American Oil and Gas Reporter - March 2019 - 36

Oil, Gas Industry Starts Strong In 2019
WASHINGTON-Coming off a remarkable December, the American Petroleum
Institute says the energy industry kicked
off 2019 with record-setting numbers. API's
latest Monthly Statistical Report documents
the U.S. oil and natural gas industry's multiple records set in January, including:
· Highest production of crude oil
(11.9 million barrels) and natural gas liquids (4.9 MMbbl);
· Highest U.S. petroleum demand
(20.7 MMbbl a day) in January, strongest
for the month since 2005;
· Highest monthly refinery and petrochemical demand for other oils (5.7 MMbbl) in any month;
· Strongest gasoline demand (8.9
MMbbl/d) for the month of January since
records began in 1945; and
· Highest refinery throughput (17.3
MMbbl/d) and capacity utilization (93.1
percent) for the month of January.
The increased oil production reflects
the rise in drilling activity during the
past quarter, with Baker Hughes reporting
an average of 878 oil-targeted rigs operating in the fourth quarter 2018, up from
863 rigs in the previous quarter. API says
the rig count slipped to an average of
866 in January 2018, "so further production growth may hinge on the extent to
which the backlog of drilled but uncompleted wells begins to be drawn down.
The U.S. Energy Information Administration reported nearly 8,600 DUCs as of

year-end 2018," the report says.
"The United States has continued to
meet virtually all of the growth in global
oil demand, more than compensating for
sanctioned Venezuelan crude and reduced
OPEC production," says API Chief Economist Dean Foreman. "America's strong
production has continued to keep fuel
prices low, benefiting consumers, businesses and our allies overseas."
Despite strong domestic demand, API
says, total U.S. petroleum inventories in
January were 5.8 percent above their historical five-year average. Notably, however,
U.S. petroleum exports decreased to 7.5
MMbbl/d in that month, it observes, down
from 7.8 MMbbl/d in December and 8.0
MMbbl/d in both November and October
of 2018. The report says this may be indicative of slowing global oil demand
and economic growth.
U.S. petroleum exports of crude oil
and refined products decreased to 7.5
MMbbl/d in January, API says.
Economic Indicators
U.S. leading economic indicators gave
mixed signals in January, the report indicates. It points out one measure of international shipping activity-the Baltic Dry
Index-fell by 47.4 percent month-overmonth between the end of December and
January. API says the only larger declines
on record came during the financial crisis
of October/November 2008.

On the domestic economic front, API
says its Distillate Economic and Financial
Indicator, which it unveiled in January,
combines industry fundamentals from
the Monthly Statistical Report with oil
prices and interest rates into an indicator
of U.S. industrial production and economic
growth. Based on data through January,
the institute says the indicator's growth
year-over-year slowed by 0.3 percentage
points for the second consecutive month.
According to the report, U.S. leading
economic indicators also were mixed in
January. It points to the University of Michigan's consumer sentiment index, which
dropped to a final reading of 91.2 in the
month, down from December's 98.3 mark.
Although the level still is relatively favorable,
API says the year-ahead outlook remains
at its worst since mid-2014 because of a
host of issues, including the partial government shutdown, tariff impacts, financial
market volatility, global economic slowdown
and uncertainties about monetary policies.
The survey anticipates the decline could
translate into lower spending, as consumers
increase their precautionary savings.
In contrast, API says the Institute for
Supply Management's Purchasing Managers Index registered 56.6 in January, a
jump of 2.3 percentage points from December's 54.3. Any value above 50.0
suggests an expansion, and the report
points out growth occurred in 14 of the
18 manufacturing sectors surveyed. ❒

COGA Hails Controller Survey Results
DENVER-A survey of pneumatic controllers used along Colorado's Front Range
showed 95 percent were operating properly. The yearlong survey, the largest
study of its kind in the country, was conducted by the Colorado Department of
Public Health and Environment.
As part of the state's 2017 Air Quality
Control Commission rule making, the
CDPHE's Air Quality Division was directed to study pneumatic controllers
used for oil and gas operations in the
Denver Metro North Front Zone Ozone
Nonattainment Area. According to the
agency, the study's primary focus was
data collection and analysis, including
an examination of Regulation 7 definitions,
and monitoring good engineering and
maintenance practices. The study analyzed
more than 3,800 controllers at 179 sites
to assess the rate, type, application and
causes of improper operation.
CDPHE says the study's initial results
36 THE AMERICAN OIL & GAS REPORTER

include data on the controllers' emission
rates, adding it will guide broader efforts
to measure emissions being undertaken
by the Colorado agency and the U.S. Environmental Protection Agency.
According to the survey, 3,645 pneumatic controllers (94.6 percent of those
surveyed), were operating properly, with
3,052 of 3,224 intermittent bleed and
593 of 614 continuous low bleed (less
than 6 standard cubic feet an hour) units
operating properly. Looking at location,
the survey says 3,253 of 3,404 pneumatic
controllers installed on separators, 278
of 313 units mounted on compressor engines, and 114 of 116 listed as other locations, were found operating properly.
In the few cases of improper operation,
corrosion is listed as the principal cause,
at 21.2 percent. Other causes include diaphragm failure (19.7 percent), seal failure
(18.7 percent) and debris (17.6 percent).
The survey indicates that cleaning and

removing debris was the leading repair
method (31.6 percent), followed by rebuilding the controller with a repair kit
(31.1 percent), replacing the controller
(11.4 percent) and replacing the diaphragm
(10.4 percent).
"While we are halfway through this
task force process as established by the
AQCC, the oil and natural gas industry
once again has shown its willingness to
come to the table in a transparent manner
and participate in an open stakeholder
process to put science and data front
and center," says Dan Haley, president
and chief executive officer of the Colorado Oil & Gas Association. "Through
continued collaboration and discussion,
we hope to work closely with all stakeholders to support the continued success
of this data-driven process being conducted by the state through the remainder
of 2019."
❒

American Oil and Gas Reporter - March 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - March 2019