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Douglas Grandt answerthecall@me.com

Laissez-faire Peak Oil is a five letter word: CHAOS
December 2, 2015 at 9:59 AM
Edward Hild (Sen. Murkowski) Edward_Hild@murkowski.senate.gov, David Cleary (Sen. Alexander)
David_Cleary@alexander.senate.gov, Dan Kunsman (Sen. Barrasso) Dan_Kunsman@barrasso.senate.gov,
Joel Brubaker (Sen. Capito) Joel_Brubaker@capito.senate.gov, James Quinn (Sen. Cassidy) James_Quinn@cassidy.senate.gov,
Jason Thielman (Sen. Daines) Jason_Thielman@daines.senate.gov, Chandler Morse (Sen. Flake)
Chandler_Morse@flake.senate.gov, Chris Hansen (Sen. Gardner) Chris_Hansen@gardner.senate.gov,
Ryan Bernstein (Sen. Hoeven) Ryan_Bernstein@hoeven.senate.gov, Boyd Matheson (Sen. Lee) Boyd_Matheson@lee.senate.gov
, Mark Isakowitz (Sen. Portman) Mark_Isakowitz@portman.senate.gov, John Sandy (Sen. Risch) John_Sandy@risch.senate.gov,
Travis Lumpkin (Sen. Cantwell) Travis_Lumpkin@cantwell.senate.gov, Jeff Lomonaco (Sen. Franken)
Jeff_Lomonaco@franken.senate.gov, Joe Britton (Sen. Heinrich) Joe_Britton@heinrich.senate.gov, Betsy Lin (Sen. Hirono)
Betsy_Lin@hirono.senate.gov, Patrick Hayes (Sen. Manchin) Patrick_Hayes@manchin.senate.gov,
Bill Sweeney (Sen. Stabenow) Bill_Sweeney@stabenow.senate.gov, Mindy Myers (Sen. Warren)
Mindy_Myers@warren.senate.gov, Jeff Michels (Sen. Wyden) Jeff_Michels@wyden.senate.gov,
Michaeleen Crowell (Sen. Sanders) Michaeleen_Crowell@sanders.senate.gov, Kay Rand (Sen. King) Kay_Rand@king.senate.gov
, Joe Hack (Sen. Fischer) Joe_Hack@fischer.senate.gov, Derrick Morgan (Sen. Sasse) Derrick_Morgan@sasse.senate.gov,
Karen Billups (Senate ENR Ctee) Karen_Billups@energy.senate.gov, Angela Becker-Dippmann (Senate ENR Ctee)
Angela_Becker-Dippmann@energy.senate.gov
Cc: Jordan Cox (Sen. Fischer) Jordan_Cox@fischer.senate.gov, Ginger Willson (Sen. Sasse) Ginger_Willson@sasse.senate.gov

Dear Chiefs of Staff of the Senate Energy & Natural Resources Committee (ENR) and the Nebraska Senate Delegation,
.
I have written you many times about my fear that Petroleum CEOs will not act in the Public Interest, and that the ENR Committee
should conduct hearings to investigate whether their business decisions during financial crisis will conflict with public welfare.
Yesterday and two weeks ago, Seeking Alpha published two reports that escalate my concerns and intensify my warning.
Doug Grandt

Report: Oil companies have scuttled plans for ~150 projects, 19M bbl/day
Dec 1 2015, 18:55 ET | By: Carl Surran, SA News Editor | Bit.ly/Alpha01Dec15 | Source Bit.ly/FuelFix01Dec15 (below)
The world's oil companies have canceled or delayed final investment decisions on ~150 projects that could wipe out 19M bbl/day
from the worlds hydrocarbons and stay underground for several years longer than expected amid lower crude oil prices,
according to a new report from Tudor Pickering Holt.
Canada and Norway top the investment banks list of deferred projects by country, while surprisingly few deepwater projects have
been deferred in the Gulf of Mexico and Brazil.
The biggest oil companies account for a third of the 150 projects Tudor Pickering says have been delayed or canceled, a scale
that suggests that companies will have real growth issues toward the end of the decade, and some will have to buy smaller
rivals to make up for it.
BP and Chevron (NYSE:CVX) have deferred the largest number of projects, while Exxon (NYSE:XOM) could delay the most oil
barrels (~2.5M bbl/day of production capacity from 25 projects); Royal Dutch Shell (RDS.A, RDS.B) is deferring 1.7M bbl/day, but
its deal to buy BG Group and its deepwater fields off Brazil has alleviated many of the growth issues it might otherwise face.

