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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 13th October 2015

Contributor: Todd Erickson
Posted: 10/12/2015
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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

Rig Counts - select states with key plays

Select states

This Week

Change from last week

3 months ago

One year ago

Alaska

11

0

10

9

Arkansas

4

0

4

11

California land

12

0

12

43

Colorado

31

+1

38

76

Kansas

9

-1

10

25

Mississippi

5

0

4

17

N. Louisiana

25

-2

25

31

New Mexico

46

0

49

102

North Dakota

64

-1

70

182

Ohio

19

-1

19

42

Oklahoma

91

-6

106

211

Pennsylvania

29

-1

45

55

Texas

353

-4

368

896

Utah

5

0

7

24

West Virginia

18

0

18

32

Wyoming

24

0

21

62

Total US

795

-14

863

1930

Total Canada land

179

+1

165

420

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

50.04

50.11

90.33

Brent

53.21

56.42

90.65

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.54

2.88

3.89

General News

Oil Execs say US to experience "dramatic" decline in production

Last Tuesday in a London conference, former EOG CEO Mark Papa told the crowd that "[w]e are about to see a pretty dramatic decline in US production growth." Shell's CEO Ben van Beurden agreed with Papa, and both said the cause was the unavailability of capital to continue drilling. According to van Beurden, "[p]roducers are now looking for new cash to survive and they will probably struggle to get it." The Energy Information Administration agrees with both, forecasting US production to decline from a high in April of 9.6 million bpd to around 8.6 million bpd next year. So, what happens when production falls so precipitously? "This could cause prices to spike upwards, starting a new cycle of strong production growth in US shale oil and subsequent volatility," said van Beurden. Article here

Unconventional Oil & Gas News

Monterey Shale potential downgraded again

At one point several years ago, California's Monterey Shale was touted to contain upwards of 13 billion barrels of oil, making it larger than the Bakken or Eagle Ford. Re-examination of the geology has pared back expectations considerably over the last year and a half. The latest study shows a potential of just 21 million barrels of oil recoverable with current technology. Article here

Environment and Safety News

The market for oil-by-rail tank cars takes a fall

A short time ago, retrofitters for crude oil tank cars expected a bonanza on work to meet new safety requirements, but recent market trends, and stricter regulations than expected, have put a damper on the industry. "No one anticipated the new rules would require all these bells and whistles," said Robert Pickel Jr., SVP at Canadian rail car builder National Steel Car. "Some of the retrofits cost more than the actual car." Initial estimates to bring older cars up to code by the US DOT were around $30,000. The actual number looks to be closer to $80,000, leaving owners of older cars uncertain whether or not to make the investment. Add to that the plunge in demand, as $40 oil depresses the market for crude-by-rail in some regions by as much as 40% from previous years. As a result, few older cars have been retrofitted to comply with the new rules. "If you would have asked me eight to nine months ago, how many retrofits would we be doing in the third or fourth quarter, we would have guessed a lot more," says Michael Obertop with GBW Railcar Services. Article here

Mergers and Acquisitions News

Encana sells DJ Basin assets for $900 million
Denver's Broe Group is the buyer, in a deal that includes 51,000 net acres producing 52 mmcfd of natural gas and 14,800 bpd of crude oil. Encana will use the money to strengthen its balance sheet after recent acquisitions of more than $10 billion in the Permian and Eagle Ford. Article here

Contributor: Todd Erickson