Liquid Shale Plays

Liquid Shale Plays: Niobrara and Eagle Ford Focus Production, Logistics and Refining Focus‐
Production Logistics and Refining
Market Outlooks
Extracts from EAI, Inc.’s North American Crude Supply, Logistics and Refining & U.S. Gulf Coast‐
Refining & U.S. Gulf Coast
f
lf
‐Eagle Ford Outlook l
d
l k
Studies‐‐ 2011
Studies
for for Crude Oil Quality Association
Salt Lake Cityy
9‐June‐2011
2
Copyright ©: EAI, Inc., 2011
Resource Plays – The Liquids Growth Source for 2009-2012
Location of fractured shale and carbonate trends found along the Western Interior Seaway.
Eagle Ford drilling ramping up and shifting from gas to liquids focus.
Niobrara potential being tested in the Powder River Basin and the DJ Basin
Basin.
In the Bakken, drilling expanding in the Tyler and Spearfish formations.
WCSB
COLORADO
GROUP
BAKKEN
NIOBRARA
HILLIARD
BAXTER
PRB
GGRB
DJ
NIOBRARA
MANCOS
DEVONIAN
SJB
MISSISSIPIAN
DEVONIAN
AUSTIN
CHALK
Copyright ©: EAI, Inc., 2011
Gulf Coast Onshore Production Comparison 2008 vs 2010
County Average Annual MBPD
Inland supply growth is dominated by light sweet crude and condensate from Eagle Ford, Woodford
Inland
supply growth is dominated by light sweet crude and condensate from Eagle Ford, Woodford‐
Bone Spring, Sprayberry and Granite Wash developments.
Granite Wash
Granite Wash
Condensate
Permian Basin
Spraberry Dominates Lt Sweet Growth
BARNETT
Delaware
Basin
Increase / Decrease
by County
2008 vs 2010 5 to 1.5 to 0.5 to ‐0.5 to ‐2 to ‐10 to HAYNESVILLE
WOODFORD
BONE SPRING
AVALON
MAVERICK
Eagle Ford
Oil & Condensate
100
5
1.5
0.5
‐0.5
‐2.0
4
EAI, Inc. Texas Production Area Definitions
Production 2010 MBPD
EAI, Inc. Distribution Areas
Geological Areas
Midland Basin
160 NM
Permian Basin
E1 NM E2 E3 E4
745 TX
E5 E6 E7
Texas Panhandle
PERMIAN
5
Play
Activity
SPRABERRY
Central Basin Platform Delaware Basin
BONE SPRING
Palo Duro Basin
GRANITE WASH
A d k B i
Anadarko Basin
Texas Hugoton
101
E8 Central Texas
Spraberry Trend
Llano Uplift
E9
Eastern Shelf
Val Verde Basin
52
East Texas Basin
East Texas Basin
171
Texas Gulf Coast
E11 E13
E11 E13
E10 E12 E14
EAGLE FORD
Cotton Valley Trend
ll
d
Marathon Belt
Ouachita System
Oligocene Detachment
Austin Chalk
EAGLE FORD
Copyright ©: EAI, Inc., 2011
Eagle Ford Specifics
The majority of new liquid is coming from gas wells with high condensate and NGL yield and from high GOR oil wells in the shallow western region. Historically the refineable liquids have been delivered to San Antonio, Three
wells in the shallow western region. Historically the refineable liquids have been delivered to San Antonio, Three Rivers and Corpus Christi.
