U.S. Economic Growth Slows

April 30, 2015 Elizabeth Alford

Data is beginning to surface on the U.S. economic growth for the first quarter of 2015 and its not looking good.

Marketwatch reports that the gross domestic product expanded by only 0.2% annual pace, well below what was forecasted. Gains over the prior three quarters were 2.2%, 5% and 4.6% respectively.

Much of the blame is being placed on the downturn in the energy industry. The 50% plunge in crude prices in 2014 initiated a domino effect through the economy. U.S. energy producers have been forced to slashed investment and have cut at least 30,000 jobs since January, according to the Commerce Department and it is estimated that the reduction in energy-related spending may have shaved 0.6% percentage points off of U.S. growth.

Many had predicted that the low oil prices would actually spark economic growth as consumers found more disposable from lower gasoline prices.

“Scott Hoyt, director of consumer economics at Moody’s Analytics shared an optimistic with Marketwatch, saying that “Energy-related investment and jobs are falling rapidly. However, these cuts will soon begin to fade, and the benefit to consumers from the lower oil prices will grow,”

Who Controls Fracking Regulations?

April 29, 2015 Elizabeth Alford

North Dakota Challenges Federal Authority

North Dakota will join forces with Colorado and Wyoming to challenge regulations on fracking.

The Federal District Court of Wyoming cleared the way for additional challenges to the U.S. Bureau of Land Management’s (BLM) authority to impose regulations on fracking practices.

At the center of the dispute is who has the ultimate authority to regulate fracking practices. States are claiming that an additional layer of federal regulation is unnecessary. North Dakota asserts that the BLM overstepped its authority by trying to interfere with the state’s current and comprehensive rules and standards. They claim these additional rules aren’t necessary because the EPA has already granted authority to the states to monitor and protect underground water sources.

“Colorado Attorney General Cynthia Coffman responded to the ruling. “To be clear, this case is not about whether hydraulic fracturing should or should not be regulated,” she said. “It should be regulated, and Colorado is doing so. However, the debate over hydraulic fracturing is complicated enough without the federal government encroaching on states’ rights.”

Lower Oil Tax for North Dakota

April 28, 2015 Elizabeth Alford

North Dakota is one step closer to cutting the price-triggered exemption that will lower the extraction tax on oil.

On Friday, North Dakota lawmakers cleared the way to change a 30 year old tax structure that gave some tax breaks for the oil industry have been linked to a price "trigger." Debate in North Dakota’s House was fierce and ended in a 66-26 vote in favor of cutting the state’s oil tax rate from 11.5 percent to 10 percent.

Republicans believe that this will provide a more stable table policy that will boost the state’s economy, but Democrats have said that it will cost the state billions over the next 10 years. The legislature’s research group estimates that the new tax structure will add $120 million to the state’s coffers between 2015-2017.

Now that the bill has cleared both house and the senate, the bill is now on its way to the governor’s desk for final approval.

“Governor Dalrymple’s spokesman Jeff Zent said the governor had not studied the bill. “Generally speaking, a flat tax offers the advantage of greater economic certainty,” Zent said. “But the details of any plan are very important, and we haven’t seen a final proposal.”

To read the full bill, visit nd.gov.

New Bakken Crude Oil Gathering System

April 27, 2015 Elizabeth Alford

Enable Midstream's Gathering and Processing Assets

Enable Midstream Partners announced last week that it has completed its first crude oil and produced water gathering system in North Dakota.

The project began in August of 2013 to service XTO Energy Inc, a major Bakken producer. The Bear Den Crude & Produced Water Gathering System system is located in Dunn Co, N.D. and now that it is fully operational, will a maximum throughput of 19,500 barrels of oil per day.

“Lynn Bourdon, president and CEO of Enable Midstream said, “It’s a great demonstration of our ability to effectively and efficiently deploy expansion capital to meet our customers’ needs for delivering energy to key markets.”

In the oil and gas industry, a gathering system includes both the flowline networks and the process facilities. It is through this system that oil and/or gas is transported and controlled from the well site to a main storage facility, processing plant, or shipping point.

Fracking Companies Likely to Close

April 23, 2015 Elizabeth Alford

Will 50% of the fracking companies be gone by the end of the year?

This is precisely the opinion of Rob Fulks, pressure pumping marketing director at Weatherford International Plc, who spoke with Bloomberg at the annual IHS CERAWeek in Houston last week. Fulk predicts that of the 41 current companies that provide fracking services, only 2o will still be viable at year’s end.

At the start of 2014, there were 61 fracking service providers in the U.S. and those numbers have decreased as the demand for fracking has dropped off dramatically. Many firms are forced to leave wells unfinished because they are no longer economically viable. Another reason for the decline is the big mergers over the last few months, including Halliburton;s plan to buy Baker Hughes.

Weatherford has had their own share of troubles, announcing plans this week to plans to cut 18% of its staff by the end of the second quarter. These actions are part of a spending cut designed to save the company $640 million this year.

“According to Bloomberg, Fulks wouldn’t say whether Weatherford is want to acquire other fracking companies or their unused equipment. “We go by and we see yards are locked up and the doors are closed,” he said. “It’s not good for equipment to park anything, whether it’s an airplane, a frack pump or a car.”

Cookie Settings