Oil Supply

More Than 440,000 Global Oil, Gas Jobs Lost During Downturn

18 Feb 2017   Oil Supply

A report from Houston-based consulting firm Graves & Co. shows that the industry has suffered more than 440,000 jobs lost since the beginning of the most recent downturn. The recent years of depressed oil prices and industry uncertainty have been the source of strict CAPEX (capital expenditures) cuts for oil and gas companies worldwide. Layoffs came in droves, much to the detriment of the industry’s workforce. As of Feb. 10, 2017, the total number of oil and gas layoffs around the globe is 441,371, according to data compiled by Houston-based consulting firm Graves & Co. In a Feb. 15 report, John Graves, president of Graves & Co., noted the reduced pace of industry job cuts over the past few months … still, additional cuts may be announced. “There has been no recovery in offshore and international oil and gas activity with the price of crude in the $50 range […]

Gasoline Glut in New York Has Traders Sending Cargoes Abroad

18 Feb 2017   Oil Supply

The biggest gasoline market in the U.S. is bursting at the seams. Traders are lining up to export gasoline and diesel from New York Harbor, an area that normally relies on fuel imports from Europe and eastern Canada, shipping data compiled by Bloomberg show. While at least 6 cargoes that were headed to New York from Europe in January and early February were diverted to the Caribbean or the U.S. Gulf Coast, that wasn’t enough to stem the oversupply building up in terminals along the Eastern Seaboard. Record-high inventories in the region are now pushing prices low enough to turn the typical trade flow on its head. “We have been exporting out of the New York Harbor, but clearly not enough, so that’s putting pressure on the products,” said Robert Campbell, head of oil products research for Energy Aspects, by phone from New York Thursday. At least two million […]

Worst Gasoline Glut in 27 Years Could Be Oil Rally’s Nemesis

18 Feb 2017   Oil Supply, USA

A gasoline glut brought on by drivers buying less at filling stations is emerging as one of the biggest threats to the yearlong oil-price rally. U.S. gasoline consumption plummeted last month, nearly matching a 15-year low, government estimates show. It fell to as low as 8.2 million barrels a day, averaged over the four-week period ended Jan. 27. January sales at the pump fell 4.4% from a year ago, according to data from the…

U.S. shale oil braces for the unfamiliar in 2017: inflation

18 Feb 2017   Shale Oil

U.S. shale producers are facing their first production cost increase in five years in 2017 as industry activity picks up and energy service providers hike fees to take a bigger share of the profits generated by higher oil prices. Drilling innovations over the past decade have generated a dizzying reduction in the cost of pumping oil from shale formations across the United States – the world’s largest energy consumer – triggering an energy revolution and a production boom. When that boom ended with the onset of a two-year global price war in 2014, shale producers responded with even deeper cost cuts. Technological breakthroughs allowed producers to wring more oil from the rock and halved the per-barrel price needed to turn a profit. But […]

Peak Supermajors

18 Feb 2017   -, Peak Oil

Hey everybody, Last Sunday I put together a quick presentation on the most recent oil & gas production data for the “supermajors” (Shell, Total, BP, Chevron, ExxonMobil): Introduction Today I would like to introduce my “Peak Supermajors” project. The goal of this project is to answer the question “when will we reach peak oil” by studying the production and financial health of the world’s largest oil companies. Because oil is a finite resource, its daily global production will eventually reach a peak. By measuring when individual oil companies reach peak oil, I hope to bring us closer to answering the question “when will we reach peak oil?” I am beginning my project by analyzing the largest publicly-traded companies: the “ supermajors “. These 5 companies – BP, Chevron, ExxonMobil, Royal Dutch Shell and Total – produce nearly 20% of the world’s oil and gas. They are mostly descendants from […]

Exploring Hydrocarbon Depletion

17 Feb 2017   Peak Oil

Technological advances and learning-by-doing have made U.S. shale oil profitable even at $55/barrel. Just ten years ago shale oil was expensive. Global oil prices spiked to $135/barrel in 2008 but shale oil didn’t and couldn’t respond. Now, at only $55/barrel, U.S. oil producers are going all in, announcing billions of dollars of increased investment, particularly in Texas and North Dakota, and energy experts like Daniel Yergin are expecting U.S. production to increase this year by more than 500,000 barrels per day or about 6%. This remarkable transformation is a perfect example of learning-by-doing. Cost reductions in solar, wind, and batteries get a lot of attention. But fossil fuel producers also learn from experience, and the pace of learning in U.S. shale oil over the last couple of years has been impressive. Recent research by Thom Covert and others help us […]

Energy Companies Face Crude Reality: Better to Leave It in the Ground

17 Feb 2017   Peak Oil

A new era of low crude prices and stricter regulations on climate change is pushing energy companies and resource-rich governments to confront the possibility that some fossil-fuel resources are likely to be left in the ground. In a signal that the threat is growing more serious, Exxon Mobil Corp. is expected in the coming week to disclose that as much as 3.6 billion barrels of oil that it planned to produce in Canada in the next few…

Is The Bakken A Bust?

