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Oil and Gas Roundup — Nov. 28

November 28, 2016
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count flat as national count up 5

The number of rigs exploring for oil and natural gas in the United States rose by five to 593 at the end of Thanksgiving week, according to Baker Hughes. The rig count in Oklahoma was unchanged at 79.

Oil was sought by 474 rigs, while 118 explored for natural gas and one was listed as miscellaneous.

A year ago, 744 rigs were active in the U.S. and 82 in Oklahoma.

Of the other major oil- and gas-producing states, Texas gained three rigs to 279, Louisiana was flat at 52, North Dakota lost one to 33, New Mexico was down two to 29, Pennsylvania gained four to 29, Colorado was up two to 22 and Ohio was unchanged at 18.

Anti-pipeline protesters told to leave North Dakota camp by Dec. 5

Activists protesting plans to run an oil pipeline beneath a lake near the Standing Rock Sioux reservation in North Dakota said on Saturday they have no intention of leaving a protest camp after U.S. authorities warned it must be vacated by Dec. 5.

The U.S. Army Corps of Engineers, which manages the federal land where the main camp protesting the Dakota Access pipeline is located, said it would close public access to the area north of the Cannonball River, including to protesters. It said this was partly to protect the general public from violent confrontations between protesters and law enforcement that have occurred in the area.

Those who stay could face prosecution for trespassing, the Corps said in a letter to tribal leaders on Friday.

Organizers told a news conference on Saturday at the main protest site where about 5,000 people are camped that they had no intention of moving.

"We are staying here committed to our prayer," said Dallas Goldtooth, an organizer with the Indigenous Environmental Network. "Forced removal and state oppression? This is nothing new to us as native people."

There are smaller camps on land not subject to the planned restrictions, including an area south of the Cannonball River where the Corps said it was establishing a free-speech zone.

Read more at Reuters.

New Bakken well designs may rival Mideast in break-even costs

Break-even oil prices in the prime acreage of the Bakken now rival oil producing areas of the Middle East, according to Lynn Helms, director of the North Dakota Department of Mineral Resources.

In giving his monthly Director’s Cut report on oil and gas activity in North Dakota for the month of September, Helms said that with ONEOK’s Bear Creek gas processing plant going into service north of Killdeer, activity in northwestern Dunn County has increased. The results from new high-volume, slick water fracturing with 40 to 50 stages have been “fantastic,” he said.

Citing break-even prices for the third quarter of this year, Helms said Dunn County was at $15 a barrel, McLean County at $16 and McKenzie County at $17.

“With the exception of Williams County—which went up a dollar—the rest of the counties all dropped between $5 and $13 dollars a barrel,” Helms explained. “What we’re seeing are the industry efforts to increase efficiency and move to lower and lower break-even prices.”

A lack of gas processing infrastructure in Dunn County has held back producers such as ConocoPhillips from testing new well designs, but that changed when Bear Creek went into service.

“The wells are coming in 200 to 300 barrels per day better than McKenzie County wells, and they have a lower gas-oil ratio,” Helms noted.

At a break-even price of $15, he said Dunn County is competitive with new oil reserves being brought online in the Middle East where the break-even price is typically in the mid-teens.  “When looking at break-even values below $20 a barrel, it’s as good a place to drill as any place in the world,” Helms explained.

Read more at The Bakken.

U.S. to export second shipment of shale gas to China

China is on the verge of receiving its second shipment of shale gas from the U.S.

The Methane Julia Louise has signaled it’s bound for Ningbo, a port city on China’s eastern coast, ship-tracking data compiled by Bloomberg show. Earlier this month, the liquefied natural gas tanker owned by Mitsui & Co. arrived at Cheniere Energy Inc.’s Sabine Pass terminal, according to the data.

The delivery would come on top of a cargo sent to Shenzhen in July from the export terminal in Louisiana, which shipped its first cargo in February. Chinese LNG imports are up by almost a fifth in the first three quarters from a year earlier, according to Timera Energy.

“China’s LNG imports have been growing this year,” Leslie Palti-Guzman, director of global gas for Bethesda, Maryland-based Rapidan Group LLC, said by phone Friday. “There is a demand response to lower prices but there’s also a ramp up of contractual arrangements.”

The U.S. is set to export a record number of cargoes of gas this month amid booming supplies from prolific shale reserves. Nine LNG tankers have departed or are scheduled to leave Sabine Pass, the most for any month since exports began.

A call and e-mail seeking comment from Cheniere weren’t immediately returned. Mitsui wasn’t immediately available to provide comment.

— Bloomberg.

More U.S. natural gas headed to Canada?

Shale drillers in the U.S. are about to tighten their grip on the global natural gas market.

TransCanada Corp.’s decision this week to shelve plans for lower tolls on its gas pipeline to eastern Canada means less supply will head there from the country’s western reservoirs. That opens the door for U.S. explorers like Antero Resources Corp. and Rice Energy Inc. to edge out Canadian competitors and ship more gas north of the border.

Canada is just one of many new frontiers for the shale producers propelling the U.S. into the ranks of the world’s top gas suppliers. Less than a decade after U.S. gas imports rose to a record, Citigroup Inc. data show the country has become a net exporter of the fuel as cargoes head from the Gulf Coast on tankers to ports across the globe.

“This makes it a lot easier for U.S. producers, knowing their Canadian counterparts aren’t going to compete,” Jihad Traya, a natural gas consultant for Solomon Associates in Calgary, said by phone Wednesday. Canadian drillers are “getting shut out of a market they might never get back.”

Drillers in Pennsylvania’s Marcellus basin, the biggest U.S. gas play, are poised to expand their reach in Canada’s population centers. Antero, Rice and Gulfport Energy Corp., which ships supplies from the basin to Midwest markets, stand to benefit the most from TransCanada’s move, Evercore ISI analysts Timm Schneider and Stephen Richardson said in a note to clients dated Wednesday.

TransCanada halted plans to lower rates on its mainline because there wasn’t enough interest from Western Canadian producers, the company said Tuesday. Those drillers now stand to lose even more market share to U.S. competitors, Martin King, an analyst at GMP FirstEnergy in Calgary, said by phone Wednesday.

“More U.S. gas is going to be feeding into southern Canada,” King said.

Read more at Bloomberg.

Ukraine celebrates one year without Russian gas imports

Ukraine’s state oil and gas company NAK Naftogaz Ukrainy is celebrating, but its not what you might think. Naftogaz is celebrating its freedom from Russian natural gas – not a small feat considering Ukraine’s problematic history with Russia.

In a disclosure on its corporate website on Friday, Naftogaz said ”today is the first anniversary since Naftogaz stopped importing gas from Russia.” The company also offers a web link that clocks the number of days it has gone without importing Russian gas.

“It is an important milestone for independent Ukraine, as just three years ago gas was a major symbol of Ukraine’s political and economic dependence on its northern neighbor,” the release says. “This dependence, being maintained through manipulating volumes of supply and prices for Russian gas, forced Ukraine into political and economic concessions.”

The reliance on imported Russian gas was particularly painful as Russia started it annexation of then Ukraine-controlled Crimea in the spring of 2014. Naftogaz says, “Overcoming it was a major challenge for the company’s management in 2014-15.”

Naftogaz offered appreciation to those who helped it achieve its geopolitical milestone. “In less than two years of work and with the help of our Western partners, international financial institutions, coordinated efforts of the president, the government and the parliament, we have managed to achieve an important result: the attempts of the Russian leadership to use gas for political pressure on Ukraine are not efficient any more.”

Read more at Forbes.
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