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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 5th May 2015

Contributor: Todd Erickson
Posted: 05/04/2015
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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

10

-1

10

9

Arkansas

8

-1

12

11

California land

13

0

14

38

Colorado

37

0

55

64

Kansas

11

-1

18

31

Mississippi

3

-1

8

13

N. Louisiana

27

-2

33

27

New Mexico

46

-2

78

90

North Dakota

79

+1

132

176

Ohio

25

0

39

35

Oklahoma

108

-7

176

195

Pennsylvania

47

-2

54

58

Texas

380

-13

654

892

Utah

7

0

12

27

West Virginia

21

0

19

28

Wyoming

24

+1

42

49

Total US

905

-27

1456

1854

Total Canada land

79

+1

377

162

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

59.56

52.99

99.74

Brent

66.98

57.00

109.48

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.77

2.62

4.73

General News

Offshore Gulf of Mexico production projected to rise

According to the US Energy Information Administration (EIA), crude oil production should rise to 1.52 million bpd this year and 1.61 million bpd in 2016, accounting for up to 17% of total US crude production. The increase comes from projects started up after the Deepwater Horizon's spill back in 2010. Offshore projects typically take years to move from discovery to production, and we can expect to see a wave of them come on line in. The EIS reports that 13 new fields are expected to start in the next two years, and we can expect more growth from this area in the future. "The Geology of the basin along with the complexity and abundance of salt structures provides the setting that makes the Gulf of Mexico on of the richest oil and natural gas regions in the world," according to the Bureau of Ocean Energy Management. Article here

Analyst sees market turning back up on 2016

At a recent conference in the Woodlands, Texas, analyst Richard Spears provided his opinion on the timing for industry recovery, stating a more optimistic outlook than most. According to Spears, the oilfield equipment and services market totaled $450 billion in 2014, and will decline by $100 billion this year. Looking at past spending declines in 1999, 2002, and 2009, Spears says that each was followed by in increase in the following year of between 8% and 10%. If that logic follows, then 2016 should see a similar increase. "We will get to the bottom of the market in summer and stay two quarters. It always looks like this. There is hardly any difference at all. It feels bad right now, but it's a normal downturn," said Spears. Article here

Unconventional Oil & Gas News

Whiting Petroleum ready to add rigs at $70 oil

According to Whiting CEO Jim Volker, "[i]f we were to see $70 oil, which is basically $10 above where we are today, you'd probably see us put a couple of rigs back." This would be in addition to the 11 rigs Whiting plans to operate through 2016. Also credit price cuts by service providers for Volker's optimism. Volker says service providers "have responded quickly and decisively" to requests to cut costs, making projects viable down to $50 per barrel. Article here

Marcellus operators shut in natural gas wells in response to low prices

Pipeline company Williams reported last week that several of its customers will be temporarily shutting in production due to the low local price environment. "This is going to dampen some of the expected growth from our Northeast volumes," said CEO Alan Armstrong. Takeaway limitations have pushed local Dominion South Hub prices down to $2.05 per mmbtu for the first three months of the year, compared to more than double that price a year ago. The situation should be temporary as new pipelines to additional markets become completed. "We continue to feel very strong about the overall health of the business as demand for gas picks up and some of the extreme bottlenecks that exist in the Northeast start to be relieved," said Armstrong. Article here

Environment and Safety News

Statoil to use CO2 to frack in the Bakken

Liquid CO2 has been used as an energized fluid in Canada, but not yet in the Bakken. Statoil has entered into an agreement with Ferus to develop the technique specifically to be employed in its Bakken operations, with help from researchers at the University of Texas, Austin. Studies have shown that CO2 can enhance well production while reducing the use of fresh water in multi-stage hydraulic fracturing operations. Article here

Mergers and Acquisitions News

Caliber Midstream putting itself up for sale

Based in Denver, Colorado and owned by Triangle Petroleum and First Reserve Corp, Caliber hopes it could be valued as high as $1 billion. The company transports crude through 250 miles of pipeline in North Dakota's McKenzie County in the heart of the Bakken. At this stage, Caliber is still interviewing investment banks to advise it in the sale process. Article here

Contributor: Todd Erickson