Pyrrhic victory:
Can you imagine how the rest of the OPEC countries are doing? Like Nigeria?
Other news:
OPEC Basket, link here: coming back strong -- now at at $21.44.
"Holy rotary, Batman!": Chevron down to five rigs in the Permian.
Shale producers "back in" at $30 oil. Behind a paywall over at Bloomberg, this story is now over at Rigzone.
Shell to divest Pennsylvania assets: a reader alerted me to this story before it was a story.
Off-shore storage: India.
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Back to the Bakken
Active rigs:
| $24.49 | 5/6/2020 | 05/06/2019 | 05/06/2018 | 05/06/2017 | 05/06/2016 |
|---|---|---|---|---|---|
| Active Rigs | 24 | 62 | 62 | 49 | 27 |
Two permits coming off confidential list today --
Wednesday, May 6, 2020: 21 for the month; 71 for the quarter, 297 for the year:
- 36589, drl, Rimrock, Skunk Creek 8-2-3-4H3, South Fork, t--; cum 14K in 31 days;
- 36550, drl, WPX, Blue Racer 14-11HUL, Mandaree, t--; cum --;
The initial start-up of Cheniere Energy’s Midship Pipeline two weeks ago occurred in a radically different market environment than when the project was conceived. As the first greenfield, large-diameter natural gas pipeline project out of the SCOOP/STACK in years, it was meant to provide relief for the once takeaway-constrained producers in the Central Oklahoma production region and connect what was until the past year a rapidly growing supply region to emerging LNG export demand along the Gulf Coast, including at Cheniere’s own Corpus Christi, TX, terminal. Instead, SCOOP/STACK production hit the skids last fall, and rig counts since then have plunged to the lowest levels in well over a decade. On the delivery end of the pipe, U.S. LNG export demand is being challenged by a global gas glut and disappearing margins to international markets. Still, the Midship project’s initial capacity of 1.1 Bcf/d is more than 80% subscribed by firm shippers, and the new pipeline is slated to provide some of the most economic routes out of the SCOOP/STACK. Today, we provide an update on the project’s start-up and the changed market environment it’s facing.
When Cheniere filed its Section 7c application with the Federal Energy Regulatory Commission (FERC) in May 2017 to build its 1.44-Bcf/d Midship Pipeline project, associated gas production from the crude oil, liquids and condensate-focused SCOOP and STACK plays in the Woodford Shale’s Cana region (a.k.a. the Cana-Woodford) — a part of the greater Anadarko Basin — was on a resounding upswing. Producers were flocking to the play and ramping up activity, even as oil prices were still recovering from the 2014-15 collapse and barely approaching $50/bbl. All signs at the time pointed to robust economics. The value-add of multiple product streams — crude oil and the associated gas and NGLs emerging from the wells, combined with the well performance and drilling efficiencies achieved in the region — signaled some of the most attractive economics in the country for producers. These included healthy double-digit internal rates of return (IRRs) — even at sub-$50/bbl crude oil prices. In fact, for a while there, SCOOP and STACK were two of the fastest-growing shale producing regions in the U.S., and it appeared at the time that the only thing that would slow things down would be the emergence of midstream constraints as midstreamers were struggling to keep up with the rapid production gains.
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