E7
E12
EAGLE FORD
OIL TARGETS 31‐42° API E8
FAYETTE
SAN ANTONIO
GONZALES
WILSON
ZAVALA
HOUSTON
AREA REFINING
LAVACA
SWEENY
DEWITT
FRIO
ATACOSA
MAVERICK
KARNES
EAGLE FORD 55‐61° API
GAS‐COND (UPDIP)
THREE RIVERS
BEE
DIMMIT
MCMULLEN
LA SALLE
PEARSALL EAGLE FORD
PEARSALL –
EAGLE FORD
32‐41° API CRUDE
LIVE OAK
WEBB
DUVALL
CORPUS CHRISTI
EAGLE FORD
DRY GAS (DOWNDIP)
E10
REYNOSA
6
Copyright ©: EAI, Inc., 2011
Eagle Ford County Level Grade Allocation
Based on well completions and sample data available as of February 2011
AUSTIN - 39
EAGLE FORD - 41.5
API Gravity of stock tank
liquid downstream of
separator. (Eagle Ford)
42.3 ( CUSSACK CLAMPIT 4H )
EAGLE FORD - 56.6
49.9 ( KRAUSE 1 )
EAGLE FORD - 60.3
45 API
Gravity cutoff
(approximate limit)
AUSTIN-CHALK - 29.5
42 ( ORR UNIT 1H )
49.2 ( BORDOVSKY - A7 1H )
43.4 ( ORR UNIT 2H )
EAGLE FORD - 50.6
EAGLE FORD - 36
FRIO, B - 41.5
AUSTIN CHALK - 36
EAGLE FORD - 50.4
50 4
57 ( BAKER TRUST 1H )
EAGLE FORD - 61.6
EAGLE FORD - 49
QUEEN CITY B - 40.2
EAGLE FORD - 56.5
63.4 ( COTULLA 1H )
56.7 ( SAN AMBROSIA D 2H )
EAGLE FORD - 53.9
FRIO, OLIGOCENE - 45.2
EAGLE FORD - 53.9
FRIO B2 - 44.3
FRIO 1 - 46.9
DRY GAS ( APPLING 695 2H )
27.9 ( BRISCOE G 1H )
FRIO - 40.2
EAGLE FORD - 55.9
CHAPMAN, FRIO - 41.1
FRIO - 40.2
LOBOS CONS (WILCOX) - 52.7
45 ( BILLINGS B 12H )
45 ( BILLINGS B 11H )
FRIO S4 - 44.7
FRIO, H-02 - 44.7
API Gravity from whole
crude assay properties
(all formations)
FRIO 21-B4,
21 B4 OLIGOCENE - 42.3
42 3
Copyright © EAI Inc 2011
8
Eagle Ford Production Outlook
‰ Eagle Ford Fairway: Eagle Ford fairway lays parallel to the highly developed Austin Chalk trend extending from the Maverick Basin on the Texas=Mexico border through San Antonio and Austin and continuing east into Louisiana. Louisiana
‰ Formation ranges from 100 to 350 in thickness and dips southeast toward the coastline with oil found at depths of 2500 to 9000 feet. ‰ Transitions from oil to light oil to condensate with increasing depth.
‰ Eagle
Eagle Ford Drilling Activity as of Early 2011:
Ford Drilling Activity as of Early 2011: There were 143 rigs active in the play. An estimated 400 Eagle There were 143 rigs active in the play. An estimated 400 Eagle
Ford wells had been drilled, 75 By Anadarko, 46 By Petrohawk, and 45 by EOG. (drillinginfo.com). Roughly 850 permits remain to be drilled (1229 issued during 2010). ‰ Liquids vs Natural Gas Focus: Recovery in natural gas prices would broaden the ‘liquids fairway’ and contribute to longer term condensate supply. The condensate yield for ‘wet gas’ wells ranges from less than 1 barrel per MMCF (d
MMCF (dry gas) to over 200 barrels per MMCF (excluding NGL). This material is stable at STP, and is typically )t
200 b
l
MMCF ( l di NGL) Thi
t i l i t bl t STP d i t i ll
recovered at the well pad, downstream of the separator, before gas processing. ‰ Production Forecast: Developed for each county based on permits as available in early 2011. Each county has different proportion of crude versus condensate Players are able to shift from crude to gas‐condensate play
different proportion of crude versus condensate. Players are able to shift from crude to gas‐condensate play within undrilled leasehold as guided by respective oil/gas prices.
