Wednesday, August 28, 2013

Energy Links -- Around The Board -- Enbridge Increasing Capacity By One Million BOPD; Cap And Trade Gets Less Expensive In California

Weekly EIA report: US crude oil production rose 91,000 b/d to 7.61 million b/d last week, highest since 7.64 million b/d in October 1989. -- Platts tweet.

Harold Hamm: Keystone XL no longer 'critical." It was probably never critical.  Regardless of whether it was once critical or not, it is now a) only a political issue; and, b) a strategic signal to our closest ally and biggest trading partner. TransCanada's Energy East will do what the Keystone XL was going to do -- get Canadian oil sand to the coast, albeit the wrong coast.

Huge wells in the Bakken -- Motley Fool.
Of course variations do exist. However, holding large reserves that can be developed at a comparatively cheaper rate translates into superior returns. Houston-based EOG Resources has done exactly that. An early mover in the U.S. shale oil revolution, EOG's Eagle Ford exposure has ensured the best returns for a U.S. oil company this year. The company's estimated net reserves in the Eagle Ford are in the range of 1.6 billion-2.2 billion barrels of oil equivalent. The best thing about this shale play is that as the lateral (horizontal) length of the fracked well increases, production rate goes up. According to the company's latest investor presentation, average initial production rate per well has progressively climbed to 1,226 barrels per day in 2013 from a lowly 483 bpd in 2009. Well costs are also falling with an average $5.8 million per completed well in 2013 -- a far cry from the $9.1 million spent per well in 2009.
The company's Bakken wells are superior to even those of Statoil and Continental Resources. The four highest producing wells in this region belong to EOG Resources with production ranging between 2,271 bpd and 1,846 bpd. However, Continental has set the benchmark in well economics in the Bakken by averaging $8.2 million in completed well costs. In comparison, EOG Resources completes a Bakken well for an average $9.5 million. With more than 4,900 drilling locations yet to complete in the Eagle Ford, as well as a 12-year drilling inventory in the Bakken, EOG is expected to have the best in class crude oil growth for the next few years.
Pad drilling -- Motley Fool.
Pad drilling is proving itself very useful in places such as North Dakota, where there are multiple layers of shale over a single site. Continental Resources has indicated that some of its drilling operations are completing as many as 14 wells per pad to target both the Bakken and Three Forks formations simultaneously, and it's looking to bump that number to above 20 for certain sites.
For producers such as Continental, the results of pad drilling are easy to see in the bottom line. A year ago, a single completed well for the company cost $9.3 million. Contrast that with the average cost of a completed well in that same region, which is expected to be below $8 million by the end of the year. With a drilling plan of 110 net wells in 2013, the savings of about $140 million per year means fewer capital expenditures for each barrel of oil. So exploration and production companies can either ramp up their drilling programs to increase production faster, or enjoy the higher margins.

With so much more activity occurring at a single site all at once, exploration and production companies are requiring less equipment and contractors to get the job done. Despite a large uptick in oil production between the middle of last year and today, total rigs drilling for oil have remained relatively flat.
KOG hits a new high.

Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

Is Nuverra going to go under? -- Motley Fool
First, there is a reason that Nuverra has missed its numbers of late. The weather has been plaguing it all year. In the first quarter it missed the equivalent of 15 working days, while the second quarter wasn't all that better. In fact, the weather is one of the reasons why there are 500 wells in the Bakken just waiting to be completed.
This backlog of completions held back at a lot of companies including Oasis Petroleum, which had been growing production by triple digits annually, but had flat production in the second quarter. The company had 37 wells drilled but not completed. Bottom line, it expects to complete almost as many wells next quarter as it had in the first half of the year, which will lead to a 10% production boost next quarter.
Clearly, the potential is there for the back half of the year to be more heavily weighted for Nuverra's business as well. This is why CEO Mark Johnsrud said on the company's last conference call that the weather issue "is not specific to Nuverra and has had similar impact on other competitors in the region. We believe this revenue is delayed, not lost." If this turns out to be the case, it could lead to a better than expected improvement in its second half earnings.
Is production in the Bakken about to explode? -- Motley Fool
Genscape, which is a leading provider of energy information, recently estimated that June's Bakken daily oil production would skyrocket by 54,000 barrels of oil per day. That would have shattered the the previous record monthly gain of 41,000 barrels of oil per day set in February.
It turned out that Genscape was way off as production only grew by 10,000 barrels per day. However, the gusher it predicted could still come real soon.
There are currently just over 9,000 wells in North Dakota producing a little more than 821,000 barrels per day. However, due to the conversion to pad drilling as well as persistent wet weather, it has created a backlog of nearly 500 wells waiting to be completed. As the industry works off that backlog it has the potential to unleash a massive amount of initial oil production.
Looking at Bakken producers last quarter, there was a fairly consistent theme of production being held back by this backlog. For example, Oasis Petroleum noted that its production was virtually flat last quarter at 30,171 barrels of oil equivalent per day.
However, the company sees its production jumping by 10% next quarter as more wells come online. Oasis had 37 wells drilled but not completed and its sees completions next quarter in a range of 40-45 after just completing 51 wells in the first half of the year.
Oasis is not alone. ConocoPhillips also noted that its production was held back by the wet weather. The company saw just a measly 3% growth quarter-over-quarter to an average of 30,000 barrels of oil per day. However, looking ahead the company has plans to grow its production by at least 50% to 45,000 barrels of oil per day by 2017. Now that the weather has cleared, more of Conoco's newly drilled wells can start coming online and boosting its production.
ENB increasing capacity by a million bopd -- Motley Fool.
Meanwhile Enbridge responsible for transporting two thirds of Canadian oil exports to the United States, has been silently expanding its capacity. Some of the company's major initiatives include twinning its Seaway and Spearhead pipelines, eliminating bottlenecks in the Chicago area, and reversing its Line 9 route. Management projects that these efforts will boost Canadian oil exports by more than one million barrels per day by 2015. 
And while pipeline routes appear blocked to the west and the south, TransCanada announced earlier this month that it will proceed with its Energy East proposal. If approved, the pipeline will ship 1.1 million barrels per day from terminals in Alberta to refineries on the Canadian east coast by 2018. The project already has the support of oil producers but still needs approval from the National Energy Board and several provincial governments. But if given the green-light, Energy East will single handedly replace the controversial Keystone XL pipeline.
Norway to start drilling the East Arctic -- Reuters.
Norway invited oil and gas firms on Wednesday to bid for the first licences to drill in the eastern part of its Arctic waters, three years after it settled a border dispute with Russia.
With oil production on course to fall to a 25-year low this year, Norway is looking to tap reserves further into the Arctic as it runs out of prospects in the North Sea.
The US will continue to remain a spectator.

Cap-and-trade gets cheaper -- Reuters
California's largest greenhouse gas-emitting businesses paid $12.22 per metric tonne (1.1 tons) for the right to release carbon this year, lower than expected and down almost 13 percent from the previous sale in May, the state said on Wednesday.
Oil refineries, utilities and market speculators were among those that purchased all 13.87 million current year permits offered at the state's fourth quarterly auction, according to the program's regulator, the California Air Resources Board.
For the first time, the state also sold all future-year permits it put up for sale. All 9.56 million allowances it offered to cover emissions in 2016 sold for $11.10 each at the auction, which was held on Aug. 16.

No comments:

Post a Comment