Last week, an improvised explosive device was discovered attached to an Oklahoma natural gas pipeline. The FBI and local authorities worked quickly to remove and safely diffuse the bomb, as well as arrest a suspect in the incident.
While much of the country was satisfied knowing that the suspect was apprehended, the oil and gas industry and midstream sector in particular remain vigilant in keeping energy infrastructure safe in the US -- and this attempted bombing is an example of that.
PennEnergy.com was able to get some insight from former CIA officer Fred Enochs, now a partner in Washington, DC-based TD International, a strategic advisory firm. Working in Houston, Enochs specializes in domestic and international energy, finance and commodity trading with a focus on government policy issues and project due diligence.
Enochs contends that the US has ample safety measures in place to ensure security for its pipelines and energy infrastructure.
"Following 9/11, energy infrastructure, including midstream assets, underwent a very thorough review and assessment process which encompassed extensive safety and security risk reviews," Enochs said. "These reviews determined the appropriate measures and response procedures based upon the overall threat, vulnerabilities and consequences."
Because of the amount of pipelines -- thousands of miles -- physically paroling the systems would prove impossible, but high-tech solutions have provided the next best thing. A combination of electronic and control room monitoring, redundancy and response measures help to keep pipelines across the US safe.
"For instance, a typical pipeline is supervised 24 hours a day by control room technicians using systems such as SCADA and checked regularly by field staff," Enochs said. "Of course their main focus is keeping the pipeline in operating order, but security measures are also built into this protocol."
"The risk assessment process also allows operators to focus their security and safety efforts, using tools like surveillance systems and actual manual checks, on the most critical areas of the pipelines thus ensuring the best use of resources," he added.
Enochs contends that our pipelines do not require any increased safety measures such as those enacted, somewhat successfully, in other regions of the world, because of the stable infrastructure in the US today.
Areas in South America, the Middle East and West Africa have a different risk profile than the US, because of increased poverty and greater threat of terrorism, as well as military strife, Enochs stated.
"For instance, in Columbia the FARC was a guerrilla terrorist group which tried in the past to harm the government by damaging pipelines in order to disrupt the nation's energy supply; while in the Nigeria Delta today you have various groups competing for political and economic power using pipelines and the country's energy infrastructure as a weapon in their arsenal," Enochs said.
The US has appropriate security measures and responses in place according to its risk assessment, he explained.
"It's about protecting the areas that have the most overall risk, which is a function of determining the threat probability, the consequence of a successful attack and your vulnerability to that attack," Enochs said. "The risk assessment methodology that has been applied allows these operators to make the best use of the resources that are available and ensures that the most critical areas are properly protected."
While suspenseful, the Oklahoma pipeline attempted bombing proves his midstream safety assessment. The bomb was quickly discovered, removed and diffused, and the man suspected of planting the device has been arrested.
Rest assured: They're on it.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
Wednesday, August 17, 2011
Thursday, August 11, 2011
Oil prices have fallen, but will they stay low?
Oil prices fell dramatically this week from the mid-$90s to $75 a barrel on worries that the global economy is headed for a double-dip recession.
With some positive jobs numbers, West Texas crude prices rose above $84 a barrel on the New York Mercantile Exchange Thursday. Brent crude in London has seen a similar drop and slight recovery, trading at more than $106 a barrel.
While the price of oil increased, investors are wary demand may drop if the economy is headed for a downfall. Stock markets also fell drastically, leaving many worried about the future.
While multiple economic data combine to affect the price of oil, including jobs, home sales, purchasing, imports and inventories, the most-recent drop was pinned on the reduction in the United States' credit rating.
While OPEC has dropped demand looking forward, which casts out any suspicion that the oil cartel might up production, many analysts see the current drop in oil prices as temporary – and $100 oil a long-lasting reality.
Oil Demand to Increase Worldwide
The fact of the matter is that demand and consumption in the United States is going to become less of a price driver – or at least not the biggest factor to be considered.
The US has held the spot as the world's largest oil consumer for some time, but the growing and industrializing massive populations of China and India will soon take the spotlight for demand.
Additionally, demand continues to rise despite spikes in oil prices in countries where oil subsidies exist, including many Latin American, Middle Eastern and Asian countries. Meaning, consumers that pull back on demand when prices at the pump escalate are outnumbered by those who do not see an increase.