North Dakota oil well backlog surpasses 1,000 for the first time
Nov 14 2015, 08:25 ET | By: Carl Surran, SA News Editor | Bit.ly/Alpha14Nov15Bakken | Source Bit.ly/Reuters13Nov15 (below)
The number of oil wells in North Dakota that have been drilled but not fracked surpassed 1,000 for the first time in September, as
producers wait for prices to recover before turning them on.
As a result, more than 8% of oil wells in North Dakota now are sitting idle, harming the industry's ability to grow production; daily
output in the state fell 2% in September to ~1.16M bbl/day.
The backlog is "sending a definite signal to the market that oil and gas operators are not willing to do a lot of drilling or hydraulic
fracturing or production at these low prices," says Lynn Helms, director of the state's Department of Mineral Resources, who
figures the backlog is not likely to be worked off until next year at least, and only if oil prices rise.

Scrapping 150 projects, Big Oil could become structurally impaired

Posted on December 1, 2015 | By Collin Eaton | Bit.ly/FuelFix01Dec15
HOUSTON Blindsided by a brutal downturn, oil companies have scuttled plans for scores of costly energy projects in an
industry-wide retreat that could wipe out 19 million barrels from the worlds daily regimen of hydrocarbons over the next few
years, a new report says.
Oil companies have canceled or delayed final investment decisions on about 150 projects that are tied to 125 billion barrels of oil
equivalent, which could stay underground for several years longer than expected amid a steep drop in crude prices, energy
investment bank Tudor, Pickering, Holt & Co. said Tuesday.
By not sanctioning projects today, youre putting a hole in production in 2017, 2018 and 2019 potentially a big hole, said
David Pursell, head of macro research at Houston energy investment bank Tudor, Pickering, Holt & Co.
Analysts had expected U.S. oil production, which is down by 500,000 barrels from its peak in April, to drop more rapidly than it
has this year and help crude prices recover quickly from multi-year lows.
But one of the lessons of the year-long price slump has been that if crude prices stay low long enough, other sources of crude will
have to share in the global output decline thats expected to eventually put oil supply and demand back into balance. Outside of
the 13-member Organization of Petroleum Exporting Countries, all kinds of crude production are at risk when Big Oil is forced to
weigh investment returns against scenarios in which crude prices remain depressed for years.
The U.S. Energy Information Administration believes the harvest of liquid fuels in non-OPEC countries like Russia and the United
States is going to sink in the fourth quarter of 2015, the first absolute decline since mid-2011. Non-OPEC production growth is
expected to sink by 520,000 barrels a day its lowest point next year in the first quarter of 2016.
Its really about how long are we down at these (oil price) levels, because the longer youre down here, every month or two it just
puts more stress on the balance sheets, said Pearce Hammond, an analyst at Simmons & Company International.
Tudor Pickering projects about 3 million barrels of the industrys deferred daily production will come from Canadian oil sands
projects, among the industrys most expensive prospects, because the viscous crude is too thick to move easily underground.
Another 5 million barrels will likely be delayed in war-torn Iraq and Kurdistan, where the regional government has previously failed
to make payments to the western oil companies that drill into reservoirs there.
Elsewhere, in Mozambique, Australia and Canada, progress on liquefied natural gas plants has been slow. Tudor Pickering
expects 20 billion cubic feet a day of LNG production capacity will be deferred as Big Oil delays plans on 20 projects. Virtually all
(LNG) project sanction decisions outside of the U.S. have been pushed back, the investment bank said.
Canada and Norway topped the investment banks list of deferred projects by country. A surprisingly few deep-water projects
have been deferred in the Gulf of Mexico and Brazil, Tudor Pickering said, but the industry has shelved plans for more deepwater ventures in Angola and Nigeria, which were in trouble even before oil prices fell, because of unattractive terms offered by
the Angolan government and fiscal issues in Nigeria. In terms of daily production, about 6 million barrels buried in the earths
deepest depths will remain there for longer than oil companies intended.
The International Energy Agency estimates it costs $95 to $114 a barrel to pull up a barrel of Canadian oil sands and $59 to $90
a barrel in the U.S. shale plays. Deep-water projects cost $60 to $75 a barrel in West Africa and $38 to $65 a barrel in Brazil.
Meanwhile, Saudi Arabia and Iraq can pump oil for $9 to $14 a barrel. Both OPEC countries have pumped record amounts of
crude this year.
All told, the industry has scrapped about $125 billion in annual capital spending plans over the next five years, assuming just half
of the projects would have been sanctioned if the oil market hadnt crashed over the last 18 months. That leaves oil companies
several years to catch up on building the production equipment and infrastructure they need to bring their buried oil to market.
Even when prices come back, U.S. production will certainly rebound after a period of time, but its the rest of non-OPEC that
could be structurally impaired for a while, Pursell said.
For the worlds biggest publicly traded oil companies, the huge scale of the delays suggests that companies will have real growth
issues toward the end of the decade, and some will have to buy smaller rivals to make up for it, the investment bank said. Big Oil
companies account for a third of the 150 projects Tudor Pickering says have been delayed or canceled.
BP and Chevron have deferred the largest number of projects while Exxon Mobil Corp. could delay the most oil barrels, about 2.5
million barrels a day of production capacity from 25 projects. Thats about two thirds the amount the Irving oil giant currently
produces. Royal Dutch Shell is next, deferring 1.7 million barrels of oil a day, but its deal to buy BG Group this year has alleviated
many of the growth issues it might face in coming years. BG Group has a big stake in Brazils deep-water fields.

