MARKET WATCH: Accidents plague industry, influence prices

Sam Fletcher
OGJ Senior Writer

HOUSTON, June 8 -- The price of the front-month crude contract continued to decline June 7 in the New York market as the euro plumbed a new 4-year low against the dollar, but the near-term natural gas position continued to climb with the eruption of a Texas intrastate gas line west of Cleburne.

“Sometimes the energy industry shoots itself in the foot. And sometimes it goes way beyond that and allows an offshore oil spill, an onshore blowout, and a pipeline explosion,” said analysts in the Houston office of Raymond James & Associates Inc.

One construction worker was killed and 8 more were injured when the 36-in. Enterprise Products Partners LP pipeline erupted in flame before 3 p.m. CST June 7. The Texas Department of Public Safety reported the workers were drilling holes for overhead transmission lines and struck the underground pipeline.

Meanwhile, EOG Resources Inc., Houston, was ordered by the Pennsylvania Department of Environmental Protection to suspend drilling for 7 days and fracing for up to 14 days, with no completions allowed for 30 days in its Marcellus operations after its Punxsutawney Hunt Club No. 36H well blew out June 3 in Clearfield County, Pa. EOG officials said they are cooperating with the state agency, which is reviewing the company’s operations. No one was injured in the mishap, and EOG said any environmental damage is expected to be minimal. No fracing fluid was released into any streams or water sources.

EOG had a four-rig drilling program in the Pennsylvania Marcellus with current net production of 11 MMcfd of gas equivalent, less than 1% of the company's total production.

But with the administration, Congress and the public already seething over the Macondo blowout in the Gulf of Mexico, many industry observers fear additional accidents may result in more regulation onshore as well as offshore.

“This is what environmentalists have been waiting for, signaling a potentially long summer for energy investors. Near term this will [financially] impact some companies active in the Marcellus via higher levels of regulation,” said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. “It appears that plenty of long-term investors are waiting for the dust to settle and are willing to miss the first 10-15% of upside move in the stocks as we await new regulations and can determine the true costs that ensue.”

Raymond James analysts said, “To see how the market has already priced in…increased industry regulation, just take a look at the December 2018 crude contract, which is now trading at a $21/bbl premium to the current month vs. an $11/bbl premium before the Macondo blowout. In the gulf, [President Barak] Obama's deepwater moratorium has taken the rig count down to 23, its lowest point since August 1993 (when oil was just $16/bbl).”

Energy prices
The July contract for benchmark US sweet, light crudes dropped 7¢ to $71.44/bbl June 7 on the New York Mercantile Exchange. The August contract slipped 3¢ to $72.77/bbl. Subsequent months registered gains and remained in contango. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 7¢ to $71.44/bbl in line with the front-month crude futures contract. Heating oil for July delivery regained 1.06¢ to $1.97/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month dipped 0.04¢ to $1.99/gal.

The July natural gas contract continued to escalate, up 11.9¢ to $4.92/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased 5.5¢ to $4.74/MMbtu.

In London, the July IPE contract for North Sea Brent crude inched up 3¢ to $72.12/bbl. Gas oil for June dropped $5.50 to $621/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes fell $2.45 to $69.64/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

EOG Resources sells bulk of Canadian assets

12/09/2014 EOG Resources Inc., Houston, has divested all its Manitoba assets along with certain assets in Alberta in two separate deals that closed on Nov. 28...

EOG Resources improves Eagle Ford completions

10/16/2014 EOG Resources Inc. said completion design advances in the Eagle Ford shale contributed to several noteworthy well results in the second quarter.

Houston launches Energy High

03/10/2014 Last summer this editor had the opportunity to visit two corporate-backed oil and gas apprenticeship programs in Scotland. Aberdeen College and For...

Record Barnett HC content seen in combo play

12/02/2009 Hydrocarbon content in the thickest part of the Mississippian Barnett shale combo play in North Texas is so great that even 2-3% recovery is highly...

EOG sees reserve hike in Barnett Combo play

11/06/2009 Improved horizontal completion techniques in the North Texas Barnett Combo play have led EOG Resources Inc. to estimate that ultimate recoveries in...

Texas-East

11/06/2009 EOG Resources Inc. has expanded its acreage position in the Haynesville shale play to 153,000 net acres after adjusting for the expected exercise o...

Pennsylvania

09/22/2009

Seneca Resources Corp., Williamsville, NY, said its first operated Marcellus shale horizontal well averaged 5.8 MMcfd of gas over 6 days.

BLM begins scoping period for EOG Uinta basin gas project

09/09/2009 A 30-day public scoping period for a large natural gas infill project proposed by EOG Resources Inc. in eastern Utah will begin on Sept. 9, the US ...

Lower E&P spending ends 6-year global rally

12/20/2008 Global spending for exploration and production is expected to decline 12% to $400 billion in 2009—"a reversal after 6 years of global growth,"...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected