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Kal Telage
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Retired Ph.D. Professor of Neuroscience, Academic Researcher, Free Market Capitalist and lifetime trader investor. Daily monitor of selected market sectors, regular contributor to Seeking Alpha, Manager of personal portfolio of equities.
  • Shale Energy - Some Clarity About The Landscape 0 comments
    Aug 20, 2014 2:00 PM

    Shale Energy - Some Clarity about the Landscape

    August 18, 2014

    Disclosure: The author has no financial holdings in any of the stocks mentioned in the article and has no plans to initiate any positions within the next 72 hours. The author is not receiving compensation for it (other than from Seeking Alpha) and has no business relationship with any company whose stock is mentioned in this article.

    Following the energy sector on Seeking Alpha immerses readers in expansive regional energy producing locations throughout the U.S. Keeping track of these sites including names, locations, total acreage, total energy production and major energy companies working them is complex. This article was written to help SA readers acquire some clarity about the landscape.

    Texas

    Texas has seen resurgence in oil production based on 44 billion dollars of capital investment in the Permian and Eagle Ford production areas. The Lone Star state now boasts a third of all US oil production with an output of over 3 million barrels per day (bpd). Amazingly, with 900 working oil rigs, Texas is on pace to out produce Iraq which at 3.2 million bpd is second only to Saudi Arabia among the Organization of Petroleum Exporting Countries.

    West Texas

    The Permian Basin has been producing oil for more than a century with extensive acreage extending from a large segment of west Texas into southwest New Mexico. To give you an idea about the relative size of this field, consider that the Wolfcamp/Cline Shale area within the Permian is larger than the state of Nebraska. The Wolfcamp/Cline Shale area in the central eastern part of the basin is experiencing the most concentrated development. Current projections for capital expenditures for this area are 12 billion dollars, a 25% increase from 2013. Projections for crude and condensate production in 2014 are 200,000 bpd with an expected increase to 700,000 bps by 2020.

    The Permian Basin in west Texas tops the scale as the number one oil shale producer in the US with 560 rigs and an output of 1.6 million bpd. This represents a 21% increase during the last year with 60% of the rigs drilling horizontal wells

    Permian producers include: Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Occidental Petroleum (NYSE:OXY), Parsley Energy (NYSE:PE), Pioneer Energy (NYSE:PES), Concho Resources (NYSE:CXO), Devon Energy (NYSE:DVN), and Apache (NYSE:APA)

    South Texas

    Number two in Texas energy production goes to the Eagle Ford complex that spans an area from the state's southern border all the way northeast to the city of Austin. First developed to extract natural gas in 2008, it has since proven to be highly productive for oil shale. By 2011, Eagle Ford became number one in capital expenditures for U.S shale development. Investment increased from 19 billion in 2012 to nearly 27 billion in 2014. Currently there are about 200 active rigs producing an oil output of 1.4 million bpd. Major producers in Eagle Ford include EOG Resources (NYSE:EOG) and Pioneer Resources (NYSE:PXD).

    BAKKEN

    Larger than both the Permian Basin and Eagle Ford in Texas is the Williston Basin that sits below North Dakota, Montana, and Canada's Saskatchewan province. Though this huge area has been producing oil and gas for half a century, recent horizontal drilling and hydraulic fracturing have increased oil production from 2,500 bpd in 2005 to a current output of 1.1 million bpd. Activity in the Bakken is growing at an accelerated scale due primarily to plans to spend 15 billion this year utilizing new scientific methods to extract oil at less risk and cost. Whiting Petroleum (NYSE:WLL) which recently acquired Kodiak Oil (NYSE:KOG) has leases on 855,000 acres and 3,460 possible target sites and is the region's largest producer. Continental Resources (NYSE:CLR) ranks as the Bakken number two producer. But other major players are ramping up including Conoco Philips (NYSE:COP), Oasis Petroleum (NYSE:OAS) and Statoil (NYSE:STO). Additionally, though not presently in production, Exxon Mobil (XOM) has completed exploration to expedite development of 570,000 acres. The Bakken is moving into full scale development mode.

    Marcellus

    Unlike oil producers, the Marcellus shale sector located beneath Pennsylvania is a major natural gas region. This year, during July, it boosted an increase in natural gas production by 1.6% to 247 million cubic feet driving U.S. production to a monthly record. This is impressive when compared to Eagle Ford whose monthly production of gas increased 1.9% to 79 million cubic feet. But the consequence of production outpacing demand has maintained the present decline in the price of natural gas compared to previous higher levels. The largest Marcellus producers are: Chesapeake Energy (NYSE:CHK), Cabot Oil and Gas (NYSE:COG), and EQT Corporation (NYSE:EQT).

    Data used in the article were obtained from Wall Street Journal, Investor's Business Daily and the Yahoo Finance Website.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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