Friday, September 27, 2013

U.S. Rig Count: -17 to 1,744

The Baker Hughes U.S. rig count was down 17 rigs this week to 1,744.  Oil rigs were down seven to 1,362, gas rigs were down ten to 376 and miscellaneous rig were unchanged.  By type, horizontal rigs were down six to 1,085, vertical rigs were down four to 417 and directional rigs were down seven to 242.  Among gas rigs, horizontal rigs were down four to 256, directional rigs were down two to 73 and vertical rigs were down four to 47.

Thursday, September 26, 2013

EIA: Storage + 87 Bcf to 3.386 Tcf

The EIA announced this week that working gas in storage was up 87 Bcf to 3.386 Tcf.  The weekly injection was 10% above last year (+79 Bcf) and 16% above the five year average (+75 Bcf). The current storage level is now 5.0% below last year (3.565 Tcf) but 0.9% above the five year average (3.356 Tcf).


Tuesday, September 24, 2013

Shell Picks Ascension Parish for GTL Plant

Hot off the press: Shell has picked a site in Ascension Parish, LA for the site of a natural gas to liquids plant. No final investment decision at this time, but a location near Sorrento seems to be a done deal.  The plant will cost around $12.5 billion and create 740 new permanent jobs.  Like the proposed Sasol project, the Shell plant will be a massive undertaking, expected to create 10,000 construction jobs.

While Gov. Jindal will take full credit, make sure to give thanks to the Haynesville Shale and all of the brave natgas independents that risked their companies to prove the play, which in the end only brought them pain and misery in the form of low commodity prices and oversupply.

Monday, September 23, 2013

Haynesville Shale Rig Count: -2 to 23

The Haynesville Shale rig count was down again last week, this time down two to 23.  Louisiana was down one (Petrohawk/BHP Billiton) to 14, while Texas was down one (XTO) to nine.


Friday, September 20, 2013

U.S. Rig Count: -7 to 1,761 (Gas Rigs Down Big)

The Baker Hughes U.S. rig count was down seven this week to 1,761.  Oil rigs were up eight to 1,369, gas rigs were down 15 to 386 and miscellaneous rigs were unchanged at six.  By type, horizontal rigs were up 15 to 1,091, vertical rigs were down 23 to 421 and directional rigs were up one to 249.  Among gas rigs, horizontal rigs were down eight to 260, directional rigs were up one to 75 and vertical rigs were down eight to 51.

Thursday, September 19, 2013

EIA: Storage +46 Bcf to 3.299

The EIA announced that working gas in storage was up 46 Bcf this week to 3.299 Tcf.  The weekly injection was 25% below last year (+61 Bcf) and 38% below the five year average (+74 Bcf).  The current storage level is 5.4% below last year (3.486 Tcf) and 0.5% above the five year average (3.281 Tcf).


With this week's positive storage report, the storage level has narrowed its deviation from the five year average:

Financing Update on Sasol GTL Plant

One of the big "wins" for the regional chemicals and manufacturing economy was the announcement that South African company Sasol will build a gas-to-liquids plant near Lake Charles, LA to use shale gas to create a range of products, including diesel fuel.

This is an exciting project, but a recent Bloomberg piece reminds us that it still has a ways to go.  The state of Louisiana put $257 million of controversial incentives behind the project, but that is a small amount relative to the all-in costs of the project.  The ambitious project will cost about $21 billion, and Sasol is still in the process of raising the first $5 to 7 billion for the ethylene cracker.  Everything around the project seems positive, but the final decision whether or not to go forward is still not made and is not expected until 2014.  It's important to remember that we still have eggs, not chickens.

Wednesday, September 18, 2013

And Now There are Four

Late last week, the DOE approved the fourth LNG export facility for export to non-Free Trade Agreement countries.  Dominion's Cove Point facility in Maryland received approval to export 21.8 million cubic meters per day from its existing (and quiet) import facility on the Chesapeake Bay in Lusby, MD.  The project will cost $3.8 billion and will funnel gas from the Marcellus Shale region to India and Japan.

This fourth approval brings the amount of approved capacity to 180.4 MMcm/day.  Previous DOE studies estimated that the quantity of exported gas that would not materially impact the domestic price of gas to be in the range of 170 to 340 MMcm/day.  While some are calling for a time out in approvals, many analysts believe there will be another three projects approved before year end, including a small expansion at the already approved Freeport LNG, Sempra's Cameron, LA facility and Veresen's Jordan Cove project in Oregon.  Approving these projects would bring the export total to 262.5 MMcm/day, which is in the middle of the DOE's range.  The Oregon project is very controversial in the state, so I wouldn't bet too many marbles that it will be approved in this coming round, but in general the news is good for natural gas.

Tuesday, September 17, 2013

German Steelmaker Breaks Ground on Shreveport Mill

As further evidence of the impact of the Haynesville Shale on the region's economy, German steelmaker Benteler Steel/Tube broke ground on a $975 million hot rolling seamless tube mill in Caddo Parish, it's first in the U.S.  The company is also involved in developing a new training facility at Bossier Parish Community College that will train workers for Benteler and other high tech manufacturers.  Construction on the plant should be finished in late 2014 with operations commencing in mid-2015.  The facility is expected to be home to 675 full time jobs.

While many politicians will line up (behind Gov. Jindal) to take credit for this new plant, the truth is that the Haynesville Shale deserves the lion's share of the credit.  Given the play's location near the geographic center of the various land-based oil and gas basins and the fact that one quarter of Benteler's steel/tube products end up in the U.S., mostly for oil and gas drilling, the Haynesville Shale region is a natural.  It wasn't mentioned in the company's press release or articles on the groundbreaking, but I'm sure a ready source of natural gas to fuel the mill was also a significant factor in the decision.

