The Weekly Oil and Gas Update

The Weekly US Oil & Gas Update: 21 January 2014

Todd Erickson
Contributor: Todd Erickson
Posted: 01/20/2014

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

11

+1

11

11

Arkansas

12

+1

11

17

California onshore

32

0

38

30

Colorado

61

+2

73

51

Kansas

29

-1

23

29

Montana

9

-1

11

18

N. Louisiana

24

-1

23

21

New Mexico

77

-4

75

79

North Dakota

168

0

171

179

Ohio

36

+1

33

28

Oklahoma

186

+3

176

182

Pennsylvania

56

+1

57

71

Texas

841

+16

817

813

Utah

26

+1

29

28

West Virginia

34

0

31

27

Wyoming

53

-1

49

48

Total US

1777

+23

1739

1749

Total Canada land

564

+92

385

600

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

93.57

98.74

96.09

Brent

106.12

108.29

112.72

Natural Gas-USD/mmbtu

NYMEX

4.27

3.61

3.63

General News

Deloitte study: North American oil & gas needs massive capital investment, lacks the skilled project managers to execute

According to the International Energy Agency (IEA), nearly $5 trillion will need to be invested into oil & gas in North America by 2035 to meet future energy demand. This will come from an estimated 630,000 wells in the US alone. The problem; finding enough skilled talent to execute all these massive capital projects. "One of the key challenges operators face to bring these wells online is their ability to acquire experienced project managers and skilled talent," Deloitte said in the report. Many of these projects will exceed $1 billion, with investment into LNG export, large midstream projects and deepwater drilling. Deloitte noted that 65 percent of projects do not meet performance criteria, resulting in cost overruns. Article here

Environmental groups raise the heat on Obama, denounce his "all of the above" energy policy

A letter sent to President Obama from 18 prominent environmental groups, including the Sierra Club, the Environmental Defense Fund and Earthjustice, asserted that the President needs to apply a strict climate test to all its energy decisions or risk losing their support in the coming election year. The environmental groups' letter is part of a larger effort to restrict domestic oil and gas development, as unconventional development of shale resources has dramatically changed the energy landscape for the US. Along with rising energy independence have come the environmental and land use impacts of intensive development, triggering increased public scrutiny and resistance. In essence, environmental groups have long thought that decreasing availability of fossil fuels would result in their gradual decline in the energy mix. Recent technological breakthroughs have changed the picture however, creating plentiful fossil fuel resources at affordable prices. In response, environmental groups are now raising their resistance to domestic fossil fuel development in general, departing from their previous stance of supporting 'clean' fossil fuels, such as natural gas. Article here

Unconventional Oil & Gas News

Marcellus gas to flow south to supply NextEra in Florida

Producers in the Marcellus are looking for additional markets as this low-cost natural gas source continues to expand production volume. Starting in 2017, William's Transco pipeline, which has traditionally supplied gas from Texas to New York City, will begin running bi-directionally, enabling it to carry Marcellus gas from Pennsylvania into the Florida power market. This bode's well for continued production expansion in the Marcellus, where the country's low-cost play continues to displace conventional Gulf Coast gas. Article here

GlobalData: $30 billion to be invested into Eagle Ford in 2014

According to GlobalData's report, the Eagle Ford is turning into an even larger resource than initially thought, with all the major operators in the play projecting at least another five years of drilling at the current pace. Internal Rates of Return exceeding 100% in the sweet spots drives this capital investment, with operators ConocoPhillips, EOG, and BHP Billiton leading development. Article here

Environment and Safety News

Funding increased to the Federal Railroad Administration (FRA) for additional safety inspector

Concern over safety for crude oil shipments by rail has prompted a congressional budget increase to the FRA for safety and operations. This will enable it to hire an additional 45 inspectors,which will increase its capacity to inspect track and conduct safety audits, according to U.S. Senators Chuck Schumer and Richard Blumethal, who pushed for the additional money. "We've been underinvesting in our rail safety agency for too long, but with this major funding boost, we're well on the way to fixing this problem," Schumer said earlier this week. Article here

Mergers and Acquisitions News

Chevron looking to sell Texas, Louisiana pipelines for $1 billion

The pipelines include the West Texas LPG Pipeline, a crude oil terminal close to the Gulf of Mexico, and at least one of its Louisiana pipelines, according to sources. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 01/20/2014

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