17 Feb 2017   Shale Oil

North Dakota has released December production data for the Bakken and for all North Dakota . They were a little shocking. (Click to enlarge) Bakken production down 86,150 barrels per day 895,330 bpd. North Dakota production down 92,029 bpd to 942,455 bpd. It was noted that this the largest decline ever in North Dakota production. But it should not be overlooked that the October increase in production was also the largest ever increase in North Dakota production. From the Director’s Cut Oil Production November 31,034,520 barrels = 1,034,484 barrels/day December 29,216,093 barrels = 942,455 barrels/day (preliminary) (all-time high was Dec 2014 at 1,227,483 barrels/day Gas Production November 52,785,707 MCF = 1,759,524 MCF/day December 47,679,872 MCF = 1,538,060 MCF/day (preliminary) (all-time high was Nov 2016 at 1,759,524 MCF/day) Producing Wells November 13,520 December 13,337 (preliminary) (all-time high was Nov 2016 at 13,520) 11,449 wells or 86% are now unconventional Bakken […]

How Long Can The Permian Craze Continue?

17 Feb 2017   Shale Oil

The two great dueling forces in the world oil market, OPEC and American production, have created an atmosphere of uncertainty, as prices hover above $50. Last week the EIA reported another record inventory and an increasing rig count , while analysts point to a possible crisis as a market held aloft by buoyant predictions of OPEC cuts slowly faces up to insufficient demand. Crucial to this situation is the state of the U.S. patch, particularly the Permian Basin, which since late last year has been the focus of recovering production. The EIA data for the field is good, with new well production rising sharply and overall production of oil and gas rising sharply in 2017. While some speculate the bubble may burst , prospects for companies already invested in the Permian look positive, even if production costs are rising. The Permian has seen the highest increase in rig count […]

U.S. Crude Inventories Reach Record High After EIA Reports Significant Build

16 Feb 2017   Oil Supply, USA

For the third week in a row the Energy Information Administration (EIA) has reported an increase in commercial crude oil inventories of 9.5 million barrels, to a total of 518.1 million barrels – exceeding the seasonal limit. The report came a day after the API estimated commercial inventories had jumped by 9.94 million barrels . The news is bound to cause worry among OPEC members who are being made painfully aware by U.S. shale boomers that the production cut agreement agreed to in November was a windfall for them – a windfall that they will make the best of while it lasts. Though prices started the week on the rise, boosted by the latest positive update from OPEC, including the IEA praising the cartel for its 90-percent compliance rate, the API figures partially offset the rise and now the EIA figures might offset the rest. The weekly inventory reports […]

Artificial Intelligence To Reveal The Biggest Secret In Oil

14 Feb 2017   Oil Supply

The EIA is, and will continue to be, the gold standard for reporting U.S. oil inventories, and the administration’s weekly reports have the power to immediately swing crude oil prices depending on builds or draws in oil stocks. But while the U.S. is a transparently reporting country, other nations are not revealing oil stocks data, or are rarely reporting—at best—opaque figures in which the markets have little faith. No one really knows how much oil the countries around the world are storing, creating uncertainty in the supply side of the oil markets. But one of the hottest new technologies may shed more light on oil storage around the globe, especially in countries that are keeping inventory figures to themselves. The tech is artificial intelligence (AI) – and an unlikely collocation to put in a sentence with oil and inventories. Yet, U.S. geospatial analytics company Orbital Insight has been using […]

U.S. shale oil output to rise in March by 80,000 bpd: EIA

14 Feb 2017   Shale Oil

U.S. shale oil production for March is expected to rise by the most in five months, government data showed on Monday, as energy companies boost drilling on the back of oil prices that are hovering over $50 a barrel. March oil production is forecast to rise by 79,000 barrels per day to 4.87 million bpd, according to the U.S. Energy Information Administration’s drilling productivity report. That would be the biggest monthly rise since October. In the Permian shale play of West Texas and New Mexico, output is forecast to rise by more than 70,000 bpd to 2.25 million bpd, in what would be the biggest monthly rise since January 2016. Meanwhile, Eagle Ford production in Texas is expected to rise by 14,000 bpd to 1.08 million bpd, the first monthly increase since December 2015, EIA data showed. In North Dakota’s Bakken field, production is forecast to fall by nearly […]

More drilling permits issued in Texas

14 Feb 2017   Shale Oil, USA

The number of new drilling permits issued in Texas last month was more than 80 percent higher than the previous year, state data show. Texas is the No. 1 oil producer in the state and accounts for about half of all the drilling activity in the country. Preliminary data from the Railroad Commission of Texas, the state oil and gas overseer, show 81.5 million barrels of oil produced in November, about 1 million barrels less than the previous month. The Texas energy sector, as well as the state economy , was under pressure for most of last year because of a downturn in crude oil prices. Since late last year, crude oil prices recovered in response to a decision from the […]

Passing On The Permian: Has The Bubble Grown Too Big?

