American Oil & Gas Reporter - December 2011 - 133

ConventionCoverage: Oklahoma Independent Petroleum Association

Price Differentials, Advocacy Receive Group’s Attention
By Bill Campbell OKLAHOMA CITY–West Texas Intermediate selling at a discount to Brent crude is taking money out of the pockets of independent producers in Oklahoma. Tax proposals being bandied about by congressional Democrats could take even more. An analysis and partial solution to the crude price issue and a plan to empower an army of royalty owners to lobby against higher taxes on industry were among the presentations at the Oklahoma Independent Petroleum Association’s fall conference. WTI’s differential to Brent stood at $25 a barrel when OIPA members gathered Oct. 23-24 at the Skirvin Hilton Hotel in Oklahoma City, and “some folks are projecting $40-$50 differentials unless this problem gets solved,” observed Michael N. Mears, chairman, president and chief executive officer of Magellan Midstream Partners LP. At least part of the solution is moving more barrels out of the Mid-Continent to the Gulf Coast, and Mears outlined Magellan’s plan to do that. Mears spoke on the opening day of the OIPA convention. On Oct. 24, a panel presented by Oklahoma Energy Resources Board Executive Director Mindy Stitt previewed a plan to educate and encourage royalty owners to explain to Congress that they, too, had a stake in preserving federal income tax deductions for intangible drilling costs and percentage depletion. In other OIPA presentations: • Diane Pedicord, general counsel and chief officer for corporate affairs at the Oklahoma Municipal League, lambasted a 50-year plan adopted a week earlier by the Oklahoma Water Resources Board. • Attorney John R. Reeves, a partner in Mock, Schwabe, Waldo, Elder, Reeves & Bryant in Oklahoma City, discussed HB 1909, which was passed by the 2011 Oklahoma Legislature to enable the state Corporation Commission to establish horizontal units as well as to allocate production from horizontal wells that penetrated multiple existing units. • Attorneys Dennis Cameron and Brad Welsh with the GableGotwals law firm in Tulsa reviewed the history and potential ramifications of an oil and gas operator possessing a fiduciary duty to a royalty owner. WTI Price Differential Mears cited projections by Bentek Energy that U.S. and Canadian crude oil supplies could grow by nearly 3 million barrels a day above 2010 levels by 2016. “The current infrastructure cannot take that crude oil to the market it needs to go to,” he remarked. “Virtually all that oil today is pointed at Cushing, Ok.” Not all of the WTI/Brent differential can be blamed on burgeoning oil stocks at Cushing, Mears said. He noted that Mid-Continent refineries were not feeding a growing market. Gasoline demand is projected to fall 1-2 percent over the next five-six years, Mears said, while diesel consumption is expected to be flat to slightly up, if the economy rebounds. “But a 1-2 percent gain in diesel demand, coupled with a 1-2 percent decline in gasoline demand does not create an environment that is going to absorb all this crude oil at Cushing,” Mears stated. “The refiners in Oklahoma, Texas and Chicago aren’t going to be expanding in any significant way.” Furthermore, Mears went on, several Mid-Continent refineries have announced they are converting between 400,000 and 500,000 barrels a day of capacity from WTI to running heavy Canadian crude by 2013. Other factors contributing to the differential are a strong contango market and better demand for Brent, Mears mentioned. With the loss of Libyan crude earlier this year and growing economies in China and India, he said, “You have growing demand for (Brent) crude oil. It isn’t constrained by the same factors that are pushing WTI prices down.” Nevertheless, getting barrels away from Cushing and into the Gulf Coast should help, Mears held. Consequently, he described Magellan’s plan to convert its Longhorn pipeline to move crude oil to Houston from the Permian Basin that might otherwise flow to Cushing. The Longhorn pipeline was built–and acquired by Magellan two years ago–to carry refined products to the U.S. Southwest. “It hasn’t played out the way we expected,” Mears confessed. “Demand for fuel in California and Arizona is plummeting.” So he said Magellan was converting the portion of the line between Crane, Tx., and Houston to transport crude oil eastward. “The initial capacity is going to be about 135,000 bbl/d. We can expand it to 225,000 bbl/d,” Mears reported, adding that the company expected to have the $275 million project partially operational by the end of 2012 and in full service by mid-2013. “This project alone is not going to solve the entire oversupply problem at Cushing,” Mears acknowledged. “But it is a partial solution. It is going to have a
DECEMBER 2011 133

Magellan Midstream Partners CEO Michael N. Mears (left) chats with Steven Agee of the Meinders School of Business at Oklahoma City University, following Mears’ presentation at OIPA’s fall conference, Oct. 23-24 in Oklahoma City.