As markets continue to absorb these fundamental changes, the market will see less volatility based on US consumption changes due to the price at the pump, summer driving season or even risk from hurricanes.
Emerging Oil Resources for a Growing Demand in the US
Nonetheless, the appetite for oil in the US continues to grow, and emerging reserves in new regions could soon prove major sources of future energy in the nation. Namely, the development of shale oil resources in the US is growing drastically in the Eagle Ford and Bakken Shale, and new liquids-rich shale plays are being aggressively sought.
Additionally, the development of Canada's vast oil sands resources could prove a major source of future oil for years to come. Currently, the US government is working to approve the development of a major pipeline that could increase imports of oil sands into the US.
Finally, the burgeoning oil resources offshore Brazil will likely supplement the demand in the US. Multiple basins in the pre- and post-salt reservoirs offshore Brazil are proving high productivity; and Petrobras (NYSE:PBR) and others are leading the way in developing these resources.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
With some positive jobs numbers, West Texas crude prices rose above $84 a barrel on the New York Mercantile Exchange Thursday. Brent crude in London has seen a similar drop and slight recovery, trading at more than $106 a barrel.
While the price of oil increased, investors are wary demand may drop if the economy is headed for a downfall. Stock markets also fell drastically, leaving many worried about the future.
While multiple economic data combine to affect the price of oil, including jobs, home sales, purchasing, imports and inventories, the most-recent drop was pinned on the reduction in the United States' credit rating.
While OPEC has dropped demand looking forward, which casts out any suspicion that the oil cartel might up production, many analysts see the current drop in oil prices as temporary – and $100 oil a long-lasting reality.
Oil Demand to Increase Worldwide
The fact of the matter is that demand and consumption in the United States is going to become less of a price driver – or at least not the biggest factor to be considered.
The US has held the spot as the world's largest oil consumer for some time, but the growing and industrializing massive populations of China and India will soon take the spotlight for demand.
Additionally, demand continues to rise despite spikes in oil prices in countries where oil subsidies exist, including many Latin American, Middle Eastern and Asian countries. Meaning, consumers that pull back on demand when prices at the pump escalate are outnumbered by those who do not see an increase.
As markets continue to absorb these fundamental changes, the market will see less volatility based on US consumption changes due to the price at the pump, summer driving season or even risk from hurricanes.
Emerging Oil Resources for a Growing Demand in the US
Nonetheless, the appetite for oil in the US continues to grow, and emerging reserves in new regions could soon prove major sources of future energy in the nation. Namely, the development of shale oil resources in the US is growing drastically in the Eagle Ford and Bakken Shale, and new liquids-rich shale plays are being aggressively sought.
Additionally, the development of Canada's vast oil sands resources could prove a major source of future oil for years to come. Currently, the US government is working to approve the development of a major pipeline that could increase imports of oil sands into the US.
Finally, the burgeoning oil resources offshore Brazil will likely supplement the demand in the US. Multiple basins in the pre- and post-salt reservoirs offshore Brazil are proving high productivity; and Petrobras (NYSE:PBR) and others are leading the way in developing these resources.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
Thursday, August 4, 2011
Devon Energy pioneers shale drilling and production
US independent Devon Energy Corp. (NYSE:DVN) has earned the distinction as the first company to combine horizontal drilling and hydraulic fracturing to produce hydrocarbons trapped in shale plays.
Prior to the 2001, this had never been done, and oil and gas in shale rock was considered uneconomic.
Announced in 2001 and completed in 2002, Devon bought junior oil and gas company Mitchell Energy. Mitchell held acreage in the Barnett Shale, and had been drilling vertical wells and hydraulically fracturing them to produce natural gas from the formation.
The Barnett Shale is located just above the Ellenberger aquifer, which if penetrated will ruin the well. In the Central Texas counties of Denton, Wise and Tarrant, the Barnett Shale is insulated from the aquifer by the Viola limestone.
After several unsuccessful tries in areas not protected by the limestone, Mitchell was drilling wells in the areas that posed no threat of water infiltrating the shale because of the Viola; but Devon had much more acreage -- about 300,000 acres beyond the limestone. That meant that the majority of Devon's acreage could not be produced with vertical wells.
