With a market capitalization of $406.3 billion, ExxonMobil Corp. once again led the world’s top oil and natural gas producers in 2011, according to the annual ranking PFC Energy 50. Irving, TX-based ExxonMobil has led all of the world’s producers except in 2007 and 2009, when PetroChina Co. Ltd. was the No. 1 producer, PFC noted. In the latest ranking PetroChina is in second place with a market valuation of $276.6 billion. Six supermajors posted the best group performance among companies returning to this year’s list: ExxonMobil, Royal Dutch Shell plc, Chevron Corp., BP plc, Total SA and ConocoPhillips increased their combined market capitalization 8% in 2011 to $1.2 trillion. Chevron, in fourth place with a market capitalization of nearly $212 billion, increased its valuation by 15% from $183.6 billion, which was the largest percentage increase of any returning company. Four midstream and pipeline companies made the list: Enterprise Products Partners LLC in the 25th spot; TransCanada Corp., 37th; Enbridge Inc., 40th; and Kinder Morgan Inc., 41st.

Texas natural gas production, prices and revenues fell in 2011 but the state’s oil production, prices and revenues more than made up the difference, driving a 15% increase in industry employment, according to the Texas Petro Index (TPI) year-end numbers for 2011. The TPI ended 2011 at 259.1, marking the 24th consecutive monthly increase. The rate of expansion was 13.8% during 2011. Oil prices rose 20.4% in 2011, and oil prices in Texas averaged $91.05/bbl, making 2011 the first year since 2008 in which the average annual price exceeded $90/bbl. On the other hand, natural gas prices declined 7.6% in 2011 to average $3.99/Mcf. By the end of the year, gas prices fell below $3 and closed on Jan. 25 at $2.55. The estimated value of Texas-produced gas declined by 13.5% to $28.2 billion as production declined 6.5% to an estimated 7 Bcf, according to the index. The number of Texans employed in the production, drilling and service sectors increased by an estimated 29,616, expanding industry employment by an estimated 15.2%. The number of Texans on oil and gas industry payrolls reached an estimated 237,500, according to the Texas Workforce Commission, ending a five-month string of record-setting reports that lifted estimated employment to 238,300 in November. The previous high occurred in October 2008. The statewide working rig count averaged 838, increasing by more than 27% from December 2010 to December 2011. Also, the Railroad Commission of Texas issued 22,480 drilling permits, which was up 24.7% from the prior year.

West Virginia Gov. Earl Ray Tomblin signed a bill that offers tax breaks to companies that build an ethane cracker in the state, then jetted off to Houston to meet with Royal Dutch Shell plc executives about plans to possibly build such a facility in the Mountain State. “I have met with multiple investors multiple times to discuss their desire to invest in new ethane crackers in our region,” Tomblin said before leaving for Houston. The bill, HB 4086, enjoyed near-unanimous support in the West Virginia Legislature, passing the Senate 33-0 on Wednesday and the House of Delegates 93-1 last Monday. Under HB 4086, capital investments specifically made in the natural gas liquids extraction industry totaling $2 billion or more would qualify for a 5% salvage value tax treatment for the facility’s first 25 years.

Range Resources Corp. has signed a deal to ship 20,000 b/d on Enterprise Product Partners LP‘s proposed Appalachia-to-Texas (Atex Express) ethane pipeline. The commitment gives Range anchor shipper status, and a transportation rate of 14.5 cents per gallon, on the 1,230-mile pipeline from southwestern Pennsylvania to the U.S. Gulf Coast. Atex Express would initially carry 125,000 b/d from the MarkWest Liberty Midstream & Resources LLC complex in Houston, PA, to Enterprise’s facility in Mont Belvieu, TX. The pipeline is expected to come online in early 2014. Chesapeake Energy Corp. previously agreed to ship 75,000 b/d on Atex Express over a five year ramp-up period.