Table of Contents for the Digital Edition of American Oil & Gas Reporter - December 2011

American Oil and Gas Reporter 12/11
Contents
Reports
Calendar
Oil & Gas Counts
State Legislative
Industry Digest
Tech Connections
Washington Watch
Keystone XL
Liaison Committee
Shale Gas Subcommittee
Endangered Species
Midstream Startups Emerging to Meet Booming Demand
Liquids Resource Plays Have Oil Production Rising Again
Organizers Anticipating Big Things for 2012 PBIOS
Cover Story
R&D Areas Key to Improving Fracturing
Natural Gas Offers Solutions as Transportation Fuel
Completion Design, Frac Modeling Optimize Eagle Ford Wells
Novel Drill-In Fluid Excels in Horizontal ERD Wells
Technologies Optimize Sand Control
Operators Must Manage Risk Before, During and After Drilling
OCS Access: BOEM Offers Business-as-Usual OCS Leasing Plan
Court Finds for Insurers in Gulf Spill Ruling
OIPA
Clean Air Act
IOGA NY
COGA
IPAA Annual
Louisiana
West Virginia
Pennsylvania
Texas
The American Well Servicing Directory, Winter 2011
Industry Focus
Classified Advertising
Advertisers Index
American Oil & Gas Reporter - December 2011 - American Oil and Gas Reporter 12/11
American Oil & Gas Reporter - December 2011 - Cover2
American Oil & Gas Reporter - December 2011 - Contents
American Oil & Gas Reporter - December 2011 - Reports
American Oil & Gas Reporter - December 2011 - 5
American Oil & Gas Reporter - December 2011 - 6
American Oil & Gas Reporter - December 2011 - 7
American Oil & Gas Reporter - December 2011 - Calendar
American Oil & Gas Reporter - December 2011 - 9
American Oil & Gas Reporter - December 2011 - 10
American Oil & Gas Reporter - December 2011 - 11
American Oil & Gas Reporter - December 2011 - Oil & Gas Counts
American Oil & Gas Reporter - December 2011 - 13
American Oil & Gas Reporter - December 2011 - Industry Digest
American Oil & Gas Reporter - December 2011 - 15
American Oil & Gas Reporter - December 2011 - 16
American Oil & Gas Reporter - December 2011 - 17
American Oil & Gas Reporter - December 2011 - 18
American Oil & Gas Reporter - December 2011 - 19
American Oil & Gas Reporter - December 2011 - 20
American Oil & Gas Reporter - December 2011 - 21
American Oil & Gas Reporter - December 2011 - 22
American Oil & Gas Reporter - December 2011 - 23
American Oil & Gas Reporter - December 2011 - 24
American Oil & Gas Reporter - December 2011 - 25
American Oil & Gas Reporter - December 2011 - 26
American Oil & Gas Reporter - December 2011 - 27
American Oil & Gas Reporter - December 2011 - 28
American Oil & Gas Reporter - December 2011 - Tech Connections
American Oil & Gas Reporter - December 2011 - 30
American Oil & Gas Reporter - December 2011 - Washington Watch
American Oil & Gas Reporter - December 2011 - Keystone XL
American Oil & Gas Reporter - December 2011 - 33
American Oil & Gas Reporter - December 2011 - Liaison Committee
American Oil & Gas Reporter - December 2011 - 35
American Oil & Gas Reporter - December 2011 - 36
American Oil & Gas Reporter - December 2011 - 37
American Oil & Gas Reporter - December 2011 - Shale Gas Subcommittee
American Oil & Gas Reporter - December 2011 - 39
American Oil & Gas Reporter - December 2011 - Endangered Species