Copyright ©: EAI, Inc., 2011
EAI, Inc. Eagle Ford Production Tracking & Outlook 9
EAI, Inc. continues to track, analyze and update its production outlook to account for latest developments
SPEC 3 HIGH CASE: MODEL OUTPUT
(USING RIG MATRIX ASSUMPTIONS)
SPEC 2 - BASE CASE: MODEL OUTPUT
ASSIGNED TO EAREA E8 OR E10
PND PLUS SPEC 1: MODEL OUTPUT
BASE CASE (SUM OF COUNTY TOTALS
WITHIN E8 AND E10)
Copyright ©: EAI, Inc., 2011
10
Eagle Ford Horizontal Well Count
There had been 200 Horizontal Well Completions over the 2009‐2010 timeframe (*) and roughly 590 wells to be completed. DRILLED HORIZ WELLS
JAN 2009 - SEPT 2010
30
15
MCMULLEN COUNTY (17)
PETROHAWK (4)
EOG (2)
SWIFT (8)
3
GONZALES COUNTY (10)
EOG (3)
SHARON RES (2)
HILL CORP (3)
DIMMIT COUNTY (20)
ANADARKO (4)
ST MARY (2)
TXCO (2)
CHESAPEAKE (2)
DE WITT COUNTY (16)
PIONEER (4)
GEOSOUTHERN (2)
ENDURING (3)
COP (3)
KARNES COUNTY (23)
ENDURING RES (5)
ENERVEST ((9))
MURPHY (2)
COP (5)
WEBB COUNTY (98)
ST MARY (19)
LEWIS
W S PET (7)
ROZETTA (3)
LAREDO (9)
CHESAPEAKE (8)
ESCONDITO (8)
LA SALLE COUNTY (18)
PETROHAWK (5)
EOG (3)
EL PASO (9)
ANADARKO
APACHE_CORP
BURLINGTON_RES__COP_
CHESAPEAKE
CML_EXPLORAT
EL_PASO
ENDURING_RES
ENERVEST_OPE
EOG_RESOURCE
ESCONDIDO RE
ESCONDIDO_RE
FOREST_OIL_C
GEOSOUTHERN_
LAREDO_ENERG
LEWIS_PETRO_
MURPHY_EXPLO
NEWFIELD_EXP
PETROHAWK
PIONEER NATU
PIONEER_NATU
ROSETTA_RESO
SAN_ISIDRO_D
ST__MARY_LAND
STONEGATE_PR
SWIFT_ENERGY
TXCO_RESOURC
WHITING_OIL_
XTO XOM
XTO__XOM_
Data vintage through September 2010 for this slide
Copyright ©: EAI, Inc., 2011
11
Condensate Production Curves – Eagle Ford Completions
Based on RRC gas well completions and sample data available as of February 2011. The model (average) curve shown below generates 210 MB condensate. Gas production is variable across the play and represent 40 to 80% of revenue (wet gas play: range from 1.2 –
f
(
l
f
1 2 4.0 BCF per well).
4 0 BCF
ll)
Copyright ©: EAI, Inc., 2011
12
Crude Production Curves – Eagle Ford Completions
Based on RRC gas well completions and sample data available as of February 2011. The model (average) curve shown below generates 250 MB crude. Operators are targeting 350 to 550 MBOE per well.
Copyright ©: EAI, Inc., 2011
Eagle Ford Transportation Logistics, Projects and Refinery Hub Access
From EAI, Inc.’s Detailed Gulf Coast Crude‐Eagle Ford, Refining & Logistics Outlook
Logistics Outlook
Pl /Local Ref Cap = 850‐
1030 MBPD West
1030 MBPD West
‰ The total transportation capacity & local refining (within EF production
local refining (within EF production area) is in the range of 1600 to 1780 MBPD.
