The Weekly USA Oil & Gas Update: 13th October 2015
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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 |
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Oil & Gas Prices - Bloomberg/EIA |
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General News |
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Oil Execs say US to experience "dramatic" decline in production Last Tuesday in a London conference, former EOG CEO Mark Papa told the crowd that "[w]e are about to see a pretty dramatic decline in US production growth." Shell's CEO Ben van Beurden agreed with Papa, and both said the cause was the unavailability of capital to continue drilling. According to van Beurden, "[p]roducers are now looking for new cash to survive and they will probably struggle to get it." The Energy Information Administration agrees with both, forecasting US production to decline from a high in April of 9.6 million bpd to around 8.6 million bpd next year. So, what happens when production falls so precipitously? "This could cause prices to spike upwards, starting a new cycle of strong production growth in US shale oil and subsequent volatility," said van Beurden. Article here |
Unconventional Oil & Gas News |
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Monterey Shale potential downgraded again At one point several years ago, California's Monterey Shale was touted to contain upwards of 13 billion barrels of oil, making it larger than the Bakken or Eagle Ford. Re-examination of the geology has pared back expectations considerably over the last year and a half. The latest study shows a potential of just 21 million barrels of oil recoverable with current technology. Article here |
Environment and Safety News |
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The market for oil-by-rail tank cars takes a fall A short time ago, retrofitters for crude oil tank cars expected a bonanza on work to meet new safety requirements, but recent market trends, and stricter regulations than expected, have put a damper on the industry. "No one anticipated the new rules would require all these bells and whistles," said Robert Pickel Jr., SVP at Canadian rail car builder National Steel Car. "Some of the retrofits cost more than the actual car." Initial estimates to bring older cars up to code by the US DOT were around $30,000. The actual number looks to be closer to $80,000, leaving owners of older cars uncertain whether or not to make the investment. Add to that the plunge in demand, as $40 oil depresses the market for crude-by-rail in some regions by as much as 40% from previous years. As a result, few older cars have been retrofitted to comply with the new rules. "If you would have asked me eight to nine months ago, how many retrofits would we be doing in the third or fourth quarter, we would have guessed a lot more," says Michael Obertop with GBW Railcar Services. Article here |
Mergers and Acquisitions News |
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Encana sells DJ Basin assets for $900 million |
