American Oil and Gas Reporter - November 2015 - 119

ConventionSection: Arkansas Independent Producers & Royalty Owners
geopolitical factors and worldwide supply
and demand trends likely would affect
2016's energy markets.
Regarding domestic policies and production, Isakower remarked that the Obama administration's Clean Power Plan
would affect how much renewable energy
was likely to grow in the coming years,
but also mentioned that renewables did
not have enough base-load power to displace fossil fuels in the foreseeable future.
"Without some kind of massive breakthrough, it is unrealistic to expect renewables to be the United States' primary
energy source within the next few
decades," he said.
Through 2040, renewables' market
share is expected to grow 8-10 percent
in base case. However, Isakower added
if the Clean Power Plan was implemented,
renewables would grow an additional 24 percent.
On the oil front, Isakower said the
United States hit record production in
2015. Additionally, the U.S. Energy Information Administration has predicted
the country will remain at or slightly
below its record level of 9.6 million
barrels of oil a day during 2016.
On a global oil market scale, Isakower
said several factors would determine oil
prices in the coming months:
* Venezuela no longer has the technical experts to develop its fields properly
or efficiently, so its production likely
will trend down.
* With the sanctions on Iran lifted,
more Iranian oil will be hitting the market
by April 2016, driving oil prices downward.
* Chinese and European demand did
not increase as much over the last five
years as was predicted.
* The strength of the dollar against
foreign currencies continues to push prices
downward.
Isakower confirmed that, when U.S.
production increased to then-record levels
in 2014, the Organization of Petroleum
Exporting Countries, and Saudi Arabia
specifically, did not decrease oil output,
which combined with growing U.S. production, caused prices to fall. "The Saudis'
production was constant, and that certainly
didn't help," he stated. "But, we (the
United States) were our own worst enemy.
North America drove prices down."
Isakower remarked that many countries
were increasing spare production capacity,
while crude oil storage had reached record
levels. "The Saudis can ramp up produc-

Kyle Isakower, vice
president for regulatory and economic policy at the American Petroleum Institute, gives
the keynote speech
during AIPRO's membership dinner. In his
presentation, Isakower
outlined several economic and geopolitical
factors that likely
would affect 2016 oil
and gas market trends.

tion very quickly if they need to," he offered. "Meanwhile, the United States has
a mass of shale wells that were drilled,
but never produced."
He mentioned that most shale production was light, sweet crude that many
domestic refineries were not equipped
for, resulting in a glut. He said much of
that could be alleviated if the United
States lifted its ban on crude oil exports.
Gas Markets
Isakower also touched briefly on domestic and global natural gas markets.
He said prices were dampened because
gas markets were regional and North
American resources were so vast, and because no demand spike was anticipated.
"The United States has such a great
supply that demand won't do much to

affect it," he reasoned. "Even additional
liquefied natural gas exports won't have
a great impact."
However, Isakower clarified that there
were still economic benefits to exporting
LNG, even if it did not affect prices
much. "For instance, Arkansas alone
could add $3.1 billion to the state gross
domestic product and more than 18,000
jobs with additional LNG exports," he
calculated.
The problem facing LNG exports, he
said, is that competition for the worldwide
LNG market is very intense. "The permitting process in the United States takes
far too long," he observed. "By the time
companies get their projects approved, a
lot of global demand is spoken for. We
need to move quickly, because it is a
race to market."
❒

Rex's Moraine East Wells Show Promising Results
STATE COLLEGE, PA.-Rex Energy
Corp. has announced initial production
test results from its first two wells in the
Butler County, Pa., Moraine East Area:
the Renick 2H in the Marcellus and the
Renick 3H in the Upper Devonian Burkett.
According to Rex Energy, the Renick
2H was drilled to a lateral length of approximately 6,000 feet, and was completed
in 40 stages with sand concentrations of
2,300 pounds a foot. The well produced
at a 24-hour test rate, assuming full ethane
recovery, of 6.6 million cubic feet a day
of natural gas equivalent. Rex Energy
clarifies that this consisted of 3.0 MMcf/d
of natural gas, 566 barrels a day of natural
gas liquids, and 47 bbl/d of condensate.
Rex Energy states that at the time the

Renick 2H was shut in, its production
rate still was rising.
Additionally, Rex Energy says its
Renick 3H was drilled with a 5,700-foot
lateral and was completed in 38 stages
with sand concentrations of 2,300 pounds
a foot. The Renick 3H produced at a 24hour rate, assuming full ethane recovery,
of 8.2 MMcfe/d, consisting of 3.5 MMcfe/d of natural gas, 675 bbl/d of NGLs,
and 101 bbl/d of condensate.
"The initial results of our first two
Moraine East wells mark a significant
development milestone for the area, and
demonstrate the value of the prospect,
further supporting our belief that it is
analogous to the legacy Butler operated
area," Chief Executive Officer Tom Stabley remarks.
❒
NOVEMBER 2015 119

American Oil and Gas Reporter - November 2015

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