Cushing
Hub
Pl Cap = 750 MBPD East
Seaway Pl
350 MBPD
Eagle Ford ProductionAreas
Production Areas
Enterprise
350 MBPD
Sealy
Hub
Enterprise
350 MBPD
EF Ref Cap
EFRef
Cap Cap M
CapMBPD
Valero 3 Rivers 85
NuStar Age 14.5
Total
99.5
Pipeline/Project
Koch
Koch‐NuStar
Koch‐Arrowhead
NuStar‐TexStar
Magellan‐M3
Plains
Total Capacity
to Corpus Christi
Cap MBPD
120
30
80
200
180
300
Corpus
Christi Refineries
CC Ref Cap
CCRef
Cap Cap M
CapMBPD
Flint Hills
290
Citgo
163
Valero (*)
315
Trigeant (**)
29
Total
797
790
Houston‐
Pasadena
Refineries
Houston
Terminal
Kinder Morgan 300 MBPD
NuStar 100 MBPD
Magellan Pl
agellanPl
Texas
City
Refineries
Gulf Coast
Refineries
13
‰ The east bound capacity ‐
h
b
d
Enterprise crude system which is expanding to EF western counties and will provide access to Cushing, Houston‐
Pasadena‐Texas City markets plus KM’s gas & NuStar’s product pipeline conversion projects. ‰ Corpus Christi‐refining/marine focused projects are Koch, NuStar, Arrowhead, Magellan and Plains. * East and West Plant; can process
residuum as feedstock
**Vacuum Tower capacity‐‐makes asphalt
Copyright ©: EAI, Inc., 2011
14
Gulf Region Coastal Refining Capacity
Atmospheric Tower, MBPD
Atmospheric Tower, MBPD
Lake Charles
TX
San Antonio
Houston
Pasadena – 117
Shell‐Deer Pk‐ 327
Lyondell ‐ 268
Valero – 90
Baytown ‐ 576
ExxonMobil Beaumont‐ 345
Baton Rouge
Exxon Mobil – 504
Placid Port Allen – 55
Alon K. Springs ‐ 83
Houston
Pascagoula
ChevronTexaco
330
Port Arthur
Texas City
BP ‐ 451
MRO ‐ 76
Valero – 245
Corpus
Christi
CITGO – 157
Flint Hills – 279
Valero CC – 205
Valero 3‐Rivers‐ 100
MS
LA
Bay Town
Sweeny
ConocoPhillips ‐ 247
Valero
Th
Three
Rivers
CITGO – 440
ConocoPhillips ‐ 239
Calcasieu‐32
Valero ‐ 310
Total ‐ 174
Motiva ‐ 285
Motiva Convent ‐ 227
MRO ‐ 436
Motiva Norco – 220
Motiva Norco Shell St. Rose ‐ 55
Valero Norco ‐ 186
COMPANY
ExxonMobil
Valero
ConocoPhillips
Citgo
Shell
Marathon
BP
Chevron
FlintHills
Saudi Arabia Oil
Saudi Arabia Oil
Total Petroleum
TOTAL ABOVE
TOTAL GC
ConocoPhillips‐Alliance ‐ 247
ExxonMobil‐Chalmette
ExxonMobil
Chalmette – 193
Murphy‐Meraux ‐ 125
CAPACITY, MBPD
1521.3
1218.7
806 0
806.0
596.8
584.5
512.0
451.3
330.0
279.3
183 0
183.0
173.6
6656.3
8413.1
PERCENT OF TTL GC
18.1%
14.5%
9 6%
9.6%
7.1%
6.9%
6.1%
5.4%
3.9%
3.3%
2 2%
2.2%
2.1%
79.1%
Refining Capacity above is summary of largest refinery capacity ownership positions for overall U.S. Gulf Coast region
Copyright ©: EAI, Inc., 2011
EAI, Inc. North American Refining Analysis
U.S. Gulf Coast Update
15
ƒGulf Coast refining capacity at 8390 MBPD Gulf Coast refining capacity at 8390 MBPD
ƒTotal crude runs averaging 7250 MBPD in 2010 & utilization rate of 86.4 %. ƒ Total crude imports for Gulf Coast refining averaging 5200‐5300 MBPD. ƒThe total light‐medium sweet crude market for imported crude is 1052 MBPD ƒWith inclusion of light sour, the total Gulf Coast imported light crude market is approximately 1833 MBPD
2500.0
105.0%
100.0%
95.0%
1500.0
90.0%
85.0%
1000.0
Refinery Utilization
Refinery Imported Crude RRuns, MBPD
2000.0
80.0%
500.0
75.0%
0.0
CRP_CHRST
HSTN_PSDN
TXSC
BMNT_PART
LAKE_CHRLS
ALNC_BTRG_CRDR
PSCGLA
NMS_NLA_AR
WTX_PHNDL_NTX
REF CRUDE RUNS
576.3
1411.1
777.3
935.0
645.2
1909.0
325.0
73.6
598.0
REF UTILIZATION
76.5%
87.7%
100.7%
84.0%
90.7%
82.7%
98.5%
91.4%
84.1%
70.0%
Copyright ©: EAI, Inc., 2011
16
Estimated Condensate Market Netbacks
‰ Market outlets for Eagle Ford condensate include nearby Houston Mt. Belvieu market, Canada and export to Northwest Europe. Generally, Northwest Europe estimated to provide best netback to Corpus Christi.
