American Oil and Gas Reporter - September 2015 - 40

es and equipment at gathering and boosting stations include:
* Reducing VOC emissions from
compressors by at least 95 percent from
each centrifugal compressor with a wet
seal system;
* Reducing VOC emission from reciprocating compressors by replacing rod
packing after 26,000 hours of operations
or 36 months, or routing rod packing emissions through a closed-vent system under
negative pressure;
* Implementing an optical gas imaging, monitoring and repair program that includes twice-yearly surveys; and
* Limiting natural gas bleed rates
for pneumatic controllers to six standard
cubic feet an hour, with exceptions for operational requirements and safety.
No Cooperation
IPAA's Russell complains EPA could

have worked with the oil and gas industry to develop a less burdensome and more
cost-effective emission reduction program, as the Obama administration did
with the agricultural industry. He points
out that program relies on a voluntary approach for reducing emissions.
EPA's scheme is not needed to meet the
goals set in Obama's Climate Action Plan
for the exploration and production segment,
Russell contends. "According to EPA
data, existing Clean Air Act regulations will
achieve the administration's goal of reducing methane emissions 40-45 percent below 2012 levels by 2025," he states.
Kathleen Sgamma, vice president of
government and public relations for the
Western Energy Alliance, points out U.S.
methane emissions have declined 38 percent even as domestic natural gas production has jumped 26 percent.
"Those reductions were the result of in-

dustry innovation and voluntary measures.
Now EPA wants to glom onto that success
by adding costly red tape. The problem
with EPA making mandatory what industry already is doing is that it simply
adds bureaucratic layers that remove
flexibility and innovation while discouraging the development of the single most
significant source of U.S. GHG reductions," she argues.
Texas Railroad Commission Chairman
David Porter warns the proposed rules will
be used by EPA as a weapon in the president's war on fossil fuels. "These excessive
regulations are another blatant attack on the
oil and gas industry that will further impede
America's energy security, kill jobs, and put
even more stress on our national and state
economies," he declares.
For more information on the proposed
rule, visit www.epa.gov/airquality/oilandgas/actions.html.
❒

Genscape Finds Drop In Crude Output

HOUSTON-After five straight years of
increasing, Genscape Inc. says it believes
domestic crude oil production has begun
to decline after peaking in April at almost
9.5 million barrels a day.
Genscape says it expects production to
continue declining into the middle of 2016,
bottoming at 8.6 MMbbl/d in July. Thereafter, the company says it anticipates production will climb, but won't reach previous peak levels until the latter half of 2019.
Genscape notes that over the course of
this summer, its view on production has diverged from the U.S. Energy Information
Administration's Petroleum Supply Monthly (PSM) report. In EIA's July PSM, total U.S. production for May came in at 9.5
MMbbl/d, which was a month-over-month
decrease of 182,000 bbl/d. Genscape says
its data showed nearly the same amount of
month-over-month decrease, which it attributed to maintenance in the Gulf of
Mexico and Alaska. But while the monthover-month decrease was similar, the
company says EIA's estimate of total U.S.
production differed from its own.
"Historically, we are, on average, within 10,000-20,000 bbl/d of the EIA's supply numbers," Genscape confirms. "However, starting in March, our estimates
were nearly 200,000-300,000 bbl/d lower. The main area of difference is in our
outlook on Texas production for March,
April, and May."
Genscape says it estimates Texas production peaked at 3.546 MMbbl/d in March,
whereas EIA reported Texas' production at
3.770 MMbbl/d for the month. Genscape has
the state's production declining to 3.504

40 THE AMERICAN OIL & GAS REPORTER

MMbbl/d in April, but EIA put it at 3.706
MMbbl/d. For May, Genscape reports it estimated Texas' output at 3.483 MMbbl/d,
while EIA placed it at 3.664 MMbbl/d.
The other region of material divergence
is in the Gulf of Mexico, where EIA's
March estimates were 100,000 bbl/d higher than Genscape's, the company says,
adding that EIA's estimates of Gulf production exceed its own by 104,000 bbl/d
for April and by 59,000 bbl/d for May.

Reasons For Difference
According to Genscape, there were several maintenance events in the Gulf of
Mexico during the spring months that may
not have been fully captured in the EIA
numbers. Also, the company says the
PSM utilizes various methodologies and
depends on the states to come up with
monthly production figures.
In general, Genscape says it utilizes
much of the same datasets that EIA does
for Texas, which is production data provided by the Railroad Commission. However, the company says it also includes
"pending lease" data, which according to
the RRC is "when a lease has not yet been
assigned an official lease (identification
number) by the RCC, the operator will report production on the 'pending lease' by
using some other identifying information."
By using this pending lease data on top
of the production data reported by the
RRC, Genscape calculates it requires
three months from when initial production
was reported for Texas state data to come
within 1-2 percent of finalized production.
"Looking at the data through this lens,

March 2015 data are a finalized number
at (slightly below) 3.6 MMbbl/d," the company relates.
Given this discrepancy in how state
production data are analyzed, Genscape
says it believes production decreases are
materializing already. This diverges from
the viewpoint implied by the EIA's figures, which the company observes are digested widely by participants in the crude
oil market.
"These decreases may not be fully reflected in crude prices," Genscape asserted in mid-August. "Acknowledging that
decreases are materializing sooner than expected will ease the downward pressure on
crude prices in the short term, and could
represent hard evidence that the market is
rebalancing to a greater degree than market participants think."
❒

Alaska LNG Project Gets
Authorization From DOE
ANCHORAGE, AK.-The U.S. Department of Energy has conditionally
authorized the Alaska LNG Project LLC
to export as much as 20 million metric
tons a year of liquefied natural gas to nonfree-trade agreement countries.
The project includes a liquefaction facility in the Nikiski area on the Kenai
Peninsula, an 800-mile pipeline, as many
as eight compression stations, at least five
take-off points for in-state gas delivery,
a gas treatment plant on the Alaskan North
Slope, and transmission lines to move gas
from Prudhoe Bay and Point Thompson
to that plant, Alaska LNG says.
❒

American Oil and Gas Reporter - September 2015

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