Friday, November 13, 2015

Active rigs:

	11/13/2015	11/13/2014	11/13/2013	11/13/2012	11/13/2011
Active Rigs	64	188	182	190	201

RBN Energy: Boosting the Power Burn Within or Near the Marcellus and Utica Plays.

Within and near the Marcellus and Utica shale plays, power plant developers are building more than a dozen new natural gas-fired generating units, mostly combined-cycle plants that can operate essentially around-the-clock. This construction boom, spurred by a combination of abundant, low-cost gas and the regulation-driven retirement of scores of older coal plants, is boosting gas consumption close to gas production areas and reducing—at least a bit—the surplus gas volumes that Marcellus and Utica producers and marketers need to move to markets outside the region. Today, we examine the race to build new power plants near production areas in the Northeast, and consider what the resulting local gas consumption might mean for the region’s gas prices and pipeline needs.

Midstream companies the past few years have been scrambling to add gas takeaway capacity out of the Marcellus and Utica shale plays, where gas production levels—now averaging about 20 Bcf/d--have been overwhelming the existing pipeline infrastructure and depressing Northeast gas prices. We’ve tracked this pipeline build-out in several blogs, including our 50 Ways To Leave The Marcellus series (also the subject of an RBN Drill Down report); we’ve also considered the effects of the Northeast’s still-constrained pipeline network in our recent Living In Forward Curves series.

Major oil companies have one-half trillion dollars to fund takeovers -- Bloomberg/Rigzone:

The world’s six largest publicly traded oil producers have more than a half-trillion dollars in stock and cash to snap up rival explorers. Exxon Mobil Corp. tops the list with a total of $320 billion for potential acquisitions. Chevron is next with $65 billion in cash and its own shares tucked away, followed by BP Plc with $53 billion, according to data from corporate filings compiled by Bloomberg.

Merger speculation was running high after Anadarko Petroleum Corp. said Wednesday it withdrew an offer to buy Apache Corp. for an undisclosed amount. Apache rebuffed the unsolicited offer and wouldn’t provide access to internal financial data, Anadarko said.

Both companies are now takeover targets, said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. Royal Dutch Shell Plc has $32.4 billion available, almost all of it in cash. That said, The Hague-based company is unlikely to go hunting for large prey given plans announced in April to take over BG Group Plc for $69 billion in cash and stock. At the bottom of the pack are ConocoPhillips with $31.5 billion and Total SA with $30.5 billion. More than 90 percent of ConocoPhillips’ stockpile is in the form of shares held in its treasury. Total’s arsenal is 85 percent cash.

Jack Kemp: US shale oil output will be less resilient than natural gas at Reuters/Rigzone.

U.S. natural gas production hit a new record in August, despite the deepening slump in gas prices and a fall in the number of rigs targeting gas formations. The failure of gas production to respond to lower prices and a falling rig count has left many analysts wondering if it heralds the same problem in the oil market - worsening oversupply.

The number of rigs drilling for oil has plunged almost two-thirds over the last 12 months, but crude production is unchanged since October 2014 and down by less than 5 percent compared with its peak in April.

Like shale gas producers, shale oil drillers have managed to raise output while cutting costs by concentrating on the best-known and most productive formations and areas. They have also standardised and accelerated the drilling process, drilled longer horizontal wells with more fracking stages, and employed more horsepower to fracture larger areas underground from the same hole.

But closer examination reveals important differences between the two markets that suggest oil output will be less resilient than gas to lower prices.

But the Marcellus/Utica play is exceptional and it is not obvious that there are any similar oil-rich shales which could keep oil production growing despite the sharp drop in prices.

Possible shale oil candidates would be the Bakken play in North Dakota, the Permian and Eagle Ford plays in Texas, and the Niobrara in Colorado and Wyoming. Producers in all four regions have cut drilling and completion costs, increased efficiency, and boosted output per well since the middle of 2014.

Even so, production has been slowly dropping in Eagle Ford since March, Niobrara since April and Bakken since May, according to the EIA. The only region to defy the slump in prices has been the Permian Basin, where output has continued to rise and is forecast to hit 2 million barrels per day this month. Permian production has grown by 250,000 barrels per day, more than 15 percent, over the last 12 months, according to estimates contained in the latest edition of the EIA's "Drilling Productivity Report".

Pioneer Resources, one of the most aggressive shale drillers during the slump, has called the Permian "the only place to grow oil long-term" and said it might quit Eagle Ford within the next five years to concentrate on Permian wells.

Much more at the link.