Oil Supply

Oil Prices Climb As Oil Rig Count Drops

19 Aug 2017   Prices, Shale Oil

The number of active oil and gas rigs in the United States fell this week by 3 rigs as drillers in the United States proceed more cautiously as oil prices fail to sustain any significant increase. Combined, the total oil and gas rig count in the US now stands at 946 rigs, up 455 rigs from the year prior, with oil rigs in the United States decreasing by 5 and gas rigs increasing by 1. Oil rigs in the United States now number 763—357 rigs above this time last year. Canada lost 6 oil rigs this week, with the number of gas rigs holding steady—for a total of 214 oil and gas rigs—93 above the year ago levels. Prices fell on Friday despite the Energy Information Administration’s Wednesday report that the United States’ crude oil inventory had fallen by 8.9 million barrels of inventory—after last week’s report of a […]

The Oil Glut Rewrites History

19 Aug 2017   Oil Supply

The good news for oil bulls is that U.S. stockpiles of the stuff, while still bloated, are now firmly back inside the historical range. The bad news is that all that bloating means the average isn’t what it was. When the Energy Information Administration puts out its weekly summary of oil inventories, the one-pager usually has some form of wording about how the current level compares with what’s typical for the particular time of year. Here’s an example from this week’s report, released Wednesday: At 466.5 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. U.S. inventories being in the upper half of the range means OPEC’s efforts to clear the glut still have a ways to go. On the bright side, stockpiles have now dropped for seven weeks in a row, draining almost 43 million barrels from […]

Efforts mount to expand U.S. offshore drilling

19 Aug 2017   Offshore

 After a rebound in the value of high bids for oil and gas acreage in the Gulf of Mexico, industry supporters said it was time to push for greater access. “We have an opportunity in the next offshore leasing plan to truly embrace our nation’s energy potential and ensure American consumers and businesses continue to benefit from the U.S. energy renaissance,” Erik Milito, the director of exploration and production for the American Petroleum Institute, said in a statement . The comments from Milito, whose organization represents the business interests of hundreds of oil and gas companies, followed the first lease in the Gulf of Mexico under President Donald Trump . Trump has put oil, gas and coal at the […]

Permian basin production could accelerate

19 Aug 2017   Shale Oil

The expansion of a Texas oil pipeline is likely to support more production from the prolific Permian shale basin, the Federal Reserve Bank of Dallas said. Texas is the No. 1 oil producer in the United States and home to the Permian and Eagle Ford shale reservoirs, some of the more robust basins in the Lower 48. The latest monthly figures from the Federal Reserve Bank of Dallas show Permian production increased nearly 3 percent from June to 2.47 million barrels per day. Eagle Ford production increased 3.1 percent to 1.35 million bpd. “Recent expansion in the capacity of the BridgeTex Pipeline, from 300,000 bpd to 400,000 bpd in second […]

Governor opposition complicates Trump administration’s Atlantic drilling plans

19 Aug 2017   Offshore, USA

The Trump administration is facing increasing pressure from governors of East Coast states to keep federal Atlantic waters out of the five-year oil and natural gas leasing plan it hopes to finalize late next year. Several East Coast governors, including Republicans and supporters of President Donald Trump, have ramped up pressure on the administration to keep the Atlantic out of the 2019-2024 federal offshore lease plan. This is significant since the administration is required by federal law to consider local and state opposition to offshore drilling before it approves a lease sale. “The coast has spoken,” said Sierra Weaver, a senior attorney with the Southern Environmental Law Center. “It’s time for Washington to listen.” Interior Secretary Ryan Zinke “has been clear that the administration will listen to local and state interests,” said Dustin Cranor, a spokesman for Oceana, an environmental group. “If that’s the case, the Atlantic Ocean should […]

Growing Shale Output Drags Oil Prices Lower

18 Aug 2017   Shale Oil

Oil prices flipped from losses to slight gains Thursday morning as the market rebounded from three week lows. U.S. crude futures were recently up 8 cents, or 0.17%, at $46.86 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 18 cents, or 0.36%, to $50.45 a barrel on ICE Futures Europe. “It just looks like a bounce off the recent weakness,” said Donald Morton, senior vice president at Herbert J. Sims & Co., who oversees an energy trading desk. Oil prices have been on a three day downward slide. Data released Wednesday showing that U.S. crude output to 9.502 million barrels a day last week weighed on the market. The prospect of rising oil output in the U.S. “took the wind out of the sails” of more bullish data also released Wednesday, which showed a further drawdown in U.S. oil stocks, said Gene McGillian, research […]

