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U.S. Taps New Energy Sources, And Potential Geopolitical Clout

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Photo Credit: David McNew / Getty Images

Photo Credit: David McNew / Getty Images

The recent oil and natural gas boom in the U.S. is paying major dividends for Washington’s geopolitical clout. Thanks to hydraulic fracturing, the U.S. is awash in domestic energy, which is having a ripple effect globally.

If you want to gauge one effect of this newfound energy wealth, you don’t have to look any further than the current crisis between Russia and Ukraine, says Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations.

He says the U.S. would be reacting very differently to what’s happening now if it was still a big natural gas importer. There’s concern Moscow could cut natural gas supplies to the Ukraine, which, in turn, would disrupt the flow to much of Europe.

Even five years ago, Levi says, Washington would have been alarmed that European nations could turn to U.S. suppliers, driving up the cost.

“We would be asking ourselves with every policy option we face: Will this disrupt markets and come back to hurt the U.S. economy? We’re not asking ourselves that question, because we’re not dependent on imports,” he says. “That’s a surprise — and a good one.”

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US Now Pumping 10 Percent of the World’s Crude

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Photo Credit: Eddie Seal/Bloomberg

Photo Credit: Eddie Seal/Bloomberg

Boosted by the galloping pace of tight oil operations, the United States produced a tenth of the world’s oil at the end of last year, the Energy Information Administration reports.

Overall U.S. oil production averaged 7.84 million barrels a day in the fourth quarter of 2013, 10 percent of the world production, up from 9 percent at the end of 2012. Shale and other dense rock, newly accessible because of advancements in hydraulic fracturing and horizontal drilling, accounted for 3.22 million barrels of the U.S. daily average during the three months ending Dec. 31.

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Alaska Sues U.S. Over Its Rejection of Oil Exploration Plan

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Photo Credit: Paxson Woelber/flickrAlaska sued the Obama administration over its rejection of an oil and gas exploration plan for the Arctic National Wildlife Refuge as the state seeks to determine the extent of energy resources in the area.

Alaska Governor Sean Parnell said exploration for the coastal plain of the wildlife area was mandated by a federal Alaska land conservation act. The U.S. Fish and Wildlife Service refused to review the plan, citing a legal opinion by the Interior Department issued in 1987 claiming provisions of the law had expired, Parnell said in a complaint filed in federal court in Anchorage, Alaska.

“It is both disappointing and disturbing that the Obama administration, which claims that it is pursuing an ‘all of the above’ energy policy, is afraid to let the people of the United States learn more about ANWR’s oil and gas resources,” Parnell, a Republican, said in a statement. “The modern technology that we are seeking to use is responsibly utilized all across the North Slope with extremely limited environmental impact, and would dramatically improve our understanding of ANWR’s resources.”

The state is proposing to study a portion of the reserve known as Area 1002, which Alaska officials said covers 3,000 square miles (4,800 square kilometers) and is less than a tenth of the entire Arctic reserve. Estimates from 30 years ago put the median volume of oil in the refuge at 10.4 billion barrels, according to the state of Alaska.

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Analysis – Alaska Crude Likely First to Flow Around U.S. Export Ban

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Photo Credit: APOil traders looking for cracks in a contentious decades-old U.S. ban on crude exports should be looking west, not east.

The first big cargoes to be shipped far overseas are likely to come from one of the country’s oldest oil patches, Alaska, rather than booming new shale fields like the Eagle Ford of Texas, or North Dakota’s Bakken.

Oil companies and analysts are already examining the widening arbitrage window for selling Alaska’s North Slope (ANS) crude to Asia, looking to resume shipments that halted a decade ago as rising domestic output of light, sweet crude threatens to crowd long-time baseload ANS out of West Coast refineries.

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We Are Drilling, Baby! U.S. Passing Saudi Arabia in Oil Production

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Photo Credit: Glen Stubbe/Minneapolis Star Tribune/MCT

Photo Credit: Glen Stubbe/Minneapolis Star Tribune/MCT

What do you know—“Drill, baby, drill” is working.

Thanks to new smart-drilling and production technologies (including hydraulic fracturing), the U.S. is the leading liquid fuels producer in the world and will soon be the world’s largest producer of petroleum. And we would be even further in the lead if we had pro-growth federal energy policies.

The latest news shows that Texas oil production doubled in just the last three years and is the highest it’s been since at least 1981. North Dakota is now the second-largest oil-producing state and sets a new production record virtually every day, and the U.S. is set to surpass Saudi Arabia as the world’s largest petroleum producer. This new production provides a cushion that helps insulate oil markets from the price spikes we might have seen with the continuing turmoil in the Middle East—from the Arab Spring to the nonstop threats from Iran.

According to President Obama, our newfound oil leadership must be a mirage, since he has consistently downplayed the benefit of increased domestic oil production.

