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The Weekly Oil and Gas Update

The Weekly US Oil & Gas Update: 15 October 2013

Contributor: Todd Erickson
Posted: 10/13/2013
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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

+4

9

7

Arkansas

12

+1

14

15

California onshore

38

-2

39

34

Colorado

70

0

66

61

Kansas

24

-4

29

31

Montana

11

-1

10

25

N. Louisiana

24

-1

23

24

New Mexico

75

+2

81

87

North Dakota

170

-1

174

177

Ohio

35

+1

35

23

Oklahoma

178

+7

169

191

Pennsylvania

58

+4

53

66

Texas

822

-8

836

872

Utah

29

0

32

37

West Virginia

30

-4

24

27

Wyoming

49

0

51

49

Total US

1743

-13

1759

1835

Total Canada land

353

-4

291

360

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

101.52

106.20

91.84

Brent

110.45

108.82

115.00

Natural Gas - USD/mmbtu

NYMEX

3.82

3.65

3.18

General News

China passes US as world's largest oil importer; planning to increase acquisitions of global producers

According to the US EIA, in September China passed the US in oil imports. In response, Chinese companies have been acquiring global production assets, both for energy security and commercial growth. Between China's CNOOC and Sinopec, since 2009 over $100 billion has been spent to acquire global oil & gas assets, with expectations this rate will increase as China's thirst for oil continues. Article here

Chesapeake lays of 800 employees

The layoff was part of the ongoing restructuring efforts of CEO Doug Lawler, who was brought after the dismissal of Aubrey McClendon. "By scaling E&P support services, reducing management layers, and aligning resources with a sharpened focus on accountability and efficiency, we have created a business built to deliver a sustainable and profitable future," said Lawler in an Oct. 8 letter to Chesapeake employees. Most of the employees who were laid off worked at the company's Oklahoma City corporate campus. Article here

Raymond James analyst estimates natural gas production to grow by 2 Bcf/d annually

At this rate, production for this year would finish at 68.2 Bcf/d and continue to grow to 75.4 Bcf/d by 2018 with an estimated price of $4.35/Mcf. The EIA's numbers are more conservative; 66.35 Bcf/d exiting this year growing to 69.5 Bcf/d by 2018, while Bentek Energy takes the most aggressive position estimating production hitting 69.9 Bcf/d by the end of the year, and reaching 82.7 Bcf/d by 2018 at a price of $4.76/Mcf. Raymond James is basing this in large part on higher-than-expected growth in the Marcellus, which continues to exceed expectations even as prices languish. Article here

See the API's interactive online map showing approved LNG export facilities by location, along with pending permits - SEE MAP HERE

Unconventional Oil & Gas News

Is the Permian Basin the future of US oil production?

In the article linked below from the Motley Fool, an investor's site, the author makes the case that the Permian contains several of the US's next big shale plays, including the Cline, Wolfcamp, and Spraberry Shales. Taken together, this makes the Permian the favorite to pass the prolific Bakken. True, the Permian's estimates of total recoverable reserves are much larger than the Bakken or the Eagle Ford, but keep in mind all the hype around California's Monterey Shale, which is also huge, but has virtually no current commercial development efforts due to its geological complexity. But the Permian isn't the Monterey, and as technology continues to evolve in extracting oil from shale formations, expect the Permian to continue its impressive growth. The region also has the advantages of a friendly regulatory and business climate, a mature transit infrastructure, and experienced workforce base. Article - Five Jaw-Dropping Facts about the Permian Basin

Aubrey McClendon, former CEO of Chesapeake, Raises $1.7 billion to drill in the Utica shale

Private equity is backing McClendon's new E&P company, which plans to purchase 110,000 acres in Ohio's Utica Shale play. The financial move has many taking a second look at the Utica since as CEO of Chesapeake, McClendon had a close look at nearly every US shale play. Article here

Environment and Safety News

Bakken has its largest oil spill ever at 20,000 barrels

A pipeline ruptured in a rural wheat field near Tioga, ND spilling 20,000 barrels of crude oil. The six-inch pipeline, carrying crude to the Stampede oil facility outside Columbus, ND, belongs to Tesoro Logistics. Kris Roberts with the state Department of Health told Reuters that the spill did not pose an immediate threat to groundwater sources, and no lakes, rivers, or streams are within 5 miles of the spill, one of the largest in the US in years. Article here

Sampling finds no oil contamination from Colorado flood

Although the sampling in 29 locations post-flood revealed no ill affects from the estimated 40,000 spilled gallons of hydrocarbons, there was a marked increase in E. coli, probably from the more than 20 million gallons of sewage spilled in the flood. "Although much attention was focused on spills from oil and gas operations, it is reassuring the sampling shows no evidence of oil and gas pollutants," Colorado Department of Public Health and Environment chief medical officer Dr. Larry Wolk said. "There were elevated E. coli levels, as we expected, in some locations." Article here

Mergers and Acquisitions News

Antero Resources went public last week

With an initial offering of 35,725,000 shares of stock, Antero began trading on the New York Stock Exchange on October 10th under the symbol AR. The company received $1.5 billion from the public offering, which it will use to pay down its debt. Article here

Hess Corp sells its terminal network for $850 million

Buckeye Partners purchased the US East Coast and St. Lucia terminal network. The sale was part of an ongoing effort by Hess to divest midstream and downstream assets in an effort to focus on exploration and production. Article here

Crestwood Midstream Partners acquires Bakken midstream company

Privately held Arrow Midstream Holdings sold its gathering system located in North Dakota's Fort Berthold Indian Reservation for $750 million. The system consists of 460 miles of gathering pipeline with current volumes of approximately 50,000 barrels per day of crude oil. Article here

Contributor: Todd Erickson