Michigan Oil & Gas Monthly – May 2016

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.

oil & gas bankruptcies
North American oil & gas bankruptcies filed in May of 2016.  There have been 35 oil & gas companies filing for bankruptcy protection so far in 2016.   Linn Energy is the largest by debt at $8.3 billion to file this year.  Linn Energy was the 3rd largest operator by revenue in Michigan in 2015 selling about $45.1 million of mostly dry Michigan natural gas from Michigan’s Antrim Formation. (photo source: Haynes & Boone)

Hal Washburn, Chief Executive Officer of Breitburn Energy Partners, said Continue reading “Michigan Oil & Gas Monthly – May 2016”

Michigan Oil & Gas Production Report January – December 2015

2015 Michigan petroleum production numbers are approximately 98% reported as of today. RMP has always focused on the numbers as they are often greater than adjectives.   Opinions are overrated.  People want to hear the numbers and then decide for themselves.   This is RMP’s fifth year studying, parsing, organizing, compiling, and reporting numbers related to Michigan petroleum production. The information RMP publishes will always be free access to the public. RMP has always followed three fundamental tenets as a research and reporting philosophy:

  • It’s all about the rock. Always respect the geology.
  • Follow the money. Money talks.
  • Follow the wastewater. Waste means inefficiency and problems. Inefficiency and problems mean additional costs. With regard to costs, see point #2.

Following the money has proven to be difficult because of the voluminous and Continue reading “Michigan Oil & Gas Production Report January – December 2015”

Michigan Oil & Gas Monthly – March 2016

Crickets.   New oil & gas activity in the Michigan Basin is so slow through the first quarter of 2016 that the only thing you can hear at the OOGM permitting department is crickets.  2015 was the slowest year in Michigan oil & gas history for new permitting activity breaking the old record set in 1931.   In the first three months of 2015, the slowest year in Michigan history, the Office of Oil, Gas, & Minerals (OOGM) had received 24 applications and had issued 28 permits.  As of today, through the first three months of 2016, Michigan’s OOGM has received only two applications and issued only six permits.   New oil & gas permitting activity in 2016 is on pace to set the bar substantially lower than last year’s record as the slowest year ever.

As always, however, there’s a lot going on in Michigan oil & gas even if the permitting department of the OOGM is Continue reading “Michigan Oil & Gas Monthly – March 2016”

Michigan Oil & Gas Monthly – February 2016

Niagaran Flare Stack

Each month, RMP publishes a detailed recap of oil & gas activity in the Michigan Basin.   This edition marks our 14th since our inaugural monthly edition was published in January of 2015. It’s time to follow up on a couple things we reported in 2015. One of the hot topics in our hometown Detroit newspapers and on our Detroit radio stations is the application for the Word of Faith 16-27 well targeting Michigan’s Silurian age Niagaran Reef. Jordan Development out of Traverse City, Michigan filed the application in October of 2015.

WordOfFaithOilWellComment1
This is an example of the bolierplate used by many of the people who submitted a comment in favor of the Word of Faith 16-27 well being permitted for drilling.  Click to enlarge.

What makes the Word of Faith 16-27 oil well different than many other potential Michigan wells is that it’s within the city limits of Southfield, which has a population of nearly 75,000 people. Often times when an application is received for a well in a heavily populated Metro Detroit city, the MDEQ’s OOGM will extend the application review process to hear comments from the public. The MDEQ has sole legal authority to permit any Michigan oil well regardless of symbolic gestures like a moratorium enacted by the Southfield City Council in effect until April 28, 2016. Only a court ordered injunction via lawsuit can Continue reading “Michigan Oil & Gas Monthly – February 2016”

Michigan Oil & Gas Monthly – January 2016

The big story this month is the location of the Ensign #161 drilling rig.   The lat/lon of Ensign #161 on the date of this post’s publication is 40.4293, -104.604 which is not a Michigan lat/lon.   You can see a map of Ensign #161 along with 10 other active Ensign rigs in the same area of Colorado by clicking on this link (depending on when you read this, the location may have changed). With Ensign #161’s location in Greeley, Colorado, which is just north of Denver and just SE of Fort Collins, you might wonder: why is Ensign #161’s Colorado location the big story in Michigan in January of 2016?

The answer is that Marathon just Continue reading “Michigan Oil & Gas Monthly – January 2016”

Michigan Oil & Gas Monthly – December 2015

marathon oil hvhf beaver creek

The December issue of RMP’s Michigan Oil & Gas Monthly (MOGM) marks our 12th edition, our first full year of publications, and the final edition for 2015. The story for 2015 was this: oil & gas exploration in Michigan is at its slowest ever. It was the all-time slowest year in Michigan’s oil & gas exploration history beating the record set in 1931 for lowest permitting & drilling activity.   While the predictions RMP made last year were spot on target for Michigan in 2015, some unexpected things happened also.