U.S. gasoline production is running near record levels

18 Aug 2017   Oil Supply, USA

Gasoline production by U.S. refiners and blenders has run near record levels over the first seven months of 2017, with four-week rolling average production well above its five-year average and close to the top of its five-year range. U.S. gasoline inventories also remain relatively high despite growing domestic and foreign demand. Growth in U.S. gasoline production since March is the result of record-high refinery runs. For the week ending April 21, 2017, U.S. refinery runs exceeded 17.5 million barrels per day (b/d) for the first time since EIA began publishing the weekly data series in 1990. Refinery runs have since exceeded this threshold eight additional times, reaching an all-time high of 17.9 million b/d the week ending on August 4, 2017. About 44% of the input to […]

Citi: U.S. Shale Beats OPEC At $40 Oil

18 Aug 2017   Shale Oil

Citigroup has said that U.S. shale will prevail over OPEC because of its higher resilience to low prices and OPEC’s losing strategy of cutting output and losing revenues and market share. Citigroup’s head of commodity research, Ed Morse, told Bloomberg in an interview that OPEC and its partners cannot sustain their current strategy over a longer term, while shale producers have adapted to low prices and can break even at WTI as low as US$40 a barrel. “In the end, the markets are going to win, and it’s going to be shale. If we’re in a $40 to $45 world, we’ll have enough drilling to add to the surplus in the world as a whole,” Morse said. So far this year, trends have supported the suggestion that cutting production to restore prices to at least some of their previous glory leaves a lot to be desired. Brent is still […]

Are Investors Bailing On U.S. Shale?

18 Aug 2017   Shale Oil

U.S. oil production continues to grow, with the EIA reporting a shocking jump in output last week. Total U.S. production rose to 9.5 million barrels per day (mb/d) for the week ending on August 11, up 79,000 bpd from a week earlier. That puts U.S. output at the highest level in nearly two and a half years. The U.S. shale industry has been adding new supply pretty much uninterrupted since late last year, despite volatile swings in oil prices over the course of 2017. In fact, the gains continued even through the price downturn in June, which saw WTI flirt with the $40 per barrel threshold, which, at first glance, suggests that the shale industry is doing just fine. To be sure, some shale drillers have breakeven prices well below the prevailing market price, allowing them to make money even during those tough times. But in the aggregate, the […]

Why Would Oil Demand Peak, Contrary to Peak Oil Supply?

18 Aug 2017   Peak Oil

People find it hard to believe that there is another side of the ‘Peak Oil Supply’ theory, which is ‘Peak Oil Demand’. The oil industry is quite familiar with the concept of a “Peak Oil Supply” but people find it hard to believe that there is another side of the theory, which is “Peak Oil Demand”. This article will examine why the concept of peak oil supply failed to materialize and why one should believe the concept of peak oil demand will materialize. Peak Oil Supply Theory Going back in history, the term “peak oil” was originally coined in the 1950s by M. King Hubbert who predicted that the US oil production would peak in 1970, and decline at the same rate as it arose. But in the history of the petroleum era, Matt Simmons will be remembered for calling attention to peak oil. In reality, whenever oil prices […]

Will Oil Demand Growth Be Enough To Tackle Inventories?

17 Aug 2017   Oil Supply, Prices

The first is a report on bets taken by the highly successful hedge fund manager Pierre Andurand on the direction for prices. Andurand is predicting prices will rise above $100 per barrel by 2020 as demand growth exceeds the ability of the U.S. shale industry to meet demand at current prices. The article quite reasonably points out investment in the oil industry has fallen dramatically as prices have declined, saying on average 40 new developments were approved annually between 2007 and 2013 by the oil majors. That number fell to just 12 last year, as the low oil price left only the most simple and straightforward projects viable. Furthermore, Andurand believes the U.S. shale industry will find it increasingly difficult to justify new investment if prices remain at current levels — as new fields will become more expensive to develop and maintain, the industry is surviving on the low-hanging […]

Oil producers signal offshore return in latest Gulf of Mexico auction

17 Aug 2017   Offshore

Major oil producers pushed up high bids at a Gulf of Mexico offshore auction to $121 million on Wednesday, a nearly seven-fold increase from a year ago, as their return to deep water exploration gained momentum. This compared with $18 million in high bids at the Bureau of Ocean Energy Management’s (BOEM) Outer Continental Shelf auction last summer. Winners will be announced after a 90-day review. Some producers have signaled that they expect Gulf of Mexico projects to become more profitable now that they have trimmed operations to adapt to low oil prices. Offshore drilling typically requires higher prices for producers to break even. Royal Dutch Shell claimed the largest number of blocks, with 19 high bids valued at a combined $25.1 million. Chevron Corp followed with 15 high bids totaling $27.9 million. Anadarko Petroleum Corp won 10 blocks for $10.6 million. Exxon Mobil Corp took […]

