Tim Rochford is taking over as chairman, Kelly Hoffman is CEO, and David Fowler is now president of Ring Energy, which is reorganizing its management and relocating its headquarters to Midland from Tulsa. The Tulsa World reported that Ring Energy, which focuses on drilling properties in West Texas and Kansas, last summer acquired Stanford Energy, a Texas-based firm owned by Rochford and Stan McCabe.
“To do what we want to do in the Permian Basin,” Hoffman told the Midland Reporter-Telegram, “we need to be in Midland in the heart of the Permian Basin.”
In a statement from the company, Rochford said, “The team of seasoned individuals we have assembled—and the assets we have in place in areas in which we have knowledge and experienced past successes—have positioned Ring Energy for growth and ultimately increased shareholder value.”
Hoffman told the Reporter-Telegram that the company “will be aggressive [in] development of our properties and acquisitions.” Fowler said Ring Energy’s Permian Basin assets are primarily conventional.
“Even as mature as the Permian Basin is,” Hoffman continued, “there are still opportunities, especially with new concepts and technology.”
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KW Express and Mercuria Energy said they plan to build a 210,000 b/d crude oil rail and barge terminal at the Greens Port Industrial Park on the Houston ship channel to source crude from West Texas, Cushing, Okla., the Bakken shale, and western Canada into the Houston ship channel.
The crude will be distributed from the HSC via pipeline and barges. The terminal will unload and load up to three unit trains per day of crude and condensate and provide up to 100,000 b/d of barge loading capacity. The Oil & Gas Journal said KW Express owns 85 percent of the project and will build and operate it.
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Newpark Resources of The Woodlands has completed its acquisition of most assets and operations of Alliance Drilling Fluids of Midland, a provider of drilling fluids, proppants, and related services.
The Midland Reporter-Telegram said total cash consideration at closing was about $53 million. Newpark is a worldwide provider of drilling fluids, temporary worksites, and access roads for oilfield and other commercial markets and of environmental waste treatment solutions.
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Blueknight Energy Partners of Oklahoma City has agreed with Advantage Pipeline of Midland to acquire 30 percent ownership in the 70-mile Pecos River crude oil pipeline from Pecos to Crane. The pipeline will allow West Texas producers to deliver to Gulf Coast markets through a connection to Magellan Midstream Partners’ Longhorn pipeline at Crane.
The Oil & Gas Journal said BKEP will operate the pipeline under a long-term agreement with Advantage.
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Speaking to the Energy and Natural Resources Committee of the U.S. Senate, Colorado Governor John Hickenlooper called for cooperation instead of confrontation between states and the federal government to improve regulations for unconventional oil and gas development.
“Regulation should be appropriate,” Hickenlooper said at the Feb. 12 hearing. “States are the ideal laboratory.” States have historically developed the best regulations, according to the governor, and they collaborate frequently through the National Governors Association and the Interstate Oil and Gas Compact Commission.
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Crude oil and petroleum products accounted for the biggest increase in railcar loadings among commodities in 2012, according to the U.S. Energy Information Administration. The EIA said coal had the biggest decline.
About 90 percent of crude oil and petroleum products in the U.S. are transported by pipeline, but increasing amounts of crude are being moved by rail from unconventional oil and gas areas, which do not have adequate pipeline infrastructure to transport oil to refineries.
Last year the amount of crude oil and petroleum products delivered by rail increased 46 percent or almost 171,000 carloads from 2011, according to the Association of American Railroads. And more than 70 percent of the coal burned by power plants for electricity generation is delivered by rail, but these deliveries fell in 2012 because of lower demand from power plant operators, who are turning to natural gas as a generating fuel.
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The chief economist of the American Trucking Association said U.S. trucking companies are interested in using more natural gas as a highway fuel. Bob Costello said, “There’s a lot of interest not just for local use, but for long-haul operations because it’s so much cheaper than diesel fuel.”
He was speaking at a quarterly economic roundtable of the U.S. Chamber of Commerce Foundation.
Costello said there is significantly higher equipment cost with natural gas, and he noted that natural gas is a long-term possibility in an industry that has “pressing short-term needs.” He added, “We need to invest at least $40 billion in new trucks. Otherwise, we won’t be able to haul all the goods once the economy recovers.”
He said unconventional oil and gas exploration and development are bright spots in U.S. trucking demand.
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More than 100 years after the gusher at Spindletop, oilmen are back at the famous salt dome oilfield in Beaumont.