Half-way around the world, Saudi Arabia’s 2015 actions to increase their own crude oil production to stave off US shale production have had a deep cutting effect on American oil & gas producers across the nation as well as right here at home.  As long as we rely on crude oil as an energy source, the King of Saudi Arabia can significantly impact a large segment of our energy economy which effects our national security and causes Americans to lose jobs.  Switching from internal combustion engines to fuel cells would fundamentally change the balance of world power as it relates to energy.  America can end its reliance on Saudi Arabia & other OPEC countries by responsibly migrating away from crude oil as an energy source. We have seen American oil producing companies lose major percentages of their net financial worth and layoff tens of thousands of American workers in 2015 because of Saudi actions.

chesapeake stock value drops 70 percent in 2015
Chesapeake has lost nearly 70% of its value in 2015. More evidence with hard numbers that supports what RMP has been saying all along about the oil & gas bust because of actions taken in Saudi Arabia to hurt American companies.

Another large scale international event related to oil & gas that will impact Michigan happened this December when President Obama Continue reading “Michigan Oil & Gas Monthly – December 2015”

Michigan Oil & Gas Monthly – November 2015

Michigan has issued 104 permits so far this year through November 20, 2015 and continues its streak of the slowest 6 years in a row ever for oil & gas activity. 14 of the permits issued thus far in 2015 are for pilot & horizontal combinations and should really only count as one.   The numbers through 2015 continue to support RMP’s forecasts and analysis of Michigan oil & gas activity.  With only 104 permits issued in November, it’s still very likely 2015 will be the slowest year in Michigan oil & gas history.  1931 currently holds the record as the slowest year for permitting in Michigan history at 111 permits issued.

According to the US Census Bureau, petroleum as a percentage of the US trade deficit is still at 13.7% even with major production increases in oil production due to horizontal drilling and hydraulic fracturing.
According to the US Census Bureau, petroleum as a percentage of the US trade deficit is still at 13.7% even with major production increases in oil production due to horizontal drilling and hydraulic fracturing.

Michigan produces less than 5% of the refined oil products purchased by Michigan consumers. Michigan is ranked 19th in crude oil production in the United States out of 31 producing states. Collective US production of oil from all 31 producing states supplies about only half of the crude products US consumers purchase. The US only holds 2.2% of world crude oil reserves. Recent increases in US production of crude because of technological advancements in horizontal drilling and hydraulic fracturing are certainly remarkable and have made a large dent in imported petroleum, but we still only produce about half of the crude oil processed in US refineries.  Oil as an energy source is simply not sustainable even at the currently boosted levels of production.  The USA will perpetually remain in a Continue reading “Michigan Oil & Gas Monthly – November 2015”

Michigan Oil & Gas Monthly – October 2015

michigan oil & gas

The featured image above (Photo Credit: Neo), is of the flare stack at the Milford Sand & Gravel 1-32 well.  West Bay Exploration filed a petition with the Assistant Supervisor of Wells for an exception to Michigan No Flare Order Provisions of Special Order No. 3-71 to flare up to 100,000 scf of natural gas a day from the flare stack shown in the featured image of our October MOGM.  Harold Fitch, the Assistant Supervisor of Wells, signed the Notice of Hearing for this petition on October 9, 2015.  The gas flared at the Sand & Gravel pit comes from two other wells also:  the Kensington Metroparks 1-31 and the Kensington Metroparks 2-32.  The flowlines from the Kensington Metropark wells flow across Kent Lake over to the Continue reading “Michigan Oil & Gas Monthly – October 2015”

Michigan Oil & Gas Production Report January – June 2015

It’s time to review the first six month’s production of subsurface hydrocarbons in the Michigan Basin as most operators have now reported results.   The theme of this report is that things aren’t always as predictable as you think and that it’s important to always be diligent in measuring the data because the data can Continue reading “Michigan Oil & Gas Production Report January – June 2015”

Secret Science – Marathon Oil’s 2015 Activity In The Michigan Basin

Part 625 wells are specially designated Michigan mineral test wells that are top secret stuff.   Even though the land & minerals may be State owned by we the taxpayers, private companies like Marathon Oil based in Houston, TX can apply for a confidential 625 well and keep their activity off the grid.  That means there will be:  no mention of the well in the application or permit list we post each month at RMP, there will be no FOIA’s allowed, and you will not be able to get answers to questions about Continue reading “Secret Science – Marathon Oil’s 2015 Activity In The Michigan Basin”