14 Feb 2017   Shale Oil

Has the Permian Basin become too hot? More companies and enormous sums of capital continue to flood into West Texas to take advantage of the most prolific shale basin in North America. Rig counts are showing no sign of slowing down and new deals in the Permian are announced on what seems like a weekly basis. However, will the Permian bubble deflate? ExxonMobil dumped more than $6 billion in January to double its holdings in the Permian, as the oil supermajor decided to ramp up shale drilling instead of taking on more complex megaprojects offshore. But in the past, ExxonMobil has made a play for shale assets at the top of the market. In 2009, Exxon paid more than $30 billion for XTO Energy, a Texas shale gas driller, in what was widely seen in retrospect as an expensive play on a market that had already peaked. With that […]

Oil and gas discoveries dry up to lowest total for 60 years

13 Feb 2017   Oil Supply

Discoveries of new oil and gasfields have dropped to a fresh 60-year low, as companies put a brake on exploration and large fields have become harder to find.  There were only 174 oil and gas discoveries worldwide last year, compared to an average of 400-500 per year up until 2013, according to IHS Markit, the research group.  The slowdown in exploration success shows that the world is likely to become increasingly reliant on “unconventional” resources such as US shale oil and gas to meet demand for energy in future decades.  The typical time from discovery to production is five to seven years, so a shortfall in oil and gas discoveries now implies tighter supplies in the next decade.  However, there are signs of a tentative upturn in conventional exploration this year, with some companies including Statoil of Norway planning to step up drilling activity.  Discoveries hit a six-decade low in 2015, and then dropped again last year to about 8.2bn barrels equivalent of oil and gas. The slowdown reflects both the cyclical cuts in exploration made by companies struggling to stay afloat after the drop in oil and gas prices since 2014, and the structural shift in the industry towards onshore shale and similar reserves, especially in North America.

Oil overhang points to need for extended OPEC output cuts

11 Feb 2017   Oil Supply, Prices

An OPEC-led production cut may well be accelerating a drawdown in global oil stocks that began last year, but implementing the reduction for just six months means the producer group will fall short of achieving its objective of rebalancing the market. The Organization of the Petroleum Exporting Countries and non-OPEC producers in December reached their first deal since 2001 to curtail oil output jointly, by around 1.8 million barrels per day. In the months leading up to the deal and after it was struck, OPEC ministers said tackling an overhang in crude and oil product inventories that has depressed oil prices for over two years was one of their main objectives. So far, OPEC kingpin Saudi Arabia, which is contributing the biggest chunk of the cut, has said the deal does not need to […]

Why The Huge Inventory Build Didn’t Crash Oil Prices

11 Feb 2017   Oil Supply

WTI snapped out of a two week coma on Wednesday trading to a low of $51.22 following an API report revealing a 14m bbl crude oil build which was later confirmed by EIA data. Technicians feared that a break below recent support near $51.50 and a spike in US crude stocks to within 3m bbls of their all-time high meant that oil’s ‘5 handle’ could be in jeopardy. A closer look at the data, however, brought relief to the market and a bounce back to the $53 mark with traders realizing that the second largest weekly crude oil build on record may not have been the fundamental disaster that the algorithmic traders had pounced on. – Rather than signaling a renewed supply/demand apocalypse, the inventory build appears to be driven by trading flows revealed in three different trends occurring in PADD III where 11m of the 14m bbl […]

EIA: Short-Term Energy Outlook

11 Feb 2017   Oil Supply

Forecast Highlights

Global liquid fuels

  • Implied global petroleum and liquid fuels inventories are estimated to have increased by 0.8 million barrels per day (b/d) in 2016. EIA expects the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million b/d in 2017 and builds averaging 0.2 million b/d in 2018. The revised forecast, which reduces average inventory builds from last month’s outlook, resulted from changes to estimates of historical global liquid fuels consumption that created a higher base for consumption during recent years and the forecast period. See International Data Revisions and the STEO Forecast for more discussion about this change.
  • U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S crude oil production is forecast to average 9.0 million b/d in 2017 and 9.5 million b/d in 2018.
  • Benchmark North Sea Brent crude oil spot prices averaged $55/barrel (b) in January, a $1/b increase from December. This price was $24/b higher than the January 2016 average, and it was the highest monthly average for Brent spot prices since July 2015.
  • EIA forecasts Brent crude oil prices to average $55/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average about $1/b less than Brent prices in 2017. The NYMEX contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a range from $45/b to $65/b encompasses the market expectation of WTI prices in April 2017 at the 95% confidence level.
  • U.S. regular gasoline retail prices are expected to decrease from an average of $2.35/gallon (gal) in January 2017 to an average of $2.27/gal in February and then rise to $2.33/gal in March. U.S. regular gasoline retail prices are forecast to average $2.39/gal in 2017 and $2.44/gal in 2018.

Natural gas

  • U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.3 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, which was the first decline since 2005. Natural gas production in 2018 is forecast to increase by an average of 4.1 Bcf/d from the 2017 level.
  • In January, average Henry Hub natural gas spot prices fell by 29 cents per million British thermal units (MMBtu) from December levels to $3.30/MMBtu. Mild January temperatures, which were the warmest since 2006, contributed to lower prices.
  • Increasing capacity for natural gas-fired electric generation, growing domestic natural gas consumption, and new export capabilities contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.43/MMBtu in 2017 to $3.70/MMBtu in 2018. NYMEX contract values for April 2017 delivery traded during the five-day period ending February 2 suggest that a price range from $2.42/MMBtu to $4.38/MMBtu encompasses the market expectation of Henry Hub natural gas prices in April 2017 at the 95% confidence level.

