3 Apr 2014 More

US Natural Gas Not a Threat to Russia

posted by Unknown @ 12:30 0 Comments

Natural Gas Not a Threat to Russia

For those out there who believe the US can use its huge reserves of natural gas to sway Russian influence in the Ukraine, they may just want to think again.  The US may very well have its supporters.  On top of that, it is expected to produce more than 2 tcf of natural gas this year alone.  But undercutting Russia’s role in the region is easier said than done.

In the oil and gas business, nothing is immediate.  For one thing, most US LNG contracts have already been promised to Asia—for the next two years.  Besides that, US gas supplies are a private business.  Unlike other countries where energy commodities are run by the government, these private companies make their decisions based on price, supply and demand, not geopolitical matters.

"Essentially the U.S. government cannot force that upon private-sector companies," says Tim Boersma, fellow at the Energy Security Initiative at the Brookings Institution. "There are rare examples of the government forbidding companies to sell a product somewhere, for example Iran, but to sell somewhere for arguably a lower price than the company could get elsewhere" is unrealistic.”

Not just a matter of who, where, and when

Besides that, the US oil and gas revolution is only five years into its existence.  In industry terms, that’s means it’s still in its infancy.  With not even 200 pipelines in operation, US infrastructure is woefully inadequate.  Case in point: Supplies of natural gas and propane could not even make their way to the American Northeast this winter from the South where record-cold temperatures created a shortage in supply.  To think that America can somehow divert massive resources to Europe is just a pipe dream.

Just look at the facts.  According to the CIA World Factbook, the US exported 46 bcm of natural gas in 2012.  While that may sound like a lot, Qatar exported 114 billion bcm, and Russia 200 bcm.  While a promising future lies ahead for the US, the numbers show that it is still down the road apiece.  Even now, there are 20 US companies awaiting federal approval for LNG export services.

But the need for an all-out confrontation may not even be necessary.  "You don't need to replace it all, you need to show Russia [Ukraine] has alternatives," says William Frohnhoefer, managing director of research firm BTIG.

The Russian economy is dangerously dependent upon natural gas and oil exports for revenue.  If Europe were to have an alternative source, this cut undercut the Russian hand considerably. "If Ukraine and other countries dependent on Russia can wean themselves away, they will be emboldened to seek other sources, and that would be the U.S.," says Frohnhoefer.

Besides, the primary market for US companies is made-up of countries which have free-trade agreements.  Right now, many European countries like the Ukraine do not have such agreements with the US.

Getting back to Asia, right now more than 80 percent of all contracts for US natural gas exports are committed by contract to countries in the Pacific Rim.  To pull out of those contracts could prove not only expensive and time consuming, but impossible.

The problem with the Ukraine

And there’s the mounting debt the Ukraine already has with Gazprom, the Russian state-run natural gas company.  Ukraine already owes Gazprom more than $2 billion and there’s no indication it can pay it anytime soon.  With the country in as much debt as it is, which American company is going to be the first to take on such risk?

"The problem is Ukraine doesn't have the ability to pay for this gas," Misra said, adding that Kiev "has been historically bad about paying gas debts. Even if we could ship this gas to Ukraine, they don't have the ability to pay for it,” says Kartik Misra, senior analyst at Energy Intelligence.

Misra believes it won’t be until at least 2016 before any LNG exports can reach the Ukraine.  By then, the crisis will be long over.

Also from Brown

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If you like keeping up with news and events, we invite you to come see our new oil & gas media site, BrownPetro.com.

Brown Book Shop, est. in 1946, is America's leading technical bookstore.  Brown Knows Books.

2 Apr 2014 More

Halcón Acquires Encana Shale Leases

posted by Unknown @ 12:23 0 Comments

Halcón Acquires Encana Shale Leases

In a new deal that could be worth as much as $400 million, Halcón Resources announces it has acquired 95 percent of Encana Corp’s  shale leases in the East and West Feliciana Parishes of Louisiana.  The deal also includes leases as far north as Wilkinson County, Mississippi.

