The Weekly Oil and Gas Update

The Weekly US Oil & Gas Update: 02 April 2014

Todd Erickson
Contributor: Todd Erickson
Posted: 04/01/2014

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

15

California onshore

38

-3

33

37

Colorado

63

+2

64

58

Kansas

29

0

31

25

Montana

7

0

9

10

N. Louisiana

27

-2

25

24

New Mexico

88

+2

78

80

North Dakota

178

-1

173

175

Ohio

38

-1

35

28

Oklahoma

188

+5

172

192

Pennsylvania

51

-5

56

69

Texas

866

+8

835

823

Utah

27

-1

23

30

West Virginia

26

+3

32

22

Wyoming

50

-3

53

42

Total US

1809

+6

1757

1748

Total Canada land

296

-92

262

243

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

101.48

93.12

97.10

Brent

107.86

106.71

108.76

Natural Gas-USD/mmbtu

NYMEX

4.46

4.19

3.97

General News

University of Colorado study: Statewide fracking ban could cost 68,000 jobs and $8 billion

The economic modeling study by CU's Leeds School of Business was conducted on behalf of the Metro Denver Economic Development Corp. along with others. "It is a worst-case scenario," Metro Denver EDC chief Tom Clark said. "We wanted the public to understand the size of the oil and gas in Colorado." The proposed ballot initiative for this fall's election is not for a statewide ban, but rather a means for municipalities to enact their own bans, counter to regulations at the state level. The study takes a worst-case view in order to demonstrate the possible effects of restricting one of the states economic drivers of growth. Article here

DOT officials say industry withholding information on crude shipped by rail from the Bakken

After four fiery rail crashes involving Bakken crude, officials from the US Department of Transportation demanded additional information from the industry on the nature of the crude shipped via rail. It is thought that Bakken-derived crude is more flammable than other, heavier crudes. "Despite the energy industry making assurances to DOT more than two months ago, we still lack data we requested and that energy stakeholders agreed to produce," a DOT spokeswoman told Reuters in a written statement on Friday. "The overall and ongoing lack of cooperation is disappointing, slows progress, and certainly raises concerns." Industry groups deny this characterization. API President and CEO Jack Gerard said in a statement the industry has been "cooperating and sharing proprietary data with the Department of Transportation on the characteristics of crude oil. Reports to the contrary are false." One energy industry trade group, the American Fuel & Petrochemical Manufacturers (AFPM), said the DOT has requested confidential business information that companies may be reluctant to share. State and local officials along rail routes have become concerned with the potential for catastrophic derailments and are also adding their voice. Article here

Pennsylvania considering severance tax on natural gas

According to Pennsylvania State Senator John Yudichak, "Our plan that we're announcing today would level a 5% severance tax on the extraction of Marcellus Shale gas." Such a tax would raise $720 million a year at current production levels. The affect this extra cost would have on industry is hotly debated. Yudichak says that many other producing states have such a tax, with no effect on production activity. Governor Tom Corbett and many on the Republican side of the aisle disagree, and fear that adding the cost of a severance tax could drive industry away. Expect a lively debate over this proposal in the coming months. Article here

Unconventional Oil & Gas News

Rigs drilling for oil at highest level ever, crude output most since 1985

The number of rigs drilling for oil hit its highest level recorded since Baker Hughes began counting oil-directed rigs separately from gas-directed in 1987. The activity is primarily the result of new drilling and completions technology which has unlocked shale formations as a source for oil and gas. One of the busiest,Texas' Eagle Ford formation, now has 209 rigs targeting oil, matching its previous high from May 2013. Article here

Environment and Safety News

Lesser prairie chicken listed as threatened, but with a final special rule

The oil and gas industry was disappointed with the US Fish and Wildlife Service's listing of the lesser prairie chicken as threatened on March 27, but a final special rule enables the Western Association of Fish and Wildlife Agencies' range-wide conservation plan to remain in effect, negating the need for additional federal oversight. The conservation plan is a joint effort between the agency and the industry to preserve and enhance the bird's habitat. Efforts have been extensive; 32 oil and gas, power transmission, and wind energy companies committed to enroll more than 3.6 million acres in its LPC range-wide conservation plan, providing about $21 million for habitat conservation over 3 years. Although the listing was short of endangered, and included the final special rule, industry participants were disappointed. "We haven't been rewarded for our proactive efforts," said New Mexico Oil & Gas Association President Steve Henke, adding, "It's a step backward." Many in the industry question the science behind the bird's reduced numbers, saying that studies did not adequately take the area's severe drought into consideration. According to Oklahoma Independent Petroleum Association Regulatory Committee Chairman Kim Hatfield, "the truth is declines in the population have very little relationship to oil and gas activity in western Oklahoma." Article here

Mergers and Acquisitions News

Private equity group KKR backs Dallas E&P company

Porter Trimble, former executive at Merit Energy, is leading the new E&P company Feur de Lis. According to Trimble, the new company has "in excess of $1 billion" in available capital to "acquire, operate and exploit" oil and gas assets in North America. KKR recently raised $2 billion for its new oil and gas fund. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 04/01/2014

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