At $60,000 an Acre, the Permian Basin May Be Too Ritzy

11 Feb 2017   Shale Oil

Record prices for drilling rights in the Permian Basin, the most fertile U.S. shale field, are prompting oil companies and private equity investors to look elsewhere for the next big gushers. Explorers eager to tap the basin’s mile-thick stack of oil-soaked rock layers have paid as much as $60,000 an acre. That marks a 50-fold explosion in deal prices over four years, according to Wood Mackenzie Ltd. It also pushes the cost 10 times higher than in the Bakken of North Dakota. The backlash is just beginning. BP Plc, the U.K.-based supermajor, has focused its shale-drilling efforts on the other end of the hemisphere, in Argentina’s Vaca Muerta region, while Sanchez Energy Corp. has targeted the Eagle Ford of South Texas and Newfield Exploration Co. has acquired rights in the Stack field in northern Oklahoma. As far as the Permian is concerned, “companies that don’t already have a foothold […]

2017 Offshore Rig Market Not in for Much Improvement

11 Feb 2017   Offshore

In 2017, the offshore rig market is not expected to recover to the levels some had forecasted. In 2017, the offshore rig market is not expected to recover to the levels some had forecasted and many were hoping for. Although the Nov. 30, 2016 OPEC production cut agreement was a positive step, it is still too early in the process for a rig demand increase to materialize. As for price forecasts, in its February 2017 Short-Term Energy Outlook, the Energy Information Administration (EIA) predicted Brent to average $55 in 2017 and $57 in 2018. Offshore drilling spending fell around 30 to 35 percent in 2016 and is also forecast to decline in 2017, albeit not as much. As the offshore rig market continues its worst slump, maybe ever, operators and rig owners have continued to cut spending. In addition to administrative staff reductions, rig crews have also been let […]

US, Canada Producers Continue to Dominate Shale Production

11 Feb 2017   Shale Oil

Despite having just one-fifth of the world’s shale resources, advantages in the US and Canada mean the countries will continue to monopolize the market, according to a new Raymond James report. Shale producers in the United States and Canada worried their market share will be absorbed by foreigners can rest easy. Your corner on the market is safe – at least for the next few years. While there is little doubt that shale resources exist in abundant quantities around the world, a variety of hurdles preclude their development, analysts at Raymond James & Associates (RayJa) said in a recent report. “The tricky aspect of the emerging plays will be how to achieve cost-effective scale-up, bearing in mind the hurdles in technical know-how, regulatory barriers and other issues,” they wrote. “Shale outside North American may become relevant vis-à-vis global oil and gas supply (and thus prices) beyond 2020, but over […]

Artificial Intelligence Tool Shines Light on Oil Storage Market

10 Feb 2017   Oil Supply

A form of AI technology is being used to provide greater transparency in the oil market by detecting unknown oil storage tanks. A form of artificial intelligence (AI) is now being utilized to make the global oil market more transparent. Using a form of AI called convolutional neural networks (CNN), Palo Alto, Calif.-based Orbital Insight can detect oil storage tankers previously unknown to existing data sources. The company gathers imagery from a number of satellite partners, then utilizes cloud computing to analyze images and identify not only oil storage tankers, but traffic activity in retail store parking lots, global water reserves and agriculture. It is also used to map poverty on a regional basis. Tracking oil storage tanks allows for greater understanding of the global supply chain. This understanding, in turn, enables better decision-making, Kevin O’Brien, chief business officer at geospatial Big Data company Orbital Insight, told Rigzone. Last […]

Short-Term Energy Outlook

10 Feb 2017   Oil Supply

Forecast Highlights Global liquid fuels Implied global petroleum and liquid fuels inventories are estimated to have increased by 0.8 million barrels per day (b/d) in 2016. EIA expects the oil market to be relatively balanced in 2017 and 2018, with inventory draws averaging 0.1 million b/d in 2017 and builds averaging 0.2 million b/d in 2018. The revised forecast, which reduces average inventory builds from last month’s outlook, resulted from changes to estimates of historical global liquid fuels consumption that created a higher base for consumption during recent years and the forecast period. See International Data Revisions and the STEO Forecast for more discussion about this change. U.S. crude oil production averaged an estimated 8.9 million b/d in 2016. U.S crude oil production is forecast to average 9.0 million b/d in 2017 and 9.5 million b/d in 2018. Benchmark North Sea Brent crude oil spot prices averaged $55/barrel (b) […]

Wall Street Pouring Money Back Into Oil And Gas

10 Feb 2017   Shale Oil

Despite the near record increase in U.S. oil inventories last week – an increase of 13.8 million barrels – oil prices traded up on February 8 and 9 as traders pinned their hopes on a surprise drawdown in gasoline stocks, which provided some evidence of stronger-than-expected demand. The abnormal crude stock increase took inventories close to 80-year record levels at 508 million barrels, and is another bit of damming evidence that should worry oil bulls. But the oil markets were not deterred. In fact, that has been a defining characteristic of the market in recent weeks – optimism even in the face of some pretty worrying signals about the trajectory of the market “adjustment” process. More signs of optimism abound. Wall Street is pouring the most money into oil and gas companies in the U.S. since at least 2000, according to Bloomberg. In January alone, drillers and oilfield service […]

