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Chevron Projects $20 Billion Spending Budget For 2019

Chevron Corp. (NYSE: CVX), the second largest U.S.-based oil producer, is budgeting $20 billion for capital projects next year, the company said Dec. 6. The San Ramon, California-based company said it plans to spend $3.6 billion to produce oil and gas in the Permian Basin of west Texas and New Mexico and $1.6 billion for other shale investments. Chevron will spend $4.3 billion on its Tengiz field in Kazakhstan.
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Perry, DOE Tout Appalachian Energy Hub

Building a new ethane storage and petrochemical hub in Appalachia presents a “once in a lifetime opportunity for this country,” Energy Secretary Rick Perry told the National Petroleum Council on Tuesday.

The secretary’s remarks coincide with the Department of Energy’s release of a report to Congress highlighting the potential of a new hub atop the natural gas and natural gas liquids-rich Marcellus and Utica shale formations of Pennsylvania, Ohio and West Virginia. Among the DOE’s conclusions:

Appalachia’s abundant resources coupled with extensive downstream industrial activity may offer a competitive advantage that could enable it to displace marginal producers and help the U.S. gain global market share in the petrochemical industry.

The new report follows DOE’s June primer, and further bolsters the findings of a recent IHS Markit study conducted on behalf of the economic development initiative Shale Crescent USA.

More Than Meets Supply

As the International Energy Agency conveyed in its annual World Energy Outlook, the petrochemical sector will drive oil and natural gas development worldwide. While the Gulf Coast will continue to be a center for petrochemical manufacturing, remaining economically competitive in the global market calls for the expansion of petrochemical infrastructure.

Development of the Marcellus and Utica-Point Pleasant shales in Appalachia has produced prolific amounts of natural gas liquids (NGLs), specifically high volumes of ethane – the “building block” of petrochemical feedstock and plastics manufacturing.

The DOE report, based on the latest data from Energy Information Administration, projects a remarkable increase in the volume of ethane from the Eastern Region, which includes the Appalachian Basin. The increased ethane supply provides the best reason to locate the new hub in Appalachia.

The Appalachian Industrial Ecosystem

In addition to producing ample supply to meet growing demand, the Appalachian Basin’s location – its transportation access and proximity to the market – strengthens the region’s viability.

Furthering the attractiveness for investment, the recent IHS Markit study identified the region – through the combination of its location, proven reserves, and production levels – as the most profitable location for petrochemical development in the United States.

A Concord of Interest

The Gulf Coast serves as the U.S. petrochemical hub, but with growing worldwide demand, a second hub would provide the ability to increase competitiveness in the global marketplace, as Sec. Perry told the NPC audience earlier this week.

The addition of a hub in Appalachia would not result in internal competition for investment between the two regions, but complement each other as the United States looks to expand its petrochemical manufacturing capacity. As the DOE report explains, a new hub in Appalachia would “enhance the geographic diversity of the vital U.S. petrochemical industrial sector, supporting U.S. economic security.”

This diversification also provides stability in the industry in the case of disruption from natural disasters such as Hurricane Harvey, which “paralyzed” the Gulf Coast.

Sec. Perry, a former governor of Texas, noted the severity of the impact these events can have on the nation’s economy during his speech on Tuesday:

“The present-day geographic concentration along the Gulf Coast of petrochemical infrastructure and supply may pose a strategic risk, where severe weather events limit the availability of key feedstocks.

“Don’t think for a second that I’m about pitting one section of the country against the other, we need it all and just like in the electricity sector, resiliency matters to the marketplace.”

Conclusion

Massive investments from the petrochemical industry including the multibillion-dollar Shell ethane cracker in Beaver County, Pennsylvania, and the proposed PTT Global Chemical complex in Belmont, Ohio, mark the first big steps toward creating the new Appalachian hub.

These projects are bringing thousands of jobs, billions of dollars in investment, and generating new revenue streams for local governments. With the DOE amplifying the region’s viability, a new wave of economic growth gained from the development of our oil and natural gas resources looks to be more inevitable than before.

The supply is here, the demand is here, and as the DOE report shows, Appalachia checks all the boxes to make the region a viable location to house the next American energy hub.

