Active Rigs Up To 38 -- November 7, 2016

5.0 earthquake hits Cushing, Oklahoma; major damage to city. Early reports suggest pipelines, storage tanks "okay."

Will this be the last USC-Los Angeles Times poll?

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$65 oil. Who are they trying to kid? FuelFix says EOG looks like a winner at $65 oil. Other data points:

• cuts losses to $190 million
• doubles Permian oil estimates
• Yates (Permian) bought for $2.34 billion this quarter
• CEO calls 2016 a "breakout year" for EOG
• EOG now more than doubles it total oil & gas recovery estimates in the Permian's Delaware Basin, from 2.35 billion bbls to 6 billion (that comes close to tripling its "original" estimate)
• company pumped 275,700 bopd 4Q16, at the upper end of its expectations
• lease and well expenses decreased 18% yoy 
• at $50 oil, EOG expects 15% annual oil production growth through 2020

Wow, it's hard to believe. One year ago, 3Q15, EOG lost $4.1 billion ($7.47/share). This quarter, one year later, 4Q16, the company cut its losses to almost a trivial amount in comparison. 

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Huge implications for the state. Overheard at the deli: North Dakota is already known as the "high-tax" state for oil drillers. With the killing of the Keystone, the Sandpiper, and the DAPL, the state will likely be known as the state that can no longer build the necessary infrastructure to make the Bakken competitive with the Permian. Compare with what Texas is doing in the RBN Energ post below. And heaven forbid if any one duck flies into a waste pit this autumn. Meanwhile slicers and dicers continue to be welcomed with open arms tax credits. 

Active rigs:

	11/7/2016	11/07/2015	11/07/2014	11/07/2013	11/07/2012
Active Rigs	38	64	193	181	188

RBN Energy: the series continues on natural gas pipelines to LNG export terminals in Texas.

Providing the capacity to transport Marcellus/Utica natural gas to and through the state of Texas to LNG export terminals and to Mexico will require pipeline reversals, new pipe and other enhancements along a combination of interstate and intrastate lines.

In many ways, the long-distance part of the job––the reversal of large-diameter pipelines between the Northeast and the Lower Mississippi Valley––is the more straightforward; the greater challenge will be reworking the complicated pipeline networks between the Texas/Louisiana state line and the U.S./Mexico border. Today we review Texas pipeline projects being planned to allow increasing southbound flows of Northeast gas.

Reversing the direction of natural gas flows between the central/western Gulf Coast and the Northeast is a monumental task that will take a few more years––and a few billion more dollars––to complete. As we’ve covered extensively in the RBN blogosphere, the reconfiguring of key elements of the nation’s gas pipeline network is needed because of fundamental changes brought on by the Shale Revolution.

Since 2008, the Marcellus/Utica shale region in Pennsylvania, Ohio and West Virginia has emerged as a gas-production powerhouse. Output from the three-state area now stands at an extraordinary 22 Bcf/d––nearly one-third of total U.S. production––and favorable production economics in the Marcellus/Utica play suggest that the region’s contribution will only increase through the early 2020s. Aside from U.S. power generation, the major centers of gas demand growth over the next several years are expected to be exports, both in the form of liquefied natural gas (LNG) shipped from new liquefaction/export facilities along the Texas/Louisiana coast and as pipeline gas to Mexico, most of it through existing and planned pipes in Texas.

We’ve discussed the interstate pipeline reversals that will move increasing volumes of Marcellus/Utica gas to Louisiana in several blogs. We’ve looked at major enhancements to Texas’s intrastate pipeline system.  And we also covered the connections between Texas intrastate and interstate pipelines to the LNG export terminals being developed at Freeport and Corpus Christi.