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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 25 February 2014

Contributor: Todd Erickson
Posted: 02/23/2014
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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

14

+3

9

9

Arkansas

12

0

11

16

California onshore

34

0

35

33

Colorado

60

0

68

57

Kansas

32

-1

28

26

Montana

8

0

13

13

N. Louisiana

23

0

25

24

New Mexico

81

-2

79

75

North Dakota

166

-2

167

173

Ohio

39

-1

34

28

Oklahoma

181

-1

172

185

Pennsylvania

54

+1

54

72

Texas

846

+6

831

843

Utah

26

0

28

29

West Virginia

30

0

37

23

Wyoming

51

0

56

45

Total US

1771

+7

1761

1761

Total Canada land

632

+8

367

661

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

102.10

93.61

92.74

Brent

109.65

111.49

114.55

Natural Gas-USD/mmbtu

NYMEX

6.43

4.24

3.42

General News

Capex into US chemical industry to top $100 billion, due to low natural gas prices

According to the American Chemistry Council, the industry's trade group, planned investments into the US chemical industry directly linked to affordable natural gas and natural gas liquids will exceed $100 billion, as of February. More than half of this investment comes from outside the US. "Thanks to the shale gas production boom, the United States is the most attractive place in the world to invest in chemical and plastics manufacturing," said ACC President Cal Dooley. The investment is expected to create 637,000 new jobs by 2023, along with 222,000 temporary jobs during the capital investment phase. Article here

Unconventional Oil & Gas News

New study by Scotiabank shows Canada's oil sands cheaper to produce than US tight oil from shale

Oil sands from western Canada contain tremendous reserve potential, but until recently have been fairly expensive to produce. Two recent studies show that these production costs are coming down, making Canadian oil sands competitive with US tight oil from places like the Bakken, Eagle Ford and Permian Basin. "Investors may have the perception that Canadian oil plays are less cost-competitive than the new 'light, tight' oil plays in the United States, which is not the case," said Patricia Mohr, vice-president of economics and commodity markets specialist at Scotiabank. According to the study, in-situ oil sands projects in Alberta have a break-even cost of from $60 to $65, while Bakken and Eagle Ford tight oil projects' break even is from $63 to $69, and Permian devlopment projects come in at $81. So far, the biggest challenge for developing Canadian heavy crude has come from transportation as the Keystone XL pipeline languishes, creating a transport bottleneck and resulting price discount. Expect crude-by-rail alternatives to unlock Canadian heavy oil going forward, as discounts to US and Brent crude attract growing interest by US refiners. Article here

Goodrich commits $300 million to Tuscaloosa Marine Shale

Currently the largest producer in this cutting-edge shale play, Goodrich will utilize the majority of their capital to drill 32 wells in the play in 2014, with a total spend of $300 million. Goodrich has two drilling rigs operating in the play right now, but will expand that to five rigs by year end. Article here

Environment and Safety News

Industry urged to change the public conversation on fracking

At the Petroleum Connection's Clean Frac'ing Conference in Houston, public relations experts expressed that environmentalists have so far framed the conversation on fracking. According to George Stark, spokesperson for Cabot Oil & Gas, "We've allowed the emotion of the opposition to dictate the conversation." Experts and producers recommended engaging the public directly, offering information and transparency on operations. Cabot demystifies the process of hydraulic fracturing by inviting community leaders, politicians and members of the media to witness the process in action. According to Hugo Gutierrez with Marathon Oil, "I think we've got a good story to tell," he said. "But it needs to be simplified and told to a large body of people." Article here

Mergers and Acquisitions News

Devon Energy sells its conventional Canadian assets to CNR

The US$2.8 billion deal does not include Devon's Horn River, Lloydminster, or thermal heavy oil assets located in Canada. Devon plans to use the proceed to pay its debt incurred in buying Eagle Ford assets. "This agreement represents a significant step forward in the execution of our non-core divestiture process," said John Richels, president and CEO. Article here

Contributor: Todd Erickson