation’s 50 largest exploration and production companies during 2015, according to EY’s 2016 U.S. oil and gas reserves study.

Last year proved the first since 2004 that the Energy Information Agency’s monthly posted spot prices for West Texas Intermediate crude averaged less than $60 per barrel for the entire 12-month period, noted EY, the global accounting services organization that includes Ernst & Young LLP in the United States.

The new reserves study found that companies studied reported total capital expenditures of $117.5 billion and revenues of $129.8 billion.

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By Polly Ross Hughes


June 14, 2016

Rare earth magnets recycling company secures $25 million

Austin facility to reprocess magnets for wind turbines, electric cars

Urban Mining Co. – developer of a recycling process for scrap rare earth magnets that can be used in wind turbines, electric vehicles and more – announced today it has secured $25 million in financing to construct and operate a recycling facility at its Austin headquarters.

“The first step towards commercializing our technology is capital intensive, and our Series A financing reflects the confidence of our team and our investors in Urban Mining’s product and business model,” Scott Dunn, CEO of the privately held company, said in a statement.

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By Polly Ross Hughes