U.S. crude stockpiles fall the most in nearly a year: EIA

17 Aug 2017   Oil Supply, Prices

U.S. crude oil inventories fell for the seventh consecutive week in their largest drawdown in nearly a year while exports and production continued to rise, the Energy Information Administration said on Wednesday. Crude inventories fell 8.95 million barrels in the week to Aug. 11, nearly three times analysts’ expectations for a decrease of 3.1 million barrels and the largest draw in since the week to Sept. 2. At 466.5 million barrels, crude stockpiles were at their lowest since January 2016. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest levels since October 2015, according to EIA data. […]

Summary of Weekly Petroleum Data for the Week Ending August 11, 2017

17 Aug 2017   Oil Supply

U.S. crude oil refinery inputs averaged about 17.6 million barrels per day during the week ending August 11, 2017, 9,000 barrels per day less than the previous week’s average. Refineries operated at 96.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 10.0 million barrels per day. Distillate fuel production decreased last week, averaging 5.3 million barrels per day. U.S. crude oil imports averaged over 8.1 million barrels per day last week, up by 364,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.0 million barrels per day, 4.7% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 667,000 barrels per day. Distillate fuel imports averaged 167,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum […]

Known Gulf of Mexico deepwater areas most attractive in modest lease sale

17 Aug 2017   Offshore

US Gulf of Mexico Lease Sale 249 on Wednesday was not a barn-burner, but it did show a measure of competitive bidding in the deepwater and even boasted two eight-figure bids and dozens more that topped $1 million each. The sale appeared to highlight majors’ preferences for known deepwater areas, since shallow-water bidding accounted for a scant 10 blocks and offers received for these were mostly under $200,000 each. But sale sponsor Bureau of Energy Management officials expect interest in shallow water bidding to improve in subsequent sales, owing to the agency’s recent lower royalty relief reduction aimed at drumming up more development in that arena. “We only provided a month’s time for [operator] interest in the lower royalty,” said Mike Celata, BOEM Gulf regional director, in a post-sale telephone press conference. “My expectation is that in March we’ll have greater interest.” In July, the agency reduced the royalty […]

Has Gulf Of Mexico Production Peaked?

17 Aug 2017   Offshore

Amid strong indicators that U.S. shale production will reach new heights by the end of 2017, efforts to promote further exploration and production in the Gulf of Mexico, long a center of U.S. energy output, have run into some headwinds. Some even doubt that Gulf production, much of it from expensive off-shore rigs, can compete in the “lower for longer” price climate that will likely endure through the end of 2017. With a much longer lag-time for off-shore projects, production in the Gulf of Mexico (GOM) is less sensitive to short-term changes in price. But with the consensus around lower prices growing, it’s possible likely that investment in offshore may taper off, as investment seeks out more reliable returns from shale fields. On Wednesday the first bids on new oil and gas leases in the Gulf of Mexico were offered. The Secretary of the Interior, Ryan Zinke, revealed plans […]

Offshore drilling mergers raise hopes for sector recovery

16 Aug 2017   Offshore

Transocean’s GSF Development Driller II crosses Istanbul’s Bosphorus on its way to the Black Sea September 6, 2014.Murad Sezer HOUSTON (Reuters) – Mergers among offshore oil drillers are raising hopes that consolidation could bring relief to a sector struggling to emerge from an industry downturn triggered by low crude prices. Transocean Ltd, one of the world’s largest offshore drilling contractors, on Tuesday agreed to buy Norwegian rival Songa Offshore SE for $1.1 billion. The deal follows Ensco Plc’s pending purchase of Atwood Oceanics Inc in a transaction valued at $839 million. The deals would bolster both companies’ positions in major oil and gas-producing regions: Transocean in the North Sea and Ensco in offshore Australia. They come as oil prices remain below where they began the year, adding to worries about excess rig capacity continuing into the next year. “I think everyone realizes that consolidation is important […]

