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Flaring rule not likely to impact Continental in North Dakota

by Adam Wilmoth and Paul Monies Modified: July 8, 2014 at 10:57 am •  Published: July 8, 2014
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Our NewsOK Energy team chatted with readers Tuesday about Oklahoma energy and oil and gas companies.

You can join our energy Q&A’s on the second Tuesday of every month at 10 a.m. and submit your questions about energy developments across the state. Below is an unedited transcript of Tuesday's chat.

NewsOK 9:30 a.m. Good morning. Our energy team will be logging on at 10 a.m., but you can start submitting your questions now.
Paul Monies 9:56 a.m. We'll be getting started in about five minutes.
Paul Monies 10:04 a.m. OK. Let's get started. I'm your moderator, Paul Monies. I'm joined by the other two members of our Energy team, Adam Wilmoth and Jay F. Marks.
Guest 10:05 a.m. Linn Energy just bought a lot of Devon's assets. Linn Energy is expanding their OKC office up by Quail Springs Mall. Coincidence?
DoctorTaco 10:05 a.m. By which I mean to ask is Linn going to be staffing up OKC to work their new stuff? Will OKC be gaining jobs here?
Jay F. Marks 10:06 a.m. Work has been underway at Linn's OKC office for quite some time, but I'm not sure there is any major hiring planned.
Jay F. Marks 10:06 a.m. Linn bought a little bit of Devon's assets, not a lot.
Jay F. Marks 10:07 a.m. Linn has only one Oklahoma job listing on its website and it has been there since September.
Stacey 10:08 a.m. I am looking for a companies purchasing undeveloped land
Stacey 10:08 a.m. where would I look to find companies purchasing 25,000 acres or upward in the shale natural gas areas?
Jay F. Marks 10:09 a.m. Linn added some additional acreage in southwest Oklahoma, which likely means more staff will be needed in the state, but the Houston-based firm also has said it will sell its holdings in western Oklahoma and the Texas Panhandle.
Jay F. Marks 10:10 a.m. Unless companies publicly disclose such acquisitions, you're at the mercy of public records at the county level.
Jay F. Marks 10:10 a.m. Any deals in undeveloped areas likely would be kept quiet to avoid driving up the lease price.
DoctorTaco 10:11 a.m. Will Contintental's profits be hurt much by new ND flaring rules?
Jay F. Marks 10:12 a.m. I haven't talked to anyone at CLR since the new rules were announced last week, but as I recall from earlier conversations the company does not flare as much as some of its competitors in North Dakota.
Jay F. Marks 10:12 a.m. That will limit the impact of the new rules on Continental.
Adam Wilmoth 10:13 a.m. The new rules could limit production in the area until more natural gas pipelines are build and expanded to handle the increased natural gas production.
Jay F. Marks 10:15 a.m. The state established the new rules because 36 percent of its natural gas was burned off last year, according to the Associated Press.
Adam Wilmoth 10:16 a.m. THe companies don't want to flare the gas. They
Adam Wilmoth 10:17 a.m. would rather sell the gas. But they don't want to have to wait until the natural gas pipelines are completed before they can sell the more valuable oil.
Adam Wilmoth 10:17 a.m. State regulators hope the new rules will encourage the pipelines to be build faster.
Lucille 10:18 a.m. How do faults effect drilling for oil and gas.
Jay F. Marks 10:19 a.m. Drillers avoid faults because they break up reservoirs where oil and natural gas can be recovered.
Adam Wilmoth 10:21 a.m. Faults run throughout Oklahoma. In some cases they mark the edge of producible areas and in other cases they help create oil and natural gas traps that are drilled in traditional vertical production.
Paul Monies 10:22 a.m. Any more burning questions out there? If not, Jay and I will discuss our World Cup picks.
Jay F. Marks 10:23 a.m. I know everyone is down on Brazil right now, with Neymar hurt, but I still think they'll find a way to get past Germany today.
Paul Monies 10:24 a.m. I think Germany will return to form and get past the sluggish play they've shown in the knockout stages.
Guest 10:27 a.m. will individual towns or citys be able to say if they will allow fracking? Reading artical about Anchultz vs New york this morning
Jay F. Marks 10:28 a.m. I suppose it's possible in Oklahoma, but no one has ever tried to enact such a ban here.
Paul Monies 10:28 a.m. OK, we've got a few more questions in the queue, so we'll spare you any more World Cup analysis.
Adam Wilmoth 10:29 a.m. The New York Supreme Court recently ruled that towns and cities in New York can ban fracking. There also are a couple of bans in Colorado.
Jay F. Marks 10:30 a.m. Drilling is a hot-button issue in many parts of the country, even Denton is exploring a ban, but Oklahoma has been home to oil and gas development for so long it's hard to find much organized opposition.
Rob 10:30 a.m. Do you think public opinion will turn against oil and gas in Oklahoma if earthquakes continue or get worse?
Jay F. Marks 10:31 a.m. That is a possibility, although there is still plenty of debate as to whether disposal wells contribute to earthquakes.
Adam Wilmoth 10:32 a.m. It could. But oil and gas represents a big part of the state's economy and many jobs in the state.
Jay F. Marks 10:32 a.m. Many of the people at the recent town hall meeting in Edmond seemed opposed to oil and gas development because of the earthquakes, but I'm sure you'd find more support among royalty owners.