A total of 13,350 wells are expected to be drilled across Canada in 2012, 1,750 (11.6%) fewer than previously forecast but still 4% more than the 12,917 wells drilled in 2011, according to the Petroleum Services Association of Canada (PSAC), which updated its 2012 Canadian Drilling Activity Forecast to reflect continuing low natural gas prices and an ongoing shortage of skilled labor in the nation’s oilfields. The Calgary-based trade association said it based its latest forecast on average prices of C$3.25/Mcf for natural gas and US$90/bbl for crude oil. PSAC estimates that 8,267 wells will be drilled in Alberta in 2012, a 2% increase from 2011 drilling levels. British Columbia is expected to drill 640 wells this year (up 3%); Saskatchewan, 3,739 wells (up 6%); and Manitoba, 665 wells (up 14%).

The Susquehanna River Basin Commission (SRBC) is planning a public hearing Feb. 16 to reconsider 26 water withdrawal permits it approved for Marcellus Shale gas drillers in December. Written comments are to be accepted through Feb. 27 on groundwater, surface water and consumptive use permits it previously approved. The SRBC also will accept oral and written comments on another 34 permits still under consideration and one request to withdraw a permit application. The commission indicated that the permits issued in December were still considered valid, but it would not take up any actions until its next regularly scheduled meeting in mid-March. The public hearing will be held in Harrisburg, PA, at the Pennsylvania State Capitol, East Wing, Room 8E-B, from 2:30 to 5 p.m. EST. Persons wishing to speak at the hearing are asked to contact SRBC General Counsel Richard Cairo before the hearing.

The global market for hydraulic fracturing (fracking) services continues to grow at a double-digit pace but not nearly as much as in 2011 since natural gas prices have begun to discourage exploration, according to a survey by Spears & Associates Inc. The worldwide market for fracking is expected to jump 19% 2011/2012 to a record $37 billion, but that is just one-third the pace of expansion from 2010 to 2011, when demand grew 63%. Horizontal drilling in the United States is predicted to be used on almost 19,000 wells this year, which would break 2011’s record of 16,000, according to Spears. Nearly three-quarters (73%) of the new horizontal wells will be looking for oil reserves, which is up from 12% in 2009. The number of new horizontal wells in 2012 that target natural gas is expected to drop to 5,000 from 6,000 three years ago.

The New York State Department of Environmental Conservation (DEC) has filed an administrative complaint seeking $112,500 in fines — the maximum amount allowed by law — against U.S. Energy Development Corp. for water quality violations that allegedly occurred during drilling activities in Pennsylvania and affected Yeager Brook in Cattaraugus County, NY. DEC said it would also require Getzville, NY-based U.S. Energy to install appropriate stormwater and erosion controls to prevent future water quality impacts in New York, and is seeking an additional $75,000 in penalties against the company for failing to comply with two previous consent orders for similar violations in 2010. The wells “are in Pennsylvania and the company’s operations are regulated there by the [Pennsylvania] Department of Environmental Protection,” according to U.S. Energy spokesman William Albert. “U.S. Energy is not aware of any issues at the wells in question.”

The Pennsylvania Department of Environmental Protection (DEP) is taking comments through March 21 on a revised policy for protecting waterways from sediment runoff during well site construction. The DEP will no longer offer expedited permitting for projects in fragile areas, such as “exceptional-value or high-quality watersheds,” floodplains or contaminated lands. The DEP will also no longer allow applicants that repeatedly submit error-filled applications to request expedited review. The expedited review allows applicants to get an answer within 14 days rather than 60. The changes are designed to meet the terms of a settlement the DEP reached in 2009 with the Chesapeake Bay Foundation (CBF), Talisman Energy USA Inc. and Ultra Resources Inc. The CBF had accused the DEP of “rubber stamping permit applications without any formal review.” The DEP had recently taken over the authority to review erosion, sediment and storm water control plans from county conservation districts (see NGI, Sept. 14, 2009).

Alaska House Speaker Rep. Mike Chenault (R-Nikiski) has drafted legislation to consolidate efforts to develop an in-state gas pipeline to commercialize North Slope reserves and transport gas to the state’s residents. The project also would support exporting liquefied natural gas. The legislation, which would advance plans by the Alaska Gasline Development Corp. (AGDC) for an in-state line, combines several existing bills with recommendations by AGDC and additional tools to bring Alaskans closer to a pipeline project. According to Chenault, the omnibus legislation ensures a reasonable, efficient regulatory process; facilitates private-sector investment; aligns existing state gasline efforts to maximize resources; and provides AGDC the flexibility to respond to gas supply and demand developments.

