Expo/Industry events for the next few months
Marcellus Utica Houston
November 7-8
JW Marriott Houston Galleria
5150 Westheimer Road
Houston, TX 77056
Downstream Petrochemical Value Chain
November 15, 2018
Eagle Sticks Golf Club
2655 Maysville Pike
Zanesville, OH
For other events visit
Latest facts and a rumor from the Marcellus, Utica, Permian, Eagle Ford, Bakken and Niobrara Shale Plays
Gulfport Energy 3rd Qtr. Financial Update. Gulfport Energy reported its net production in third-quarter 2018 grew 19% from the Q3 2017, Kallanish Energy reports.
Net production in Q3 2018 averaged 1.43 billion cubic feet-equivalent pe4r day (Bcfe/d), said the company, a major player in the Appalachian Basin. Production was 1.20 Bcfe/d in the third quarter of 2017.
The latest Q3 production was 89% natural gas, 8% natural gas liquids and 3% oil, the company reported last week.
The company said its realized natural gas price for Q3 2018 averaged $2.32 per thousand cubic feet, its oil price averaged $68.73 per barrel and its NGL price averaged 74 cents a gallon, or $31.18/Bbl.
Those prices are before the impacts of derivatives and include transportation costs.
Gulfport reported it turned to sales 11 gross and net operated wells in the Utica Shale in the Appalachian Basin and 7 gross (5.4 net) operated wells in the SCOOP play in Oklahoma during the third quarter.
“The third quarter marked another outstanding operational quarter for Gulfport, delivering a 7% increase in total production per day and realizing strong price realizations across all of our products,” said CEO and President Michael G. Moore, in a statement.
“Gulfport’s third-quarter production increase was driven by continued outperformance of our base production wedge, an active turn-in-line schedule and an increase in ethane recovery during the quarter, maximizing the value received for the natural gas liquids stream,” he said.
In Q3, the company produced 104.98 Bcfe from the Utica Shale in Ohio, 25.26 Bcfe from the SCOOP play, and 1.01 Bcfe in southern Louisiana. Utica production jumped from 90.82 Bcfe in Q3 2017, a 15.6% increase.
Gulfport will release its 3Q 2018 financial data in the next few weeks.
VA DEP Approves Atlantic Coast Pipeline. Although the 600-mile Atlantic Coast Pipeline (ACP) was federally approved a year ago, in October 2017, the $6 billion pipeline from Dominion Energy running from West Virginia through Virginia into North Carolina had not yet secured all state-required permits. The remaining holdout has been Virginia. Late Friday afternoon the Virginia Department of Environmental Quality (DEQ) finally issued a “401” permit for crossing streams and rivers, which clears the way for ACP construction to begin in the Old Dominion.
Satellite Imagery Reveals Permian Frack Trends. New research gathered through daily satellite imagery reveals the impact infrastructure bottlenecks and differentials are having on frack crew count numbers and well completions in the Permian basin. Westwood Global Energy Group’s SatScout Service is responsible for the new data.
“The Delaware and Midland Basins are paramount to the U.S. shale story,” said Boyd Skelton, vice president of operations for Westwood. “The public and private E&Ps we monitor are feeling the constraints in the Permian market. You can see the softening demand for horsepower, frack sand and water based on the decline in last month’s observed completions. The market,” he added, “is fluid with operators acting swiftly to changing conditions.”
After a peak in well completions—510—that took place in June, Westwood’s team said completions in September across the Permian were down six percent to 472.
According to the company, SatScout can identify when an operator has constructed a pad, rigged up for drilling, or started fracturing the well with a frack crew. Westwood’s aerial scouting service can provide such information on activity of public or private oil and gas operators before the information is reported in quarterly earnings, investor presentations or via state regulatory organizations. The system utilizes daily satellite imagery and a proprietary algorithm designed to identify key stages of well development.
“We can analyze thousands of images in a fraction of the time it would require to do manually,” the company said.
Energent Group, a Houston-based energy and shale analyst firm, creates and operates SatScout. In 2017, Westwood Global Energy acquired Energent.
