Bakken Shale – North Dakota/Montana Houston-based pipeline operator Targa Resources closed a deal in early April to sell a minority stake in its Bakken-region pipeline operations to New York-based GSO Capital Partners and Blackstone Tactical Opportunities. The purchasers obtained a 45 percent stake in Targa Badlands LLC for $1.6 billion. Targa Badlands’ assets include 480 miles of crude oil gathering pipelines, 260 miles of natural gas gathering pipelines, crude oil storage terminals and a natural gas processing plant. Early Bakken pioneer Bud Brigham, founder of Brigham Exploration, announced an IPO for stock in his Brigham Minerals acquisition company in mid-April. Brigham Minerals plans to offer 13.5 million shares on the New York Stock Exchange at an initial price of $14 to $18 per share.
Denver/Julesburg (DJ) Basin – Colorado The DJ Basin now has a new largest producer, thanks to Chevron’s buyout of Anadarko Petroleum. Chevron’s agreement to move forward with such a major deal means that it has decided internally that it will still be able to get its business done in Colorado despite the recent passage of Senate Bill 19-181, a bill signed into law by Governor Jared Polis that passed through the Colorado legislature without receiving a single Republican vote. The new law will reduce industry representation on the Colorado Oil and Gas Conservation Commission, and change the Commission’s mission from one of ensuring efficient development of the state’s mineral resources to one of environmental regulation. The new law is designed to make permits much more costly and more difficult to obtain, and will allow cities and counties to now enact their own sets of oil and gas regulations.
Permian Basin – Texas/New Mexico The acquisition of Anadarko Petroleum by Chevron was the biggest news to hit the Permian so far in 2019 — a deal that will serve to heat up the already-fierce competition among the major integrated companies to establish themselves as the region’s dominant players. The deal expands Chevron’s already-large holdings in the prolific Delaware Basin part of the Permian region, and the company’s 1.4 million acres of leasehold across the play will rank second behind only the 1.8 million acres owned by ExxonMobil. Writing at Forbes.com, Robert Rapier notes that, thanks to production cutbacks by Saudi Aramco in its own prolific Ghawar field and surging production in the Permian region, the Permian Basin most likely now ranks as the largest producing field — not just in the U.S., but across the globe.
Eagle Ford Shale – Texas In a deal designed to allow it to focus more of its capital on projects in the Eagle Ford Shale, Murphy Oil announced in late March that it was selling its Malaysia assets for $2 billion. Murphy said it expects to realize a net gain of between $900 million to $1 billion on the deal, and plans to earmark $750 million of the proceeds for investment in its Eagle Ford and Gulf of Mexico assets. Bloomberg reported on March 26 that “two South Korean refiners — SK Innovation Co. and Hyundai Oilbank Co. — turned away their purchased shipments of Eagle Ford crude that were due to arrive in January and February due to quality issues, according to people with knowledge of the matter, who asked not to be identified because the information is private.” The two refiners claim that some shipments of crude produced from the Eagle Ford and various other U.S. formations contain contaminants, such as “oxygenates, metals and cleaning agents,” which can make the refining of the crude more costly and difficult.
Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio A new study from IHS Markit concludes that the Marcellus/Utica Shale region now represents the largest natural gas resource play on earth, and will supply more than 40 percent of all U.S. natural gas demand by 2040. The study says the region “will play a key role in satisfying America’s increasing reliance on natural gas, as well as keeping energy costs moderate. Favorable production economics place the Marcellus and Utica shale plays amongst the most cost competitive in the nation.” According to IHS Markit, 41 percent of the natural gas produced in the U.S. will come from this tri-state area by 2040, up from 31 percent this year. Other profitable natural gas liquids, such as ethane, propane and butane are expected to nearly double in production over this same period. By 2040, production of those liquids in Ohio, Pennsylvania and West Virginia will account for 19 percent of the nation’s total by 2040, up from 14 percent in 2018.
Haynesville/Bossier Play – Louisiana/East Texas A new report from the EIA says that the Haynesville produced natural gas at a new record pace in April, surpassing its previous high from 2011. The EIA projected that the play produced 10.75 bcf per day during the month, largely attributable to slightly higher natural gas prices and continued high demand from Gulf Coast LNG facilities. Moody’s Investor Service said production from the Haynesville has become more efficient over the past decade, and well economics have improved with the introduction of longer laterals and advanced technologies. “Capital investment in the Haynesville is likely to continue over the near term as producers benefit from increasing Gulf Coast demand,” Moody’s concluded.
SCOOP/STACK Play – Oklahoma The SCOOP/STACK region has surpassed the Eagle Ford Shale as the nation’s second most-active drilling province, with a recent rig count consistently hovering in the mid-80s. This improved outlook can in part be attributed to this year’s very quiet, non-controversial session of the state’s legislature, which has raised taxes on the oil and gas industry in each of the previous three years. A new study from the Oklahoma Chamber of Commerce notes that, after years of ranking among the states with lower oil and gas production tax rates, the state’s effective rate of 5.1 percent now ranks it as the fifth highest rate among the 16 largest oil and gas producing states. The study also estimates that “Oklahoma’s gross domestic production grew an average of 2.41 percent annually between 2003 and 2017 and that the state’s oil and gas industry was responsible for 40 percent of that gain.”
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].