Corpus Christi. EUROPEAN MARKET
Qatar LSC condensate (Platts spot)
87.77
Waterborne to UKC
2.13
Waterborne Transport Corpus Christi to UKC
Waterborne Transport Corpus Christi to UKC
2 96
2.96
Netback to Corpus Christi
86.94
HOUSTON MARKET
Mt. Belvieu Natural Gasoline (Platts spot)
86.6
W t b
Waterborne Transport Corpus Christi to Houston
T
tC
Ch i ti t H
t
1 18
1.18
Netback to Corpus Christi
85.42
EDMONTON MARKET
Edmonton Spot Condensate (Platts spot)
89.13
T
Transport via Cushing to Southern Lights*
i C hi
S h
Li h *
9 56
9.56
Transport via Capline to Southern Lights*
Netback to Corpus Christi
79.57
Timeframe: Mar 2010 to April 2011 average Units: $/Bbl
* U
* Uses Southern Lights lowest tariff 5.48 $/Bbl Manhattan to Neche
S h
Li h l
iff 5 48 $/Bbl M h
N h
Clean tanker rate
Clean tanker rate
Clean tanker rate
Maximum price allowable
E ti t
Estimate
89.13
Originates at Sealy
O
i i
S l
10.39 Corpus to St. James barge
78.74
Copyright ©: EAI, Inc., 2011
EAI, Inc. Eagle Ford Disposition Scenario 2015 (includes Spec 2 Base Case)
Koch pipelines taking the majority of stock tank liquids in 2010 with EPPL pipeline to pull the most new supply Koch
pipelines taking the majority of stock tank liquids in 2010 with EPPL pipeline to pull the most new supply
east into Houston area on startup. Spec2 volume of 100‐120 MBPD available in base case but not assigned to AUSTIN
specific counties.
EAGLEVILLE
TEPPCO – 12”
COMAL
BANDERA
ROSANKY
SEALEY
COLORADO
EASTERN SUPPLY
22 MBPD in 2015
GUADALUPE
ROSANKY OPTION
BEXAR
50 MBPD TO CORPUS
45‐50 MBPD EAST ON EPPL
INCREMENTAL SPEC GOES EAST
MEDINA
UVALDE
HAWKVILLE
RED HAWK
WILSON
ZAVALA
MAVERICK
ARROWHEAD TO
KOCH 10””, 12”
FRIO
TEPPCO – 8”
WHARTON
KOCH - 8”
DEWITT
280
NGL
VICTORIA
25
EPPL 350 MBPD CAPY
65
PETTUS JCT
CALHOUN
BEE
KOCH -12”
Loop 16”
MCMULLEN
3-RIVERS
< 96 > LIVE OAK
70
145
NGL – GAS AND
PRODUCTS PL
CORRIDOR
REFUGIO
CORPUS LOCAL
20 MBPD in 2015
MAYO JCT (REFUGIO)
SAN PATRICIO
DUVAL
ARANSAS
KOCH - 12”
BENAVIDES
WEBB
KOCH - 8”
S. TX CRUDE
SOUTHERN SUPPLY
20 MBPD in 2015
DECLINING
MATAGORDA
GOLIAD
DIMMIT
WESTERN SUPPLY LA SALLE
KOCH TO CORPUS
AT CAPY( 120 MBPD)
TOTAL AVAILABLE SUPPLY
IS 175 MBPD by 2015
SEAWAY
KARNES
120
EPPL INSTALLS
NGL LINE
30-60 MBPD EAST
LAVACA
50
FORT BEND
JACKSON
ATASCOSA
50
GONZALES
NUECES
20JIM WELLS
KLEBERG
CORPUS REFINING
FLINT HILLS < 297 >
CITGO
<163>
VALERO
<315>
TRIFINERY <30>
25
ESTIMATED
THROUGHPUT
MBPD
18
D‐J/Niobrara Fairway: Transitioning from Vertical to Horizontal Drilling Fairway can be broken into 2‐3 distinct cells (so far). HORIZONTAL
VERTICAL (historical)
35-38° API Crude
SILO TREND: VERTICAL (historical)
VERTICAL WELL: EUR 23-38 MBOE
25-40 ACRE DRAINAGE
500-750 MBO OOIP
GOSHEN
EOG
Norseman
Prospect
MORILL
SILO
FIELD
LARAMIE
CHEYENNE
Cheyenne
HORIZ
NIOBRARA
ACTIVITY
EOG (JAKE AREA): VERTICAL (historical)
VERTICAL WELL: EUR 40-90 MBOE
