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Natural Gas Taxes Tops $10 billion in Texas in FY 2022

Production taxes paid by the Texas oil and natural gas industry topped $10 billion in fiscal 2022. This is the highest amount the industry has paid in Texas history.

The fiscal record was reported after the industry has broken records nearly every month this year in both the number of jobs added and the record amount of taxes paid.

According to the most recent data published by the state comptroller’s office, production taxes paid by the oil and natural gas industry totaled $10.83 billion for fiscal 2022.

Both oil and natural gas production taxes exceeded the annual revenue estimate prepared earlier this summer by the comptroller’s office.

Oil production tax revenue was $6.36 billion, up 84.4% from fiscal 2021. Natural gas production tax revenue was $4.47 billion, up 185% from fiscal 2021. Both totals exceeded their projected estimates by over $134 million and $9 million, respectively.

The industry paid 88% more in 2022 than it did during its previous highest year in 2014.

The record amount of taxes paid by the oil and natural gas industry fund two key expenses: the Economic Stabilization Fund (Rainy Day Fund) and State Highway Fund. The Rainy Day Fund has been used to fund public K-12 and higher education needs, retired teachers, and state police funds, in addition to other services in Texas.

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Source: Santa Barbara News Press

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oil price hike

Oil Price Hike to 4% after OPEC+ Trims Output by 100k per day

There is an oil price hike of 4% on Monday after OPEC+ crude producers agreed to cut output quotas and Russia said it won’t sell its exports to countries that abide by a US-led planned price cap.

Members of the Organization of Petroleum Exporting Countries and their allies agreed at a meeting Monday to reduce production by 100,000 barrels a day from October, surprising analysts who widely expected the group to maintain current levels. Leading oil exporter Saudi Arabia floated the idea last month to ease pricing dysfunction in the oil market.

Brent crude futures, the global benchmark, were up 4.0% at $96.77 at last check, while WTI crude futures, the US benchmark, were 3.8% higher at $90.19.

Oil prices have slid about 20% from their June highs, in part because of growing concerns about a global recession that would knock demand. An OPEC+ cut to supply levels, even if small, could help support oil prices.

The group said it was returning quotas back to August levels because its previously agreed addition of 100,000 barrels a day in September was intended for that month only.

Oil market analysts had largely expected no change to supply from OPEC+, giving as one factor the uncertainty around whether the Iran nuclear talks would add more barrels to the market.

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Source: MARKETS INSIDER

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Inflation Reduction Act

The Inflation Reduction Act: Topline Oil and Gas Reforms

In a historic achievement, President Joe Biden signed into law the Inflation Reduction Act (IRA) on August 16, 2022.

This bill, was recently thought to be on life support with very little chance of congressional passage. It is a sprawling piece of legislation. Also, it lowers prescription drug costs for those covered by Medicare and raises taxes on large corporations. It also represents the largest climate investment in American history. A preliminary assessment was done by the Rhodium Group. It estimates that it can reduce net U.S. greenhouse gas emissions to 31%-44% below 2005 levels by 2030, as compared to 24%-35% under current policy. According to the White House, the IRA will also reduce the deficit by hundreds of billions of dollars.

Specifically, it will raise over $700 billion in revenue for the federal government over the next 10 years, some of which will be put toward paying down the national debt and some of which will go toward lowering carbon emissions and extending subsidies for health insurance under the Affordable Care Act.

Among the mountain of provisions in the IRA is also language that reforms the oil and gas industry for the first time in decades. As POGO has been advocating for since the 1990s, it is imperative that the administration, specifically the Department of the Interior, take meaningful steps to ensure that U.S. taxpayers are paid their fair share for industry’s use of public lands.

Here’s our take on the good and the bad. Learn more when it comes to the oil and gas provisions in the IRA.

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Source: POGO

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Crude Oil Prices

Crude Oil Prices Climb Above $100 After OPEC Warns Of Output Drop

Global crude oil prices surged past $100 per barrel on Wednesday for the first time in more than three weeks following a warning by Saudi Arabia that oil-producing nations may have to cut output to deal with the recent drop in prices, amid fears of a global recession.

