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

ConocoPhillips plans further capex reduction for deepwater exploration

07/16/2015 ConocoPhillips reported plans to further reduce its capital expenditures for deepwater exploration, with the “most significant reductions” coming f...

DOE official: LNG exports could be limited by silt-clogged waterways, ports

07/16/2015 Silt, which is increasingly filling US waterways and ports, potentially could limit US LNG exports if it is not dredged soon, a top US Department o...

Fitch notes increase in energy-default rate

07/16/2015 Recent actions of two exploration and production companies have pushed the trailing 12-month energy default rate among issuers of high-yield bonds ...

ENOC trims Turkmen plan in Dragon takeover

07/16/2015 Emirates National Oil Co. Ltd. (ENOC), Dubai, will lower target oil production from the Cheleken area offshore Turkmenistan after acquiring full co...

KMI to buy Shell’s stake in Elba LNG project for $630 million

07/16/2015 Kinder Morgan Inc., Houston, has reached a deal with Royal Dutch Shell PLC to purchase 100% of Shell’s equity interest in Elba Liquefaction Co. LLC...

Genesis to buy Enterprise offshore pipelines

07/16/2015 Genesis Energy LP has agreed to buy the Gulf of Mexico pipelines and services business of Enterprise Products Partners LP for $1.5 billion cash.

Mexican round nets two successful bids

07/16/2015 Two of 14 shallow-water blocks received successful bids on July 15 in Mexico’s historic Round One offering of exploration and production rights (OG...

CAPP: Canada needs global LNG markets for gas production growth

07/16/2015 Canada needs to connect to global LNG markets to avoid a decade of decline in natural gas production, according to the Canadian Association of Petr...

MARKET WATCH: Front-month crude oil price drops to lowest settlement since April

07/16/2015 Light, sweet crude oil prices dropped more than $1/bbl on the New York and London markets July 15, dipping to their lowest settlement since early A...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

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