Mariner East 2 to Start Service. U.S. energy company Energy Transfer LP plans to start service on its Sunoco Mariner East 2 natural gas liquids pipeline in Pennsylvania during the fourth quarter of 2018, an analyst following the company said on Monday:
Energy Transfer told analysts at Height Capital Markets in Washington, DC, that the pipeline “will be in service as soon as it is mechanically complete, which is expected to be in the next few weeks.” That fits with the timing the company has told several customers of the pipeline, including U.S. energy producer Range Resources Corp and U.S. ship owner Dorian LPG Ltd , which owns very large gas carriers (VLGCs).
When Energy Transfer’s Sunoco subsidiary started building the $2.5 billion Mariner East 2 in February 2017, the company expected to finish the project by the third quarter of 2017.
Merkel Opens Germany to U.S. LNG. German Chancellor Angela Merkel is a move to open up Germany's market to U.S. gas companies, following a lobbying push from President Trump, The Wall Street Journal reported. Merkel told a group of lawmakers over breakfast in October that her government will co-finance a $576 million liquefied natural gas (LNG) shipping terminal in northern Germany, the Journal reported, citing people familiar with the meeting. The project had been stalled for years, but Trump has lobbied hard for Europe to increase LNG purchases from the U.S. while reducing their reliance on Russia. Germany gets most of its gas from Russia, and American efforts to open its market to U.S. companies have stalled due to lack of government support. Merkel told lawmakers that the decision to co-finance the LNG terminal was "strategic" and could pay off in the long term, people familiar with the meeting told the Journal. A German government spokesman told the Journal that the move was made because of Germany's economic interests, not U.S. pressure. Less than a week after the reported Merkel meeting with lawmakers, an international consortium filed its first official bid for government financing for a terminal in a town near Hamburg.
XTO Bullish on the Utica. The Appalachian Basin’s Utica Shale holds great potential, according to XTO Energy’s Andree Griffin.
Speaking to roughly 900 attendees Wednesday at the Shale Insight 2018 conference in Pittsburgh, Pa., at the Shale Insight 2018 conference. Griffin, XTO’s vice president, Geology and Geophysics, is a big believer in the Utica, found mostly in eastern Ohio, Kallanish Energy reports.
“Do not underestimate the potential of the Utica Shale,” she told the audience. What’s happening there is “staggering and very exciting,” she added. It is a shale play where the surface has barely been scratched, she said.
Only the beginning
“You can tell this is only the beginning,” Griffin said of the Utica Shale. “The potential in the Utica is enormous.”
The gassy Utica Shale is newer in terms of production and smaller than the neighboring Marcellus Shale and it's generally lumped together with the Marcellus Shale in reports.
40% of U.S. production
Together, the Utica and Marcellus produce 40% of the natural gas in the U.S. -- about 29 billion cubic feet per day. Production in the Appalachian Basin could hit 8 trillion cubic feet this year.
If they were a separate country, the Utica and Marcellus would rank third in the world for natural gas production behind the rest of the U.S. and Russia, Griffin said.
To date, only about 2,400 Utica wells have been drilled in Ohio, plus about 230 in Pennsylvania and 15 in West Virginia, she said. The first Utica wells were drilled in Ohio in late 2011/early 2012.
The Utica is deeper in West Virginia and Pennsylvania and that makes drilling more costly and more risky for drillers.
Griffin's company has drilled roughly 75 wells in Ohio’s Belmont and Monroe counties, according to state records.
XTO, an ExxonMobil subsidiary, has about 56,000 acres in Ohio and is producing 240 million cubic feet of natural gas per day (Mmcf/d), the company says.
In Pennsylvania, XTO holds 534,000 acres and produces 220 Mmcf/d from 12 counties. In West Virginia, XTO has 140,000 acres with production totaling 50 Mmcf/d from eight counties, the company says.
Happy 10th Anniversary Eagle Ford Shale. Secretary of Energy and former Texas Governor Rick Perry traveled to San Antonio to participate in the Shale-a-Thon, the celebration of the 10th anniversary of the completion of the first successful horizontal oil well into the Eagle Ford Shale formation. That first well, drilled by Petrohawk Energy (later acquired by BHP Billiton), was announced on October 21, 2008, but the company's Chief Operating Officer, Dick Stoneburner, was notified of its successful completion via an email he received on October 11 while sitting in the stands in the Cotton Bowl as he watched the annual grudge match between the Texas Longhorns (Stoneburner is a UT graduate) and Oklahoma Sooners.