The bottom line:  this new mill promises to be a big contributor to the state's economy and natural gas brought it home.

Fugitive Methane Problem Overstated?

A study by scientists from the University of Texas and published in the Proceedings of the National Academy of Sciences shows that methane leaks from natural gas wells are not as large as previously suspected.  The researchers took direct measurements from several hundred wells and found "fugitive" methane levels approximately 20% lower than the EPA previously suspected and well below numbers trotted out by environmental groups opposed to gas drilling.

While the study is not exhaustive and it focused more on the upstream side of the business, it nevertheless represents a credible data point that favors the gas industry.  As we've noted before, fugitive methane is a real problem (as opposed to hydraulic fracturing, which is a widely exaggerated suspected problem), but it is one that is addressable through better practices and improved equipment.

While this new study will excite the pro-gas folks, it isn't likely to change many opponents' minds.  And the battles will rage on.

Haynesville Shale Rig Count: -1 to 25

The Haynesville Shale rig count was down one last week to 25.  Louisiana held at 15, while Texas was down one to 10 (Anadarko).



Friday, September 13, 2013

U.S. Rig Count: +1 to 1,768

The Baker Hughes U.S. rig count was up one this week to 1,768.  Oil rigs were down four to 1,361, gas rigs were up seven to 401 and miscellaneous rigs were down two to 6.  By type, horizontal rigs were up one to 1,076, vertical rigs were up two to 444 and directional rigs were down two to 248.  Among gas rigs, horizontal rigs were up three to 268, directional rigs were up four to 74 and vertical rigs were unchanged at 59.

Thursday, September 12, 2013

Only One New Louisiana Completion in Two Weeks!

  • LFLLC 16-14-15 H #2-ALT, Chesapeake Operating: 14.112 MMcf/day IP on 20/64 in. choke at 6,353 psi; Perfs: 11,895-16,314, length: 4,419 ft.; Bethany Longstreet Field, DeSoto Parish, S16/T14/R15; res. A, serial #244120
Because of this meager output, I'll hold off updating the completion spreadsheets until next week.

EIA: Gas in Storage +65 Bcf to 3.253 Tcf

The EIA reported this week that working gas in storage was up 65 Bcf to 3.253 Tcf.  The weekly injection was 141% above last year (+27 Bcf) but only slightly higher than the five year average (+62 Bcf).  The current storage level is 5.0% below last year (3.425 Tcf) but 1.4% above the five year average (3.207 Tcf).


Wednesday, September 11, 2013

Some Interesting Developments

I've been busy and out of town lately, so I haven't had the chance to update the site as regularly as I'd like - sorry.  I did notice some interesting developments earlier this week that impact the Haynesville Shale.

First, I saw that Freeport LNG signed export agreements (might be restricted access) with Toshiba of Japan and SK of Korea for 2.2 million tonnes per year of natural gas.  Freeport would get a flat fee rather than bear commodity price risk.  Sounds like a sweet deal for Toshiba and SK.  The new deals go along with previous Freeport contracts with Osaka Gas, Chubu Electric and BP and provide enough demand to justify a third liquefaction train at the Freeport facility.  The only problem is that Freeport only has DOE permission (for export to non-free trade agreement countries - the hard one to get) for two trains.  The company does have an application high in the stack, but at some point the DOE is going to call time out on issuing new permits.

Tuesday, September 10, 2013

Haynesville Shale Rig Count: -2 to 26

The Haynesville Shale rig count was down two last week to 26.  Louisiana was unchanged at 15 (but Chesapeake added a rig and EXCO dropped one) and Texas was down two (EOG and Valence).

Friday, September 6, 2013

U.S. Rig Count: -9 to 1,767 (But Gas Rigs up Big)

The  Baker Hughes U.S. rig count was down nine this week to 1,767.  Oil rigs were down a whopping 23, while gas rigs were up 14 to 394.  By type, horizontal rigs were down three to 1,075, vertical rigs were down eight to 442 and directional rigs were up two to 250.  Among gas rigs, horizontal rigs were up 10 to 265, directional rigs were up five to 70 and vertical rigs were down one to 59.

Thursday, September 5, 2013

EIA: Storage +58 Bcf to 3.188 Tcf

The EIA reported today that working gas in storage was up 58 Bcf this week to 3.188 Tcf.  The weekly injection was 76% higher than last year (+33 Bcf) but slightly below the five year average (+60 Bcf).  The current storage level is 6.2% below last year (3.398 Tcf) but 1.4% above the five year average (3.145 Tcf).



Tuesday, September 3, 2013

Recent Texas Completions

8/2/13 - 9/3/13:
  • Hancock, J.F. Gas Unit #20HH, Anadarko E&P: 3.218 MMcf/day IP, 2.6 Bbl/day liquids, 16/64" choke, 4,944 psi; Perfs: 10,888-15,516, length: 4,628 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: ASHTON, M, A-8 
  • Hancock, J.F. Gas Unit #52HH, Anadarko E&P: 4.046 MMcf/day IP, 2.4 Bbl/day liquids, 16/64" choke, 4,924 psi; Perfs: 10,815-15,719, length: 4,904 ft.; Carthage Field (Haynesville Shale), Panola Co., Survey: ASHTON, M, A-8 

Haynesville Shale Rig Count: -1 to 28

Last week's Haynesville Shale rig count was down one to 28.  Louisiana was down one (Chesapeake) to 15, while Texas held at 13.

Recent Texas Permits

8/2/13 - 9/3/13:

  • Brent Miller Unit A2 #1H, Encana; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: CHIRINO, JA, A-17 
  • Brent Miller Unit A2 #2H, Encana; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: CHIRINO, JA, A-17