Suncor Output Hits Record With Oil-Sands Unit at Full Speed

10 Feb 2017   Tar Sands

Suncor Energy Inc.’s production rose to a record last quarter after the oil-sands giant took control of the Syncrude processing unit and put it at full throttle. Canada’s biggest energy company produced 738,500 barrels of oil equivalent a day in the period, up from 582,900 in the previous quarter, according to an earnings report Wednesday. The jump was largely due to its increased stake in the Syncrude upgrader, which processes bitumen mined in northern Alberta into light crude, and to boosting the utilization of the unit to 102 percent of nominal capacity, from 73 percent a year earlier. Suncor has slashed costs to weather the industry downturn and is now benefiting from a 76 percent rebound in oil prices over the past year as the Organization of Petroleum Exporting Countries and other major exporters curtail production. The company’s output has risen after it completed the acquisition of Canadian Oil […]

Suncor Output Hits Record With Oil-Sands Unit at Full Speed

9 Feb 2017   Canada, Tar Sands

Suncor Energy Inc.’s production rose to a record last quarter after the oil-sands giant took control of the Syncrude processing unit and put it at full throttle. Canada’s biggest energy company produced 738,500 barrels of oil equivalent a day in the period, up from 582,900 in the previous quarter, according to an earnings report Wednesday. The jump was largely due to its increased stake in the Syncrude upgrader, which processes bitumen mined in northern Alberta into light crude, and to boosting the utilization of the unit to 102 percent of nominal capacity, from 73 percent a year earlier. Suncor has slashed costs to weather the industry downturn and is now benefiting from a 76 percent rebound in oil prices over the past year as the Organization of Petroleum Exporting Countries and other major exporters curtail production. The company’s output has risen after it completed the acquisition of Canadian Oil […]

Wall Street’s Love Affair With Energy Heats Up as Rigs Soar

9 Feb 2017   Shale Oil

Wall Street is throwing the most money at U.S. energy companies since at least 2000 amid growing confidence that the industry is emerging from the worst downturn in a generation. Energy firms raised $6.64 billion in 13 equity offerings in January, drawn in by a rich combination of oil prices consistently above $50 a barrel and a rush to drill that’s doubled the rigs in use in the U.S. and Canada since May. The biggest change from last year: oilfield servicers that provide the rigs, fracking equipment and sand used by drillers. The most beaten-down sector during a two-year price rout, servicers made up 22 percent of the equity totals in January, compared with 5 percent all last year. “The mood is absolutely different,” Trey Stolz, an analyst in New Orleans at the investment banking firm Coker & Palmer Inc., said by phone. “Go back to a year ago […]

Permian Drilling Costs Surge: Are The Days Of Cheap Oilfield Services Over?

9 Feb 2017   Shale Oil

It was only a matter of time before drilling, fracking, and oilfield service providers for the oil and gas industry started raising their prices to reflect the improving prospects for their clients. Now the time has come, and drillers and frackers are asking much higher prices for their services; according to a CNBC report , the cost of fracking per well in some cases shot up by 50 percent between bidding and executing. We wrote about this last month, when a Wood Mac report warned that 2017 would be tough for oilfield service providers, and things would only start looking up in 2018. Yet, it seems that the rush to the Permian will help relieve many drillers and frackers of their earlier hardships. The Permian is currently the top spot for shale oil and gas. Everyone is buying acreage there and everyone is optimistic, not least because of the […]

U.S. crude stocks surge, gasoline draws down unexpectedly: EIA

9 Feb 2017   Oil Supply

U.S. crude stockpiles surged last week, driven by a big rise in imports and inventory build at the key oil hub at Cushing, Oklahoma, while gasoline drew down unexpectedly, the Energy Information Administration said on Wednesday. Crude inventories USOILC=ECI were up 13.8 million barrels in the week to Feb. 3, compared with expectations for an increase of 2.5 million barrels. Crude imports USOICI=ECI jumped, rising 1.1 million barrels per day, with a big increase in imports at the Gulf Coast, where crude stocks rose by 10.9 million barrels, the largest weekly rise on record, to 267.6 million barrels. That figure is also a record. Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures USOICC=ECI rose 1.1 million barrels, EIA said. Demand for the feedstock slipped as refinery crude runs USOICR=ECI fell 54,000 bpd and refining utilization rates USOIRU=ECI edged down 0.5 percentage point to 87.7 percent […]

IEA does not foresee oil demand peaking soon, Birol says

8 Feb 2017   IEA, Oil Supply

The International Energy Agency (IEA) does not expects oil demand to peak any time soon due to rising consumption in developing economies, Director Fatih Birol said on Monday. Birol also warned that oil markets could enter a period of high volatility unless companies develop new projects after two years of sharp drops in investments sparked by low oil prices. “We do not see in the near and medium terms oil products can be substituted by other fuels. More than one third of growth comes from trucks in developing Asia… We do not subscribe to oil demand peaking anytime soon,” Birol said at the GE Oil and Gas annual meeting in Florence, Italy. “If there are no major new major projects this year, it will be very […]

