The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 07th October 2014

Todd Erickson
Contributor: Todd Erickson
Posted: 10/06/2014

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

9

-2

10

7

Arkansas

12

0

11

11

California onshore

44

+1

45

40

Colorado

76

-1

69

70

Kansas

24

-1

29

28

Mississippi

13

-1

15

11

N. Louisiana

32

+2

25

25

New Mexico

99

-2

92

73

North Dakota

189

0

171

171

Ohio

40

-2

41

34

Oklahoma

212

-1

209

171

Pennsylvania

57

0

54

54

Texas

895

-2

896

830

Utah

23

0

27

29

West Virginia

30

+3

27

34

Wyoming

60

0

51

49

Total US

1922

-9

1874

1756

Total Canada land

430

+3

307

357

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

90.13

101.73

103.07

Brent

92.83

104.73

109.66

Natural Gas-USD/mmbtu

NYMEX Henry Hub

3.94

4.13

3.62

General News

Wood Mackenzie says technical advances in secondary recovery could boost total US oil production by 25%

Analyst Phani Gadde says that the new technology should make a major impact on secondary recovery after 2020, and could add an additional 1.5 to 3 million barrels per day to total US production. The new technologies are in test phases right now in tight oil plays by companies such as EOG, but once proven, could double the amount of oil extracted through secondary recovery methods. "This is going to happen, like horizontal drilling and fracking, leading to another step change in production technology," said Skip York, Wood Mackenzie analyst.Article here

Texas crude oil production way up over last year

According to the Texas Petro Index report, crude oil production is up 23% from August 2013 to August 2014. Employment in oil-field service companies also rose by 8.3% over that time. Natural gas production was flat in comparison, rising just 0.5% over the same period. Article here

EIS forecasts industrial gas use to rise by 4% in 2015

A steady low price for natural gas has prompted US industrial users to expand their consumption, according to the EIA's most recent Short-Term Energy Outlook. Two methanol plants and a handful of fertilizer plants are either scheduled to open soon, or are already running. Additional plants are scheduled to open over the next four years, increasing optimism that industrial use of natural gas will continue to rise. Article here

Unconventional Oil & Gas News

Regulators delay Enbridge's Sandpiper oil pipeline for another year

When completed, the $2.6 billion Sandpiper pipeline will carry 225,000 bpd of crude oil from North Dakota's Bakken to a hub in Wisconsin. The pipeline was expected to be ready in 2016, but a "longer than expected permitting process" on the Minnesota portion will delay this for at least another year. Regulators in Minnesota want to expand environmental impact studies on the pipeline's six possible routes. Lack of pipeline capacity for Bakken oil is why about 70% of it leaves the state by rail, rather than the safer, more economical option of pipeline. North Dakota regulators have already approved their portion. "Obviously, we've done our part," said Brian Kalk, who heads the North Dakota Public Service Commission. "Now it's up to Minnesota." Industry officials are becoming frustrated. "Everybody is complaining about train safety, and now we've lost a year," said Ron Ness, president of the North Dakota Petroleum Council. "This is a great project and we're ready to go. This comes at the same time the Minnesota governor is complaining about trains." Article here

Environment and Safety News

Rail and energy industry make joint recommendation to US DOT

Transporting crude oil by rail has had some consequences, including multiple derailments resulting in fires, killing 47 people in one instance. As a result, the DOT is in the process of looking at enhanced regulation, especially around stiffening the requirements on what sorts of railcars can transport crude. The problem for both the rail and the energy industry is that there aren't enough of the newer, safer railcars to transport all the crude that goes by rail, and it will take years to upgrade existing ones and build new ones to carry all the crude projected to go by rail. To provide some additional time to build and retrofit railcars to transport flammable crude, both the rail and the energy industry have proposed to the DOT to extend the deadline to comply. API President Jack Gerard said his group and the Association of American Railroads (AAR) have asked the Transportation Department for 6 to 12 more months for rail tank car manufacturers to prepare the reinforce newer cars, and three more years to rebuild older cars. They also want an additional three years to upgrade newer tank cars that don't comply with the higher standard. Article here

Mergers and Acquisitions News

Encana buys Athlon in $5.93 billion deal

The deal also includes Encana's assumption of $1.15 billion in debt, bringing the total value to over $7 billion. The deal provides Encana with about 140,000 acres in the oil-rich Permian Basin. "This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America's top oil plays," said Doug Suttles, Encana President & CEO, in a statement. Expect Encana to quickly ramp up activity in its new Permian acreage as it plans to invest $1 billion in 2015. Article here

LINN sells Anadarko Basin assets to FourPoint Energy and EnerVest

The $1.95 billion deal includes 145,000 acres in western Oklahoma and the Texas Panhandle. The purchase price also includes midstream assets consisting of more than 170 miles of gas gathering and compression systems, liquid stabilization, associated water supply and disposal infrastructure, and an oil terminal facility in Wheeler County, Texas. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 10/06/2014

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