American Oil & Gas Reporter - December 2011 - 41
American Oil & Gas Reporter - December 2011 - Midstream Startups Emerging to Meet Booming Demand
American Oil & Gas Reporter - December 2011 - 43
American Oil & Gas Reporter - December 2011 - 44
American Oil & Gas Reporter - December 2011 - 45
American Oil & Gas Reporter - December 2011 - 46
American Oil & Gas Reporter - December 2011 - 47
American Oil & Gas Reporter - December 2011 - 48
American Oil & Gas Reporter - December 2011 - 49
American Oil & Gas Reporter - December 2011 - 50
American Oil & Gas Reporter - December 2011 - 51
American Oil & Gas Reporter - December 2011 - 52
American Oil & Gas Reporter - December 2011 - 53
American Oil & Gas Reporter - December 2011 - 54
American Oil & Gas Reporter - December 2011 - 55
American Oil & Gas Reporter - December 2011 - 56
American Oil & Gas Reporter - December 2011 - 57
American Oil & Gas Reporter - December 2011 - Liquids Resource Plays Have Oil Production Rising Again
American Oil & Gas Reporter - December 2011 - 59
American Oil & Gas Reporter - December 2011 - 60
American Oil & Gas Reporter - December 2011 - 61
American Oil & Gas Reporter - December 2011 - 62
American Oil & Gas Reporter - December 2011 - 63
American Oil & Gas Reporter - December 2011 - 64
American Oil & Gas Reporter - December 2011 - 65
American Oil & Gas Reporter - December 2011 - 66
American Oil & Gas Reporter - December 2011 - 67
American Oil & Gas Reporter - December 2011 - 68
American Oil & Gas Reporter - December 2011 - 69
American Oil & Gas Reporter - December 2011 - 70
American Oil & Gas Reporter - December 2011 - 71
American Oil & Gas Reporter - December 2011 - 72
American Oil & Gas Reporter - December 2011 - Organizers Anticipating Big Things for 2012 PBIOS
American Oil & Gas Reporter - December 2011 - Cover Story
American Oil & Gas Reporter - December 2011 - 75
American Oil & Gas Reporter - December 2011 - 76
American Oil & Gas Reporter - December 2011 - 77
American Oil & Gas Reporter - December 2011 - 78
American Oil & Gas Reporter - December 2011 - 79
American Oil & Gas Reporter - December 2011 - 80
American Oil & Gas Reporter - December 2011 - 81
American Oil & Gas Reporter - December 2011 - 82
American Oil & Gas Reporter - December 2011 - R&D Areas Key to Improving Fracturing
American Oil & Gas Reporter - December 2011 - 84
American Oil & Gas Reporter - December 2011 - 85
American Oil & Gas Reporter - December 2011 - 86
American Oil & Gas Reporter - December 2011 - 87
American Oil & Gas Reporter - December 2011 - 88
American Oil & Gas Reporter - December 2011 - 89
American Oil & Gas Reporter - December 2011 - 90
American Oil & Gas Reporter - December 2011 - Natural Gas Offers Solutions as Transportation Fuel
American Oil & Gas Reporter - December 2011 - 92
American Oil & Gas Reporter - December 2011 - 93
American Oil & Gas Reporter - December 2011 - 94
American Oil & Gas Reporter - December 2011 - 95
American Oil & Gas Reporter - December 2011 - Completion Design, Frac Modeling Optimize Eagle Ford Wells
American Oil & Gas Reporter - December 2011 - 97
American Oil & Gas Reporter - December 2011 - 98
American Oil & Gas Reporter - December 2011 - 99
American Oil & Gas Reporter - December 2011 - 100
