Friday, October 24, 2014

New Louisiana Completions

  • Lady Oak Farms 4-9 H #1, Petrohawk Operating: 9.442 MMcf/day IP on 16/64 in. choke at 8,036 psi; Perfs: 12,057-17,325, length: 5,268 ft.; Caspiana Field, Red River Parish, S4/T14/R12; res. A, serial #247435 
  • Lady Oak Farms 4-9 H #2, Petrohawk Operating: 9.517 MMcf/day IP on 16/64 in. choke at 8,224 psi; Perfs: 11,819-16,927, length: 5,108 ft.; Caspiana Field, Red River Parish, S4/T14/R12; res. A, serial #247436 

U.S. Rig Count: +9 to 1,927

The Baker Hughes U.S. rig count was up nine this week to 1,927.  Oil rigs were up five to 1,595 and gas rigs were up four to 332.  By type, horizontal rigs were up two to 1,355, vertical rigs were down one to 361 and directional rigs were up eight to 211.  Among gas rigs, horizontal rigs were down five to 245, directional rigs were up five to 59 and vertical rigs were up four to 28.

The Big Kahuna Helps Keep a Lid on NatGas Prices

The EIA has been updating a variation of the chart below showing production from the main gas shale plays for the past couple of years (I cleaned it up by consolidating it into the major plays):


It's pretty remarkable how much shale gas has been produced over the past half decade. But, as one can clearly see, growth over the past several years has been driven mainly by the Marcellus Shale (light blue in chart above).  Taking that same data and charting the twelve month trailing trends (i.e. 12 months of trailing data from November 2011 versus 12 months of trailing data from November 2010) shows the trend more clearly:


Thursday, October 23, 2014

EIA: Storage +94 Bcf to 3.393 Tcf

The EIA announced this morning that working gas in storage was up 94 Bcf to 3.393 Tcf.  The weekly injection was 9% above last year (+86 Bcf) and 34% greater than the five year average (+70 Bcf).  The current storage level is now 9.0% below last year (3.729, a difference of 336 Bcf) and 9.1% below the five year average (3.731 Tcf, a difference of 338 Bcf).


Wednesday, October 22, 2014

Recent Texas Completions

10/6/14 - 10/21/14:
  • Hill Heirs Deep Gas Unit #5H, XTO Energy: 4.962 MMcf/day IP, 16/64" choke, 4,087 psi; Perfs: 11,282-17,316, length: 6,034 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: MANN, W , A-431 
  • Brent Miller Unit A2 #2H, Encana: 15.971 MMcf/day IP, 20/64" choke, 9,575 psi; Perfs: 14,720-21,322, length: 6,602 ft.; Carthage Field (Haynesville Shale), Nacogdoches Co., Survey: CHIRINO, JA, A-17 

Tuesday, October 21, 2014

QEP Sells Midstream, But Keeps Haynesville Portion

Tesoro made a splash over the weekend when it announced the purchase of the midstream assets of QEP Resources (formerly Questar) by one of its subsidiaries for $2.5 billion in cash.  The sale of QEP Field Services included gathering, treatment and pipeline infrastructure, but QEP retained midstream assets associated with the Haynesville Shale region.


Monday, October 20, 2014

Haynesville Shale Rig Count Unchanged at 26

Last week's Haynesville Shale rig count was unchanged at 26.  Louisiana was down one (EXCO) to 20, while Texas was up one (BP!) to six.  This week marks the first time BP has drilled a Haynesville well since July 2012.  The company currently has three Haynesville permits in Texas with another one pending.


Recent Texas Permits (Including BP)

10/5/14 - 10/19/14:
  • CGU 29-31 #72HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: MORRIS, J, A-446 
  • Coyotes DU #B 1SL, XTO Energy; Carthage Field (Haynesville Shale), San Augustine Co. Co., Survey: ANDERSON, G, A-47 

U.S. Rig Count: -12 to 1,918 (But Gas Rigs +8)

The Baker Hughes U.S. rig count was down 12 last week to 1,918.  Oil rigs were down 19 to 1,590, gas rigs were up eight to 328 and miscellaneous rigs were down one to zero.  By type, horizontal rigs were unchanged at 1,353, vertical rigs were down eight to 362 and directional rigs were down four to 203.  Among gas rigs, horizontal rigs were up nine to 250, directional rigs were down three to 54 and vertical rigs were up two to 24.

Thursday, October 16, 2014

EIA: Gas in Storage +94 Bcf to 3.299 Tcf

The EIA announced this morning that working gas in storage was up 94 Bcf to 3.299 Tcf.  The weekly injection was 19% higher than last year (+79 Bcf) and 21% above the five year average (+78 Bcf).  The current storage level is now 9.4% below last year (3.643 Tcf, a difference of 344 Bcf) and 9.9% below the five year average (3.661 Tcf, a difference of 362 Bcf).


