Derrick Digest for Feb. 10, 2017

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'Impartial scrutiny' says Dakota Access, Keystone XL good for the U.S. of A.

The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation.

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FEB. 10, 2017

The paid protesters and the celebrities say one thing.

The facts say quite another.

In a commentary recently published in the Chicago Tribune, Southern Illinois University economics professor Stanford Levin notes that the Keystone XL and Dakota Access pipelines—recently approved by American president Donald Trump, after being stuck in regulatory quagmires—would be good for the environment and the U.S.

Arguments against both pipelines, considered controversial by some, “do not stand up to impartial scrutiny,” says Levin. “With proper policies, we can make better use of energy resources, while protecting the environment and moving toward energy independence.”

In the case of Keystone XL, argues Levin, oil transportation is safer and has less impact to the environment than alternatives like rail or barge.

And in the absence of Keystone XL, he notes, Americans won’t use less energy. “We will just import more oil from other countries, and our two biggest sources of imported oil are Venezuela and Saudi Arabia,” says Levin. “Isn’t it better to get oil from Canada?”

As for Dakota Access, the U.S. Army Corps of Engineers said Tuesday it will allow completion of the line under Lake Oahe in North Dakota. Were that not to happen, Bakken oil from North Dakota “will continue to be transported, as it is now, by rail, crossing the river by a rail bridge within sight of the proposed pipeline location . . . objecting to the pipeline because of potential harm to the lake and water supplies simply ignores reality.”



Some have tried to make “fracking” a dirty word.

But as Forbes Magazine points out, it’s actually a prosperous word.

According to the American Automobile Association, lower gasoline prices saved Americans in excess of US$115 billion in 2016, compared to 2014—an average of $550 per licensed driver, or $1,000 per household.

“Economists point out that substantial increases in U.S. oil production, made possible by hydraulic fracturing (fracking), are the primary reason oil supplies have grown and prices have fallen,” writes contributor James Taylor.

“More than any other factor, fracking added approximately $1,000 to each household’s disposable income last year.”



Speaking of Dakota Access, it seems the Standing Rock Sioux Tribe has ordered protesters still camping on its land to clear out.

Reportedly, the directive comes for fear of “environmental damage,” and because protesters have been blocking access to a road deemed important for business—to wit, the road leading to a native-run casino.

“Our main venture that we have on Standing Rock is the Prairie Knights Casino, and Highway 1806 is the main access road,” Phyllis Young, a consultant to the Standing Rock tribe, tells Reuters.

The tribe unanimously passed a resolution for calling for camps to be dismantled in late January.

“The throngs originally swarmed in to voice their support for a beleaguered native band under threat from the big bad corporate world,” writes columnist Terry Etam in the BOE Report.

“Fair enough, if it were true, but regardless of that point the protest is over, and the band has asked them to leave. And they won’t,” adds Etam. “Which means they are no longer there for the support of the band, and most likely never were in the first place.”

Sanitation crews are also busy dealing with mountains of garbage left behind by the protesters. It’s estimated that 250 trucks’ worth of trash will need to be moved to a nearby landfill site.



How far has Cenovus Energy gone to minimize its environmental footprint?

World-record far.

The oilsands exploration and production company announced in recent days that it had broken a Steam Assisted Gravity Drainage (SAGD) record last year at its Foster Creek project near Fort McMurray, AB.

The four extended-reach wells average 1,605 meters (1,755 yards) in horizontal length—the length of nearly 12 Canadian Football League fields, including end zones.

“Our ability to drill wells that run more than 1.6 kilometers through our oilsands reservoirs really push the bounds of what our industry has traditionally been able to do,” Jason Abbate, the director of subsurface engineering for Cenovus, tells the company’s website.

“We can now use fewer wells and surface facilities to access the same amount of oil, which helps to reduce our environmental footprint and could significantly cut our costs.”

Cenovus expects it will achieve sustaining capital costs of $7 per barrel at its SAGD projects, down from $14/bbl in 2014 and $10.50/bbl in 2015.

Speaking of environmental considerations, “over the last 10-plus years we’ve actually reduced our emissions intensity by about 33% in oilsands,” Cenovus executive vice president Drew Zieglgansberger tells the Journal of the Canadian Heavy Oil Association, “and have set a target now to reduce it again by another 33% from current levels over the next 10 years.”