The shale leases lie in the Tuscaloosa shale formations and according to Dan Collins, a Baton Rouge landowner, is a positive development for the region.  In fact, Halcón Chairman and Chief Executive Officer Floyd Wilson first started looking at the region back in 2000 when he was the CEO of Petrohawk.  At the time, Wilson decided to focus on E&P projects in the Eagle Ford Shale play.  Now, he’s turning his attentions toward Tuscaloosa.

While Wilson had great success in the Eagle Ford, Petrohawk had equal success at Tuscaloosa, eventually selling off its interest in the formation to BHP Billiton for $12 billion.  “If anybody can find oil and make it work, it’s Mr. Wilson,” Collins said.

Kirk Barrell, author of the Tuscaloosa Trend blog and head of Amelia Resources, says Halcón has a long track record of successes.  At the same time, the move is a smart one for Encana as it most likely does not have the ability to drill the 300,000 acres before its leases run out.

For now, Encana says it will keep its interests in just three wells, two in Mississippi and one in Louisiana.  The company still retains a 5 percent interest in the other leases.  For the deal with Halcón, the total acreage is unclear, although it does include 5000 leases.

New deal includes at least 100,000 acres

According to UpstreamOnline.com, the deal includes at least 100,000 acres at anywhere between $1000 and $1250 apiece.  If those numbers are correct, that would make the deal worth around $100-$125 million.  But SeekingAlpha.com puts the total acreage count closer to 235,000.  It is estimated that the Tuscaloosa formation contains as much as 9 bbo.  Spokesmen from both companies declined comment.

The new deal is just the latest development for Halcón in the region.  Halcón has been very aggressive.  The Houston-based company increased its interests in the shale-rich region from 75,000 to more than 300,000 acres back in 2013.

CEO Wilson says that the company will spend as much as $95 million to drill 10-12 new wells in the region and is looking for what he calls a “Huge” impact in 2015.

Also from Brown

If you're in the oil business then you know just how important your tools are. Come check out all the great tools at our news tools division site, BrownToolBox.com.

If you like keeping up with news and events, we invite you to come see our new oil & gas media site, BrownPetro.com.

Brown Book Shop, est. in 1946, is America's leading technical bookstore.  Brown Knows Books.

1 Apr 2014 More

April 6-9: AAPG Annual Convention & Exhibition in Houston Texas

posted by Unknown @ 07:07 0 Comments

aapg3One of the great things about being in the oil and gas capital of the world is that eventually everyone comes our way.  This will be the case again in April when the AAPG Annual Convention & Exhibition (American Association of Petroleum Geologists) comes to the George R. Brown Convention Center, literally right around the corner from our 1517 San Jacinto location downtown   The event will be held April 6-9.

AAPG is now nearly 100 years old, having been founded back in 1917.  It’s the world’s largest organization for professional geologists with more than 34,000 members.  But the association isn't just for geologists.  Members include geophysicists, managers, CEOs, consultants, academics, even students.

The AAPG annual convention on average attracts nearly 7000 attendees from all over the world.  The technical program provided at the event draws professionals from 78 countries and is international in its appeal.  Keep an eye out for the AAPG Global Gateway and International Pavillion.  This is the hot spot, where professionals from both sides of the industry, exploration and investment, gather together.

For more information on the 2014 AAPG Annual Convention & Exhibition, please visit their website at AAPG.org.  For a list of upcoming conferences, workshops, and education events, please check out their meetings page on their site.

And keep an eye out for our booth, as well.  We will be in booth # 1254.  Look for the Brown Technical Book Shop sign and get the inside track on where you can find all the best books in the industry.  Brown Book Shop carries a wide array of books on everything from petroleum microbiology engineering to geology mapping and other essentials.  Brown Technical Book Shop, serving the oil and gas community since 1946.

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Look for these great titles and more at BrownTechnical.org.