Sunday, March 31, 2013

Haynesville Shale Rig Count: Unchanged at 23

Boring!  The Haynesville Shale rig count was unchanged this week at 23.  Louisiana held at 14 and Texas did the same at nine.

New Louisiana Completions

  • Allums 7-15-10 H #1, Chesapeake Operating: 16.176 MMcf/day IP on 22/64 in. choke at 6,981 psi; Perfs: 12,074-15,940, length: 3,866 ft.; Swan Lake Field, Bossier Parish, S7/T15/R10; res. A, serial #243772 
  • Caplis 30-16-12 H #3-ALT, QEP Resouces: 12.153 MMcf/day IP on 18/64 in. choke at 7,500 psi; Perfs: 11,500-16,061, length: 4,561 ft.; Elm Grove Field, Caddo Parish, S30/T16/R12; res. A, serial #244323

Friday, March 29, 2013

U.S. Rig Count: +2 to 1,748 (But Gas Rigs Down 29)

The Baker Hughes U.S. rig count was up two this week to 1,748.  Oil rigs were up 30 to 1,354, gas rigs were down 29 to 389 and miscellaneous rigs were up one to five.  This is the smallest number of gas rigs operating in the U.S. since May 21, 1999.  By type, horizontal rigs were down one to 1,099, vertical rigs were up 11 to 443 and directional rigs were down eight to 206.  Among gas rigs, horizontal rigs were down 25 to 277, directional rigs were up two to 64 and vertical rigs were down six to 48.

Thursday, March 28, 2013

EIA: Storage -95 Bcf to 1.781 Tcf

The EIA reported that working gas in storage dropped by 95 Bcf to 1.781 Tcf.  The weekly withdrawal was  way, way, way better than historical averages, given that both last year and the historical averages for this week are net injections into storage.  The current weekly withdrawal was net 140 Bcf greater than last year's 45 Bcf injection and 101 Bcf higher than the five year average's 6 Bcf injection.  


The current storage level is now 26.5% below last year (2.423 Tcf) and only 3.5% above the five year average (1.72 Tcf). What a difference a few cold fronts will make!  The current storage level is now only 61 Bcf higher than the five year average.  Will that gap be narrowed or wiped out in next week's report after this week's chilly weather across the country?


Wednesday, March 27, 2013

Haynesville Shale Rig Count: +1 to 23

The Haynesville Shale rig count was up by one rig last week to 23.  Louisiana was up one to 14, while Texas held at nine.

Friday, March 22, 2013

U.S. Rig Count: -30 to 1,746

The Baker Hughes rig count was down 30 this week to 1,746.  Oil rigs were down 17 to 1,324, gas rigs were down 13 to 418 and miscellaneous rigs were unchanged at four.  By type, horizontal rigs were down 31 to  1,100 (lowest level since August 2011), vertical rigs were down  four to 432 and directional rigs were up five to 214.  Among gas rigs, horizontal rigs were down 16 to 302, directional rigs were up five to 62 and vertical rigs were down two to 54.

Thursday, March 21, 2013

New Texas Completions

3/8/13 - 3/20/13:
  • CGU 18 #54HH, Anadarko E&P: 5.404 MMcf/day IP, 20/64" choke, 4,937 psi; Perfs: 10,747-16,708, length: 5,961 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: SMITH, M, A-607 (9 Bbl/d liquids)
  • CGU 6 #53HH, Anadarko E&P: 6.642 MMcf/day IP, 18/64" choke, 5,465 psi; Perfs: 10,776-17,147, length: 6,371 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: DUNCAN, S, A-158 (85 Bbl/d liquids)
  • CGU 6 #52HH, Anadarko E&P: 7.349 MMcf/day IP, 20/64" choke, 4,965 psi; Perfs: 10,892-18,255, length: 7,363 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: DUNCAN, S, A-158 (96 Bb/dl liquids)