"We realized that if we could drill horizontally across the non-core area of the Barnett, than we could use the bottom half of the formation as the barrier, protecting us from the Ellenberger aquifer," revealed Devon spokesperson Chip Minty.
That realization is what drove Devon to experiment with the combination of horizontal drilling and hydraulic fracturing in shale plays. While both practices were well-established technologies, no companies had ever used them together in shale.
While the first two wells drilling and completed this way were disappointing, the third was encouraging.
"What we found was these horizontal wells would produce three times more gas as a vertical one, and they only cost twice as much," Minty said.
What Devon started tinkering with in 2002 has become an industry-wide practice for developing shale, unconventional and tight gas formations in North America. Now many companies are starting to use horizontal drilling and hydraulic fracturing in other parts of the world, including China, Poland and Argentina.
"This company has a history of innovation and perseverance," Minty continued. "Devon pioneered production of natural gas from deep coal seams in northwestern New Mexico in the late 1980s and early '90s."
At its operations in the Fruitland coal formation in the San Juan Basin of New Mexico, Devon was one of the first companies in the US to economically produce natural gas from coal.
Applying its expertise to various shale plays across North America, Devon currently employs 72 rigs in North America. Devon is active in the Barnett Shale of Central Texas, Cana Woodford Shale in Western Oklahoma, Arkoma Woodford Shale in Southeastern Oklahoma, Haynesville Shale in East Texas, the Permian Basin in West Texas and Southeast New Mexico, Horn River Shale in British Columbia Canada, Utica Shale in Ohio and Michigan, and Tuscaloosa Shale in Louisiana. The company is also pursuing exploration and production drilling in oil sands and unconventional plays in Alberta.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
Prior to the 2001, this had never been done, and oil and gas in shale rock was considered uneconomic.
Announced in 2001 and completed in 2002, Devon bought junior oil and gas company Mitchell Energy. Mitchell held acreage in the Barnett Shale, and had been drilling vertical wells and hydraulically fracturing them to produce natural gas from the formation.
The Barnett Shale is located just above the Ellenberger aquifer, which if penetrated will ruin the well. In the Central Texas counties of Denton, Wise and Tarrant, the Barnett Shale is insulated from the aquifer by the Viola limestone.
After several unsuccessful tries in areas not protected by the limestone, Mitchell was drilling wells in the areas that posed no threat of water infiltrating the shale because of the Viola; but Devon had much more acreage -- about 300,000 acres beyond the limestone. That meant that the majority of Devon's acreage could not be produced with vertical wells.
"We realized that if we could drill horizontally across the non-core area of the Barnett, than we could use the bottom half of the formation as the barrier, protecting us from the Ellenberger aquifer," revealed Devon spokesperson Chip Minty.
That realization is what drove Devon to experiment with the combination of horizontal drilling and hydraulic fracturing in shale plays. While both practices were well-established technologies, no companies had ever used them together in shale.
While the first two wells drilling and completed this way were disappointing, the third was encouraging.
"What we found was these horizontal wells would produce three times more gas as a vertical one, and they only cost twice as much," Minty said.
What Devon started tinkering with in 2002 has become an industry-wide practice for developing shale, unconventional and tight gas formations in North America. Now many companies are starting to use horizontal drilling and hydraulic fracturing in other parts of the world, including China, Poland and Argentina.
"This company has a history of innovation and perseverance," Minty continued. "Devon pioneered production of natural gas from deep coal seams in northwestern New Mexico in the late 1980s and early '90s."
At its operations in the Fruitland coal formation in the San Juan Basin of New Mexico, Devon was one of the first companies in the US to economically produce natural gas from coal.
Applying its expertise to various shale plays across North America, Devon currently employs 72 rigs in North America. Devon is active in the Barnett Shale of Central Texas, Cana Woodford Shale in Western Oklahoma, Arkoma Woodford Shale in Southeastern Oklahoma, Haynesville Shale in East Texas, the Permian Basin in West Texas and Southeast New Mexico, Horn River Shale in British Columbia Canada, Utica Shale in Ohio and Michigan, and Tuscaloosa Shale in Louisiana. The company is also pursuing exploration and production drilling in oil sands and unconventional plays in Alberta.
Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.
Subscribe to:
Posts (Atom)
Posts
