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Major fossil fuel-producing states rely heavily on severance taxes

graph of state government taxation sources, as explained in the article text Several states that produce large amounts of fossil fuels rely heavily on severance tax revenue—taxes based on the volume and/or value of oil, natural gas, coal, and other natural resources. On average, severance taxes accounted for less than 2% of state tax collections in 2014, but in three states—Alaska, North Dakota, and Wyoming—severance taxes provided a much larger share of total state tax revenue in that year. Pennsylvania, on the other hand, is considering a severance tax, and currently derives less than 1% of its revenues from a well head fee. Alaska. Alaska relies on revenues from oil and natural gas production for up to 90% of its budget , and consequently the state experiences fluctuations in tax receipts that reflect changing oil and natural gas prices. The Alaska Clear and Equitable Share Wellhead tax is calculated […]

Posted On : Published By : Tom Whipple
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BHI: US oil-directed rig count rises for fifth straight week

The overall US drilling rig count edged up 1 unit to 885 rigs working during the week ended Aug. 21, according to data from Baker Hughes Inc. The oil-directed count increased for the fifth straight week, rising 2 more units ( OGJ Online, Aug. 14, 2015 ). The overall count is now down 1,011 units year-over-year. Last week 894 new well permits were issued, up from 832 permits issued during the previous week, according to an energy update by Raymond James & Associates. Utilizing a 4-week average, weekly permits issued were up 22 week-over-week. “Just like the rig count, permits are currently trending above the [year-to-date] lows, but still well below levels seen this past spring,” RJA said. “With WTI closer to $40[/bbl] than $45[/bbl], operators are likely to be reassessing any plans to ramp up activity. If prices continue to fall—or even stay flat as we are modeling—from […]

Posted On : Published By : Tom Whipple
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No End in Sight for Oil Glut

When oil prices started to edge down a year ago, most energy mavens thought the drop would be small and short-lived. Instead, the price of crude has plunged by almost 60% from its 2014 peak—and suddenly looks likely to stay low for months and maybe years to come. The reason: In the global battle for market share, nobody has backed down. Nobody has even blinked. Not Saudi Arabia, not the U.S., and not even troubled producers from Russia to Iraq. Everyone who can seems locked into pumping as much oil as possible. Far from going out of business, American oil companies have stunned their global rivals by maintaining or even adding production as U.S. prices nose-dived from $100 a barrel to $70 late last year to, as of Thursday, just above $40. Even more surprisingly, the Saudis have actually increased their production in the face of falling prices, in […]

Posted On : Published By : Tom Whipple
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Canada’s Largest Refinery Shifts from Bakken Shale Oil to Brent Crudes

The operator of Canada’s largest crude oil refinery, Irving Oil Ltd., said it has stopped importing Bakken Shale oil from the U.S. in favor of cheaper crudes from such producers as Saudi Arabia, reflecting a shift in crude costs affecting East Coast refiners during a global slump in oil prices. The closely held company’s 320,000-barrel-a-day refinery in Saint John, New Brunswick, one of the biggest by volume in North America, has reduced purchases of Bakken crude shipped by rail to zero from a high of nearly 100,000 barrels a day two years ago, Irving President Ian Whitcomb said in an interview on Thursday. “We’re not importing any Bakken crude right now,” he said. The move reflects shifting economics in the energy industry even as the price of oil—including Bakken crude—has slumped to six-year lows . A once-yawning gap, between the cost of oil produced in North America and overseas […]

Posted On : Published By : Tom Whipple
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In downturn, frackers turn to toilet water in drought-prone Texas

Rigging equipment is pictured in a field outside of Sweetwater, Texas June 4, 2015. Top shale oil producer Pioneer Natural Resources Co ( PXD.N ) has found an unusual way to both save water and cut costs for its wells: tapping the treated runoff from toilets, sinks and showers in west Texas. Pioneer has signed an 11-year, $117 million deal with the city of Odessa, Texas that will guarantee it access to millions of gallons of treated municipal wastewater each day, for use in nearby oilfields. Deliveries of the so-called effluent, are expected to start at the end of the year. As crude oil has slid to its lowest level in six years – currently about $40 a barrel – oil and gas companies pumping from shale rock have tried to cut every unnecessary penny from their operations. Water acquisition and transportation can be up to 10 percent of […]