UPDATE 2-North Dakota oil well backlog eclipses 1,000 for first time
By Ernest Scheyder | Fri Nov 13, 2015 9:00pm GMT | Bit.ly/Reuters13Nov15
Nov 13 The number of oil wells in North Dakota that have been drilled but not fracked eclipsed 1,000 for the first time in
September, as producers delayed turning them on in hopes crude prices will soon recover.
The milestone, which was widely expected around the second-largest oil producing state, highlights the immense cost pressure
companies have come under in the past year as crude prices have dropped more than 50 percent.
Fracking alone can account for nearly two-thirds of a well's cost.
Today more than 8 percent of oil wells in the state are sitting idle, storing their crude and natural gas in rock miles underground
until prices rise.
The delay harms the industry's ability to grow production, a metric closely watched by investors. Daily output in the state fell 2
percent in September.
"That's sending a definite signal to the market that oil and gas operators are not willing to do a lot of drilling or hydraulic fracturing
or production at these low prices," said Lynn Helms, director of the state's Department of Mineral Resources (DMR), the oil
regulator.
State officials last month said they would consider, on a case-by-case basis, allowing oil producers additional extensions to bring
new wells online. The change was widely perceived as a cost-saving favor to the energy industry and has helped fuel the jump to
above 1,000.
The DMR doesn't expect that backlog to be worked off until next year at least and only if oil prices rise, Helms said.
Helms released separate data showing the breakeven price for oil production now sits above current prices for two of the state's
four main crude-rich counties.
Producers "are shutting some wells in and producing only as much oil as they need to make the stockholders and the bankers
happy," Helms said.
OUTPUT FALLS
North Dakota produced 1,162,253 barrels of oil per day (bpd) in September, compared with 1,187,631 bpd in August, according
to the DMR, which reports on a two-month lag.
The number of producing wells fell by six to 13,025, though state officials permitted one more well in September than in August.
Helms acknowledged the state has experienced far more pain in its oil price battle with OPEC than initially expected when the
cartel decided to maintain production last year.
Many in the state had said at the time that OPEC's strategy would ultimately fail, an expectation that, so far, has proven
premature. (Reporting by Ernest Scheyder; Editing by Meredith Mazzilli)