Petrohawk's discovery set off a drilling boom over the next six years that at times saw the traditionally sleepy, rural area of South Texas become one of the hottest economic development regions in the country. Traffic jams became commonplace in a 23-county region whose largest city, Beeville, boasts a population of around 14,000 on a good day. At the boom's peak in 2014, more than 300 rigs operated in the region, with as many as 275 plumbing the dense rock in the Eagle Ford formation.
Many wonder why it is called the "Eagle Ford" shale. The formation is named for the community of Eagle Ford, which was once an incorporated city, but is now a neighborhood of Dallas, by which it was annexed in the mid-1950s.
Not far from the center of the community, a small cliff face reveals an out-cropping of the Austin Chalk formation, which had become famous during the 1970s and again in the 1990s for the production of prodigious amounts of crude oil. In fact, the Chalk is experiencing a bit of a third revival today.
Immediately beneath the Chalk outcropping, another formation displays what seems to be a rocky, clay-like profile. This formation is actually a shale formation, one that happens to be the source rock for the Austin Chalk. It was the oil migrating up from the Eagle Ford Shale that made the Chalk such a prodigious formation to begin with.
More oil through Dakota Access pipeline. The developer of the Dakota Access pipeline is gauging shippers’ interest in a possible expansion of the volume of crude oil moved through the pipeline from 500,000 barrels to 570,000 barrels per day, despite ongoing tribal efforts to shut the pipeline down. Texas-based Energy Transfer Partners on Oct. 19 began seeking commitments from shippers to transport additional oil. The pipeline’s permit in North Dakota allows it to ship up to 600,000 barrels per day. North Dakota produced nearly 1.3 million barrels of oil per day in August, the most recent month for which data is available. Companies can increase pipeline capacity by adding a chemical to make oil flow more easily, or by adding more pumping power or pumping stations, according to North Dakota Pipeline Authority Director Justin Kringstad. Company spokeswoman Vicki Granado told The Bismarck Tribune that an expansion would require minimal modifications to the actual pipeline system. Dakota Access was subject to prolonged protests during its construction in North Dakota in late 2016 and early 2017 because it crosses beneath the Missouri River, just north of the Standing Rock Sioux Reservation. The tribe draws its water from the river and fears pollution. ETP insists the pipeline is safe. That tribe and three others are fighting in federal court to get the pipeline shut down.
Lack of Fractionation Causing Problems for Ethan Crackers. A surge in production of natural gas from U.S. shale gas and tight oil plays, combined with new petrochemical ethane crackers coming online, have created a major hurdle for producers/purchasers of ethane due to a lack of adequate NGL fractionation.
Simply put, a lack of capacity to separate/fractionate mixed natural gas liquids (Y-grade) into purity ethane is causing chemical producers major consternation, according to business information provider IHS Markit.
“The U.S. upstream shale gas and tight oil revolution has translated into a petrochemical feedstock bonanza and significant cost advantages for U.S. chemical producers, but a misalignment between ethane purity product supply capacity and demand has driven a tight ethane market and a spike in price,” said Yanyu He, executive director, Asia and Middle East NGLs and Global NGL pricing at IHS Markit
He is an author of IHS Markit Midstream and NGLs Analysis: Ethane—What Went Wrong?
“We expect purity product ethane supply and demand to be tight through 2020, and ethane market price volatility is expected to persist through 2020," according to He. "The energy industry strives for alignment, but the unconventional upstream industry is much more nimble and responsive to price signals than the midstream sector.
“We are now seeing the fall-out of underinvestment in midstream infrastructure that occurred during 2014 to 2016, after oil prices cratered and put the brakes on NGL-centric midstream infrastructure build-out,” he said.
He said U.S. shale gas and tight oil producers have drastically improved their efficiency and can now bring a well into production in a matter of months, while adding capacity at a natural gas processing plant can take 12 to 18 months, expanding Y-grade pipelines and purity product NGL fractionation capacity can take up to three years, and steam crackers require four to five years to bring online from final investment decision (FID) to completion, Kallanish Energy finds.