80-120 ACRE DRAINAGE
1500-2000 MBO OOIP
NEW WELLS PROPOSED BY JONAH GAS
Expect better completions and
more efficient drainage
NORTHERN DJ: 35-45° API Crude
EOG (JAKE AREA): Horizontal
EUR 250
EUR:
2 0 MBOE ((one well
ll sample)
l )
18-20 MILLION BARRELS OOIP (640 AC)
LOGAN
WELD
WATTENBERG: VERTICAL (historical)
WATTENBERG
(hi t i l)
VERTICAL WELL: EUR 23-38 MBOE
25-40 ACRE DRAINAGE
500-750 MBO OOIP
WYOMING HORIZONTAL
SILO Horizontal (1990’S Vintage)
EUR: 150-200 MBOE
150-480 ACRE DRAINAGE
5-18 MILLION BARRELS OOIP
NOBLE
HORIZ
ACTIVITY
MORGAN
WATTENBERG: GAS CONDENSATE
45-58°
45
58 API Condensate
Horizontal (Core vs Non-Core)
18-25 MILLION BOE OOIP (650 AC)
YUMA
18
Copyright ©: EAI, Inc., 2011
Niobrara Play
Overall Activity Update
Update-2011
2011
Permit Activity Heating Up: 370 in Weld County, CO, 18 in Laramie County, WY (33 with
Cirque-Jonah Gas Silo redevelopment), 10 locations in Goshen County, WY. A dozen Niobrara
locations scatted throughout PRB-GGRB.
DJ Basin Play is Evolving: Expect horizontal development of Wattenberg gas-condensate area
will persist as an alternative to high density vertical development. Noble has the only core
area completion to date (Gemini well, Cum: 0.8 BCF and 1800 barrels condensate) and a
dozen locations in various lateral configurations. Anadarko (Kerr-McKee) has 10 locations.
Results Outside Core Wattenburg: Estimated 56 wells have been spudded outside the
Wattenberg Core (condensate) play. Comprise 3 to 4 groups of locations that have tested 3139° API crude with results available for 22 of these horizontal wells. IP: range from 20 BPD to
1558 BOPD. Best two operated by EOG (Jake 2-01H, Red Poll 10-16H).
Assessment to Date: Jury is out on the Niobrara crude play in NE Colorado – SE Wyoming.
Operators appear to be finding the same proportion of marginal wells (many) to economic
producers (few to date) which is typical of most resource plays. If these wells are indeed in
‘sweet spots’
p
then the operators
p
have yet
y to solve the reservoir-completion
p
puzzle.
p
Need to
cure an extremely rapid decline rate (same problem encountered in the 1990’s exploration).
Powder River-Niobrara Potential: PRB offers an equally broad range of potential targets for
Niobrara exploration with a high proportion being more gas prone. Chesapeake wells in
Converse county are encouraging
encouraging.
Niobrara Permit Activity
Roughly 300 horizontal permits have been filed for in Colorado and another 80 horizontal permits filed in SE Wyoming for testing of Niobrara objectives. At this point roughly 90 of these locations have been drilled or have a rig on them Results for these wells is limited to about 30 of the completions
have a rig on them. Results for these wells is limited to about 30 of the completions..
GOSHEN
PLATTE
EOG
CHSPKE
BANNER
SILO AREA
CIRQUE
ST MARYS
ST.