Tuesday, October 14, 2014

Last Week's Louisiana Completions


  • LSU 31-6 HC #1, Petrohawk Operating: 7.711 MMcf/day IP on 16/64 in. choke at 6,839 psi; Perfs: 11,437-16,546, length: 5,109 ft.; Elm Grove Field, Bossier Parish, S31/T17/R12; res. A, serial #246177 
  • Gray Inv. 29-32 HC #1-ALT, Petrohawk Operating: 9.091 MMcf/day IP on 16/64 in. choke at 7,300 psi; Perfs: 11,542-16,763, length: 5,221 ft.; Elm Grove Field, Bossier Parish, S29/T17/R12; res. A, serial #247772 

Reflections on Windfall Tax Spending in DeSoto

Five years ago, the movie "Haynesville" came out and arrived at a theater near me.  One of my takeaways was the discussion of Norway's approach to the oil wealth "problem."  The country has maintained a very conservative approach to managing its energy windfall and created a trust fund that benefits the entire population of the country.

I was thinking about Norway when reading an article on the Environment and Energy web site reflecting on the spending of Haynesville tax revenues in DeSoto Parish and the communities within it, which racked up huge tax windfalls in tax revenues from the short-lived Haynesville Shale drilling boom of 2009-11.  Not exactly the Norway approach, and not everyone will approve of how funds were allocated, but most of the entities made some one-time purchases that would normally have been out of reach (but were not excessively extravagant) and focused on health, safety and education in their spending.  Others weren't quite as prudent.  Some entities even kept some money around for a rainy day, not exactly a Louisiana oil boom mentality.  Maybe some of us actually learned something from years of bouncing around in a recurring boom-bust energy cycle.

Haynesville Shale Rig Count Unchanged at 26

The Haynesville Shale rig count was unchanged at 26 last week.  Louisiana held at 21 and Texas was unchanged at five.  The only action of note was the movement of a Chesapeake rig from Caddo to Sabine Parish in Louisiana.


Endeavour International Declares Bankruptcy

Endeavour International Corporation, a Houston-based E&P company with an international focus, announced earlier this week that it had declared Chapter 11 bankruptcy.  Delays in a couple of major offshore projects in the North Sea put the company in a cash flow crisis that ultimately led to the filing.

Endeavour has a small presence in the Haynesville Shale.  It entered the play in 2010 through a transaction with Cohort Energy, a subsidiary of J-W Operating, to buy half of the company's Haynesville acreage, amounting to 7,250 net acres.  Endeavour maintains a working interest in this acreage and is not listed as an operator in the Haynesville.  The company will continue to operate, albeit with a different ownership structure.

Saturday, October 11, 2014

Another Big Plant Coming to Louisiana

Connecticut-based Castleton Commodities International announced this week that it plans to build a methanol plant in Plaquemines Parish, LA.  The site is downriver from New Orleans on the east bank of the river near Braithwaite.  The plant is expected to cost $1.2 billion and produce 5,000 metric tons of methanol per day and use natural gas as a feedstock.  While it is not specifically mentioned, the downriver location gives Castleton easy access to the Gulf of Mexico and international shipment, yet another way to export U.S. natural gas by turning it into a basic industrial product and bypassing the LNG route.

Friday, October 10, 2014

U.S. Rig Count: +8 to 1,930

The Baker Hughes U.S. rig count was up eight this week to 1,930.  Oil rigs were up 18 to 1,609, gas rigs were down ten to 320 and miscellaneous rigs were unchanged at one.  By type, horizontal rigs were up 12 to 1,353, vertical rigs were down two to 370 and directional rigs were down two to 207.  Among gas rigs, horizontal rigs were up one to 241, directional rigs were down three to 57 and vertical rigs were down eight to 22.

Thursday, October 9, 2014

Pink Drill Bits?

Every October I play a parlour game to guess what unusual new thing will get "pinked" for Breast Cancer Awareness Month.  Drill bits might be this year's winner.  Baker Hughes, in a promotion deal with the Susan G. Komen organization, is distributing pink drill bits this month.


After a few weeks of so much pink (especially during NFL games), I get a bit cynical and see it more as a bunch of marketing managers getting on board with a popular brand (and visa-versa).  Don't get me wrong, I am very appreciative of the funding and attention that Komen has brought to the treatment of breast cancer over the past couple of decades.  I feel especially hypocritical saying this because my family has been a direct benefactor of this progress.  But after a while, it feels that this one cause is sucking all the air out of the room when the world is full of other worthy causes that unfortunately don't have such a ready-made marketing angle.

