Tag Archives: Shale Natural Gas

What it costs to drill oil and gas shale wells in various states

Here is what it costs to drill oil and gas shale wells in various states, measured in dollars per foot:

Mississippi: $167

Utah: $245

Kansas: $276

Arkansas: $281

South Dakota: $315

Montana: $320

North Dakota: $337

Oklahoma: $344

Kentucky: $371

Texas: $379

Colorado: $397

New Mexico: $400

Ohio: $454

Louisiana: $462

Virginia: $472

West Virginia: $518

Pennsylvania: $537

Michigan: $577

Wyoming: $594

AVERAGE: $401

Source: American Petroleum Institute, Independent Petroleum Association of America (provided by House Speaker Mike Turzai’s office)

Three reasons to buy this oil-transport play – MarketWatch

There are plenty of ways to wring shareholder value out of a company, and the more of them that can be employed, the better. In this case, we have a company creating valuable synergies with its partners, building new pipelines and all with a nice distribution yield.

Energy Transfer Partners LP ETP, +0.42%  hiked its first-quarter distribution by about 8% from year-ago levels and generated enough cash flow to cover 118% of this higher payout. Some of this upside came from the partnership’s wheeling and dealing with its general partner, Energy Transfer Equity LP ETE, +0.74% and its sister MLP, Sunoco LP SUN, +1.55% in a series of kick-up and drop-down transactions.

For example, Energy Transfer Equity retired 30.8 million of Energy Transfer Partners’ common units in the first quarter, paid the master limited partnership (MLP) $879 million in cash and transferred a 45% interest in a pipeline project that will transport crude oil from the Bakken Shale.

In exchange, Energy Transfer Partners kicked up the bulk of its remaining general-partner interest and incentive distribution rights in Sunoco Logistics Partners LP SXL, +0.96%  to Energy Transfer Partners.

During the first quarter, Energy Transfer Partners also sold a 31.58% stake in its wholesale fuel-distribution business to Sunoco LP for $775 million in cash and 795,482 common units. Energy Transfer Partners plans to drop down the remaining interests in these assets to Sunoco LP over the next two years, providing another source of liquidity.

At some point, Energy Transfer Partners can kick up the general-partner interest in Sunoco LP to Energy Transfer Equity in exchange for more unit retirements or other considerations.

On Energy Transfer Partners’ first-quarter earnings call, management also provided an update on the opportunities created by its acquisition of Regency Energy Partners LP, which closed on April 30. We analyzed this deal at length in Energy Transfer Partners LP to acquire Regency Energy Partners LP.

Management estimated that if the transaction had closed in the first quarter, Energy Transfer Partners’ distribution coverage would have slipped to 104%, reflecting the equity issued to close the deal. However, this coverage rate improves to 110% when you factor in $165 million to $225 million in recurring synergies.

via Three reasons to buy this oil-transport play – MarketWatch.

Millions of Barrels of Oil Are About to Vanish – Bloomberg Business

Millions of barrels of untapped oil that U.S. shale drillers discovered during the boom years are about to disappear from their inventories.

Six years ago, the industry pushed the Securities and Exchange Commission to make it easier for companies to claim proved reserves for wells that wouldn’t be drilled for years. Some prospects considered sure-things when crude was $95 a barrel are money losers at today’s $60. When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels from their books.

Now the stakes are higher. Of all the proved reserves of oil and natural gas liquids found by the 44 companies since 2008, more than half — 5.4 billion barrels out of the 9.7 billion — is attributed to wells that don’t exist yet, according to data compiled by Bloomberg.

“We’re going to see a lot of proved undeveloped reserves get vaporized,” said Ed Hirs, a managing director at Houston-based Hillhouse Resources LLC, an independent energy company, who also teaches energy economics at the University of Houston. “It could easily be 10 or 20 years before some of these wells get drilled if prices stay at these levels.”

via Millions of Barrels of Oil Are About to Vanish – Bloomberg Business.

Flood Of Shale Gas Spilling Into Communities Across America – Forbes

Not many years ago, the U.S. steel industry found itself losing ground.

U.S. Steel Corp., the country’s largest producer, still had billions of dollars in revenue, but had posted large losses for three consecutive years. Meanwhile, China was offering cheaper labor and an abundance of the raw materials used to make steel. As a result, the World Steel Association reported that Chinese production of steel increased 57 percent between 2007 and 2013, while American production during that time period declined by 11 percent.

But then came the domestic shale gas boom, which has put the American steel industry back in the business of making pipes for drilling rigs and new pipelines.

via Flood Of Shale Gas Spilling Into Communities Across America – Forbes.

Consol Slashing Spending, Yet Still Increasing Gas Production

In a slumping oil and natural gas market, Consol Energy will cut capital spending by $300 million this year compared to 2014. Still, the firm long known for mining coal continues shattering its own Marcellus and Utica shale production records.