Paul Monies 10:32 a.m. The industry is calling for more studies, but at a certain point, the weight of the scientific evidence could spur action by state officials.
Paul Monies 10:33 a.m. For now, regulators are taking a cautious approach and asking disposal well operators near fault lines to do extra monitoring and reporting.
Adam Wilmoth 10:36 a.m. The issue is different in Oklahoma than in some other parts of the country. Where fracking is banned in parts of the Northeast, the issue tends to focus more on concerns about air and water quality. Here, the issue has more to do with earthquakes, which some studies have linked to water disposal wells, but not necessarily to fracking.
Poseidon 10:36 a.m. Why can't drillers recycle some of that water that they're pumping into the disposal wells?
Jay F. Marks 10:37 a.m. Recycling may be possible, but it is not economical at this point.
Jay F. Marks 10:38 a.m. Many operators are recycling water for future frac jobs, but as I understand it there is not much demand for further treatment that could render it useful in other capacities.
Dragon 10:39 a.m. I'm sure Poseidon would love to rent their expensive tanks to operators for recycling, but the cost of new water versus cost of recycling supports disposal of produced and flow back water.
Jay F. Marks 10:39 a.m. EPA regulations also make recycling difficult, according to industry officials.
Jay F. Marks 10:40 a.m. I wrote quite a bit about disposal wells in Sunday's paper: http://newsok.com/energy-co...
Adam Wilmoth 10:41 a.m. Water recycling is gaining popularity in parts of Texas where fresh water is very expensive or not available. Some of the water recycling companies are hoping to improve the techniques in those parts of the country so they can make it less expensive and more economical here.
politico 10:42 a.m. It appears that the president isn't going to make any decision on Keystone XL pipeline before he leaves office. Is that your impression, and do you think that pipeline will ever be built?
Jay F. Marks 10:43 a.m. It is half done already.
Jay F. Marks 10:43 a.m. The delay is deciding on a presidential permit to cross the U.S.-Canada border.
Jay F. Marks 10:43 a.m. The Obama administration doesn't seem willing to decide any time soon, but I think the line eventually will be completed.
Adam Wilmoth 10:45 a.m. President Obama has said a decision is unlikely before the midterm election, but I wouldn't be surprised if a decision is made during the lame duck period after the election.
Paul Monies 10:46 a.m. It's important to keep in mind that Keystone XL is just one pipeline. It's not going to be the economic savior some of its backers claim, nor is going to single-handedly doom the environmental movement. But like it or not, it has become the focal point of a lot of the current political and environmental battles.
Guest 10:47 a.m. What sort of effect/benefit will the Keystone pipeline have on OKCs energy companies?
Jay F. Marks 10:47 a.m. Keystone XL likely will be a boon to Devon and Continental, who are looking to move crude out of Canada's oil sands and the Bakken Shale, respectively.
Adam Wilmoth 10:48 a.m. Continental has said it will be fine with or without Keystone. The company is moving much of its oil by rail, but any company would like to have as many options as it can.
Jay F. Marks 10:48 a.m. Devon has voiced its support of the project in the past, while Continental CEO Harold Hamm has said it's not needed anymore. The issues with moving crude by rail, especially out of the Bakken, mean another avenue to markets would probably be appreciated.
Guest 10:49 a.m. I'm curious about how the current energy boom differs from past decades in Oklahoma. Can we expect a bust like the 80s that crippled OKC, or has the industry as a whole moved to protect itself against downturns like this.
Jay F. Marks 10:50 a.m. This is a different kind of boom, since it was spurred by new technology rather than new resource discoveries.
Jay F. Marks 10:50 a.m. The industry has discovered a new way to produce oil and natural gas that it knew was there all along.
Adam Wilmoth 10:50 a.m. Industry leaders say it is different this time -- although they said the same thing last time.
Jay F. Marks 10:51 a.m. Officials have been reticent to use the term boom because of the bust connotation that goes with it. Most are optimistic this rise in production can be sustained for years to come, especially as technology continues to improve.
Paul Monies 10:52 a.m. Because of the technology advances in the drill bit and with 3D seismic mapping, producers are drilling few, if any, dry holes. So there's probably a lot less speculative money going into drilling. That's also because drilling costs are much higher for horizontal wells.
Adam Wilmoth 10:52 a.m. The improved technology is a key difference, but it is worth noting that the technology is expensive. As long as oil is selling for around $100, the process is affordable. But if oil prices fall -- like natural gas prices did in 2008 -- drilling will slow.
Adam Wilmoth 10:54 a.m. On the other hand, oil is still a global commodity. Demand continues to grow throughout Asia and other parts of the world. As more people gain access to cars and industry, demand for oil is likely to continue growing.
Paul Monies 10:55 a.m. OK, I think we'll wrap it up here. Thanks for joining us today. Our next chat will be at 10 a.m. Aug. 12.
by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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