The Weekly Oil and Gas Update

The Weekly US Oil & Gas Update: 01 October 2013

Todd Erickson
Contributor: Todd Erickson
Posted: 09/30/2013

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

12 weeks ago

One year ago

Alaska

9

-3

8

7

Arkansas

11

-1

14

16

California onshore

38

0

38

35

Colorado

70

0

63

62

Kansas

29

0

30

30

Montana

12

-1

10

24

N. Louisiana

24

0

23

24

New Mexico

74

+3

76

86

North Dakota

171

0

175

181

Ohio

35

0

32

19

Oklahoma

166

+4

173

191

Pennsylvania

52

+2

54

63

Texas

825

-11

832

878

Utah

29

-1

33

37

West Virginia

34

-3

25

27

Wyoming

49

-1

49

50

Total US

1744

-17

1748

1848

Total Canada land

385

+2

204

359

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

102.87

97.94

92.44

Brent

108.63

107.75

112.58

Natural Gas - USD/mmbtu

NYMEX

3.59

3.81

2.82

General News

Pew Research poll: only one third of Americans know domestic oil & gas production increasing, while almost half oppose hydraulic fracturing

The poll conducted in September of this year showed an alarming trend in increasing resistance to the common method of hydraulic fracturing (fracking), with 49% opposed to the method, up from 38% opposed just last March. Additionally, although 48% of Americans are aware that domestic energy production is expanding, only 34% realize that this expansion comes from oil & gas production. Reminds me of a poll that I saw on the US deficit some years ago; a majority of Americans had strong opinions on how to solve he US federal deficit problem, but only about 25% could define what a budget deficit was. On the positive side, 65% favor building the Keystone XL pipeline. Article here

Hydrocarbon spills from Colorado's recent flood escalate the anti-industry rhetoric

Recent articles from the New York Times (here) and community public radio station KUNC (here) do a good job of framing up the issues, as they are perceived by those embroiled in the rising resistance to development. Activists are using spills from the recent flooding, an event that has no precedent in Colorado history, as an "I told you so" event that highlights the risks of developing in urban and suburban areas. What is lacking from the fractivist side is any sense of proportionality. True, about 37,000 gallons of hydrocarbons spilled as a result of the flood, but as energy officials point out, that would fill up about five percent of an Olympic-size swimming pool. Contrast that to the millions of gallons of raw sewage and countless gallons of waste spilled from agriculture and industrial applications that resulted from the flood. Proportionally, the impact from hydrocarbons was small and well managed. As you might expect though, activists are not calling for a ban on housing development, agriculture, or industrial activity along the front range. In the court of public opinion, where facts sometimes play second fiddle, expect the spills to play an important role in future regulatory activities.

Uintah Basin to get crude terminal/processing facility

Rock River Resources will build the terminal and plant that will be located in Green River, Utah. Construction will break ground this year, with terminal capacity becoming available next year. by 2015, the second segment of the project will be onlline; a 10,000 barrel per day topping plant that will process local crudes and condensates into naptha, fuel oil, diesel and jet fuel. By 2016, the third phase will be complete; a processing plant that will produce refined paraffin waxes and lube oils for the local market. Article here

Unconventional Oil & Gas News

North Dakota's Lynn Helms expects Bakken production to double by '17

According to Helms at a recent industry address, the State's Department of Mineral Resources Director, production of oil will hit 1.6 million barrels per day some time in 2017. Other comments that impacted the crowd were the estimate that fresh water volume for maintenance would soon surpass that of water volume for hydraulic fracturing, and that Helms believes the number one challenge for state regulators was natural gas flaring. Article here

Expect another big growth year for the Marcellus and Utica

Analysts say that due to a backlog in processing and pipeline capacity, the Marcellus and Utica have over 1,500 wells drilled that are not yet producing. As these wells come on line over the next year and a half, production could increase by an additional 46% this year and by another 29% next year, according to Barclays analyst Shiyang Wang. Expect gains like these to keep prices low in the near future. Article here

Environment and Safety News

Habitat exchange; a free-market way for the oil & gas industry to protect the Lesser Prairie Chicken

The Lesser Prairie Chicken has been a species of concern since 1998. "Now it's on the fast track to be listed as threatened or endangered, possibly as early as March, 2014. And it affects private land. Agricultural producers and oil and gas will be affected and this is only the beginning." according to Steve Manning, a consultant with Natural Resources Solutions. But the concept of a habitat exchange has the possibility of utilizing free market principles to set aside large tracts of land for the benefit of the Lesser Prairie Chicken. It works like this; for any development that proposes to disturb land identified as species habitat, a similar amount of land in some other part of the habitat must be set aside in exchange, with the cost borne by the developer. David Wolfe, with the Environmental Defense Fund, says this sort of creative thinking sometimes pays off with solutions that produce, "positive, sustainable outcomes that benefit wildlife, farmers and ranchers and the energy industry." Watch for this concept to gain attention as oil & gas development continues across the Western US. Article here

Mergers and Acquisitions News

Shell putting its Eagle Ford assets up for sale

A company spokesman said that the asset did not meet Shell's targets for size and profitability. The assets include 106,000 acres and 150 operating wells. In August, Shell took a $2.2 billion value impairment charge against its U.S. shale business. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 09/30/2013

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