Energy In-depth: Keystone’s replacement plus crude oil climbs higher

Editor’s note: Each Friday, Talk Business & Politics provides “Energy In-depth,” a round-up of energy and regulatory news.

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TRANSCANADA TO BUY U.S. PIPELINER COLUMBIA FOR $10 BILLION
Fresh off the Obama administration’s rejection of its Keystone XL pipeline proposal in the fall, TransCanada announced plans after the close of market Thursday (March 17) to acquire U.S.-based Columbia Pipeline Group Inc. in a deal worth more than $10 billion. Columbia now operates an approximate 24,000-kilometre (km) (15,000-mile) network of interstate natural gas pipelines extending from New York to the Gulf of Mexico, with a significant presence in the Appalachia production basin. If approved by Canadian and U.S. regulators, the deal would make the Canadian pipeline giant one of the largest regulated natural gas transmission companies, on par with Kinder Morgan, Enbridge and The Williams Companies.

Under the terms of the all-cash deal, unanimously approved by the board of directors of both companies, Columbia shareholders will receive $25.50 per common share, an 11% premium to Columbia’s closing stock price of $23 per share at the closing of market Wednesday on the New York Stock Exchange. The aggregate transaction value of nearly $13 billion, including the assumption of approximately $2.8 billion of debt. The deal is subject to Columbia shareholder approval and certain regulatory approvals.

CRUDE OIL PRICES TOP $40 A BARREL FOR FIRST TIME SINCE DECEMBER
Crude oil futures rose above $40 a barrel on the New York Mercantile Exchange on Thursday (March 17), a day after the Federal Open Market Committee held back on raising interest rates and the Organization of the Petroleum Exporting Countries (OPEC) announced plans to meet in Qatar with Russia and other non-OPEC oil producers to consider scaling back on global output to prop up the price of oil.

In Thursday’s session, West Texas Intermediate for April delivery closed at $40.20 a barrel, up $1.74 or 4.5%. The last time the U.S. benchmark crude traded at more than $40 a barrel was Dec. 3. International Brent crude settled in London at $41.54, up $1.21 or 3%.

EIA: FRACKING DRIVING NEARLY HALF OF TOTAL U.S. CRUDE OIL PRODUCTION
Based on the most recent available data from oil-producing states, the U.S. Energy Information Administration (EIA) estimates that oil production from hydraulically fractured wells now makes up about half of total U.S. crude output. Although hydraulic fracturing has been in use for more than six decades, it has only recently been used to produce a significant portion of crude oil in the U.S., allow oil and gas drillers to increase its production faster than at any time in its history.

Using well completion and production data from DrillingInfo and IHS Global Insight, EIA created a profile of oil production in the U.S. In 2000, approximately 23,000 hydraulically fractured wells produced 102,000 barrels per day (b/d) of domestic oil, making up less than 2% of the national total. By 2015, the number of hydraulically fractured wells grew to an estimated 300,000, and production from those wells had grown to more than 4.3 million b/d, making up about 50% of the nation’s total oil output.