NOBLE (10)
KIMBALL
LARAMIE
SLAWSON
ANAKARKO
EOG
EOG
Jake, Critter Ck. &
Garden Ck. offsets
WELD
CHSPKE
NOBLE & PDC
Wattenberg Expansion
43° API
EOG
CARIZZO
NOBLE
WHITING
CTNTL
Source: Colo Geological Survey, Rocktalk, V13 Spring 2011.
MORGAN
Copyright ©: EAI, Inc., 2011
DJ Basin / Niobrara Production Outlook
Conservative Basis with Information Known To Date
DJ Basin liquids production is directly related to gas drilling activity, particularly at Wattenberg and will DJ
B i li id
d ti i di tl
l t dt
d illi
ti it
ti l l t W tt b
d ill
vary according to natural gas prices. Base production is comprised of condensate ranging from 45 to 55°
API. Niobrara crude is shown as speculative curves (Includes Weld County and Wyoming DJ Basin).
150
$10.00
F
Forecast
t
Niobrara Spec
CASES
P ro d u c tio n (M B P D )
100
A
Average %
%
96 – 99
‐14.6
00‐09
Increase 7.1%
$8.00
2010+
Condensate held flat
$7.00
$9.00
$6.00
Henry Hub
Natural Gas Price
$5.00
$4 00
$4.00
50
$3.00
Denver Julesburg Basin
0
$2.00
$
$1.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
5.724 17.17 22.59 27.97 28.02 23.61 21.1 18.94 16.92 15.15
NIOBRARA SPEC
0
NIOBRARA (BASE)
NIOBRARA (BASE)
6 652 20.78
6.652
20 78 35.89
35 89 37.35
37 35 39.53
39 53 36.71
36 71 29.32
29 32 25.11
25 11 20.4
20 4 17.23
17 23 14.66
14 66
D J Basin
30.4
31.3 33.7
33.5 40.8
41.2
41.6 40.7
53.5
53.2 51.8
Gas Price
3.0
5.0
8.4
6.9
6.8
8.0
4.5
6.1
7.5
6.8
51.2 50.7
50.2
49.7 49.2
48.7
48.2 47.8
47.3 46.8
$0.00
G a s P ric e (w ellh eaa d )
Hi t
History
Timeline
i li
Niobrara Production Data Through May 2011
Post 2009 horizontal completions Wyoming and Colorado by well
Only two wells stand out.
Source: WOGCC & COGCC monthly production databases
Vertical scale barrels per month
Normalized on first month of oil sales (Horizontal scale)
16000
SSDU 16‐4 (CONVERSE)
14000
ATLAS 1‐19H
CRITTER CK 4‐09H
12000
CRITTER CK 6‐12H
CRITTER CK 9‐15H
10000
SM ENERGY
SM ENERGY
ATLAS 1‐19H WELL
COMPLETED 2010
8000
ELMER 8‐31H
GARDEN CK 6‐11H
GEMINI 01‐99HZ
6000
JAKE 2‐01H DISC
CHSPKE
SPILLMAN DRAW UNIT
CONVERSE COUNTY
4000
GAS WELL
LONGHORN B3 36H
LONGHORN B3‐36H
LONGHORN B5‐36H
MOONSHINE 36‐11‐65H
2000
RED POLL 10‐16H
SIMS 7‐25 VERT CONVERSE
0
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20
Copyright ©: EAI, Inc., 2011
Bakken‐PRB‐Niobrara‐Canadian
Pushing through the Eastern RM Corridor
Generally RM represents higher end market values‐‐‐more insular from competition on both crude and product. Crude Generally
RM represents higher end market values more insular from competition on both crude and product Crude
flowing through Eastern Corridor can access Eastern WY‐CO refineries, back flow to Casper/SLC or move east to Holdredge/Wood River or Cushing
Bakken‐PRB‐DJ E t
Eastern RM RM
Corridor Access
Enbridge Portal reversal & Plains N. Bakken‐
Wascana Reversals to transport 75‐225 MBPD to Enbridge mainline
Enbridge ND Line
Expanded to 185 MBPD
in January 2011
in January 2011
Tesoro expansion by 10
MBPD‐2012
C
Major crude oil gathering
and distribution points
Pipeline capacity (MBPCD)
c
Butte/BFPL expanding to /
150/50 over 2011‐
13 period
Rail Export at 120‐150 MBPD early 2011 Constrained Pipeline Segments
RMP = Rocky Mountain Pl
RMP 120 MBPD
CAPY TO SLC
CAPY TO SLC
with new loop.