New Texas Permits

3/8/13 - 3/20/13:
  • CGU 27 #54HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: LINDSEY, C, A-386 
  • Nile #1H, XTO Energy; Carthage Field (Haynesville Shale), Shelby Co. Co., Survey: HOLMES, S, A-287

Lots of New Louisiana Completions (Including Four Questar)

  • Caplis 30-16-12 H #2-ALT, QEP Resouces: 10.623 MMcf/day IP on 18/64 in. choke at 7,140 psi; Perfs: 11,510-16,071, length: 4,561 ft.; Elm Grove Field, Caddo Parish, S30/T16/R12; res. A, serial #244322 
  • Caplis 30-16-12 H #4-ALT, QEP Resouces: 8.678 MMcf/day IP on 18/64 in. choke at 6,810 psi; Perfs: 11,465-16,026, length: 4,561 ft.; Elm Grove Field, Caddo Parish, S30/T16/R12; res. A, serial #244324 

EIA: Storage -62 Bcf to 1.876 Tcf

The EIA reported that working gas in storage dropped 62 Bcf last week to 1.876 Tcf.  The weekly withdrawal was 62 Bcf higher than last year, which was unchanged at 2,378, and 36 Bcf greater than the five year average of -26 Bcf.  The current storage level is now 21.1% below last year (2.378 Tcf) but 9.5% above the five year average (1.714 Tcf).


Temperatures last week averaged 43.9 degrees, 6.1 degrees cooler than last year and 0.6 degrees warmer than average.

Wednesday, March 20, 2013

Landowners Sue Chesapeake for Underpayment in Barnett

A small group of landowners including notable investor (and "Bass Brother") Ed Bass have sued Chesapeake Energy for underpayment of royalties from the Barnett Shale in Tarrant Co., Texas.  The suit is a contract dispute that alleges that Chesapeake passed on costs not actually incurred and charged other expenses that the contract with the landowners excluded.

Chesapeake's royalty payment practices have drawn much criticism over the years, so this suit certainly won't be the last one of its kind.  As with many other aspects of its business, Chesapeake employs aggressive business practices, so its legal department stays quite busy.

Tuesday, March 19, 2013

No Surprise: Utilities Drive Higher 2012 Natural Gas Consumption

As previously noted, natural gas consumption in 2012 was 5.1% greater than in 2011 and 10.9% above the ten year average.  The biggest reason for the greater consumption was higher use in the utility sector, which used 20.6% more gas in 2012 than in 2011 and 43.4% more gas in 2012 than the ten year average..  Residential consumption was the biggest loser in 2012, down 11.7% versus 2011 and down 12.9% compared to the ten year average.



2012 Natural Gas Consumption 5.1% Above 2011

The EIA reported that December 2012 natural gas consumption, measured as gas delivered to consumers, was 2.285 Tcf, which was 1.6% lower than December 2011 (2.323 Tcf)/  But total consumption in 2012 was 23.351 Tcf, which was 1.132 Tcf, or 5.1%, higher than 2011.  Compared to the trailing ten year average, 2012 consumption was 2.299 Tcf, or 10.9%, above average.


2012 U.S. Natural Gas Production +4.4% vs. 2011

The EIA reported (a few weeks ago...) that December 2012 U.S. total dry gas production was 2.041 Tcf, which was 0.5% higher than December 2011 and 20.4% higher than the ten year average.




Production per day in December averaged 65.8 Bcf/day, which was 21.3% higher than the ten year average of 54.7 Bcf/day.



Monday, March 18, 2013

A Gas to Liquids Startup

One of the my favorite things about living in the U.S., especially now, is the environment of constant innovation.  A new start-up in San Francisco called Siluria Technologies is bringing a new natural gas to liquids technology to market that doesn't depend on the Fischer-Tropsch process.

Unlike the Fischer-Tropsch method, which requires high heat and lots of energy, Siluria's process supposedly requires lower heat and less energy.  The technology is not proven at scale, but it has attracted significant venture capital backers. Depending on the viability of the technology and its ability to both scale and survive higher natural gas prices, we might have yet another potential end user market for natural gas.  Put it on the list.  It won't help natural gas right now, but it is one of many things that make the future for gas look rosy.