American Oil & Gas Reporter - December 2011 - 101
American Oil & Gas Reporter - December 2011 - 102
American Oil & Gas Reporter - December 2011 - 103
American Oil & Gas Reporter - December 2011 - 104
American Oil & Gas Reporter - December 2011 - 105
American Oil & Gas Reporter - December 2011 - 106
American Oil & Gas Reporter - December 2011 - 107
American Oil & Gas Reporter - December 2011 - 108
American Oil & Gas Reporter - December 2011 - 109
American Oil & Gas Reporter - December 2011 - 110
American Oil & Gas Reporter - December 2011 - Novel Drill-In Fluid Excels in Horizontal ERD Wells
American Oil & Gas Reporter - December 2011 - 112
American Oil & Gas Reporter - December 2011 - 113
American Oil & Gas Reporter - December 2011 - 114
American Oil & Gas Reporter - December 2011 - 115
American Oil & Gas Reporter - December 2011 - 116
American Oil & Gas Reporter - December 2011 - Technologies Optimize Sand Control
American Oil & Gas Reporter - December 2011 - 118
American Oil & Gas Reporter - December 2011 - 119
American Oil & Gas Reporter - December 2011 - 120
American Oil & Gas Reporter - December 2011 - 121
American Oil & Gas Reporter - December 2011 - Operators Must Manage Risk Before, During and After Drilling
American Oil & Gas Reporter - December 2011 - 123
American Oil & Gas Reporter - December 2011 - 124
American Oil & Gas Reporter - December 2011 - 125
American Oil & Gas Reporter - December 2011 - 126
American Oil & Gas Reporter - December 2011 - 127
American Oil & Gas Reporter - December 2011 - 128
American Oil & Gas Reporter - December 2011 - OCS Access: BOEM Offers Business-as-Usual OCS Leasing Plan
American Oil & Gas Reporter - December 2011 - Court Finds for Insurers in Gulf Spill Ruling
American Oil & Gas Reporter - December 2011 - 131
American Oil & Gas Reporter - December 2011 - 132
American Oil & Gas Reporter - December 2011 - OIPA
American Oil & Gas Reporter - December 2011 - 134
American Oil & Gas Reporter - December 2011 - 135
American Oil & Gas Reporter - December 2011 - Clean Air Act
American Oil & Gas Reporter - December 2011 - 137
American Oil & Gas Reporter - December 2011 - IOGA NY
American Oil & Gas Reporter - December 2011 - 139
American Oil & Gas Reporter - December 2011 - 140
American Oil & Gas Reporter - December 2011 - 141
American Oil & Gas Reporter - December 2011 - 142
American Oil & Gas Reporter - December 2011 - 143
American Oil & Gas Reporter - December 2011 - COGA
American Oil & Gas Reporter - December 2011 - 145
American Oil & Gas Reporter - December 2011 - 146
American Oil & Gas Reporter - December 2011 - IPAA Annual
American Oil & Gas Reporter - December 2011 - 148
American Oil & Gas Reporter - December 2011 - 149
American Oil & Gas Reporter - December 2011 - 150
American Oil & Gas Reporter - December 2011 - 151
American Oil & Gas Reporter - December 2011 - Louisiana
American Oil & Gas Reporter - December 2011 - 153
American Oil & Gas Reporter - December 2011 - 154
American Oil & Gas Reporter - December 2011 - 155
American Oil & Gas Reporter - December 2011 - West Virginia
American Oil & Gas Reporter - December 2011 - 157
American Oil & Gas Reporter - December 2011 - Pennsylvania