The global benchmark Brent Crude Futures index rose to $101.20 per barrel early on Wednesday morning—up nearly 5% since Monday.

The U.S. West Texas Intermediate benchmark has also risen 5.5% since Monday to $94.50 per barrel.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told Bloomberg earlier this week that the OPEC+ group of oil-producing nations may be forced to cut output to deal with “thin liquidity and extreme volatility” in the oil market.

According to Reuters, the slashing of output may not take place immediately but will instead happen once Iran returns to the global oil markets after securing a nuclear deal with the West.

SURPRISING FACT

OPEC+’s oil output in July was already 2.9 million barrels per day below its target, Reuters reported, citing unnamed sources. It is unclear if this purported deficit would impact the bloc’s plan to cut back on production.

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Source: Forbes

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Texas Oil And Gas Employment

Texas Oil And Gas Employment Uptick In July Breaks 11 Year Record

As drilling activity in Texas continues to increase, so are job levels for the state’s oil and natural gas industry. How does it affect the Texas oil And gas employment trends?

Citing the latest Current Employment Statistics report from the U.S. Bureau of Labor Statistics, the Texas Independent Producers and Royalty Owners Association (TIPRO) highlighted new employment figures showing significant growth in monthly employment for the Texas upstream sector.

According to TIPRO’s analysis, direct Texas upstream employment for July 2022 totaled 202,800, an increase of 6,800 jobs from June employment numbers. Texas upstream employment in July 2022 represented an increase of 35,400 positions compared to July 2021, including an increase of 8,600 in oil and natural gas extraction and 26,800 jobs in the services sector.

The Houston metropolitan area, the largest region in the state for industry employment, showed an increase of 2,000 upstream jobs last month compared to June, for a total of 68,800 direct positions, according to TIPRO. Houston metro upstream employment in July 2022 represented an increase of 11,000 jobs compared to July 2021, including an increase of 5,200 in oil and natural gas extraction and 5,800 jobs in the services sector.

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Source: Rig Zone

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Barrels Of Oil

Iran Is Ready To Release Millions Of Barrels Of Oil Into The Market

Iran has considerable volumes and barrels of oil in floating storage. It could quickly release should a deal with the United States be finalized.

In an update earlier this month, OilX claimed that Iran has some 40 million barrels. The bulk of which is probably condensate.

Vortexa estimates Iranian crude in floating storage at 60 to 70 million barrels. Moreover, Kpler has estimated them at 93 million barrels, Bloomberg reported on Sunday.

The barrels of oil volumes would not be released immediately. However, as issues such as insurance and shipping would need to be dealt with first.

“Iran has built up a sizable flotilla of cargoes that could hit the market fairly soon,” John Driscoll from JTD Energy Services told Bloomberg.

Currently, Iran and the United States are both considering the final version of an agreement proposed by the European Union, which is acting as an intermediary in the negotiations.

According to recent reports, some of the problems have been straightened out but others still remain and need to get resolved before a deal is finalized.

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Source: Oil Price

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Climate Bill Beneficiary

Climate Bill Beneficiary: US Oil and Gas Industry

The U.S. oil industry hit a legal roadblock in January. It is when a judge struck down a $192 million oil and natural gas lease sale. That was in the Gulf of Mexico over future global warming emissions from burning the fuels. It came at a pivotal time for Chevron, Exxon, and other industry players. The Biden administration curtailed the opportunities for new offshore drilling while raising climate change concerns. Is the U.S oil and gas industry a climate bill beneficiary?

The industry’s setback was short-lived, however. The climate measure President Joe Biden signed Tuesday bypasses the administration’s concerns. It is about emissions and guarantees new drilling opportunities in the Gulf of Mexico and Alaska. The legislation was crafted to secure backing from a top recipient of oil and gas donations, Democratic Sen. Joe Manchin, and was shaped in part by industry lobbyists.

