U.S. shale producers boost production; BP finds high-volume New Mexico shale source; Dow, DuPont merger to close
Our pick of the latest petrochemicals news you need to know
Shale producers cut spending plans while boosting production
Continental Resources is among the latest U.S. shale oil producers to cut back on drilling amid weaker crude oil prices.
The company said during its quarterly earning call that it would spend $1.75 billion to $1.95 billion this year, down from a prior $1.95 billion target.
While Continental said it would trim its spending plans, is also said it would boost production expectations by as much as 30% from the fourth quarter.
"We are raising our production estimates while lowering guidance for operating costs. The updated guidance metrics are expected to be achieved while targeting cash neutrality between $45 and $51 WTI (West Texas Intermediate crude oil) with capital expenditures ranging from $1.75 billion to $1.95 billion,” John Hart, Chief Financial Office said during the company’s earnings call.
By cutting its budget, Continental is following the direction of many of its U.S. shale peers, who have already cut more than $1.2 billion from their spending plans for the year, but announced they would boost production.
Anadarko Petroleum Corp, ConocoPhillips, Whiting Petroleum Corp and Hess Corp have cut a combined $750 million from their capex plans, each citing weaker-than-expected oil prices.
Marathon also shaved its 2017 spending plan by $200 million to $300 million after posting a quarterly loss. Similarly, Marathon boosted its production forecast by about 7% for the year.
Concho Resources of West Texas said it would boost output by 25% this year over last year's levels.
U.S. shale oil producers expect to pump at least 160,000 more barrels per day this year than previously announced, according to Reuters.
BP makes discovery that could provide massive new source of U.S. shale gas
BP made a huge discovery in New Mexico at the Mancos Shale, which the company said could provide a significant new source of U.S. shale gas.
The initial 30-day production rates of the new well in San Juan County hit 12.9 million cubic feet of gas per day, a figure that tops horizontal wells in the highly prolific Eagle Ford shale, which often sees wells producing 8 to 12 million cubic feet per day.
The production figures are the highest in 14 years within the San Juan Basin, a large oil and gas producing area spanning southwest Colorado and northwest New Mexico.
Image: By USGS Uinta-Piceance Assessment Team [Public domain], via Wikimedia Commons
The successful well test took place on assets BP acquired in late 2015.
A United States Geological Survey (USGS) report from 2016 estimates that the Mancos Shale holes 66.3 trillion cubic feet of natural gas, enough to rank the Mancos as the second largest shale play in the country, just behind the Marcellus in the Northeast.
Dow to invest $105 million in Texas plant
Dow Chemical Company will invest an estimated $105 million on a plant expansion at its Seadrift site in Texas.
Construction on a plant to produce catalysts used to make high density polyethylene will break ground in August, the company said. The plant is expected to be fully operational in 2019.
The project will require 200 jobs during construction and 20 permanent jobs.
The $105 million investment will be the second expansion project at the plant. The first was in 2016 for about a $100 million investment.
DCP to build natgas plants in Colorado
DCP Midstream approved its 11th natural gas processing plant in the Denver-Julesburg (DJ) Basin in Colorado, the company said in its second quarter earnings report.
The 200 million cubic feet per day (MMcf/d) plant will be called The O'Connor 2 plant and be in service by 2019 at a cost of up $400 million, according to earnings reports.
Together with the 200 MMcf/d Mewbourn 3 plant that is under construction, this will add 400 MMcf/d of processing capacity, up more than 45%, to approximately 1.2 billion cubic feet per day (Bcf/d), the company said.
Natural-gas processing plants are important to the industry because they extract natural-gas liquids (NGLs) from the natural-gas stream. Then, those NGLs are used as feedstocks in petrochemical plants.
DuPont, Dow merger to close
Photo: Dow Chemical
DuPont and Dow Chemical Company announced all regulatory approvals and clearances have been received to close on its merger.
Stock for Dow and DuPont will stop trading after market close on August 31, the companies announced in a statement.
On September 1st, shares of the new company DowDuPont will start trading on the New York Stock Exchange under the ticker symbol DWDP.
They will then pursue a separation of DowDuPont into three independent publicly traded companies through tax-free spin-offs within the next two years.
The merger has been in the works for nearly two years. On closure, the combined company is estimated to be worth $130 billion.