The Railroad Commission of Texas (RRC) has approved draft rules to implement new or amended potential matrices to be guidelines in determining penalties for safety violations of state regulations governing safety of pipelines, liquefied petroleum gas, compressed natural gas, liquefied natural gas (LNG), as well as underground pipeline damage prevention. Penalty guidelines at the RRC have not been updated since 2004, and they have never been adopted as official RRC rules, with the exception of rules for pipeline safety violations. The first penalty guideline schedule was drafted in 1986, according to the commission. All three commissioners voted to approve the draft rules, which have been published in the Texas Register for a 30-day comment period.

In spite of a state-wide drought, there’s enough water in the Carrizo Wilcox Aquifer in South Texas to support Eagle Ford Shale oil and gas drilling, according to the Eagle Ford Task Force, which advises the Railroad Commission of Texas. Data indicated that drilling and completions in the Eagle Ford Shale account for about 6% of the water demand in South Texas, while irrigation accounts for 64% and municipal uses account for 17%. According to the Texas Water Development Board, irrigation accounted for 60% and municipal 27% of the water used statewide in 2009, while mining accounted for 1%. Industry is reporting an average use of about 11 acre-feet of water used to complete each well, down from the 15 acre-feet previously used. One acre-foot is about 326,000 gallons.

Citing more stringent federal mercury and air toxic standards (MATS), Akron, OH-based FirstEnergy said it plans to retire by Sept. 1 six older coal-fired electric generation plants representing 2,689 MW. The company also said other environmental regulations were related to the decision that comes after the U.S. Environmental Protection Agency finalized MATS calling for much stricter emissions requirements that are difficult for older coal plants to meet (see NGI, Jan. 2). These generation facilities are located in Ohio, Pennsylvania and Maryland and will require reliability reviews by PJM Interconnection, the regional transmission operator. Four of the plants are in Ohio, Bay Shore Units 2-4; Eastlake; Ashtabula; and Lake Shore in Cleveland; another is in Pennsylvania, the Armstrong Power Station; and the one in Maryland, R. Paul Smith Power Station in Williamsport, MD.

The Interstate Natural Gas Association of America (INGAA) submitted answers to 120 questions posed by the Pipeline Hazardous Materials and Safety Administration’s (PHMSA) proposed rulemaking on pipeline safety, which came in the wake of the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 recently signed into law by President Obama. The PHMSA proceeding covers many of the same areas as the law, including integrity management, verification of maximum allowable operating pressures and pipeline safety research/development efforts. INGAA, whose 27 members operate 200,000 miles of transmission pipeline, urged the federal proceeding to remain focused on identifying the “best ways to enhance and ensure the safety of the nation’s pipelines.” INGAA urged PHMSA to use “performance-based regulation” to foster innovation as opposed to a more “prescriptive” approach that relies on regulatory standards.

UK-based Weir Group plc has struck a $176 million deal to acquire Dallas-based Novatech LLC, its second oilfield services purchase in two months. The transaction would give Weir an even bigger footprint in North America’s onshore. Weir now owns a half-stake in the supply of high-pressure pumps used in North America’s unconventional fields. The latest acquisition would allow it to expand its manufacturing capabilities in Fort Worth, TX, and Edmonton, Canada, to deal with a big backlog of orders from rig operators. Two months ago Weir paid $675 million to acquire Houston’s Seaboard Holdings Inc. (see NGI, Dec. 5, 2011), which extended its presence in the frack rental market.

Denver-based Bill Barrett Corp. in 2011 grew reserves and production as it transitioned to more oil and natural gas liquids (NGL). CEO Fred Barrett said eight of nine drilling rigs now are targeting oil and NGLs. The company plans to spend between $900 million and $1 billion for capital expenditures in 2012, including facilities costs. Barrett expects to drill 370 gross development wells in 2012, which would include 175 wells at Gibson Gulch, 100 wells in the Uinta oil program, 60 wells at West Tavaputs and 15 wells in the Denver-Julesburg Basin.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.