Expensive Middle East Crude Could Lose Market Share To U.S. Shale

OPEC’s production cuts have put a floor under oil prices, at least for now. The resulting reduced supplies have also boosted the price of Middle East crude grades, and increased the spread between WTI and Brent. WTI is now trading at a discount of more than $2.20 compared to Brent. The current price differentials have made flows of U.S. crude oil to Asia commercially profitable after the Saudi-led production cuts resulted in higher Dubai and Oman benchmark prices against the U.S. benchmark WTI and the Brent benchmark. Therefore, commodity traders and oil supermajors are taking advantage of this arbitrage window to send more crude oil to the region with the world’s highest demand – Asia – which is the traditional stronghold of Middle East crude oil exports. But Middle Eastern exporters have been very carefully selecting which buyers to cut off as part of the OPEC output reduction, and […]

It’s Time For Big Oil To Embrace The Digital Age

8 Feb 2017   Oil Supply

The 2014 oil price bust very quickly changed the agenda of the oil industry, prioritizing efficiency as a tool of keeping costs down. This emphasis on efficiency was the best outcome of the crisis that pushed the larger part of the industry into survival mode. Now the crisis is over, or at least sector players have more or less become used to the new price normal, and growth is once more on the agenda. The industry’s best pal in this new stage of its evolution seems to be digital technology: connected devices, the cloud, and data analytics. An earlier piece from Oilprice.com highlighted the potential of cloud computing and the challenges that the oil industry faces with its adoption, such as the critical importance of data protection due to the sensitive nature of much of the information an oil company handles. The benefits, however, seem to outweigh the risks, […]

Offshore Drillers Still Seeking Recovery Enjoyed by Shale

8 Feb 2017   Offshore, Shale Oil

While oil drillers in US shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. (Bloomberg) – While oil drillers in U.S. shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. U.S. offshore operators like Diamond Offshore Drilling Inc. and Atwood Oceanics Inc. are down more than 15 percent in the last month, as companies focus on onshore oil that reaps better returns. With oil trading near $53 a barrel, firms are looking toward booming plays like the Permian Basin in West Texas and the Scoop and Stack formations in Oklahoma, according to Marc Edwards, Diamond Offshore’s chief executive officer. “From an operator perspective, they still have choices as to how they deploy their capital. And, of course, […]

Rise In Nationalism Could Set Oil Industry Up For A Surprise

7 Feb 2017   Oil Supply

Much of this week’s resource news was driven by politics. The biggest development being the Philippines’ mine ban, with protectionist moves in U.S. oil and gas also having critical implications for investors, end users, and project developers. And there’s a common thread to both these stories. Nationalism. Much has been written the last year on the rise of nationalistic parties and leaders around the global. With big implications for defence, trade and security. But nationalism is also impacting energy and mining. A year ago, no one predicted the Philippines would install a staunch environmentalist as head of mining — the way President Rodrigo Duterte did almost immediately after his election. A big motivation for Duterte is showing outside interests who’s boss inside Philippines borders. The president has little love for foreign mining companies, which are some of the biggest international investors in the Philippines. That’s turned into a major […]

A Primed Pump: Midstream Prepared for the Permian’s Pinch Point

7 Feb 2017   Shale Oil

With hundreds of thousands of barrels’ worth of crude oil pipeline announced during recent weeks, the midstream sector proves it’s planned ahead for the Permian Basin’s production recovery. This is the third story in a series of Rigzone’s “A Primed Pump,” an analysis of the Permian Basin in 2017. To view the second story, click here . As rig rage drove up the U.S. count to a level not seen in years, production in the prolific Permian Basin entered 2017 under the shadow of a bottleneck that threatened to choke the flow of all that black gold. But as luck would have it, the midstream sector saw that coming. During January alone, midstream companies shared their expansion plans to increase capacity by more than 300,000 barrels per day (bpd), hauling hydrocarbons from the Permian Basin. Analysts had forecast production increases would fill incremental capacity, and create problems for producers […]

Offshore Drillers Are Still Seeking Recovery Enjoyed by Shale

7 Feb 2017   Offshore

While oil drillers in U.S. shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. U.S. offshore operators like Diamond Offshore Drilling Inc. and Atwood Oceanics Inc. are down more than 15 percent in the last month, as companies focus on onshore oil that reaps better returns. With oil trading near $53 a barrel, firms are looking toward booming plays like the Permian Basin in West Texas and the Scoop and Stack formations in Oklahoma, according to Marc Edwards, Diamond Offshore’s chief executive officer. “From an operator perspective, they still have choices as to how they deploy their capital. And, of course, I think, we all understand that right now competing with the unconventional place is quite difficult from a deepwater perspective,” Edwards said. “In the short run, if oil stays in a range […]

