The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 29 April 2014

Todd Erickson
Contributor: Todd Erickson
Posted: 04/27/2014

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

0

11

3

Arkansas

12

0

12

15

California onshore

40

+1

31

39

Colorado

64

+2

62

63

Kansas

31

+3

31

27

Montana

8

+1

9

11

N. Louisiana

26

+1

24

21

New Mexico

91

+2

79

79

North Dakota

179

+1

169

173

Ohio

35

-1

36

31

Oklahoma

192

+5

187

183

Pennsylvania

61

+2

55

59

Texas

894

+10

839

834

Utah

27

0

26

30

West Virginia

27

+4

33

24

Wyoming

50

+1

53

40

Total US

1861

+30

1777

1754

Total Canada land

165

-31

590

119

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

101.30

96.44

94.09

Brent

109.92

106.55

102.88

Natural Gas-USD/mmbtu

NYMEX

4.67

5.04

4.28

General News

Unions supporting Marcellus development, throwing a wrench in the works for opposing environmental groups

In the Marcellus region, which includes Pennsylvania, Ohio and West Virginia, unions hold a powerful political position. Recently, environmental groups fighting area oil & gas development didn't worry about having the support of traditionally-Democratic union's because the prevailing sentiment was oil & gas jobs were going to out-of-state workers. That's changed dramatically over the last couple years, and unions are now largely supporting oil & gas development in the region. "The shale became a lifesaver and a lifeline for a lot of working families," said Dennis Martire, the mid-Atlantic regional manager for the Laborers' International Union, or LIUNA, which represents workers in numerous construction trades. Others agree with Martire. Alex Paris, head of a PA contracting firm said "It has created more work for our business. There's jobs here for the first time in many, many years. Legitimate, good-paying jobs." This attitude worries local opposition groups such as Penn Environment, who worry that union support of oil & gas will erode their political base, and its power to slow or stop development. "I understand the dynamic at play. It feels fairly short-sighted," Said David Masur, the group's director. Article here

North Dakota regulators considering plan to reduce flaring by slowing production

Infrastructure to capture and process the natural gas associated with oil production in the Bakken has lagged the rapid pace of drilling for oil. Consequently, 36% of gas produced is flared, compared to an average of just 1% nationwide. Some residents are demanding change, by asking regulators to slow down drilling while infrastructure catches up. The area's operators would rather the regulators consider self-imposed steps to curb flaring, in the way of reduction plans. "I'm confident that flaring goals are going to be met by industry," said Ron Ness, president of the Petroleum Council, which represents more than 500 energy-related companies working in North Dakota. "Nobody wants gas flaring captured more than the operator." Some residents want more though. Part of the problem building gas infrastructure is obtaining pipeline right of way easements from landowners, who are becoming resistant to the industry due to impact fatigue. Theodora Bird Bear with the Dakota Resource Council, an environmental-minded landowner group said "We need to address issues the public has. We know a lot of revenue is being generated. But there is going to be a lot of costs to the public if this is not done right." Article here

Unconventional Oil & Gas News

EIA says that gas production in the Marcellus continues to outpace takeaway capacity

The prolific gas play continues to exceed production expectations as makes more gas than it can get to market, with current gas transportation and processing infrastructure. This has contributed to the backlog of wells in the play that have drilled but remain uncompleted, which, according to the EIA, stands at 1,300 wells. More capacity is coming though. "Projects that have recently come online, such as Transcontinental Pipeline Co.'s (Transco) Northeast Supply Link, have expanded the capacity of pipelines to move gas north, into the New York and New England demand centers. Recently, there have also been several proposed projects to move natural gas from the Marcellus region south, reversing flows on pipelines that historically sent natural gas from the Gulf Coast to consumers in the Northeast," EIA said. Article here

Environment and Safety News

Baker Hughes to provide full disclosure on all chemicals used in hydraulic fracturing

The industry has attempted to provide transparency around the chemicals used on hydraulic fracturing, or fracking, through the industry web site FracFocus, which provides a list of chemicals utilized on a well-by-well basis. Last year, researchers from Harvard's environmental law program said FracFocus has "serious flaws" because it allows operators to withhold information from the website by asserting trade secret exemptions, which industry does on 84% of the wells, leaving full disclosure on only 16% of wells drilled. Baker Hughes is taking the lead on transparency with 100% disclosure on FracFocus. In a statement recently posted on its website, the Houston-based oil field services firm says it "believes it is possible to disclose 100 percent of the chemical ingredients we use in hydraulic fracturing fluids without compromising our formulations - a balance that increases public trust while encouraging commercial innovation." Expect more transparency from other industry participants as activist shareholders continue to ramp up the pressure for additional disclosure. Article here

Mergers and Acquisitions News

BP sells North Slope Alaska properties to focus on Prudhoe Bay

Hilcorp Energy was the buyer for BP's interests in its Endicott, Northstar, Liberty, and Milne Point fields, with current production of 19,700 boe/d. According to BP, this will enable them to better focus on their Prudhoe Bay assets, in which they expect to invest $1 billion over the next five years. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 04/27/2014

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