American Oil & Gas Reporter - December 2011 - Texas
American Oil & Gas Reporter - December 2011 - 160
American Oil & Gas Reporter - December 2011 - The American Well Servicing Directory, Winter 2011
American Oil & Gas Reporter - December 2011 - 162
American Oil & Gas Reporter - December 2011 - 163
American Oil & Gas Reporter - December 2011 - 164
American Oil & Gas Reporter - December 2011 - 165
American Oil & Gas Reporter - December 2011 - 166
American Oil & Gas Reporter - December 2011 - 167
American Oil & Gas Reporter - December 2011 - 168
American Oil & Gas Reporter - December 2011 - 169
American Oil & Gas Reporter - December 2011 - 170
American Oil & Gas Reporter - December 2011 - 171
American Oil & Gas Reporter - December 2011 - 172
American Oil & Gas Reporter - December 2011 - 173
American Oil & Gas Reporter - December 2011 - 174
American Oil & Gas Reporter - December 2011 - 175
American Oil & Gas Reporter - December 2011 - 176
American Oil & Gas Reporter - December 2011 - 177
American Oil & Gas Reporter - December 2011 - 178
American Oil & Gas Reporter - December 2011 - 179
American Oil & Gas Reporter - December 2011 - 180
American Oil & Gas Reporter - December 2011 - 181
American Oil & Gas Reporter - December 2011 - 182
American Oil & Gas Reporter - December 2011 - 183
American Oil & Gas Reporter - December 2011 - 184
American Oil & Gas Reporter - December 2011 - 185
American Oil & Gas Reporter - December 2011 - Industry Focus
American Oil & Gas Reporter - December 2011 - 187
American Oil & Gas Reporter - December 2011 - 188
American Oil & Gas Reporter - December 2011 - 189
American Oil & Gas Reporter - December 2011 - 190
American Oil & Gas Reporter - December 2011 - 191
American Oil & Gas Reporter - December 2011 - Classified Advertising
American Oil & Gas Reporter - December 2011 - 193
American Oil & Gas Reporter - December 2011 - Advertisers Index
American Oil & Gas Reporter - December 2011 - Cover3
American Oil & Gas Reporter - December 2011 - Cover4
http://www.nxtbook.com/nxtbooks/aogr/201909
http://www.nxtbook.com/nxtbooks/aogr/201908
http://www.nxtbook.com/nxtbooks/aogr/201907
http://www.nxtbook.com/nxtbooks/aogr/201906
http://www.nxtbook.com/nxtbooks/aogr/201905
http://www.nxtbook.com/nxtbooks/aogr/201904
http://www.nxtbook.com/nxtbooks/aogr/201903
http://www.nxtbook.com/nxtbooks/aogr/201902
http://www.nxtbook.com/nxtbooks/aogr/201901
http://www.nxtbook.com/nxtbooks/aogr/201812
http://www.nxtbook.com/nxtbooks/aogr/201811
http://www.nxtbook.com/nxtbooks/aogr/201810
http://www.nxtbook.com/nxtbooks/aogr/pbios_201810
http://www.nxtbook.com/nxtbooks/aogr/201809
http://www.nxtbook.com/nxtbooks/aogr/201808
http://www.nxtbook.com/nxtbooks/aogr/201807
http://www.nxtbook.com/nxtbooks/aogr/201806
http://www.nxtbook.com/nxtbooks/aogr/201805
http://www.nxtbook.com/nxtbooks/aogr/201804
http://www.nxtbook.com/nxtbooks/aogr/201803
http://www.nxtbook.com/nxtbooks/aogr/201802
http://www.nxtbook.com/nxtbooks/aogr/201801
http://www.nxtbook.com/nxtbooks/aogr/201712
http://www.nxtbook.com/nxtbooks/aogr/201711
http://www.nxtbook.com/nxtbooks/aogr/201710
http://www.nxtbook.com/nxtbooks/aogr/201709
http://www.nxtbook.com/nxtbooks/aogr/201708
http://www.nxtbook.com/nxtbooks/aogr/201707