All you fat brains out there, just keep 'em coming!

Sunday, March 17, 2013

Haynesville Shale Rig Count: -1 to 22

The Haynesville Shale rig count was down one this week to 22.  Louisiana was down one to 13, while Texas held at nine.



Friday, March 15, 2013

U.S. Rig Count: +24 to 1,776

The Baker Hughes U.S. rig count was up 24 this week to 1,776.  The gain was entirely in gas rigs, which jumped to 431, the biggest weekly increase since January 2010.  By type, horizontal rigs were up one to 1,131, vertical rigs were up nine to 436 and directional rigs were up 14 to 209.  Among only gas rigs, horizontal rigs increased by 16 to 318 (74% of all operating gas rigs), directional rigs were up three to 57 and vertical rigs were up five to 56.

Thursday, March 14, 2013

EIA: Storage -145 Bcf to 1.938 Tcf

The EIA reported that the level of working gas in storage dropped 145 Bcf to 1.938 Tcf.  The weekly withdrawal was 120% larger than last year (-66 Bcf) and 96% larger than the five year average (-74 Bcf).  The current storage level is now 18.5% below last year (2.378 Tcf) but 11.4% above the five year average (1.74 Tcf).


This is a good result for natural gas, but before getting too excited it is worth remembering that the 2011 storage level (I try not to look at 2012!) was approximately this same level on February 14.  Since the end of March is generally the end of the winter withdrawal season, we are running out of room to catch up to normal levels.  At least the big weekly withdrawal narrowed the gap between the current level and the five year average by 3.4 percentage points:

Wednesday, March 13, 2013

Happy Birthday Haynesville Shale! Five Years Old

Next Sunday marks the fifth birthday of of the Haynesville Shale.  While there are Haynesville wells going back to 2006, I always view March 24, 2008 as the official birthday of the Haynesville Play.  That's the day that Chesapeake Energy dropped a bomb of a press release that announced its "discovery" of the play and started the Great Haynesville Land Rush.  One can argue that Chesapeake didn't discover the field, especially since Encana completed its first Haynesville well a year before Chesapeake, but they certainly ushered in the boom with a bang.

I started this web site in May 2008 as something of a lark, but I quickly became obsessed with following the rapid development of the Haynesville.  Over the past five years we have seen earth-shattering changes because of shale gas, and one can trace most of that back to Chesapeake's announcement.  I won't replay all of the excitement, but we quickly went from natural gas scarcity to a glut, which killed natural gas prices and pushed most producers to the brink of extinction.  But our gas glut and the cheap commodity prices that followed caused a ripple effect in world market that is becoming a tsunami in global geopolitics.  Domestic manufacturing is making a comeback - had anyone even coined the word "reshoring" five years ago?  We are at the early stages of major national and international changes, all because of U.S. shale gas, and it's fascinating to watch.

But ironically some of the biggest drama played out at Chesapeake Energy.

Tuesday, March 12, 2013

Encana's Clean Thinking

I was interested to see that Encana Corp. invested in a venture capital round for start-up company Alphabet Energy.  From the web site GigaOm.com (linked above):
"Alphabet Energy, founded in 2009 as a spin-out from Lawrence Berkeley National Laboratory, makes a next-generation thermoelectric material, which is a semiconductor that can convert heat to electricity. When thermoelectric materials come in contact with heat it causes the electrons to move from the hot side of the material to the cold side, and the difference in temperature causes the material to produce electricity."
What's in it for Encana?  Alphabet is working on a process that converts waste heat into electricity.  Encana sees uses for the process in its natural gas drilling and processing operations.  It sounds very cool.

What strikes me more than anything is the process and speed of innovation that we are witnessing on a daily basis. Five years ago (this month) the vast majority of us had never heard of shale gas.  Now companies have developed technologies and techniques to extract gas very efficiently in quantities far greater than we can handle.  I can only imagine what innovations we will see in the next five years.