From Oct. 1 through Dec. 31, Consol pumped 7.1 billion cubic feet of natural gas from the Utica formation, up from just 0.5 Bcf during the same period in 2013. This is 14 times more gas than the amount the company generated from the Utica in the same three-month stretch the previous year. In the Marcellus Shale field, Consol nearly doubled its natural gas output by collecting 36.5 Bcf from Oct. 1 through Dec. 31, compared to the 19.4 Bcf drawn in the 2013 fourth quarter.

Overall, the company produced 70.5 Bcf during the three-month period, up from 48.5 Bcf the prior year. Consol expects overall gas production to grow 30 percent each year for the next two years.

via Consol Slashing Spending, Yet Still Increasing Gas Production – News, Sports, Jobs – The Intelligencer / Wheeling News-Register.

Natural gas rig count jolts energy investors’ hopes – Market Realist

In the United States, the natural gas rig count was 314 for the week ended February 6, down by five compared to the previous week. In the major basins, the key reduction occurred in the Marcellus shale, where four rigs went off last week.

Natural gas rig counts have been on a downward trend for about three years. Nevertheless, the gas-targeted rig count seems to be stabilizing. It increased ten times in the last 17 weeks.

via Natural gas rig count jolts energy investors’ hopes – Market Realist.

FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE

FirstEnergy Corp. will spend $35 million over the next two years on several transmission and substation projects aimed at improving electrical service around Marcellus shale gas development.

The upgrades, which include a $31 million substation in Washington County to support a new gas processing facility, also will improve reliability for West Penn Power customers in the area, the utility’s Akron-based parent company said Monday. In addition to the substation, the company this spring will start $1 million worth of work on a transmission substation near Houston in Washington County, and next year will upgrade a 9-mile transmission line between Burgettstown and Weirton, W.Va.

via FirstEnergy plans $35 million in upgrades for shale gas facilities | TribLIVE.

Natural gas shale drillers in US undaunted by 32% price plunge

US natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade.

Output will rise 3.2% in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration. Marcellus production will increase 2.8% through February after a 21% gain in 2014, a year when prices tumbled 32%. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co.

Drilling more wells at one site and extending the length of horizontal wells are among the efficiencies that have helped gas companies cope with falling prices. The EIA expects Marcellus to climb to about 20% of production in the lower 48 states from about 2% in 2007. Cabot Oil & Gas Corp, the biggest Marcellus producer, plans to increase output by at least 20% this year.

“The Marcellus has been a game changer in terms of production, reserve potential, everything,” said Fadel Gheit, a senior energy analyst for Oppenheimer & Co in New York. “They are not waiting for higher gas prices to bail them out.”

Natural gas futures fell 2.1 cents to $2.579 per million British thermal units on Friday on the New York Mercantile Exchange, the lowest settlement since June 2012. Gas has declined 81% from a high in 2008 as production from shale formations increased, touching $1.907 in April 2012, the lowest since 2002.

Break-even prices for Marcellus producers have dropped below $2 per thousand cubic feet ($1.95 per million Btu) from around $4 in 2008, Gheit said in a February 3 interview.

US gas production growth was projected to slow to 1.4% last year, the least since a decline in 2005, the EIA said in December 2013. Instead, output jumped 5.6%.

via Natural gas shale drillers in US undaunted by 32% price plun...

Oil lobbying group buys Super Bowl ad

The oil industry’s top trade group will be among the advertisers vying for attention during halftime of Sunday’s Super Bowl game, according to an ad contract obtained by a political spending database.The Sunlight Foundation, a nonproft open government group that maintains the database tracking political ad buys, showed that the American Petroleum Institute bought a 30-second spot for $100,000 from WRC-TV, the NBC affiliate for the Washington, D.C. area. According to the foundation, the ad was the single most expensive television spot of API’s recent campaign promoting the Keystone XL pipeline and other industry priorities as the new Republican-led Congress debates several energy-related bills.An API spokeswoman said the group will fill the spot with its “Energy Superpower” ad championing hydraulic fracturing, the drilling technique that has led to a surge in natural gas production and made the U.S. the largest producer in the world. The Sunlight Foundation reported that API recently spent about $80,000 on a separate ad with WRC.The lobbying firm spent $73.5 million on advertising and promotion in 2012, the last year for which the organization’s tax forms were available.

via Fuel Fix » Oil lobbying group buys Super Bowl ad.

Consol Energy announces trimmed capital budget

Following the trend of other oil and gas companies that have already announced their capital budgets for 2015, Cecil-based Consol Energy Inc. said it would spend $1 billion drilling for oil and gas this year, a drop from the $1.3 billion it spent last year.

Coal spending for the year is projected to be around $220 million, Consol said.

The oil, gas, and coal producer reported fourth-quarter earnings this morning, posting net income of $74 million, or 32 cents per share, for the fourth quarter of 2014. During the same time in 2013, Consol had a profit of $738 million, or $3.20 per share.

Revenue was $936 million, up from $825 million during the year before quarter.

Consol achieved and surpassed its goal of growing oil and gas production by 30 percent in 2014, a target it plans to reach again in 2015 and 2016.

via Consol Energy announces trimmed capital budget.