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The Weekly Oil and Gas Update

The Weekly Update: 23rd July 2012

Contributor: Todd Erickson
Posted: 07/23/2012
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Catch up with his week's industry news, oil and gas prices and the North American rig count.
GENERAL NEWS

Statoil: US the most attractive country for oil/gas development

A stable and transparent regulatory environment, private mineral-rights ownership, and lower taxes than Norway all combine to make the US Statoil's most attractice location for further investment. With $20 billion in assets acquired domestically in the last few years, Statoil is counting on the US to maintain its production levels as its legacy wells offshore of Norway experience high declines. Article here

API: Q2 number of oil well completions grew 13% from last year, while gas well completions fell 24%

Drilling and completion activities for oil continue to increase in 2012, with 7,195 wells completed in the second quarter of this year. Gas completions took a dive for a total of 2,472 for the second quarter. Article here

Gas and oil prices will de-link with the advent of global gas trading

The global price for natural gas has traditionaly been derived from the price of oil, due to their close production association. Analysts expect that association to change, with the US's growing export capacity. Sabine Pass will be the first US LNG export terminal to come on-line in 2015, with more to follow shortly. With a market released from its dependance on pipeline delivery, gas will be traded at prevailing market prices. Cheniere Energy Inc., which plans to export LNG from the Sabine Pass terminal in the US by 2015, already used Henry Hub pricing for its LNG export contracts. Article here
OIL & GAS PRICES



This Week

12 weeks ago

1 year ago

Oil

Nymex Crude Future

88.32

Brent Spot

103.76

WTI Cushing Spot

91.44

104.89

98.97

Natural Gas

Henry Hub Future

3.05

Henry Hub Spot

3.02

1.89

4.27

NYC Gate Spot

3.19




SHALE
NEWS


Texas' Eagle Ford has 280 rigs drilling for gas and oil

Receiving more attention than any resource play in the US right now, the Eagle Ford continues to increase its rig count, even as North Dakota has plateaued around 200 rigs. Of the 280 drilling rigs, 263 are drilling horizontally and 71 target natural gas. Article here

Analyst says Bakken's largest driller are reducing their rig counts

Barclays analyst Amrita Sen said in a note last week that although companies are not publicly announcing it, rig counts for the Bakken's largest drillers will come down this month. This is largely due to anxiety over the stability of oil prices, currently around $88 per barrel, and the high cost to drill a Bakken well, around $10 million. If oil were to drop below $80, a larger reduction could be expected. Article here

Natural gas-fed fertilizer plant proposed for North Dakota

The North Dakota Corn Growers Association is in the planning stages for a world-class fertilizer plant for the North-South Dakota market. The plant would utilize natural gas from the nearby Bakken fields as feedstock to produce 2,200 tons of fertilizer a day. Estimate cost for the plant is $1.5 billion. Article here


ENVIRONMENT & SAFETY NEWS


Illegal North Dakota wastewater injection well generates fines and criminal charges

The President of Executive Drilling LLC faces criminal charges for deceiving inspectors and knowingly injecting drilling wastewater down a well not approved for these activities. The well is owned by Halek Operating ND LLC, who had been told by state regulators to stop wastewater injections, but continued. The connection between the two companies is unclear at this time. Lynn Helms, Director for the ND DMR, said this this was the most significan environmental case in North Dakota that he was aware of. "It's a very serious violation and it needs to be dealt with in a very serious manner," Helms said. Article here

ACQUISITIONS & MERGERS NEWS


Private equity group Riverstone invests $500 million into midstream company Meritage Midstream Services II

The company provides transportation and processing to E&P companies in the US's emerging shale plays. Article here

RIG COUNT


This Week

Change from last week

12 weeks ago

One year ago

Arkansas

17

0

26

34

California

52

0

45

46

Colorado

65

-1

68

70

Kansas

27

-2

26

31

Montana

20

+1

17

11

N. Louisiana

25

+2

41

91

New Mexico

86

-5

85

82

North Dakota

198

-1

195

158

Ohio

18

-1

12

12

Oklahoma

202

0

201

177

Pennsylvania

78

0

101

116

Texas

900

-10

929

864

Utah

40

0

40

29

West Virginia

24

-3

22

21

Wyoming

47

+2

40

51

Total US

1935

-18

1972

1916

Total Canada land

326

+34

146

375



The Oil & Gas Weekly is compiled by Todd Erickson. Todd is a veteran executive manager in the North American E&P market. He has management experience in high-growth oil & gas service organizations performing a leadership role in operations, strategy, and corporate development with a track record of identifying opportunities and best-practices, creating execution plans, then developing effective teams and leaders to execute them.

Learn more about Todd here

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Contributor: Todd Erickson