Posted On : Published By : Tom Whipple
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Low Oil Prices Could Break The “Fragile Five” Producing Nations

Persistently low oil prices have already inflicted economic pain on oil-producing countries. But with crude sticking near six-year lows, the risk of political turmoil is starting to rise. There are several countries in which the risks are the greatest – Algeria, Iraq, Libya, Nigeria, and Venezuela – and RBC Capital Markets has labeled them the “Fragile Five.” Iraq, facing instability from the ongoing fight with ISIS, has seen its problems compounded by the fall in oil prices, causing its budget to shrink significantly. The government is moving to tap the bond markets for the first time in years, looking to issue $6 billion in new debt. Revenues have been bolstered somewhat by continued gains in production. Iraq’s oil output hit a record high in July at 4.18 million barrels per day, up sharply from an average of 3.42 million barrels per day in the first quarter of this year. […]

Posted On : Published By : Tom Whipple
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Oil Companies Sit on Hands at Auction for Leases

Photo Oil pumping jacks and drilling pads at the Kern River Oil Field in Bakersfield, Calif. Credit Mark Ralston/Agence France-Presse — Getty Images HOUSTON — With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986. It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future. The auction, for drilling leases, attracted a scant $22.7 million in sales from five companies, but energy analysts said that came as no surprise on a day when the American oil benchmark price plummeted by more than 4 percent. For the first time since the recession, it is approaching the symbolic $40-a-barrel level. Last summer, it was above $100 a barrel. A glut on American and world […]

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Canadian Oil-Sands Producers Struggle

CALGARY, Alberta—Canada’s high-cost oil-sands producers are struggling as oil prices sink to fresh six-year lows, and even the most efficient drillers are losing money on every barrel they produce at current prices, according to a report published Wednesday. Canadian oil-sands production has grown 30% in the past five years but the recent price slump has hit producers’ bottom lines and forced them to suspend development of new projects. Western Canadian heavy crude costs more to extract than other oil sources because it must be separated from deposits of sand. It also trades at a discount to other crudes, in part because of the distance it must be transported from remote boreal forests in Alberta. Benchmark West Texas Intermediate oil cost less than $41 a barrel in Wednesday trading, which although at multiyear lows was still well above the Western Canadian Select average of around $24 a barrel. More than […]

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Athabasca oilsands operations hit by water shortages

Alberta’s first oilsands operation, Bitumont, on the shore of Athabasca River near Fort McMurray, Alta. Many oilsands operators are facing water restrictions due to low water levels. (Jeff McIntosh/Canadian Press) It’s wreaked havoc on crops and shut down fisheries across Alberta, but now the hot dry weather and ensuing stresses on our rivers have hit the oilsands. This week the Alberta Energy Regulator reined in oil companies by imposing restrictions on how much water they can draw from the North Athabasca basin. Those in the lower Athabasca region — including heavy hitters Suncor, Syncrude and CNRL — are not affected by the restrictions. ‘Preview of the future’ Simon Donner says a University of British Columbia study he helped to write predicted this would happen. He says this year’s low flows are the result of both climate change and a strong El Nino event that’s developing. "With regulators this week […]

Posted On : Published By : Tom Whipple
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Texas RRC June Production Data

The Texas RRC Oil & Gas Production Estimates are in. By now everyone should know that the Texas oil and gas data is incomplete and the drooping data lines will eventually look more like the EIA lines as the more and more data comes. The EIA data is only through May but all Texas Railroad Commission data is through June. Texas C+C It appears that Texas C+C was flat to slightly up in June. Dean C+C Dr. Dean Fantazzini has a program that attempts to correct for the incomplete data and give a pretty good estimate of what the final data will look like. He has April C+C down, May down also but only slightly so and has June Texas Crude+Condensate up slightly. Texas crude only appears to have increased slightly. Dean Oil Dean has crude only pretty much the same as C+C for April, May and June except […]

Posted On : Published By : Tom Whipple