by Jessica Sena, Montana Petroleum Association
Oil Prices - The U.S. petroleum industry is still ringing in the New Year with much to celebrate. Oil prices are at highs not seen since late 2014 and the forecast for 2018 is looking good.
According to the U.S. Energy Information Administration (EIA), operators are projected to increase overall domestic oil production by 10 percent, elevating output to more than 10 million barrels per day and surpassing the previous all-time high. With WTI price above $60 a barrel, the current outlook seems to be delivering just what every displaced oilfield worker and strapped owner/operator has been wishing for since the latest downturn.
Coupled with a Trump-sized regulatory rollback, 2018 promises to be a “YUUUGE” year for oil and natural gas, barring turmoil overseas or dramatic changes to output by OPEC and Russia. EIA projections expect U.S. LNG exports to average about 3 bcfd (billion cubic feet per day) this year, up from 1.9 bcfd in 2017.
BLM Leases – Recently, the Bureau of Land Management’s Butte Field Office announced a possible auction of 63,496 acres of federal public land for petroleum leases, with more than 4,000 acres of land in Park County.
Environmental groups were quick to petition, filing an administrative appeal. Park County Environmental Council and local landowners (Livingston) worry that potential drilling would negatively impact the tourism economy in the area.
Sage grouse – Since Governor Bullock signed an executive order (no. 10-2014) creating the Montana Sage Grouse Oversight Team and the Montana Sage Grouse Habitat Conservation Program, and the 2015 Legislature passed the Montana Greater Sage Grouse Stewardship Act to establish the Sage Grouse Stewardship Account, little has been done to move the ball forward through the Oversight Team.
As changes loom at the federal level, Montana has yet to approve a Habitat Quantification Tool to determine debits (impacts) and credits (conservation/improvements).
Without the HQT, projects face unnecessary delays and costs associated with waiting for the “go ahead”.
Pipelines – Montana received exciting news from MPA Member, ONEOK, which has proposed a 900-mile pipeline to transport up to 240,000 barrels per day of unfractionated natural gas liquids (NGL) from Sidney, Montana to Kansas. The proposal couldn’t be timelier, as record oil production in the Bakken may be threatened by the current threshold on flared natural gas at well sites - a problem far greater in North Dakota than in Montana, where the state regulatory agency (Montana Board of Oil and Gas Conservation) boasts a more than 90% capture rate.
The estimated price tag on the Elk Creek Pipeline (and associated infrastructure) is $1.4 billion dollars.
Another MPA member, Denbury Resources, has also been working on a pipeline project to carry CO2 from the Powder River Basin into developed oilfields in the Cedar Creek Anticline.
This project is perhaps the largest of the Petroleum Association’s members impacted by new sage grouse stipulations.
The proposed Cedar Creek Anticline Pipeline will start in the Bell Creek oil field in Powder River County, Wyoming, and span 110 miles through Carter County into Fallon County, Montana. The pipeline will transport up to 400 million standard cubic feet of compressed carbon dioxide (CO2) per day for enhanced oil recovery (EOR).
The exact timing and schedule of the flood depends on future oil prices, permitting, and availability of CO2.