The Bud Man Cometh (in NatGas-Fueled Trucks)

I don't know why it took so long, but a major beer distributor serving northwest Louisiana announced yesterday that it has ordered 23 compressed natural gas (CNG) tractors to replace its diesel delivery fleet.  Shreveport-based  Eagle Distributing, Inc., which is a distributor of Anheuser-Bush and InBev products, agreed to a lease agreement with Ryder System for the trucks.  Eagle also plans to change out smaller fleet vehicles and is considering building its own fueling station.

The deal makes a lot of sense for Eagle.  Not only will the company will reduce fueling costs and decrease its carbon footprint, it will take advantage of the fuel that is so abundant in its service area.  A win-win-win if ever there was one.

Sunday, March 10, 2013

Haynesville Shale Rig Count: -1 to 23

The Haynesville Shale rig count was down by one this week to 23.  Louisiana was up one to 14, while Texas was down two to nine.  One Anadarko rig shifted from Panola Co., TX to Caddo Parish, LA to drill the Caddo Pine Island field.  This is the first Anadarko rig in Louisiana in about three years.  One of the J-W operating rigs was taken over by and Comstock Resources in DeSoto Parish, LA.  This is the first Comstock rig in Louisiana since March 2012.

Friday, March 8, 2013

U.S. Rig Count: -5 to 1,752

The Baker Hughes U.S. rig count was down five this week to 1,752.  Oil rigs were up eight to 1,341, gas rigs were down 13 to 407 and miscellaneous rigs held at four.  By type, horizontal rigs were down 11 to 1,130, vertical rigs were down four to 427 and directional rigs were up ten to 195.

Thursday, March 7, 2013

A Couple New Texas Completions

2/18/13 - 3/7/13:

  • CGU 9 #54HH, Anadarko E&P: 4.319 MMcf/day IP, 20/64" choke, 4,319 psi; Perfs: 11,012-16,245, length: 5,233 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: SMITH, M, A-607 
  • Terrapins (SL) DU #1H, XTO Energy: 8.132 MMcf/day IP, 16/64" choke, 8,132 psi; Perfs: 14,380-18,378, length: 3,998 ft.; Carthage Field (Haynesville Shale), San Augustine Co., Survey: MOSS, J , A-191

New Texas Permits

  • CGU 23 #56HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: MOORE, I, A-464 
  • CGU 23 #55HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: MOORE, I, A-464 

BNSF Railway Looking at Natural Gas Locomotives

The Wall Street Journal reported yesterday that BNSF Railway, now owned by Berkshire Hathaway, is moving forward with a pilot project to use natural gas-powered locomotives in its fleet.  The pilot will begin this fall and will be based on LNG.

It is ironic that one of the biggest carriers of Powder River Basin coal and Bakken Shale oil might become the first train line to move to natural gas power.  If nothing else, building LNG fueling infrastructure in the Bakken region will give producers something to do with all that nuisance natural gas other than flaring it - or bringing it to an already glutted market.

LNG has a number of advantages for a railroad.  The low coast of natural gas is the biggest advantage over diesel.  But considerably lower pollution versus diesel is a significant plus given that railroads will be subject to tighter air pollution standards beginning in 2015. Additionally, early indications are that LNG locos will have a longer range per fueling without sacrificing hauling power.  Hurdles include the growing pains of developing new rolling equipment (with requisite regulatory approvals for the fueling cars) and building fueling infrastructure.  But BNSF seems to think that the upside outweighs the negatives.

Last October, CN Railway announced a pilot program to test a dual fuel locomotive (90% LNG/10% diesel) that is still in process.  Given the upcoming pollution regulations and the work that GE and Caterpillar are putting into LNG locomotives, I wouldn't be surprised to see more railways looking harder at natural gas.

