Baker Hughes Avoids Another Round of Layoffs by Using Furloughs
We’ve long bemoaned the fact that the first tactic used by oil and gas companies to stay in business during this severe downturn has been to layoff large numbers of employees. We understand all the arguments: better to cut some rather than go bankrupt and out of business, putting everyone at the company in the unemployment line. We also understand many of these same companies added large numbers of people over the past half decade in the rapid scale-up to handle all of the new shale drilling–so this is simply a “correction” or rebalancing. But tell that to someone who has lost his or her job and the families affected by it. “Hey, you’ve been made redundant” (as our British friends call it). Or, “You’re just a correction.” No, our sympathies are with the men and women who have been laid off and suffer. Some of the biggest layoffs have come from oilfield services companies, like Halliburton and Baker Hughes–both with major operations in the Marcellus/Utica. Tens of thousands have been laid off at each company over the past two years or so. In July Baker Hughes laid off another 3,000 in fell swoop (see Baker Hughes Laid Off 3K in 2Q16, No Drilling Recovery in 2016). It’s been an employment apocalypse. We spotted a story that may offer some hope, and an idea, for companies in o&g pondering yet more layoffs. Instead of laying off yet more people at Baker Hughes, the company has just announced they are using furloughs to cut employee payments by 5%…
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A great article in Investor’s Business Daily explores the link between shale gas and the “explosive expansion” of the U.S. petrochemical industry. Part of the petchem supply chain is finding a cheap source of ethylene, the raw material used in making all sorts of plastics products. Manufacturers get ethylene from ethane cracker plants. The article discusses that link, and the reasons why Shell chose to locate their new multi-billion dollar ethane cracker plant near Pittsburgh. As you can guess, economics play a major role in such a decision. Here are the specific economics that convinced Shell that PA is a good bet…
Two weeks ago MDN provided an update on the new Antero state-of-the-art frack wastewater treatment plant and landfill being built in West Virginia (see 
The Ohio Dept. of Natural Resources (ODNR) has just issued production numbers for the second quarter of 2016. Compared with second quarter 2015, production numbers in 2Q16 were a mixed bag. Oil production in 2Q16 dropped by 19%–that’s the bad news. But natural gas production from shale is up 51% year over year–that’s the good news. CONSOL Energy’s CNX Gas division had the #1 producing gas well in Monroe County, the Brewster well, producing 1.6 billion cubic feet of natgas during 2Q16. Eclipse Resources had the #1 producing oil well in Guernsey County, the monster Purple Hayes, which produced an astonishing 71,072 barrels of oil in 2Q16. Below we have the ODNR’s high level overview of the numbers, along with MDN’s own exclusive analysis showing: the top 25 producing gas wells, the top 25 producing oil wells, and then the top 25 gas and oil wells as ranked by average production per day. There is a difference!…
One of the lowest cost producers that gets some of the highest prices for its natural gas in the Marcellus/Utica is Rice Energy. The difference between what it costs Rice to produce gas ($0.90/thousand cubic feet, or Mcf) verses what they sell it for (an average $3.12/Mcf) means Rice makes a whopping 247% internal rate of return, or IRR–which is THE most profitable driller among 10 of the largest Marcellus/Utica drillers surveyed (see today’s companion post on Hedging Gas Prices in the Marcellus/Utica). The Rice boys’ stellar performance has not gone unnoticed by analysts at investment and research firms. In fact, one such analyst, from Wolfe Research, says Rice “could be” a target for takeover/buyout by a larger competitor. Which competitor? Let’s name names…
S&P Global Market Intelligence recently conducted research on 10 of the largest Marcellus/Utica drillers to discover which have “hedged” their 2017 production, and for how much. Hedging is a concept of pre-selling the gas you produce at a price you agree to now, in advance. Although that may sound risky, it’s actually an exercise in risk avoidance. It’s less risky to lock in favorable prices in advance rather than wait and potentially get far less. How do these drillers know what the prices will be a year from now? They don’t know, for sure, but there is something called the forward market, that predicts what prices will be at future dates. In fact, traders create contracts now based on prices in the future, and those contracts are reported by various news and data services, like 
Last week MDN alerted you to yet another study, in a long line of such studies, issued by anti-drilling zealots pretending to be researchers at Johns Hopkins University (see 
Two weeks ago the Massachusetts Supreme Judicial Court (MA’s highest court) ruled that utility companies, which are heavily regulated and the prices they can charge controlled, cannot pass along the cost of a pipeline to electric ratepayers (see 
Two radical environmental groups in Ohio–Ohio Environmental Council and the Clean Air Task Force–have just released a 100% bogus “report” that attempts to tie asthma in children to fracking. If lying to the public were a crime, they’d be in jail right now. Here’s how these sleazy groups make such a claim: They claim, from looking at medical records, that there are 7,129 childhood asthma attacks in the Columbus metro area, and 7,558 in the Cleveland metro area each year. Absolutely no context as to whether those numbers are higher or lower than elsewhere in the country, or whether or not the numbers are increasing year over year. These groups just toss out numbers. They claim the asthma attacks are because of smog in those cities. They further claim smog comes from burning oil and gas and ergo, childhood asthma attacks are the result of fracking, because fracking extracts more oil and gas which is burned and causes smog which causes asthma. It is a heaping mound of cow manure. The problem is that otherwise good news sources, like the Akron Beacon Journal, push this manure out as news…
The University of Texas at Austin has just been awarded a $350,000 grant from the U.S. Department of Energy to conduct an 18-month review of a study they previously did of major American shale gas plays. Hey, getting paid to look at what you previously wrote is good work if you can get it! The previous study, called the “Shale Production and Reserve Study” looked at data from the Barnett, Fayetteville, Haynesville, and Marcellus natural gas plays. However, the data reviewed in the original study was only 4-6 years’ worth of data, depending on the play. Since the original study was completed, UTA-Austin now has access to an additional 2-4 years’ worth of data. In other words, the new data will help confirm, or not, the original conclusions. More data, better results and better conclusions. Here’s what UTA-Austin had to say about the new grant…