The Weekly USA Oil & Gas Update: 15th July 2014

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

International Energy Agency expects crude oil production growth through 2015

The shale oil boom should continue through 2015, according to the IEA in its latest monthly report. World demand will grow 1.2 million bpd this year and another 1.4 million bpd next year, primarily driven by demand growth in China. Supply increases to meet this higher world demand will not come from OPEC countries, but rather from North America. "The U.S. and Canada remain the mainstays for growth," said the IEA in its report. It expects the US and Canada to contribute two thirds of the net non OPEC supply increases. Most of this comes from increases in Texas and North Dakota's tight oil fields, which will account for half of the total non OPEC supply increase. The Eagle Ford alone is expected to grow 34% to 1.4 million bpd in total production this year, and exceed 1.6 million bpd next year. Article here

Unconventional Oil & Gas News

Whiting Petroleum to acquire Kodiak, creating Bakken's largest crude oil producer

Consideration for the deal includes $3.8 billion in stock and $2.2 billion in assumed debt, totaling $6 billion. The deal will be executed through a stock swap were Kodiak shareholders will receive 0.177 shares of Whiting stock for each Kodiak share. Upon transaction completion, Whiting shareholders will own 77% of the new combined entity. This new entity will hold 855,000 total acres in the Bakken, producing 107,000 bpd, more than any other current Bakken producer. Article here

Environment and Safety News

Oil and gas production on federal lands continues to fall, despite the overall boom in production

Data from the Congressional Research Service shows that during the time for 2009 to 2013, as overall US crude oil production rose from 5.233 million bpd to 7.235 million bpd, crude oil production actually fell 6% on federal lands. Natural gas production has also seen declines over this time period. According to the industry, more rigorous requirements and lengthy delays in receiving permits to develop on federal lands is the culprit. The application process has risen form 218 days in 2006 to 307 days in 2011, according to John Kemp, a Routers market analyst. The steady increases in federal bureaucracy and costs to drill on federal lands has prompted many in the industry to drop projects on federal lands from their development portfolio, and instead focus on private lands. This makes President Obama's claims that his policies have contributed to the current energy boom particularly irritating to oil & gas developers, who feel the federal government has been hostile to their efforts over this time. Article here

Pipeline spills 1 million gallons of saltwater in North Dakota

The pipeline, owned by Crestwood Midstream, apparently began leaking sometime over the July 4th weekend, resulting in a path of brine water 8,240 feet long. Dead vegetation at this early stage appeared limited to the first 200 yards of the brine path, but brine waters may have flowed up to 2 miles down a creek bed towards Lake Sakakawea. The EPA said that most of the spill was pooled on the ground or held behind beaver dams, and crews are currently working to clean up the spill. Article here

Mergers and Acquisitions News

Engineering firm AECOMM to acquire URS for $6 billion

A stock swap of URS shares for AECOMM shares will create the combined entity, which will have a total of 95,000 employees in 95 countries after the transaction. Both companies expect cost savings from combining the two entities. Press release here