Report: Gas companies frequent in violation of water rules

LITTLE ROCK — Gas companies were in violation of water quality rules more than half the time officials conducted inspections at sites in the Fayetteville Shale, according to a report released Tuesday by the Arkansas Public Policy Panel.

The report reflects inspections from 2006 to 2010 obtained through the Freedom of Information Act, the panel said in a news release.

“The good news is that ADEQ inspectors are doing a great job when they conduct an inspection,” Arkansas Public Policy Panel Executive Director Bill Kopsky said in a news release. “But the bad news is that a majority of gas production sites that were inspected had violations of our relatively weak state regulations. We don’t have nearly enough inspectors. And most disheartening, ADEQ is not taking corrective and enforcement actions for most violations when they find them.”

The study found 300 inspections revealing violations and only nine follow-up inspections, according to the release.

The panel is recommending ADEQ inspect each well site annually and conduct a followup inspection any time a violation is uncovered, among other suggested changes.

Source: Arkansas Online 

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BHPB update on petroleum production

The successful integration of the Fayetteville shale gas assets, the start-up of the Angostura Gas Phase II project on schedule, and strong underlying performance from existing assets, delivered 159.4 million barrels of oil equivalent for the 2011 financial year, the fourth consecutive increase in annual petroleum production.

BHP Billiton brought the first new deepwater well into production since the Gulf of Mexico moratorium was enacted in May 2010 and this important milestone, achieved at the BHP Billiton operated Shenzi field (USA), followed previous regulatory approvals for water injection and production well drilling.

Underlying EBIT of USD 6.3 billion represented an increase of USD 1.8 billion or 38 per cent when compared with the prior period. Higher average realised prices were a major contributor to the increase in Underlying EBIT (USD 1.5 billion, net of price linked costs) and reflected a 28% increase in oil prices to USD 93.29 per barrel, a 22% increase in realised liquefied natural gas prices to USD 11.03 per thousand standard cubic feet, and a 17% increase in natural gas prices to USD 4.00 per thousand standard cubic feet.

BHP Billiton’s operating capability was further underscored by the success of Pyrenees although natural field decline worldwide was further impacted by the deferral of high volume wells in the Gulf of Mexico. Gross exploration spend of USD 557 million was similarly impacted, although an increase in seismic acquisition and processing partially offset the decrease in drilling activity. Recommencement of development drilling at Atlantis (USA) is still pending although a step out exploration well at Mad Dog (USA) is currently underway.

From a longer term perspective, the growth potential of the Petroleum business has been significantly enhanced by the acquisition of onshore US shale gas resources while organic growth projects, such as the Macedon gas project (Australia), continue to move through the execution phase.


Source: Steel Guru


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Southwestern Energy shares fall

Shares of oil and natural gas producer Southwestern Energy Inc., which have rallied this year, fell Friday along with oil prices and the company revealed a new venture in unproven territory.

THE SPARK: The company reported late Thursday that net income in the second quarter rose to $167.5 million, or 48 cents per share, from $122.1 million, or 35 cents per share, a year earlier. That beat analysts' expectation of 45 cents per share, according to FactSet.

But average initial production dropped 7 percent from a year ago at new gas wells in the Fayetteville shale formation. The rates were the lowest for new wells since the second quarter of 2009. The company blamed shorter lateral lengths, the increasing number of wells, and new locations.

ANALYSIS: Michael Bodino of Global Hunter Securities LLC said several factors were pushing the stock lower Friday, including concern about the lower initial production rates in the Fayetteville shale wells and a forecast of "limited" production growth in the third quarter compared with the second quarter.

Source: Bloomberg

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Chesapeake Tops On Oil Volume

Natural gas provider, Chesapeake Energy Corp. (NYSE:CHK) has reported sharper-than-expected adjusted second quarter 2011 earnings of 76 cents per share, striding ahead of the Zacks Consensus Estimate of 72 cents. The outperformance came on the back of a 62% expansion in liquid production volumes. The reported figure showed a modest improvement from the year-earlier profit of 75 cents.

Total revenue surged 65% year over year to $3,318 million from $2,012 million reported in the comparable period last year.

Operational Performance

Chesapeake’s average daily production in the quarter increased 9% year over year to 3.049 billion cubic feet equivalent (Bcfe), of which natural gas accounted for 84%. However, the volume dropped 2% sequentially due to the Fayetteville Shale
assets divestiture. The percentage of natural gas production to total volume decreased 6% on an annualized basis. However, natural gas production grew 3% and oil production expanded 62% from the year-ago level.

Natural gas equivalent realized price in the reported quarter was $6.07 per thousand cubic feet equivalent (Mcfe) versus $6.14 in the year-earlier quarter. Average realizations for natural gas were $5.19 per Mcf compared with $5.66 per Mcf in the year-earlier quarter. Liquids were sold at $65.23 per barrel, up from the year-ago price level of $61.43 per barrel.

Source: Daily Markets 

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Permitting Delays Dampen BHP Production

Company crude oil and condensate production was down 3.8 million barrels from 2010 to 80.6 million in the year to date, a fact the company put down to the Gulf of Mexico moratorium on oil and gas drilling enacted in May 2010.

“Permitting delays in the Gulf of Mexico continue to impact our petroleum operations and the drilling of high volume production wells,” BHP said in an announcement.

But the biggest drag was lower production in the Gulf of Mexico, a slip of about 5 million barrels of oil from the Shenzi and Atlantis projects in the 2011 year to date, compared with the previous year.

While performance from its Pyrenees field was 258,000 barrels higher in the 2011 June quarter than in the previous period, it was not enough to offset additional losses incurred by planned maintenance at Bass Strait and tie-in activities at North West Shelf.

The company brought its first new well in the Gulf of Mexico, at its Shenzi field, into operation in June, following previous regulatory approvals for water injection and production well drilling, it said

“When excluding volume growth from the Fayetteville Shale acquisition, we continue to expect production to be lower in the 2012 financial year.”

The company acquired Chesapeake’s holdings in the Fayetteville shale natural gas field in Arkansas for $4.75 billion in cash in February, with the deal taking effect from 31 March.

Source: Upstream Online 

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BHP in $12B Shale Gas Deal

BHP Billiton has agreed to acquire shale gas producer Petrohawk in a deal valuing the US company at $12bn (£7.5bn). Petrohawk’s assets cover one million acres in Texas and Louisiana and add to the half-a-million-acre Fayetteville shale field in Arkansas that BHP bought in February from Chesapeake for $4.75bn.


Source: The Independent

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Union Drilling Signs Multi-Year Contracts For Two New Rigs

FORT WORTH, Texas, July 6, 2011 /PRNewswire/ -- Union Drilling, Inc. (NASDAQ: UDRL) has entered into contracts to purchase two new drilling rigs based upon executed three-year contracts with a long-standing customer.  The 1,500 horsepower AC electric drilling rigs, designed for pad drilling and efficient rig moves, have an aggregate cost of approximately$35 million. Upon completion, which is expected in the first quarter of 2012, the rigs will be deployed to Arkansas for work in the Fayetteville Shale.

Christopher D. Strong, Union Drilling's President and Chief Executive Officer, stated, "This type of investment is exactly what we had in mind when we entered into an expanded revolving credit facility earlier this year.  These two new rigs represent an excellent opportunity to generate attractive returns for our shareholders while expanding our relationship with a key customer."

Since January 2011, the Company has added two 1,000 horsepower rigs to its fleet and two more 1,000 horsepower rigs are expected to be completed for operations in the Marcellus Shale by the end of 2011.

Source: PR Newswire

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