Energy Sustainability Is Produced by the Free Market, Not Government

Robert Bradley, Jr. Founder and CEO of the Institute for Energy Research. …. ….   Energy sustainability is the product of innovation and consumer choices best left to the free market. Government is terrible picking winners and losers. Depletion … … Continue reading

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Sanchez Energy Hires Financial Adviser To Explore Strategic Alternatives

Sanchez Energy Corp. (NYSE: SN) said Dec. 4 it has engaged Moelis & Co. LLC as financial adviser to explore strategic alternatives to strengthen its balance sheet and maximize the value of the Eagle Ford-focused company. So far this year, Sanchez has faced three straight quarters of production declines and analysts with Capital One Securities recently said the company appears to be insolvent with about $3.1 billion of asset value and roughly $3.7 billion of net liabilities and corporate overhead. Tony Sanchez III, president and CEO of Sanchez Energy, said the company has been focused on taking critical steps throughout the year to stabilize its production profile and reduce the capital intensity of the business. “However, these operational challenges, combined with volatility in the commodity markets and the company’s leverage, led the company to review opportunities to improve its financial flexibility for continued success in the future,” Sanchez said in a statement.
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If It’s About Upstate Jobs, It Also Has to Be About Natural Gas

Richard Downey Unatego Area Landowners Association           Otsego County is doing its best to create Upstate jobs, but without the gas and pipelines Pennsylvania has and the fracking Cuomo denies, it’s all uphill. Otsego County,’s population has … Continue reading

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U.S. Proved Oil, Natural Gas Reserves at All-Time Highs

U.S. proved oil and natural gas reserves hit an “all-time high” – about double their levels from a decade ago – thanks in large part to continued development and exploration of shale and tight oil formations nationwide, according to newly released data from the Energy Information Administration.

Proved reserves are the estimated volume of a hydrocarbon believed to have a 90-percent or greater probability of being recoverable based on geologic and engineering data. Estimates vary from year to year as new discoveries are made, and existing fields are developed and further explored. In recent years, technological advances have increased the ability to access and explore previously unrecoverable shale reserves, expanding the known U.S. supply of oil and natural gas, as EIA explained:

In 2008, the downward trend for crude oil reversed when innovations in horizontal drilling and hydraulic fracturing were applied to tight oil-bearing formations, such as the Bakken Shale of the Williston basin. The upward trends have continued, and both crude oil and natural gas proved reserves reached new U.S. record levels at Year-End 2017.”

The percentage of natural gas proved shale reserves versus other formations, in particular, increased significantly in the past decade.

According to EIA:

“The share of natural gas from shale compared with total U.S. natural gas proved reserves increased from 62 percent in 2016 to 66 percent in 2017.”

The continued exploration of these formations has led to a greater understanding of their geology – and higher production numbers as a result. EIA estimates production of natural gas from shale increased 9 percent—from 17.0 trillion cubic feet (Tcf) in 2016 to 18.6 Tcf in 2017.

Similarly, the development of shale and tight oil formations since 2008 has reversed the standing of American energy, and propelled the United States past Russia and Saudi Arabia as the world’s leading crude oil producer as of this year for the first time since February 1999.

According to EIA, as of December 31, 2017, tight plays accounted for 48 of all U.S. crude oil and lease condensate proved reserves. From 2016 to 2017, the proved crude oil reserves in these formations increased 28.4 percent, with the largest gains coming from the Permian Basin in Texas and New Mexico.

The United States beat its 1970 record of 39 billion barrels of proved crude oil in 2017.

Gains in crude oil reserves came on the back of exploration in the Southwest region. Last year, the Wolfcamp/Bone Spring shale play in the Permian Basin surpassed the Bakken/Three Forks play in the Williston Basin to become the largest oil-producing tight play.

And 2017 reaffirmed everything really is bigger in Texas: The Lone Star state added 3.3 billion barrels of crude oil and lease condensate proved reserves, the largest net increase of all states. The rise was “a result of increased prices and development in the Permian Basin of the Spraberry Trend and the Wolfcamp/Bone Spring shale play,” according to EIA.

New Mexico, meanwhile, produced the next largest net gains in crude oil and lease condensate proved reserves, with a 1-billion-barrel increase over 2016.

U.S. proved natural gas reserves grew 19 percent from 2014 to 2017, when the previous record of 388.8 trillion cubic feet was set.

Just as the Southwest is driving America’s rise as a leader in crude oil – both in production and proved reserves – the Northeast region is propelling the record-setting growth on the natural gas side. According to EIA:

Producers in Pennsylvania added 28.1 Tcf of natural gas proved reserves, the largest net increase of all states in 2017, as a result of increased prices and development of the Marcellus and Utica shale plays.”

In fact, the United States – already the world’s leading producer of natural gas – is projected to supply 40 percent of total global gas growth to 2025, according to the International Energy Agency’s World Energy Outlook.

Conclusion

The United States has more proved reserves than ever before, and is producing oil and natural gas at levels unfathomable a decade ago. As the new data show, our geology is providing a clear rebuke of any sort of “peak oil” narrative.

More Risk from Falling Downstairs Than Delaware County Pipelines

Jim Willis Editor & Publisher, Marcellus Drilling News (MDN)   Mariner East and Adelphia opponents were counting on a study to show the risks of Delaware County pipelines but the results showed they were very very small. Well this wasn’t supposed to … Continue reading

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