The Weekly USA Oil & Gas Update: 13th August 2014

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

EIA: Marcellus natural gas production exceeds 15 billion Bcf/d, equaling 40% of US total

This is up from just 2 bcf/d in 2010, making the Marcellus natural gas plays one of the most astounding energy stories of the last decade. The story keeps getting better--although rig count has remained stable at 100 rigs over the last 10 months, efficiency has been increasing and each rig now supports 6 million cubic feet per day in new-well production each month, a rate which enables the play's overall production to keep growing despite steep decline rates in existing wells. Article here

Midstream company Blueknight Energy looking to build Eaglebine to refineries pipeline in east Texas

The $300 million project would cross 160 miles in Texas, taking payloads of up to 100,000 barrels a day out of the Eaglebine play on the eastern edge of the Eagle Ford. "Essentially all of the crude is shipped out by truck. That's a lot more expensive than a pipeline, and that's why there's great demand for one," said Mark Hurley, CEO of Blueknight, in an interview with Fuelfix. "We're trying to build it big enough to serve all the producers in the area." If built, the pipeline would go into service in 2016, and have expansion capabilities to 200,000 barrels per day. Article here

Unconventional Oil & Gas News

Well 1,000 drilled in Ohio's Utica Shale

According to the Ohio Department of Natural Resources, as of August 2nd, 997 wells have been drilled into Ohio's Utica Shale play. At its current rate, the 1,000th well will have been drilled by today's date. So far this year, 330 wells have been drilled into Ohio's Utica, with 600+ expected for the year. Area researchers believe this pace is sustainable in coming years as well, especially with the higher-than-expected amount of natural gas liquids that are being extracted from current wells being drilled. "It's turning out to be quite a bit more and definitely better than we had projected. That's good for the industry," said Cleveland State researcher Andrew Thomas. Article here

Environment and Safety News

Anti-industry ballot measures in Colorado withdrawn in exchange for state-appointed task force

Last week, the environmental groups Coloradan for Safe and Clean Energy (CSCE) and Colorado Concern (CC) agreed to withdraw their competing petitions for anti-industry ballot initiatives after governor John Hickenlooper announced the formation of a task force to develop recommendations that will "minimize land use conflicts that can occur when siting oil and gas faculties". CSCE spokeswoman Mara Sheldon said the group agreed to drop the measure because the task force "gives real people having real problems with [hydraulic fracturing] a voice. It's not just elected officials."

CC executive director Tamara Ward said they decided to drop their ballot measures because it was less risky than having initiatives fail, or have CSCE's competing initiatives prevail. "A discussion around this issue trumps a crapshoot at the ballot," Ward said. "Negotiated settlements require negotiation." Article here

Mergers and Acquisitions News

Kinder Morgan consolidating its four MLP's into one giant C corp

The combined, publicly-traded entity will have a market cap of $92 billion. This combination will be accomplished through a transaction between Kinder Morgan's current four MLP's, in a deal comprised of $40 billion in equity, $4 billion cash, and $27 billion in assumed debt. "This combined entity will be the largest energy infrastructure company in North America and the third largest energy company overall," CEO Rich Kinder said in a statement. industry observers had said that Kinder Morgan's current structure was too difficult for investors to understand, resulting in a lower valuation. Combining the MLP's into a single unit solves this. Additionally, the new combined entity should enable a better structure for making acquisitions. Article here

Blackstone Group reported to be a buyer for Shell's Haynesville asset

According to someone familiar with the matter, the financial group Blackstone is in negotiations to purchase a 50% interest in Shell's Haynesville gas field in Louisiana, a deal that would be valued around $1.2 billion. Blackstone is also an investor in the Cheniere LNG export terminal, also located in Louisiana. Article here