U.S. East Coast Has a Growing Appetite for Foreign Oil

7 Feb 2017   Oil Supply, USA

U.S. East Coast refineries, which have thrived for a few years on a boom of production from the Bakken shale play in North Dakota and eastern Montana, are increasingly looking abroad to supply their needs. Last year through November, the region imported 884,000 barrels a day, which would be the highest full-year total since 2011, data from the U.S. Energy Information Administration show. Rising supplies overseas made imported oil cheaper than domestic for the first time since 2013, data from the U.S. Energy Information Administration show. The price switch opened the doors for refineries like PBF Energy Inc., Philadelphia Energy Solutions and Phillips 66 to boost imports, says Andy Lipow, president of Lipow Oil Associates LLC in Houston. He said the new Dakota Access Pipeline, one of the energy projects supported by President Donald Trump, will make the East Coast even more reliant on imports. The 1,172-mile line developed […]

BP may ‘incrementally’ increase U.S. shale portfolio: CEO

BP is looking at ways to incrementally increase its footprint in U.S. shale oil and gas production, its Chief Executive Officer Bob Dudley said on Tuesday. Dudley said the company will use “a lot of discipline” in investments in the sector as asset prices are high. Talking to analysts after reporting its 2016 results, Dudley also said the British oil and gas company was considering giving the green light to several projects around the world, including in Oman, Trinidad and Tobago and India. (Reporting by Ron Bousso; editing by Jason Neely)

Signs of Shift in Oil Balance Draw Investors Back In

6 Feb 2017   Oil Supply, Prices

A closely watched indicator in the oil market is signaling that a supply glut may be easing, a development that could help boost crude prices. This market gauge refers to the relationship between current and future oil prices. For more than two years, the price of oil delivered in the future has been higher than the spot price—a market condition…

Will Trump’s Border Tax Plan Include A Loophole For Mid-East Allies?

A border adjustment to income tax that will see imports in the U.S. become more costly may need to be, well, adjusted, lest the country loses some key allies in the Middle East, including its second-largest foreign supplier of crude, Saudi Arabia. Aimed at strengthening the dollar and generating money for the construction of the notorious border wall with Mexico, the income tax adjustment stipulates that businesses will have to pay income tax on products sold in the United States. At the moment, income tax is due on products made in the country when products are sold overseas. Now, while this is great news for exporters, since they won’t have to pay income tax on goods they sell in, say, Europe, it is certainly not good news at all for importers, and not just importers of foodstuffs from Mexico, which are bound to suffer from the adjustment. No, the […]

U.S. oil rig count rises to highest since October 2015: Baker Hughes

4 Feb 2017   Shale Oil, USA

U.S. energy companies added oil rigs for a 13th week in the last 14, extending a nine-month recovery as drillers take advantage of crude prices that have held mostly over $50 a barrel since OPEC agreed to cut supplies in late November. Drillers added 17 oil rigs in the week to Feb. 3, bringing the total count up to 583, the most since October 2015, energy services firm Baker Hughes Inc said on Friday. During the same week a year ago, there were 467 active oil rigs. Since crude prices first topped $50 a barrel in May after recovering from 13-year lows last February, drillers have added a total of 267 oil rigs in 32 of the past 36 weeks, the biggest recovery in rigs since a global oil […]

A Primed Pump: Depleted Labor Force Squeezes Permian Production

4 Feb 2017   Shale Oil

Producers angling to produce more crude oil at higher, stable prices must replenish their workforces to take advantage of the low-key rally, analysts say. This is the second half of Rigzone’s “A Primed Pump,” an analysis of the Permian Basin in 2017. To view the first story, click here . Now that oil prices are stable and above $50 per barrel, the energy industry’s depleted workforce is being called back into the field – but there are far fewer candidates with an ear to the ground. As many as 350,000 oilfield workers lost their jobs during the downturn, which stretched beyond two years in a much lower for much longer down cycle. But the U.S. rig count is on the upswing, led by a frenzy in the Permian Basin, and companies need bodies at the wells. Those companies that recognize its time to staff up will likely find the […]

A Primed Pump: Can the Mighty Permian Basin Live Up To The Hype?

3 Feb 2017   Shale Oil

Supermajors and independents alike scramble for acreage in the prolific Permian Basin as rigs counts increase and crude oil prices stabilize. During the oil and gas industry’s last two dismal years, the Permian Basin stood apart in an apparent “one basin recovery” in which money could be made at $30 per barrel oil. With price stability now in the low- to mid-$50s, the basin has become that much more attractive – luring capital spending, rigs and jobs. And perhaps, even a more widespread recovery. Indeed, analysts at Barclays say operators can breakeven on average in the play at $43 per barrel. In the upper and middle portions in Midland, Martin and Howard counties, the breakeven price may be as low as $35 per barrel. Double-digit growth is achievable at prices between $45 and $50 per barrel, Barclays said. During a sustained period of low prices, most M&A activity migrates […]

The 150,000 Oil Jobs That May Never Come Back

3 Feb 2017   Oil Supply

The political discourse last year has largely been dominated by the absence of jobs and wage growth in the blue collar space. For many blue collar workers, the energy sector offered one of the few respites from an otherwise sloppy job market. The oil price collapse has changed that reality. Since oil prices started falling a couple of years ago, energy firms have automated many repetitive, dangerous, and expensive tasks, which in turn has meant fewer blue collar jobs in the space. Products such as those from National Oilwell Varco automate the process of doing tasks like connecting hundreds of segments of drill pipe as they are shoved through miles of ocean water and oil-bearing rocks. Bloomberg estimates that the oil price collapse eliminated 440,000 jobs, and anywhere from one-third to one-half of those jobs may never come back. The world’s biggest oil services companies – Schlumberger, Haliburton, and […]

Is Era of Oil and Gas Megaprojects Over?