“From an investment standpoint, you have a months-versus-years cycle that causes misalignment across the upstream through midstream to downstream value chain,” He said. “Ironically, the increasing efficiency of the U.S. unconventional upstream energy sector has rapidly increased oil, natural gas, and correspondingly, by-product Y-grade NGL-production rates. The current production has surpassed the midstream supply chain’s capability to receive, process, produce, and deliver purity product ethane supply to the new U.S. Gulf Coast ethane crackers,” He said.
And there is more demand coming as the industry is in the middle of the first wave of new U.S. ethane cracker-capacity additions built to consume advantaged ethane, IHS Markit said.
Change at FERC. Federal Energy Regulatory Commission Chair Kevin McIntyre said late Wednesday that he was relinquishing his chairmanship due to health problems and will simply serve as a commissioner, and President Donald Trump tapped Commissioner Neil Chatterjee to take McIntyre's place leading the agency.
Nexus Seeks FERC Approval. Less than two weeks ago NEXUS Pipeline, a $2.6 billion, 255-mile interstate pipeline that runs from Ohio into Michigan, received permission from the Federal Energy Regulatory Commission to begin operation.
NEXUS has begun to flow close to 1 billion cubic feet (Bcf) per day out of its eventual 1.5 Bcf/d capacity. NEXUS’ recent startup was a partial startup. NEXUS is now taking the next step. They asked FERC yesterday for an OK to start up service at two more compressor stations–one in Medina County, the other Sandusky County.
Atlantic Coast Pipeline Gets FERC Approval. Dominion’s 600-mile Atlantic Coast Pipeline (ACP) from West Virginia to North Carolina has had its share of setbacks. But these days, it appears the project is building momentum and government/regulatory decisions are breaking in ACP’s favor. The project is on track to finish by the end of 2019, so says Dominion. The latest win for ACP came yesterday when the Federal Energy Regulatory Commission (FERC) granted permission for ACP to begin construction pretty much in all locations in West Virginia. The only prohibitions are small areas in National Park Service land and a few locations where there may be Indiana bats.
Two Permian Drillers Going on the Market. Felix Energy LLC, a closely held Denver-based oil producer with operations in the largest U.S. shale field, is exploring a sale that could value the company at more than $3.5 billion, two people familiar with the matter said on Wednesday.
The U.S. oil producer has hired investment bank Jefferies to solicit buyers, the sources said.
Premium prices paid this year for acreage in the Permian Basin of West Texas and New Mexico, the largest and fastest growing oilfield, has smaller companies looking to cash in on their holdings. At the same time, higher crude oil prices have allowed bigger oil producers to acquire new holdings.
Endeavor Energy Resources LP, an oil producer in Texas, also is exploring a sale that could value the company at more than $10 billion.
Earlier this year, RSP Permian and Energex Corp were bought by Concho Resources Inc for $8 billion and Diamondback Energy Inc for $9.2 billion, respectively. Concho paid more than $70,000 an acre in its deal.
Felix's management team sold assets in Oklahoma to Devon Energy Corp in January 2016 for more than $1.9 billion, according to the company's website.
The company's acreage in the Permian Basin is concentrated in the oil-rich Delaware Basin in Loving, Winkler and Ward counties in Texas. Felix has more than 70,000 net acres in the Permian Basin, one of the people familiar with the matter said.
PA NatGas Production Surpasses 17 billion cfpd. Pennsylvania Department of Environmental Protection (PA DEP) published preliminary oil and gas well production data for August 2018 earlier this week.
While we still observe marginal underreporting for August (with 250 million cfpd missing from HG Energy, which also delayed reporting for July), it is already obvious that shale gas production increased further from the level seen in July 2018. Taking into account reporting delays, we estimate that shale gas production in Pennsylvania surpassed 17 billion cfpd in August 2018 for the first time in history. In addition to a new all time-high production level, year-over-year growth reached a staggering 2.87 billion cfpd, which has not been seen since 2H 2012 – 1H 2014.
Joe Barone jbarone@shaledirectories.com 610.764.1232
Vera Anderson vera@shaledirectories.com 570.337.7149https://www.shaledirectories.com/blog/facts-rumors-310/
No comments:
Post a Comment