http://www.nxtbook.com/nxtbooks/aogr/201706
http://www.nxtbook.com/nxtbooks/aogr/201705
http://www.nxtbook.com/nxtbooks/aogr/201704
http://www.nxtbook.com/nxtbooks/aogr/201703
http://www.nxtbook.com/nxtbooks/aogr/201702
http://www.nxtbook.com/nxtbooks/aogr/201701
http://www.nxtbook.com/nxtbooks/aogr/201612
http://www.nxtbook.com/nxtbooks/aogr/201611
http://www.nxtbook.com/nxtbooks/aogr/201610
http://www.nxtbook.com/nxtbooks/aogr/pbios2016_programguide
http://www.nxtbook.com/nxtbooks/aogr/201609
http://www.nxtbook.com/nxtbooks/aogr/201608
http://www.nxtbook.com/nxtbooks/aogr/201607
http://www.nxtbook.com/nxtbooks/aogr/201606
http://www.nxtbook.com/nxtbooks/aogr/201605
http://www.nxtbook.com/nxtbooks/aogr/201604
http://www.nxtbook.com/nxtbooks/aogr/201603
http://www.nxtbook.com/nxtbooks/aogr/201602
http://www.nxtbook.com/nxtbooks/aogr/201601
http://www.nxtbook.com/nxtbooks/aogr/201512
http://www.nxtbook.com/nxtbooks/aogr/201511
http://www.nxtbook.com/nxtbooks/aogr/201510
http://www.nxtbook.com/nxtbooks/aogr/201509
http://www.nxtbook.com/nxtbooks/aogr/201508
http://www.nxtbook.com/nxtbooks/aogr/201507
http://www.nxtbook.com/nxtbooks/aogr/201506
http://www.nxtbook.com/nxtbooks/aogr/201505
http://www.nxtbook.com/nxtbooks/aogr/201504
http://www.nxtbook.com/nxtbooks/aogr/201503
http://www.nxtbook.com/nxtbooks/aogr/201502
http://www.nxtbook.com/nxtbooks/aogr/201501
http://www.nxtbook.com/nxtbooks/aogr/201412
http://www.nxtbook.com/nxtbooks/aogr/201411
http://www.nxtbook.com/nxtbooks/aogr/201410
http://www.nxtbook.com/nxtbooks/aogr/201409
http://www.nxtbook.com/nxtbooks/aogr/pbios2014_programguide
http://www.nxtbook.com/nxtbooks/aogr/201408
http://www.nxtbook.com/nxtbooks/aogr/201407
http://www.nxtbook.com/nxtbooks/aogr/201406
http://www.nxtbook.com/nxtbooks/aogr/201405
http://www.nxtbook.com/nxtbooks/aogr/201404
http://www.nxtbook.com/nxtbooks/aogr/201403
http://www.nxtbook.com/nxtbooks/aogr/201402
http://www.nxtbook.com/nxtbooks/aogr/201401
http://www.nxtbook.com/nxtbooks/aogr/201312
http://www.nxtbook.com/nxtbooks/aogr/201311
http://www.nxtbook.com/nxtbooks/aogr/201310
http://www.nxtbook.com/nxtbooks/aogr/201309
http://www.nxtbook.com/nxtbooks/aogr/201308
http://www.nxtbook.com/nxtbooks/aogr/201307
http://www.nxtbook.com/nxtbooks/aogr/201306
http://www.nxtbook.com/nxtbooks/aogr/201305
http://www.nxtbook.com/nxtbooks/aogr/201304
http://www.nxtbook.com/nxtbooks/aogr/201303
http://www.nxtbook.com/nxtbooks/aogr/201302
http://www.nxtbook.com/nxtbooks/aogr/201301
http://www.nxtbook.com/nxtbooks/aogr/201212
http://www.nxtbook.com/nxtbooks/aogr/201211
http://www.nxtbook.com/nxtbooks/aogr/201210
http://www.nxtbook.com/nxtbooks/aogr/201209
http://www.nxtbook.com/nxtbooks/aogr/2012_pbios
http://www.nxtbook.com/nxtbooks/aogr/201208
http://www.nxtbook.com/nxtbooks/aogr/201207
http://www.nxtbook.com/nxtbooks/aogr/201206
http://www.nxtbook.com/nxtbooks/aogr/201205
http://www.nxtbook.com/nxtbooks/aogr/201204
http://www.nxtbook.com/nxtbooks/aogr/201203
http://www.nxtbook.com/nxtbooks/aogr/201202
http://www.nxtbook.com/nxtbooks/aogr/201201
http://www.nxtbook.com/nxtbooks/demo/aogr_clone
http://www.nxtbook.com/nxtbooks/aogr/201112
http://www.nxtbookMEDIA.com