While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating the leasing of vast areas of public lands off the nation’s coasts. And it locks renewables and fossil fuels together: If the Biden administration wants solar and wind on public lands, it must offer new oil and gas leases first.

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Source: AP News

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US oil and gas production

US oil and gas production to set new highs in September

The Permian basin and the Haynesville shale are leading increases in US oil and gas production. This is what the US Energy Administration (EIA) said in its monthly drilling productivity report.

The EIA estimates that gas production from unconventional plays is in the report. It stated that it will surpass 93.8 billion cubic feet per day in September. It is an increase of 673 million cubic feet per day over August.

Crude oil includes lease condensate. The sum of individual states may not equal total U.S. volumes due to independent rounding. Volumes are at the nearest whole number which is a zero may indicate a volume of fewer than 0.5 thousand barrels per day. Previous months’ production volumes may have been revised for all states/areas. Percent change is calculated using unrounded values.

  • The August Short-Term Energy Outlook (STEO) is subject to heightened uncertainty resulting from Russia’s full-scale invasion of Ukraine, how sanctions affect Russia’s oil production, the production decisions of OPEC+, the rate at which U.S. oil and natural gas production rises, and other contributing factors. Less robust economic activity in our forecast could result in lower-than-forecast energy consumption.
  • We forecast the spot price of Brent crude oil will average $105 per barrel (b) in 2022 and $95/b in 2023.

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Source: Upstream

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climate bill

‘Easter Eggs’ in Climate Bill Delight Oil and Gas Industry

The oil and gas industry doesn’t hate the climate bill.

The industry as a whole isn’t yet embracing the $700 billion-plus reconciliation deal, which would penalize some forms of fossil fuel pollution while making one of the largest investments in clean energy in U.S. history. But the legislation also contains what some called “Easter eggs” that would benefit oil and gas companies, including access to new swaths of federal waters in Alaska and the Gulf of Mexico.

“There are some things in there that are helpful to our business,” Rich Walsh, senior vice president and general counsel at Valero, one of the country’s largest fuel refiners, said during an earnings call Thursday with investors.

Frank Maisano, a partner at the law firm Bracewell, said the compromise deal offers wins for both the fossil fuel and green energy industries.

“There are a lot of pieces in there that are going to be valuable to different sectors,” said Maisano, whose firm works with companies in both fields.

Maisano added that Sen. Joe Manchin (D-W.Va.), who reached the deal with Senate Majority Leader Chuck Schumer, “has been clear on where he stands — to have some mix of benefits and not lean too heavily on renewables only. That’s what he’s gotten here.”

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Source: POLITICO

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Oil Price

Oil Price To Hit $120 Again By Winter According to an Analyst

While oil and gas prices may continue to weaken in the near term, by the time winter sets in, the market is going to become extremely tight and the per-barrel price of oil should return to around $120, Energy Aspects’ Amrita Sen told Bloomberg Surveillance on Monday.

Sen suggests that while gasoline prices have declined, demand remains strong. Sen cites petrochemical weakness due to China’s back-and-forth COVID lockdowns, which have contributed to the high availability of nafta to be blended into gasoline. However, she insists this is “not a demand problem; it’s a supply problem”.

The national average per gallon of gasoline in the United States continued to fall on Monday, dropping to $4.059, according to AAA.

At the same time, crude oil prices are solidly below $90 per barrel.

Sen said she is not expecting a “sudden increase” in prices due to upcoming seasonal refinery maintenance; however, by the time winter hits, and particularly after November, she expects supply to become “very, very tight”.

On November 1st, releases from the U.S. Strategic Petroleum Reserve (SPR) will halt. In March this year, the Biden administration ordered the release of 1 million barrels per day from the country’s emergency crude stockpile in a bid to lower gas prices. Last week, the SPR fell to its lowest level in nearly four decades, according to the U.S. Department of Energy data.

 

Source: Oil Price

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