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Alaska North Slope Crude Production Rises to Highest Since March, But Down From Last Year

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Photo Credit: Paxson Woelber/flickrOil production in Alaska’s North Slope gained to an eight-month high as producers boosted rates in the Prudhoe Bay and Kuparuk fields following seasonal maintenance.

Output climbed 4.1 percent in November from a month earlier to 556,471 barrels a day, the most since March, data posted on Alaska’s Department of Revenue website show. The yield is down 4.5 percent from year-earlier levels, the agency said.

“BP’s North Slope production has returned to normal after a successful turnaround season,” Dawn Patience, a spokeswoman for London-based BP, Alaska’s largest oil producer, said by telephone from Anchorage.

The North Slope, once the largest crude source for the western U.S., has been producing less oil every year since 2002 as output from wells naturally declines and isn’t replaced. The region’s refiners have increasingly depended on oil imports from overseas and shipments from Canada and other U.S. states to counter the shrinking supply, boosting California’s receipts of oil by rail to a seasonal record.

BP has increased output in Alaska after finishing seasonal maintenance in late September, Patience said. The state’s energy producers typically take advantage of warmer weather, lower yield and pipeline shutdowns during the summer to perform routine maintenance in fields.

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America’s Oil Surge Leaving Alaska in the Dust; U.S. Producing More Crude Than Imports

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Photo Credit: Fox News America’s oil boom has the Texas tea flowing, whole new towns being built in North Dakota and, for the first time in decades, the U.S. producing more crude than it imports. But Alaska, a state known for its vast oil resources and pro-drilling politics, is being left in the dust of this new oil surge.

The state, with its 800-mile pipeline running from the North Slope to Valdez, has fallen to fourth among oil-producing states, now trailing Texas, North Dakota and California. It’s not sitting well with many there.

“There’s definitely a hit to the state pride,” said Alaska Department of Natural Resources Commissioner Joe Balash. “There’s a certain amount of embarrassment that a place as over-regulated and over-taxed as California is eclipsing Alaska.”

Production in Alaska peaked in 1988 when companies sent 2.1 million barrels of oil per day down the pipeline. Declining ever since, last year production hit a low of 526,000 barrels per day.

Everyone agrees that part of the decline is due to the natural cycle of oil field drilling. Prudhoe Bay, on Alaska’s North Slope, is still the largest oil field ever discovered in the U.S. But nearly 40 years of drilling has diminished the supply of easy-to-get oil.

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Syria Conflict and the Oil Market: Best and Worst Case Scenarios (+video)

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Photo Credit: US Navy

Photo Credit: US Navy

Western military strikes on Syria present a complex set of possible outcomes, and all of them make problems for energy markets to one degree or another. But some scenarios are worse than others.

Despite an abundance of oil supplies—and the fact that Syria is a minor oil producer, at best—the global market for crude has been dominated for a week by worries about the Middle Eastern country. U.S. oil hit a two-year high above $112 on Wednesday, after closing below $104 on Aug. 21, the day that the Syrian military is believed to have used chemical weapons against rebels fighting the regime of President Bashar Assad. Hundreds of civilians died in the attacks.

Since then the United States has intensified its naval presence in the region, and increasingly hostile rhetoric has spilled from allied capitals, including Washington, London, Paris and Ankara, Turkey. Given Syria’s geographical location and the multitude of countries and non-national actors with interests in Syria’s brutal 2½-year-old civil war, market watchers and others are asking themselves, where is this conflict headed?

CNBC asked a group of Middle East, economic and energy experts for their opinions, and came away with possible worst-case and “least bad-case” scenarios.

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FAA OKs Drones Over Alaska Oil Area

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drones_The FAA has cleared the way for unmanned aircraft, or drones, to fly for the Alaskan oil industry.

The Petroleum News reports approval for two remote-controlled aircraft to fly over the Arctic Ocean is an aviation milestone.

ConocoPhillips requested permission for the drone flights. But the company says it’s not quite ready to put them to use.

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Oil Giant Halliburton Pleads Guilty to Destroying Crucial Evidence About the Deadly Deepwater Horizon Gulf of Mexico Oil Spill

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Photo Credit: EPAHalliburton Co has agreed to plead guilty to destroying computer test results related to the 2010 Gulf of Mexico oil spill, the U.S. Department of Justice said on Thursday.

The government said Halliburton’s guilty plea is the third by a company over the spill and requires the world’s second-largest oilfield services company to pay a maximum $200,000 statutory fine.

Halliburton also agreed to three years of probation and to continue cooperating with the criminal probe into the April 20, 2010, explosion of the Deepwater Horizon drilling rig.

The company said in a statement Thursday night that it had agreed to plead guilty ‘to one misdemeanor violation associated with the deletion of records created after the Macondo well incident, to pay the statutory maximum fine of $200,000 and to accept a term of three years probation.’

The Justice Department has agreed it will not pursue further criminal prosecution of the company or its subsidiaries for any conduct arising from the 2010 spill, Halliburton’s statement said, adding that federal officials have also ‘acknowledged the company’s significant and valuable cooperation during the course of its investigation.’

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