EIA: Gas in Storage +105 Bcf to 3.205 Tcf

The EIA reported this morning that working gas in storage is up 105 Bcf to 3.205 Tcf.  The weekly injection was 15% above last year (+91 Bcf) and 25% higher than the five year average (+84 Bcf).  The current storage level is now 10.1% below last year (3.564 Tcf, a difference of 359 Bcf) and 10.5% below the five year average (3.583 Tcf, a difference of 378 Bcf).


Monday, October 6, 2014

New Texas Completions

9/4/14 - 10/5/14:
  • Brent Miller Unit A2 #2H, EXCO Operating: 15.971 MMcf/day IP, 20/64" choke, 9,574 psi; Perfs: 14,830-20,846, length: 6,016 ft.; Carthage Field (Haynesville Shale), Nacogdoches Co., Survey: CHIRINO, JA, A-17 
  • Hill Heirs Deep Gas Unit #7H, XTO Energy: 6.945 MMcf/day IP, 17/64" choke, 4,866 psi; Perfs: 10,917-16,372, length: 5,455 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: MANN, W , A-431 

Recent Texas Permits

9/4/14 - 10/5/14:
  • Womack #10H, XTO Energy; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: HARDING, SH, A-297 
  • Womack #11H, XTO Energy; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: HARDING, SH, A-297 

Haynesville Shale Rig Count Unchanged Last Week at 26

The net Haynesville Shale rig count didn't budge, holding at 26.  Louisiana held at 21, while Texas was unchanged at five (Anadarko was up one, XTO down one).


Friday, October 3, 2014

U.S. Rig Count: -9 to 1,922

The U.S. rig count was down nine this week to 1,922.  Oil rigs were down one to 1,591, gas rigs were down eight to 330 and miscellaneous rigs held at one.  By type, horizontal rigs were down six to 1,341, vertical rigs were down one to 372 and directional rigs were down two to 209.  Among gas rigs, horizontal rigs were up one to 240, directional rigs were down two to 60 and vertical rigs were down seven to 30.

EIA: Storage +112 Bcf to 3.1 Tcf

Welcome to the shoulder season.  I'd like to call it the Goldilocks Season, when it's not too hot but not too cold, leading to large storage injections, but "Goldilocks" has been taken over by astronomers looking for earth-like planets elsewhere in space.  I guess I could expand the Goldilocks theme by calling it the Third Bowl of Porridge, but the name starts to drift from the meaning, so I'll stick with the boring old "shoulder."  Anyway, the EIA announced yesterday that working gas in storage was up 112 Bcf to an even 3.1 Tcf.  The weekly injection was 13% higher than last year (+99 Bcf) and 32% above the five year average (+85 Bcf).  The current storage level is now 10.7% below last year (3.473 Tcf, a difference of 373 Bcf) and 11.4% below the five year average (3.499 Tcf, a difference of 399 Bcf).


Wednesday, October 1, 2014

LNG Fueling Facility to Open in Baton Rouge

Waller Marine and Tenaska NG Fuels, LLC, a subsidiary of Omaha-based energy company Tenaska, announced they would open a facility in Baton Rouge to liquefy natural gas for sale to natural gas powered trucks and marine vessels.  The facility will be located on 80 acres at the Port of Baton Rouge near Interstate 10 and US 190 and will be the first of its kind in Louisiana.  The owners expect to produce 200,000 gallons of LNG per day, with the ability to expand if demand warrants.  Given the proximity of the facility to the Haynesville Shale, it is likely that the Haynesville will be a good source of gas for the project.

The marine industry has justifiably come under increased scrutiny for the pollution it causes, and increased use of natural gas would be a welcome substitute for burning low grade bunker fuel, which is only a few steps above liquid asphalt.  While the use of LNG (not to be confused with CNG, which fuels smaller vehicles) as transport fuel is in its infancy, it is a viable future market that will increase consumption of natural gas (although not significantly) and diversify its user base.

Last Week's Louisiana Completions

  • Legrand 35+2-15-12 HC #1-ALT, Chesapeake Operating: 14.784 MMcf/day IP on 20/64 in. choke at 7,035 psi; Perfs: 12,267-17,438, length: 5,171 ft.; Red River-Bull Bayou Field, DeSoto Parish, S35/T15/R12; res. B, serial #247654 
  • Legrand 35+2-15-12 HC #2-ALT, Chesapeake Operating: 13.488 MMcf/day IP on 20/64 in. choke at 7,325 psi; Perfs: 12,165-17,372, length: 5,207 ft.; Red River-Bull Bayou Field, DeSoto Parish, S35/T15/R12; res. B, serial #247655