The big news in oil & gas this month was the Chapter 11 bankruptcy filings of Houston, Texas based Linn Energy and Los Angeles, California based Breitburn Energy Partners. Linn energy was the 3rd largest hydrocarbon producer in Michigan in 2015 bringing in approximately $45.1 million worth of Michigan petroleum revenue. Breitburn was Michigan’s 5th biggest producer in 2015 bringing in approximately $44.0 million. Now, the questions will come about how the Chapter 11 bankruptcy restructurings will impact these companies along with their Michigan assets. RMP published a summary of the 2015 top 25 producers in the Michigan Basin last month, you can read it here. Less than a month after publishing the top 25 producers, we learn that two of Michigan’s top five producers are bankrupt.
Hal Washburn, Chief Executive Officer of Breitburn Energy Partners, said about Breitburn’s restructuring, “During the restructuring process, we will continue managing our business and operating our assets as we do today. Cash from our operations, cash on hand, and cash available under the DIP [Debtor In Possession] Financing Facility will provide us with more than sufficient funds to operate our business during the restructuring process. We look forward to working with our service providers, suppliers, vendors, customers, and partners to ensure that Breitburn emerges from the restructuring process a stronger company.”
Mark E. Ellis, Chairman, President and Chief Executive Officer of Linn Energy, said about Linn’s restructuring plan, “After our review of the available options, with the assistance of our financial and legal advisors, we determined that this court supervised financial restructuring process is the best course of action for the Company and our stakeholders. Like many others in our industry, LINN has been impacted by continued low commodity prices. We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth.”
Breitburn lists $3.0 billion in debt and Linn lists $8.3 billion in debt. Linn’s $8.3 billion in debt makes Linn the biggest North American producer to seek bankruptcy protection so far this year in 2016. Breitburn had only recently acquired Quicksilver Resources in 2014 for about $3 billion including debt.
In other Michigan news, there were 4 new applications through May 20, 2016. Two of the apps were for new oil wells and two are for re-entries for gas storage. There were three new permits issued which were all for oil wells. Six wells were reported plugged through May 20, 2016. Totals on the year so far through May 20, 2016 are apps: 8, permits: 11, and pluggings reported: 67.
Click any of the infographics below showing May 2016 apps, permits, and plugging below to enlarge it in your browser.
The May 2016 Apps to Plugs Ratio KPI:
The apps to plugs ratio is self explanatory. By looking at the number of applications to wells plugged KPI we can see wells coming vs wells going. This KPI along with the previous one supports our original 2014 & 2015 outlook post with more numbers and data.
2016 Apps to Plugs Ratio KPI:
8 Applications : 67 Wells Plugged
The May 2016 Permits to Plugs Ratio KPI:
The permits to plugs ratio is nearly the same as the apps:plugs ratio but with permits instead of applications.
2016 Permits to Plugs Ratio KPI:
11 Permits Issued : 67 Wells Plugged
May 2016 – Petroleum As % Of U.S. Trade Deficit KPI:
New in 2016! RMP will be tracking petroleum as a percentage of the US trade deficit. RMP mentioned in our December 2015 MOGM that President Obama signed a bill that lifted an export ban on crude oil that had been in place since 1970. RMP will be monitoring the effect of that federal legislation by monitoring an important economic statistic published by the United States Census Bureau. The data and graph (shown below) come from this website: https://www.census.gov/foreign-trade/statistics/graphs/PetroleumImports.html
This stacked-area line graph shows how much of the monthly US trade deficit can be attributed to the deficit in petroleum products. The vertical axis shows percent of the U.S. Goods and Services Trade Deficit. The horizontal axis shows a monthly time series from January 2006 to present. The bottom area of the graph shows what percent of the deficit comes from petroleum goods. The top area shows the percent of the deficit coming from non-petroleum goods and services.
This statistic lags 3 months behind the current month, so the last data point on the graph below is March 2016.
In other Michigan oil & gas news for RMP, May was a great month to get out in the field and see some oil wells, central processing facilities, fractionation plants, and other oil and gas facilities on Michigan publically owned land. I had the pleasure of meeting Ted Auch who works at the FracTracker Alliance in their Cleveland, Ohio office. RMP worked with FracTracker Alliance to show them around in the Michigan oil fields. If your environmental group wants to get a field tour of Michigan energy infrastructure, contact RMP by leaving a comment below. RMP’s advanced software for mapping allows us be the ultimate environmental tour guides in the State of Michigan. Also, touring with our group this month was Frank Finan from Pennsylvania. Frank had a sophisticated camera that could see hydrocarbon gases where the human eye could not. RMP toured with Ted & Frank this month and we showed them wells using RMP’s new “mobile” software. Frank was able to capture video footage of hydrocarbon gases being vented to atmosphere at Michigan oil & gas locations.
RMP’s New Oil & Gas Mobile Mapping Technology
Check out this link to our new mobile oil & gas well map and bookmark it on your phone or mobile iPad: http://www.respectmyplanet.org/public_html/full_screen/mobile_map
That link above is one of RMP’s newest maps in development. It finds you, puts a marker on the map centered right where you are, and finds the nearest 500 oil & gas wells near you in Michigan. All you have to do is open the webpage. Try saving it in your phone as a bookmark and you can see which oil & gas wells are near you in Michigan and easily find them in your car. The software is cool because it’s really easy to use, just open the page and the software does all the work. It works best on an LTE iPad because the iPad has the big screen but most people don’t have those. It is being development tested on an iPad, iPhone, desktop, and notebook.
While it does work on the iPhone, the markers appear a little small as the software is still in development. It’s still very cool to save as a bookmark on your phone because you can quickly and easily find oil & gas wells near you when you’re camping in Michigan, playing golf, or travelling to any part of Michigan and you want to know what oil & gas wells are near you. It’s also a cool tool for identifying a well should you come across one in your recreational use of Michigan public lands.
Be careful if you’re driving when trying to use the mobile map. Also, do not trespass. Many wells are on private property. Get the landowner’s permission before entering any private property or stick to Michigan public lands. Now that the logic is written for the mobile tracking & AJAX search calls to the database, RMP will be able to create some really cool mobile maps to help you find all kinds of energy infrastructure around yourself . The “you” marker that represents your location moves on the map as you physically move.
This month’s feature image photo is permit#31993 State Whitewater Unit E 3-22. The photo was taken May 18.
Below are some more photos taken in May as I toured Michigan testing RMP’s new mobile mapping application. Our mobile mapping app finds oil & gas wells near you very easily.