The Weekly USA Oil & Gas Update: 17 June 2014

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

US leads world in 2013 oil-consumption growth

With growth in oil consumption of 400,000 barrels per day, for a total of 18.9 million/day, the US exceeded China's increase of 390,000/day. China consumes a total of 10.8 million/day . This was the first time since 1999 that the US outgrew China. Not only did the US lead in consumption growth, it also added its largest-ever growth in oil production, up 13.5% from last year to above 10 million bpd. The consumption growth was led by an expansion in the US industrial sector, while the growth in oil production came from the massive expansion in tight oil production. Article here

Noble Energy and CONSOL energy to form Marcellus midstream JV

The two upstream companies submitted a Form S-1 to the SEC to sell a minority interest in the 50/50 owned Master Limited Partnership (MLP) that would own and operate the two companies' gathering and processing assets in the region. Article here

Unconventional Oil & Gas News

Canadian-side Bakken sees big results

Crescent Point Energy announced a discovery in the Torquay formation (Three Forks south of the border) which is showing outstanding economics. North of the border in Crescent Point's Flat Lake area in southeast Saskatchewan, the play lies much shallower than down south in North Dakota. Consequently, it's cheaper to drill. Crescent Point claims all-in costs for a well here with a 1-mile horizontal of $3.5 million, giving them an IRR of >300%. Seeing these results, Crescent Point went on an acquisition spree, acquiring CanEra Energy with its 880 net sections of Torquay potential. Article here

ConocoPhillips ramping up its Eagle Ford spending

One of the play's leaders, ConocoPhillips plans to increase its capital expenditure from $2 billion in 2013 to $3 billion this year. The company expects to exceed 250,000 boe/d in production by 2017 from its 221,000 net Eagle Ford acres. Returns are high for ConocoPhillips who has some of the best acreage in the play. "You want to be in the parts of the Eagle Ford where you've got high calcite content so that it's very frackable and where you've got a lot of preserved organic material, so you've got a lot of oil in place," said Matt Fox, EVP of E&P. "And that's where we are in the Eagle Ford, in the geologic sweet spot." Article here

Environment and Safety News

Eagle Ford operators recovering 30% of their water from fracking

Drought condition and increased public scrutiny have prompted drillers in the region to re-use an increasing portion of water utilized in hydraulic fracturing. It is estimated that five years ago, just 1% of this water was reclaimed. Expect regulations to push this number even higher if the drought continues. Article here

Mergers and Acquisitions News

Williams to acquire Access Midstream for $6 billion

The deal gives Williams, the fourth-largest US pipeline company based on market capitalization, control over the industry's largest master limited partnership (MLP) as measured by throughput volume. "The proposed merger of Williams Partners and Access Midstream Partners, if consummated, would create an industry-leading, large-scale MLP with substantial positions across the midstream business - spanning natural gas gathering and processing, natural gas transmission pipelines, and NGL and petchem services. Our positions in these businesses provide clearly identified growth for the foreseeable future," Alan Armstrong, Williams' chief executive officer, said in a statement. Article here