2 Feb 2017   Oil Supply

To survive the lower-for-longer price market, oil and gas companies need to rethink their strategies for major offshore projects. With oil prices still trading around the $50/barrel mark, oil and gas companies will likely revisit costly field development projects, as BP plc did late last year with Mad Dog 2 development project . The company was able to reduce project costs through system optimization, collaboration with co-owners, simplification of the design using industry-led solutions and competitive bidding to capture deflationary pricing. BP also changed the development concept which can take advantage of standardized designs, BP spokesperson Jason Ryan told Rigzone. The Mad Dog 2 design now looks more similar to field development projects pursued in the past, Caitlin Shaw, research director with Wood Mackenzie, said. Does BP’s design signal the end of the oil and gas megaproject era? For the most part, yes, industry insiders told Rigzone. Megaprojects, particularly […]

Top 10 Bankruptcies Of 2016 Feature 9 Energy Firms

2 Feb 2017   Shale Oil, USA

Low oil prices and the distress of the solar, coal, and oil and gas producers resulted in nine energy firms making the top 10 of public company bankruptcies for 2016 with assets valued at more than US$3 billion each, according to a recent publication by law firm Jones Day. The top 10 bankruptcies of public companies – defined as a company with publicly traded stock or debt – included just one non-energy entry and came from the airline industry. Jones Day’s top 10 bankruptcies list for 2016 paints a rather gloomy picture of the energy industry’s struggles amid the downturn in oil prices, slashed investments in drilling, and heavy borrowing before the slump. Saint Louis-based solar energy company SunEdison Inc held the unfortunate no.1 spot on Jones Day’s list with US$11.5 billion worth of assets and more than US$8 billion in debt. SunEdison filed for Chapter 11 protection in […]

U.S. Shale Sees Rebound In 2017…But Mostly From The Permian

2 Feb 2017   Shale Oil

The oil industry invested more than $28 billion in buying up land in the Permian Basin in 2016, three times the amount spent in 2015, according to Reuters . That accounted for about 39 percent of all money spent on land acquisitions in the U.S. oil industry last year. Other shale basins do not even come close to that level of investment. By way of comparison, the Marcellus Shale attracted 10 percent of total land investment in 2016, while the once-hot Bakken only captured 3 percent. Money has flooded into West Texas because the Permian has both below-ground and aboveground advantages over other shale basins. To start with, the Permian has a vast volume of oil waiting to be tapped. But more importantly, it is geologically favorable for drillers – multiple shale formations are stacked on top of each other, which means that a driller can sink a vertical […]

A tale of two shales in Texas

2 Feb 2017   Shale Oil

The Permian shale oil basin in the southern United States is among the few to show gains even during the market downturn, a federal report finds. Overall, the shale oil basins in the United States have been more resilient than expected during the market downturn that began in mid-2015. In a recent forecast, the U.S. Energy Information Administration predicted a slight increase in total U.S. oil production for 2017, a reversal of estimates last year that forecast a decline. Texas remains the No. 1 oil producer in the United States and the EIA said in a daily briefing that the Permian shale basin is the most durable in the country. “Although overall U.S. oil production has […]

Statoil completes sale of Alberta oil sands

2 Feb 2017   Canada, Tar Sands

Norwegian energy major Statoil said it closed on the sale of its entire oil sands operations in the oil-rich Canadian province of Alberta. Statoil said it completed the sale of its oil sands division to Athabasca Oil Corp. “Statoil has received $329 million in cash, following customary closing adjustments, plus 100 million common shares in Athabasca, representing just below 20 percent of the equity in the company,” the company stated. The cash deal extends to the Leismer thermal oil project in Alberta, which was producing about 24,000 barrels of oil per day when the deal was announced last year. Athabasca said the deal gives it a stronger base of production of around 40,000 barrels of oil equivalent estimated for 2017. Both companies said the project […]

U.S. crude and distillate stocks rise sharply: EIA

2 Feb 2017   Oil Supply, USA

U.S. crude stocks rose last week, along with gasoline and distillate inventories, the Energy Information Administration said on Wednesday, as refiners continued to let stocks build in a seasonally slow season for production. Crude inventories rose 6.5 million barrels in the week to Jan. 27, far exceeding analyst expectations for an increase of 3.3 million barrels. Crude prices declined briefly after the data and then rebounded as traders focused on other factors. U.S. West Texas Intermediate crude futures were at $53.20 a barrel, up 0.7 percent on the day, or 38 cents, while Brent crude gained 0.9 percent to $56.05 a barrel, up 47 cents. “Crude prices are still receiving support due to the weakening US dollar index and as markets look ahead to the upcoming OPEC report highlighting the […]