SLC / Rawlins runs down‐‐‐PL to LV for Refined product being completed to
Refined product being completed to Provide additional market outlet and increase runs
C
Platte at‐near capacity in near term it i
t
Exit Wyoming Capacity 145 MBPD White Cliffs to Cushing
Started up 6‐09
30 MBPD –can expand to 50 MBPD with HP
23
Copyright ©: EAI, Inc., 2011
Crude Supply-Market Dynamics
Canada-US Central Corridor-Gulf Crude Network
161
Bakken to RM Bakken to MW/MC
Eastern corridor
on pipeline
115
460
Lakehead &
Southern Access
435 MBPD
KEYSTONE
STARTUP 2010
KEYSTONE XL
TARGET 2013
Enbridge – Lakehead
SARNIA
LINE 6B
CHICAGO
623
500
590
340
Toldeo
BP
Express-Platte
Mustang
Spearhead
180
ChiCap
Lima
275
W
R
PATOKA
193
White Cliffs
219
VYCENTER
150
30
TEXAS PANHANDLE
BORGER
COP
CAPLINE
150
238
150
WICHITA
FALLS
Seaway
185
325
CUSHING
DRUMRIGHT
Exxon Mobil
Mid Valley
350
JAL
MIDLAND
ODESSA
WTG
335
CORSICANA
350
Seaway
LONGVIEW
Sunoco
lines x 3
1140
SHELL
Refineries
150
Pipeline Capacities, MBPD
Copyright ©: EAI, Inc., 2011
Williston and Niobrara Market Margins
1Q2011 Average Spot Prices – Posted Prices Net of Transportation
1Q2011 LLS – WTI spread grew dramatically as world crude prices responded to Middle East
il P
d prices
i
i l l llow making
ki ffor hi
h iincentives
i
hi to S
turmoil.
Posted
off Willi
Williston particularly
high
to ship
St.
James via rail. Cushing margins while lower still attractive. Clearing prices at coastal markets,
e.g. St. James LLS, determined by laid in world prices whereas Cushing North prices subject to
significant discounts from transportation, market and storage constraints.
ENBRIDGE - SPEARHEAD
TO CUSHING 4.70 – 4.90 $/BBL
13.30/ 161
ND SW
North
Besides St. James,
numerous other rail
markets
k t b
being
i
pursued
d
– Port Arthur, Houston,
Corpus Christi,
Bakersfield, Anacortes
Enbridge – Lakehead
14.50/
11
5
ND SW
South
to LLS
460
Lakehead &
Southern Access
SARNIA
LINE 6B
CHICAGO
623
500
590
340
Toldeo
BP
Express-Platte
WHITE CLIFFS
4 00/
4.00/
TO CUSHING
White Cliffs
5.70 $/BBL SemCrude
Spearhead
180
W
R
193
Mustang
ChiCap
275
Lima
PATOKA
219
DJ
30
TEXAS PANHANDLE
BORGER
150
325
CUSHING
DRUMRIGHT
FALLS
Seaw
way
WTI
93.98
WICHITA
COP
Cushing 185
RAIL TO ST. JAMES
7.00
CAPLINE$/BBL
150
Exxon Mobil
238
Mid Valley
$/Bbl
350
JAL
MIDLAND
ODESSA
WTG
335
CORSICANA
350
Seaway
Calculated as Platts spot minus posted price minus
transportation. Units: $/Bbl
LONGVIEW
Sunoco
1140
LLS
SHELL
104.17
lines x 3
$/Bbl
St. James
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Suite 310
Westminster, CO 80234
United States
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P: +1.303.469.4722
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EAI, Inc. Team Contributors to this Presentation
Resources & Production: Steve Fillingham Crude Transportation: Dipak Sarkar
Crude Transportation: Dipak Sarkar
Crude Quality and Supply Economics: Paul Rolniak Refinery Crude Slates and Qualities: Jeff Leto
Crude Supply‐Market Optimization: Evan Moran Refining & Logistics: Joseph Leto 1
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