Higher gas prices encourage more drilling in Utica Shale | New frac sand mining capacity in Texas to help drillers slash costs | Citigroup: OPEC losing the battle against US shale
August 17, 2017
Shale SmartBrief
News on shale oil and natural gas
Top News
Frac sand market faces oversupply amid declining usage
Reduced sand usage by US shale drillers, rising prices and the planned openings of new mines could lead the frac sand market into oversupply. Rystad Energy expects average sand volumes for each foot of well drilled to decline 2.5% this quarter as shale producers turn to alternative strategies and designs that require less frac sand to cut costs and avoid logistics problems.
Reuters (8/16) 
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News from the Field
Higher gas prices encourage more drilling in Utica Shale
The Ohio Department of Natural Resources issued 38 drilling permits in July as higher natural gas prices increased producers' appetite for new drilling following a steep decline to 32 applications in June, compared with 46 in May. The Energy Information Administration reported natural gas production of 4.42 billion cubic feet per day from the Utica Shale in July, an increase of nearly a fifth from a year earlier.
Argus Media (8/16) 
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New frac sand mining capacity in Texas to help drillers slash costs
Permian Basin drillers could see logistics costs drop by as much as 40% as the planned construction of several frac sand mines in West Texas means hydraulic fracturing in the area will no longer depend on expensive rail transportation to bring sand from Wisconsin. Oil companies pay up to $140 to have a ton of sand shipped by rail to West Texas, but that cost could drop to $85 per ton once producers will be able to buy sand from local mines and haul it by truck, according to IHS Markit.
Houston Chronicle (tiered subscription model) (8/17) 
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Citigroup: OPEC losing the battle against US shale
Citigroup: OPEC losing the battle against US shale
(Juan Mabromata/AFP/Getty Images)
US shale drillers' ability to expand production with oil at $40 to $45 per barrel means OPEC is doomed to fail in its attempt to lift prices, because its strategy "is not sustainable over a long period," according to Citigroup's head of research, Ed Morse. To maintain growth momentum, shale producers are hedging their output for 2017 and 2018, Morse said, adding that activity in the Permian Basin will grow at a "hefty rate" this year and next.
Bloomberg (8/15) 
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Whiting Petroleum dumping N.D. assets in $500M deal
Whiting Petroleum has agreed to sell its properties in the Fort Berthold Indian Reservation area in North Dakota to RimRock Oil & Gas Williston for $500 million, with proceeds going toward debt repayment. The asset package consists of 29,637 net acres in Dunn and McLean counties with average net daily production of 7,785 barrels of oil equivalent per day in the second quarter of 2017.
Upstream (subscription required) (8/15) 
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Permian drillers keep adding to backlog of untapped wells
The number of drilled-but-uncompleted wells in the Permian Basin climbed by 135 last month to 2,330, 73% more compared with July 2016, according to the Energy Department. With the average Permian well producing about 400 barrels of oil per day, these untapped wells could boost US oil production by hundreds of thousands of barrels per day once they come online.
Houston Chronicle (tiered subscription model) (8/15) 
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Permian drillers embrace multiwell pads to improve efficiency
Despite recent spending cuts announced by major shale producers, many Permian Basin drillers will be able to maintain or even exceed production targets for the year thanks to more efficient drilling processes such as multiwell pads, high-spec rigs and longer laterals. "Pad drilling offers numerous benefits, including reduced drilling cycle times and smaller surface footprints with the possibility for increased frac efficiencies and simultaneous operations," energy consultancy Westwood Global Energy Group said.
Oil & Gas Journal (8/11) 
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Spotlight on Policy
Trump looks to speed infrastructure permitting
Trump looks to speed infrastructure permitting
Trump (Pool/Getty Images)
President Donald Trump signed an executive order Tuesday with the aim of reducing the environmental permitting process for new infrastructure projects to two years. The administration proposes $200 billion in government funding over 10 years as part of a goal of getting $1 trillion in public and private infrastructure spending.
Reuters (8/15),  Politico (8/15),  CNN (8/15) 
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API News
SANGEA-4 for International GHG Emission Inventory Development
SANGEA-4 is the user-friendly software program used by petroleum and natural gas companies for estimating, managing and reporting greenhouse gas emissions. The current version, SANGEA-4.3, offers protocols based on the API Compendium 2009 and EPA Mandatory Reporting Rule for GHG Emissions and has been updated to address US regulatory changes and improve reporting options, including those based on IPIECA guidelines. The SANGEA software developer has built a supplemental tool to directly interface the program's output data with a company's enterprise resource planning system to improve efficiency and accuracy, as well. International SANGEA customers continue to implement the software for estimating GHG and criteria air pollutants emissions, allowing the companies to accurately calculate facility-specific emissions and provide corporate oversight to facilitate training, coordination and integration. Learn more about how your organization can use SANGEA-4.
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