The strike Jan. 10, 1901, by Anthony F. Lucas soon produced more than 100,000 barrels of oil per day—the most productive oil field ever at that time—and marked a turning point in the industry in Texas and the United States. Production from the gusher peaked in 1927 at 21 million barrels and continued until about 1936.
According to a report in the Houston Chronicle, following about two decades of data-gathering and exploration, two companies now are working together to finance and build a well at Spindletop. Data from a team of independent geologists allows International Petroleum of Salt Lake City and E&B Natural Resources of Bakersfield, Calif., to better predict where profitable pockets of oil and gas may be buried.
“The data is like a giant three-dimensional puzzle that you have to figure out,” Chet Pohle, geophysicist for E&B Natural Resources, told the Chronicle.
Exploration took place in the 1990s and again in 2007, proving that reservoir sands containing oil and gas are present at the Yegua level, the Chronicle said. But the 2007 well was less productive than investors hoped because it encountered faults—disruptions in reservoir rock that essentially divide it into small, uneconomical reservoirs—near Spindletop’s salt dome. They hope to identify a location close enough to the salt dome for resource rock to exist, but far enough away to avoid faults.
“We know the sand’s there. We found it,” Bud Tippens of E&B Natural Resources said. “We’ve just got to find it in a bigger tank.”
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FROM THE RAILROAD COMMISSION OF TEXAS
[issued 27 February 2013]
The Texas average rig count as of Feb. 22, 2013, was 812, representing about 48 percent of all active land rigs in the United States. In the last 12 months, total Texas reported production was 534 million barrels of oil and 7.1 trillion cubic feet of natural gas.
The commission’s estimated final production for December 2012 is 51,069,243 barrels of crude oil and 485,269,993 MCF (thousand cubic feet) of gas well gas.
The commission derives final production numbers by multiplying the preliminary December 2012 production totals of 43,824,975 barrels of crude oil and 425,078,831 MCF of gas well gas by a production adjustment factor of 1.1653 for crude oil and 1.1416 for gas well gas. (These production totals do not include casinghead gas or condensate.)
Texas natural gas storage reported to the RRC for January 2013 was 363,238,354 Mcf compared to 393,708,521 Mcf in January 2012. The February 2013 gas storage estimate is 343,001,687 Mcf.
The RRC Oil and Gas Division set initial March 2013 natural gas production allowables for prorated fields in the state to meet market demand of 9,334,758 MCF (thousand cubic feet). In setting the initial March 2013 allowables, the commission used historical production figures from previous months and producers’ demand forecasts for the coming month, then adjusted the figures based on well capability. These initial allowables will be adjusted after actual production for March 2013 is reported.
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FROM THE U.S. ENERGY INFORMATION ADMINISTRATION
[issued 12 February 2013]
The U.S. Energy Information Administration expects that the Brent crude oil spot price, which averaged $112 per barrel in 2012 and rose to $119 per barrel in early February 2013, will average $109 per barrel in 2013 and $101 per barrel in 2014. The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which averaged $18 per barrel in 2012, averages $9 per barrel in 2014 as planned new pipeline capacity lowers the cost of moving midcontinent crude oil to the Gulf Coast refining centers.
The EIA expects that falling crude prices will contribute to a decline in the national annual average regular gasoline retail price from $3.63 per gallon in 2012 to $3.55 per gallon in 2013 and $3.39 per gallon in 2014—about 11 cents per gallon for 2013 and 4 cents per gallon for 2014 higher than forecast last month. Diesel fuel retail prices averaged $3.97 per gallon during 2012 and are forecast to fall to $3.92 per gallon in 2013 and to $3.82 per gallon in 2014.
The EIA estimates U.S. total crude oil production averaged 6.4 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year. Projected domestic crude oil production continues to increase to 7.3 million bbl/d in 2013 and 7.8 million bbl/d in 2014.
Total U.S. liquid fuels consumption fell from 20.8 million bbl/d in 2005 to 18.6 million bbl/d in 2012. The EIA expects total consumption to rise slowly over the next two years to an average of 18.7 million bbl/d in 2014—driven by increases in distillate fuel and liquefied petroleum gas consumption with mostly flat gasoline and jet fuel consumption.
Natural gas working inventories reached a record high in early November 2012, but ended January 2013 at an estimated 2.7 trillion cubic feet (Tcf)—about 0.2 Tcf below the level at the same time the previous year. The EIA expects the Henry Hub natural gas spot price, which averaged $2.75 per million British thermal units (MMBtu) in 2012, will average $3.53 per MMBtu in 2013 and $3.84 per MMBtu in 2014.
—compiled by Garner Roberts