The Weekly Update: 16th July 2012

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Todd Erickson
07/17/2012

Catch up with his week's industry news, oil and gas prices and the North American rig count.

GENERAL NEWS

The IEA expects global oil demand to rise by 1.1% in 2013

Demand from emerging countries will overtake demand in the world's most industrialized nations for the first time next year, as daily demand for oil increases 1.1% from the current 90.9 barrels per day. This is a structural decline in demand in these most industrialized countries, and analysts do not expect it to change as countries in the emerging economy continue their growth in demand. Article here

Canadian report says crude from oil sands essentially "landlocked"

In recently-released notes from Natural Resources Minister Joe Oliver, limited pipeline capacity and overloaded refineries in the US's midwest have led to a $15 price differential, crippling the economics of oil sands crude. Environmental concerns for oil sands-produced crude have slowed the development of additional pipeline capacity to export markets in the US, with projects such as the Keystone XL pipeline still on hold. Article here

Battelle: EPA fracking study has numerous deficiencies

Funded by the API and America's Natural Gas Alliance (ANGA), Battelle Memorial Institute found a number of shortcomings in the EPA's congressionally-authorized study on the effects of hydraulic fracturing. Batelle found fault with the EPA's scope and study design. "Given the scientific importance of the study, the effort likely meets the requirements of a 'highly influential scientific assessment', yet it is not designated as such," said Battelle. "Such designation from the outset would have raised the level of rigor, funding, timing and transparency of all stages of the study." Article here

OIL & GAS PRICES

	This Week	12 weeks ago	1 year ago
Oil
Nymex Crude Future	87.10
Brent Spot	103.38
WTI Cushing Spot	87.19	102.68	95.94
Natural Gas
Henry Hub Future	2.86
Henry Hub Spot	2.88	1.89	4.27
NYC Gate Spot	3.13

SHALE NEWS

Railroads account for growing portion of Bakken crude shipments

Traditionally in the US, railroads have transported no more than 1% of crude to refineries. In the Bakken, that number is 25% and growing, due to the lack of pipeline capacity in the region. Shipping by rail also enables producers to bypass overloaded refineries like Cushing, OK and go directly to where the demand lies. BNSF railroad commands the largest portion of the pipeline-on-rails, with over 730,000 bpd and growing, while Union Pacific expects to quadruple its delivery by rail to gulf-coast refineries this year. Canadian Pacific, which owns one of only two tracks into the North Dakota Bakken, also predicts substantial growth. Article here

Consol completes its most productive Marcellus well ever

The company said Friday in a press release that a Marcellus Shale well it drilled in Westmoreland County, Pennsylvania, achieved a peak 24-hour production rate of 17,900 Mcf, the highest of any well in the company's history. Article here

ENVIRONMENT & SAFETY NEWS

Duke study determines hydraulic fracturing likely had no role in elevated salinity of Marcellus area water

The underlying geology seems likely to be the cause of brine and methane migration into drinking water, as the Duke team found elevated levels of methane contamination in drinking water wells located within a kilometer of hydraulic fracturing, but found no evidence of contamination from fracturing fluids."These results reinforce our earlier work showing no evidence of brine contamination from shale gas exploration," said Robert Jackson, co-author of the study. Article here

Cate Street Capital to invest $60 million into waste water treatment

Based on the success of its Wyoming Red Desert facility treating drilling waste water, the private equity company plans to open ten more such facilities utilizing its Clean Runner technology over the next two years, in Colorado, North Dakota, New Mexico and additional facilities in Wyoming. Article here

Two Bakken services companies cited for dumping 500,000 gallons of raw sewage onto North Dakota ditches and fields

The North Dakota State Health Department cited the two companies for the illegal dumping prompted by citizen reports. The offending companies included Mon Dak Water and Septic Services and Hurley Oilfield Services. One dumping site featured a 2 1/2' by 100' eroded channel that ended into a tributary to the Painted Woods Creek. Article here

ACQUISITIONS & MERGERS NEWS

Noble Energy to sell TX panhandle properties to accelerate Niobrara

Unit Corp, which has substantial production in the panhandle area already, will purchase the 84,000 net acres and 900 producing wells for $617 million. Noble intends to use the proceeds for additional activities in its 860,000 net acre holdings in the DJ Basin in the heart of the Niobrara shale formation, as well as its international program. Article here

Voyager Oil & Gas to acquire Emerald Oil

The acquisition will provide the combined entity with acreage in the Williston Basin's Bakken, the Niobrara formation in the Sandwash Basin of Colorado and Wyoming. Article here

RIG COUNT

	This Week	Change from last week	12 weeks ago	One year ago
Arkansas	17	0	26	34
California	52	-1	45	47
Colorado	66	-3	63	69
Kansas	29	0	26	31
Montana	19	0	18	10
N. Louisiana	23	-2	40	92
New Mexico	91	+7	85	82
North Dakota	199	+3	196	154
Ohio	19	+1	12	12
Oklahoma	202	+1	196	175
Pennsylvania	78	0	101	115
Texas	910	-17	916	861
Utah	40	0	40	29
West Virginia	27	0	22	20
Wyoming	45	+3	41	51
Total US	1953	-12	1950	1905
Total Canada land	293	+32	163	393

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

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