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The Weekly Oil and Gas Update

The Weekly Update 12th June 2012

Contributor: Todd Erickson
Posted: 06/11/2012
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Catch up with his week's industry news, oil and gas prices and the North American rig count.
GENERAL NEWS

Chevron believes development of shale gas outside US will be slower than most expect

CEO of ExxonMobil agrees. The US's known geology and extensive infrastructure have enabled it to take advantage of new drilling and completion technologies in shale resources very quickly. The rest of the world will move more slowly. China, with its huge reserve potential, may move most quickly--Chevron has already started drilling there. Article here

US oil production hits 6 million bpd, highest in 14 years

Production expansion in new tight oil plays accounts for most of the gain. The US uses approximately 18.8 million bpd, so we still have a ways to go to energy independence. Article here

Refiner Phillips 66 may purchase 2,000 rail cars for crude transport

Recently spun off from ConocoPhillips, the downstream company sees the railcars as a "pipeline on wheels" that it can use to transport crude oil from the rapidly-expanding tight oil fields, such as the Niobrara, Bakken, Eagle Ford, to excess capacity in select refineries that do not have pipeline capacity from these plays. Article here
OIL & GAS PRICES


This Week

12 weeks ago

1 year ago

Oil

Nymex Crude Future

84.47

Brent Spot

99.43

WTI Cushing Spot

84.83

106.34

97.20

Natural Gas

Henry Hub Future

2.26

Henry Hub Spot

2.23

2.25

4.20

NYC Gate Spot

2.37

SHALE NEWS


Bakken oil out-competing Canadian oil sands for refinery capacity

Oil production from North Dakota's Bakken and northern Alberta's oil sands has been steadily increasing; Wood Mckenzie expects Bakken production to double to 1.2 million bopd by 2015, and Canadian oil sands to reach 2.4 bopd by 2015. With no refineries close by, both need to move oil to refineries in either the Midwest or the Gulf States. Limited refinery space in these areas, and capacity to move the oil from production areas to refineries with capacity have created a competitive situation, and the Bakken has the upper hand with its lower production costs. Wood Mckenzie estimates that Bakken breakeven is WTI $60/bbl, while Canadian oil sands runs from WTI $60/bbl to $100/bbl, depending on the production technology utilized. Both resource plays would benefit from an infrastucture expansion of such projects such as the Keystone XL pipeline. Article here

California's Monterey Shale huge, but recovery is technical and tricky

The EIA believes the Monterey Shale total recoverable is 15.4 billion barrels, larger than the prolific Bakken, but the "tricky" geology will make extracting this resource complex and expensive. Article here
ENVIRONMENT & SAFETY NEWS


Officials in Ohio's largest watershed halt water sales to oil & gas

Responding to public concern over the oil & gas industry's use of water for hydraulic fracturing, the Muskingum Watershed Conservancy District halted all sales of water to industry, preferring to wait until a third-party water-availability study was complete. Not everyone agrees; "Their inaction will cause an increase in truck traffic, random withdrawals of water from creeks and streams in the watershed, and will slow down the pace of oil and gas development because of the difficulty in finding water," Rich Milleson, economic-development director for the Cadiz Community Improvement Corp., told the newspaper. Milleson says more research isn't necessary.

"They have the science to know they can withdraw great amounts of water from those lakes without any impact," Milleson said. Article here
ACQUISITIONS & MERGERS NEWS

Chesapeake nets $4 billion cash on sales of midstream assets from three transactions

The latest transactions for the struggling company brings the total proceeds from asset sales in 2012 to $6.6 billion. Chesapeake still has numerous other assets up for sales to close its cash shortfall in the coming year, including acreage in Wyoming, Colorado, Ohio, and Texas. Article here

Antero sells Arkoma Basin assets to Vanguard Natural Resources for $445 million

The divestiture by Antero will enable them to focus on their high-growth Appalachian shale projects. Article here

Tetra Tech buys Denver-based Rooney Engineering

Rooney focuses on midstream engineering in the growing Niobrara and Bakken plays. Article here

Koch puts Alberta oil-sands assets up for sale

The Wichita-based private company is offering to sell, or a joint venture opportunity in 220,000 acres in projects in northern Alberta. Article here
RIG COUNT


This Week

Change from last week

12 weeks ago

One year ago

Arkansas

21

-1

29

35

California

53

+2

44

43

Colorado

74

+4

63

69

Kansas

25

-2

33

29

Montana

22

0

17

10

N. Louisiana

31

-4

57

101

New Mexico

88

0

81

85

North Dakota

203

0

196

166

Ohio

19

-2

10

9

Oklahoma

194

+2

195

166

Pennsylvania

85

0

101

114

Texas

934

+2

929

833

Utah

39

-2

36

27

West Virginia

23

0

28

18

Wyoming

39

0

45

45

Total US

1984

+4

1973

1855

Total Canada land

230

+74

655

231



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