.

Bakken Shale – North Dakota/Montana

Citing strong success in their 2018 drilling and production efforts, both Marathon and Hess announced in December that they plan to expand their positions and activities in the region during 2019. Hess said it would expand its Bakken drilling program from four to six active rigs and drill as many as 170 new Bakken wells in the coming year. Marathon CEO Lee Tillman cited strong results from a four-well test in the company’s Ajax area of Dunn County, and said the company plans to expand on those results in its core acreage during 2019.

Meanwhile, ConocoPhillips announced that it plans to dedicate over half of its planned $6.1 billion capital drilling budget for 2019 to projects in the Bakken, Eagle Ford and Permian Basin. The company said it plans to allocate an 11-rig drilling program between the three basins.

Overall, the Bakken continued to set record daily production records for both crude oil and natural gas, even as the region’s rig count remained essentially static throughout the fourth quarter.


Denver/Julesberg (DJ) Basin – Colorado

The Colorado oil and gas industry successfully beat back Prop. 112, a ballot proposition that would have implemented a vaguely-defined 2,500’ statewide setback rule. After a long and expensive campaign, voter in the state strongly rejected the proposition by a 56-44 margin.

However, longtime industry critic and opponent Jared Polis was elected to become the state’s next governor in the same election, making it likely that efforts to diminish the industry’s license to operate in the state will continue.

Despite all the political noise, the overall rig count for the basin moved slightly higher and production of both oil and natural gas continued to set records throughout the fourth quarter of 2018.


Permian Basin – Texas/New Mexico

The USGS, in an updated assessment released in early December, declared the Wolfcamp Shale/Bone Spring formation to be the largest continuous oil and gas resource it has ever estimated. The new assessment estimates the Wolfcamp Shale contains the following amazing volumes of technically recoverable resource:

· 46.3 billion barrels of crude oil;
· 20 billion barrels of natural gas liquids; and
· 281 trillion cubic feet of natural gas.

The U.S. Department of Transportation awarded a $50 million grant in early December to the Texas Department of Transportation (TxDOT) to help pay for improvements to the highway system in the Permian region. The grant would go toward projects designed to improve highway safety and connectivity in the booming region.

“Our rural communities depend on roads like SH 158 and SH 137 to keep us connected,” Congressman Mike Conaway said. “Critical infrastructure improvements are especially necessary as the Permian Basin’s energy sector continues to boom, making these roads busier than before.”


Eagle Ford Shale – Texas

Despite the crude oil price collapse, the Eagle Ford rig count remained steady in the ~80 range, and production of both oil and natural gas continued to trend upward throughout the fourth quarter of 2018. Overall oil production reached its highest point since late 2015, while natural gas production in the play approached record levels as the year came to an end.

Oct. 30, Chesapeake announced it would acquire Wildhorse Resource Development Corp. in an all-stock deal worth almost $4 billion. The acquisition includes roughly 420,000 net acreage position along with significant existing production from both the Eagle Ford and Austin Chalk formations.

In good news for Eagle Ford gas producers, Cheniere Energy opened the first train in its Corpus Christi LNG export facility in December, shipping out its first load Dec. 11.


SCOOP/STACK Play – Oklahoma

Thanks largely to a rebounding oil and gas industry — which provides about 25 percent of the annual revenue taken by the state government — the Oklahoma state Legislature will enjoy a small revenue surplus when it convenes in January, the first time that has been the case since 2013. However, ongoing pressures from the public to restore some of the major spending cuts to education and healthcare that have taken place over the past decade will still have policymakers looking for ways to raise revenues in 2019.

The industry is planning to mount an effort to tie the state’s oil and gas production taxes to the state’s rainy day fund, similar to what is done in Texas. Such a change would provide a certain and steady stream of funding to the fund, and also serve to make members of the Legislature more aware of the industry’s contributions to the state’s economy.


Marcellus Shale – Pennsylvania/West Virginia/Ohio

A study compiled and released by Energy In Depth in November shows that natural gas production from the Marcellus/Utica Shale plays has enabled the construction of over 26,000 megawatts of electric generation capacity in the Ohio/Pennsylvania/West Virginia region. This represents more than $25 billion in capital investment and the creation of almost 18,000 jobs during that time.

In December, the U.S. Department of Transportation awarded the city of Hannibal, Ohio $20 million to invest in improvements to the Long Ridge Energy Terminal. The funds will go toward improvements and expansion of the Terminal’s rail and pipeline energy loading facility. The Long Ridge Terminal has three primary lines of business that are operational or in development, including power generation, natural gas liquids storage, and transloading and frac sand transloading. Additionally, the terminal has two barge docks on the Ohio River with a docking capacity of up to 48 barges.

The Appalachia region’s rig count and natural gas production levels moved upward in the fourth quarter of 2018, as the NYMEX price moved well above $4 per Mmbtu due to lower-than-normal storage levels and cold early winter weather.


Haynesville/Bossier Play – Louisiana/East Texas

QEP Resources announced in late November that it would sell its acreage and production in the Haynesville/Bossier region to Aetheon III, a private equity firm based in Dallas, for $735 million. This sale advances QEP’s strategy to become a pure Permian Basin producer, and follows a series of other divestitures of non-Permian assets by the company during 2018.

Continuing to build commitments on its planned Driftwood LNG Facility in Calcasieu Parrish, Telurian, Inc. reached a memorandum of understanding with Vitol to supply 1.5 million metric tons per year (mmty) of liquefied natural gas for at least 15 years. The Driftwood Facility, planned for opening in 2023, would source the bulk of its natural gas supply from the Haynesville/Bossier play area.

Despite the run-up in natural gas prices, the rig country for this region remained basically static throughout the fourth quarter of 2018.

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at [email protected]

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