One New Louisiana Completion This Week

  • Roe 31 #1-ALT, EXCO Operating: 11.337 MMcf/day IP on 17/64 in. choke at 7,892 psi; Perfs: 12,008-16,577, length: 4,569 ft.; Caspiana Field, DeSoto Parish, S6/T14/R12; res. A, serial #244084

EIA: Storage -146 Bcf to 2.083 Tcf

The EIA reported that working gas in storage declined 146 Bcf last week to 2.083 Tcf.  The weekly withdrawal was 59% larger than last year (-92 Bcf) and 36% greater than the five year average (-107 Bcf).  The current storage level is 14.8% lower than last year (2.444 Tcf) and 14.8% higher than the five year average (1.814 Tcf).



Tuesday, March 5, 2013

Shell to Build LNG Plants for Transportation Fuels

Shell announced today that it is going forward with two small scale natural gas liquefaction plants on the Mississippi River in Geismar, LA to serve the Gulf of Mexico and Intra-Coastal waterway and in Sarina, Ontario, Canada to serve the Great Lakes region.  Here is a blurb from the company's press release about the Louisiana facility:
"In the Gulf Coast Corridor, Shell plans to install a small-scale liquefaction unit (0.25 million tons per annum) at its Shell Geismar Chemicals facility in Geismar, Louisiana, in the United States. Once operational, this unit will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana. To service oil and gas and other industrial customers in Texas and Louisiana, Shell is expanding its existing relationship with fuels and lubricants re-seller Martin Energy Services, a wholly-owned subsidiary of Martin Resource Management Corporation (MRMC). MRMC and its publicly traded affiliate, Martin Midstream Partners L.P. will provide terminalling, storage, transportation and distribution of LNG."
Shell is the world leader in LNG for export, a status affirmed by last week's announcement that it will buy the LNG assets of Spanish company Repsol, SA for $4.4 billion.  The Repsol deal gives Shell better economics to export its own gas from places like Peru and Trinidad and Tobago.  If LNG export doesn't work out in the U.S. because of political pressures, at least Shell has an export outlet to capitalize on the imbalance of natural gas prices worldwide.

Monday, March 4, 2013

Sundrop Fuels Buys Alexandria Land

Sundrop Fuels, a Colorado-based biofuels company, closed on a second land acquisition in the Alexandria, LA area last week.  The company bought 1,213 acres for $4.752 million.  The property is adjacent to another 27.5 acres that will serve as the company's regional headquarters.

Sundrop, which is backed by Chesapeake Energy, plans to convert wood chips and forest debris using natural gas into "green gasoline."  The Alexandria project is more of a pilot project with a projected output of around 1.2 million barrels per year.  If successful, the company will aim to build a larger plant using the same methodology.

Does New Energy Secretary Get Shale Gas?

President Obama today nominated two people for cabinet positions that will have a significant impact on the energy industry.  He nominated MIT physicist Ernest Moniz to head the Department of Energy and Gina McCarthy to head the EPA.

From all indications, Ernest Moniz has a long-term view of energy that is heavy on solar and renewables but a short-term realistic approach to what fuels us now, specifically fossil fuels and nuclear.  He has been a proponent of the "natural gas as a bridge fuel" argument and has shepherded research at MIT that was favorable towards shale gas and fracking.  Ultimately, his position on fracking matters little given that the DOE has no real control over the process, but it is good for the natural gas industry to have a sympathetic ear at the top.

Saturday, March 2, 2013

Haynesville Shale Rig Count Unchanged at 24

The Haynesville Shale rig count didn't change this week, holding at 24, with Louisiana and Texas both sticking at 13 and 11, respectively.



Friday, March 1, 2013

U.S. Rig Count: -4 to 1,757

Baker Hughes reported that the U.S. rig count is down four to 1,757 this week.  Oil rigs were up four to 1,333, gas rigs were down eight to 420 and miscellaneous wells held at four.  Horizontal rigs were up one to 1,141, vertical rigs were up seven to 431 and directional rigs were down 12 to 185.