American Oil and Gas Reporter - January 2018 - 119

Cushing, Ok., and likely contributed to
a $1.01 daily increase in WTI frontmonth futures prices relative to longerdated futures prices on Nov. 21, the
largest daily increase in almost a year,"
EIA comments, observing that Cushing
stocks fell by 2.9 million barrels the
week ending Nov. 24 and that imports
from Canada declined by 400,000 bbl/d.
The Keystone Pipeline resumed operations
on Nov. 28.
EIA reflects that crude oil prices traded
at the highest levels in more than two
years in November and early December,
following OPEC's announcement.
EIA says an important metric for
identifying oil market balance is the
level of commercial liquids inventories
compared with their five-year average
for countries in the Organization for
Economic Cooperation and Development. Since reaching a record high of
almost 3.09 billion barrels at the end of
July 2016, according to EIA, OECD inventories fell by 141 million barrels to

less than 2.95 billion barrels at the end
of November.
Over the same period, it says, the surplus to the five-year average declined by
214 million barrels. Going forward, the
agency points out, the five-year average
will include a higher proportion of data
points from 2015-17, which were years
of high inventory levels, resulting in
higher five-year average stock levels for
comparison.
EIA predicts the OECD five-year average inventory level for May 2018-the
last full month before the June 2018 OPEC
meeting, at which it will review its production cut strategy-will be 2.8 billion
barrels, 80 million barrels higher than the
five-year average for December 2017.
Although EIA forecasts OECD inventories will increase by 51 million barrels
from December through May, it says it
expects the level of OECD inventories
relative to the five-year average to decrease
by 29 million barrels because of the increase in the five-year average.

Natural Gas
The December STEO forecast U.S. dry
natural gas production would average 73.5
billion cubic feet a day in 2017, 700 million
cubic feet a day more than in 2016. The
agency predicts 2018 natural gas production
will exceed that 2017 level by 6.1 Bcf/d.
"Increased take-away capacity from
Appalachia is expected to result in increased natural gas production in the
coming months and could limit significant
upward price pressure, although colderthan-normal temperatures could result in
price increases," EIA reasons.
It notes that the Henry Hub natural
gas spot price averaged $3.01 an MMBtu
in November, almost 14 cents higher than
in October. EIA predicts Henry Hub gas
prices will average $3.12 an MMBtu for
all of 2018.
"Expected growth in natural gas exports
and domestic natural gas consumption contribute to an increase in the forecast Henry
Hub natural gas spot price from 2017's
annual average of $3.01," EIA states. r

Texas Best Place For Oil Investments
CALGARY-Texas regained the top
spot from Oklahoma as the most attractive
jurisdiction in the world for oil and gas
investments in the Fraser Institute's 2017
Global Petroleum Survey. Oklahoma was
ranked second worldwide.
"Texas and Oklahoma have, for years,
been seen as the most attractive jurisdictions in the world for oil and gas investors-proof that sound regulatory policies and stable environmental protections
help attract scarce investment dollars
even when commodity prices are down,"
says Kenneth Green, study co-author and
senior director of national resource studies
at the Fraser Institute, an independent,
Canadian public-policy think tank.
Green says the 2017 Global Petroleum
Survey ranks 97 jurisdictions worldwide
based on their barriers to investment (e.g.,
taxation, costly regulatory obligations
and uncertainty over environmental regulations), and on the size of their oil and
gas reserves. Those 97 jurisdictions hold
52 percent of proved global oil and gas
reserves and account for 66 percent of
global production, he adds.
The 10 most attractive jurisdictions regardless of reserves size, Green reveals,
are Texas, Oklahoma, North Dakota, Newfoundland & Labrador, West Virginia,
Kansas, Saskatchewan, offshore Norway
(excluding North Sea), Wyoming and South
Australia. The 10 least attractive jurisdictions, starting with the worst, are Venezuela,
Bolivia, Libya, Iraq, Ecuador, Indonesia,

California, Cambodia, France and Yemen.
Of the 15 jurisdictions with the largest
petroleum reserves, Green says the five
that rank as most attractive, or least likely
to deter investment, are Texas, United
Arab Emirates, Alberta, Kuwait and Egypt.
The five least attractive of the largereserve jurisdictions are Venezuela, Libya,
Iraq, Indonesia and Nigeria, which Green
says account for 41 percent of the proved
oil and gas reserves of all the jurisdictions
included in the survey.
In the group of 39 jurisdictions with
medium-sized reserves, Green continues,
the 10 most attractive for investment are
Oklahoma, North Dakota, Newfoundland
& Labrador, West Virginia, Norway-other,
Wyoming, Norway-North Sea, United

Kingdom-North Sea offshore, Arkansas
and the Netherlands.
Of the 39 jurisdictions with relatively
small proved oil and gas reserves, he adds,
the top 10 performers are Kansas,
Saskatchewan, South Australia, Manitoba,
New Zealand, Mississippi, Montana, Namibia, United Kingdom-other, and Alabama.
"With oil and gas investors losing
confidence around the world, it's crucial
for policymakers to pursue sound regulatory and tax regimes-and perhaps most
importantly, stable environmental protections-that attract, not deter, petroleum
investments," Green concludes.
The 2017 Global Petroleum Survey may
be accessed at www.fraserinstitute.org/studies/global-petroleum-survey-2017.
r

DOE's Coal/Nuclear NOPR Has
Significant Flaws, IPAA Claims
WASHINGTON-The Department of
Energy's attempt to revise the regulatory
system governing the nation's wholesale
electricity markets is flawed on both
policy and procedural grounds, asserts
the Independent Petroleum Association
of America in two sets of submitted comments. IPAA joined with an energy industry coalition that unites renewable energy and natural gas groups, as well as

issuing comments alongside state oil and
gas associations and allied industries.
DOE published its notice of proposed
rule making in the Oct. 10 Federal Register. It predicted prematurely retiring
power plants that now help withstand
major fuel supply disruptions would
threaten the resiliency of the nation's
electric grid. The notice said events similar
to the 2014 Polar Vortex, when peak
JANUARY 2018 119


http://www.fraserinstitute.org/studies/global-petroleum-survey-2017 http://www.fraserinstitute.org/studies/global-petroleum-survey-2017

American Oil and Gas Reporter - January 2018

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2018

Contents
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