Pullback in U.S. fracking sand use pressures producers

16 Aug 2017   Shale Oil

U.S. shale oil companies are pulling back on the amount of sand they use to hydraulically fracture new wells, responding to rising prices of the material that are driving up costs. Investors worry a slowdown in sand use, combined with new mining capacity coming online, could lead to a glut of the material and bring down prices. The worries have pressured shares of sand companies. Sand prices soared in the last year as oil companies ramped up shale drilling and production. But with crude LCoC1CLC1 prices below where they started the year, oil producers are employing new well designs and chemical agents that lessen the use of sand that represents around 12 percent of the cost of drilling and fracturing. The price of frack sand is expected to rise 62 percent this year to average $47 a ton, according to researcher IHS Markit. That is expected to […]

Anadarko shale basin lands Oklahoma on EIA map

16 Aug 2017   Shale Oil

With more than 10 percent of the new wells drilled in U.S. shale basins, Oklahoma has earned a place in new monthly data reporting, the government said. The U.S. Energy Information Administration said it was adding the Anadarko region to its monthly drilling report. The shale basin covers 24 counties in Oklahoma and five in Texas. “The Anadarko region accounts for approximately 450,000 barrels per day of oil production, 5.7 billion cubic feet per day of natural gas production, 13 percent of new wells drilled, and 13 percent of drilled but uncompleted wells as of July 2017,” EIA reported. Oklahoma is home to about 4 percent of the total petroleum reserves in the country and accounts for as much as 5 […]

Peak Oil And Peak Demand Have Entirely Different Outcomes

16 Aug 2017   Peak Oil

Following my previous article — Peak Demand? No, A New Gasoline Demand Record — I received some interesting feedback from readers. It quickly became apparent that some didn’t understand that the current discussions around “peak oil demand” are quite different than the “peak oil” arguments that were popular a few years ago. Some interpreted my headline to mean that peak oil is a myth and that oil supplies will simply continue to grow. Actually, I was addressing the irrational exuberance around the near-term peak oil demand argument, which is something entirely different. So let’s review. Almost from the beginning of the U.S. oil industry, there have been those who suggested that it wouldn’t be long before oil production began to inevitably decline. The layman’s understanding of “peak oil” typically boiled down to “The world is running out of oil.” But that was a misunderstanding of the actual peak oil […]

U.S. Oil Drillers Keep Pressure on OPEC With Record Shale Output

15 Aug 2017   Shale Oil

EIA expands monthly shale forecasts to include Anadarko region September oil output seen at record 6.15 million barrels a day Oil output from major U.S. shale plays is poised to reach a fresh record next month, further complicating OPEC’s efforts to support prices. The gain is being led by the oil-rich Permian basin of Texas and New Mexico, where production has risen steadily over the past two years. The Energy Information Administration projects Permian output to rise by 64,000 barrels in September, reaching a record of 2.6 million barrels a day. The forecast comes just as Saudi Arabia and Iraq , the two biggest producers of the Organization of Petroleum Exporting Countries promised to strengthen their commitment to cutting production. Crude output in the U.S. meanwhile has climbed in nine of the last 10 months. Prices declined to a three-week low Monday as the growing U.S. output and signs […]

U.S. shale output seen posting ninth straight monthly rise: EIA

15 Aug 2017   Shale Oil

U.S. shale oil production for September which includes a new regional data input, is forecast to rise by 117,000 barrels per day to 6.15 million bpd, its ninth consecutive monthly rise, the U.S. Energy Information Administration said on Monday. The total forecast figure has expanded to include the Anadarko region, a growing and prolific shale play that has the second-most operating rigs, at 129, after the Permian’s 373, according to the EIA’s monthly drilling productivity report. The EIA added that the region has become “the target of many producers using improved drilling and completion technology to this already well-established oil and gas producing basin.” Meanwhile, the EIA is combining the Marcellus and Utica regions into a new Appalachia region to help the precision of its productivity estimates. Without the addition, total shale output for September would have been forecast to rise by 106,000 bpd to […]

Can The Permian Push Prices Down To $40?

15 Aug 2017   Shale Oil

Two analyst firms have revised upwards their production growth forecasts for the Permian, expecting oil output there to be 300,000 bpd higher by the end of this year. The firms are none other than Wood Mackenzie, whose analysts expect 300,000 bpd more in Permian output by end-2017—a 200,000-bpd increase to its year-end forecast—and Rystad, which sees the cumulative increase for June-December at 300,000 bpd. That’s the kind of consensus market players like to see, especially when it comes a couple of days after reports that investors are pulling out from the Permian after Pioneer Resources reported the share of natural gas and gas liquids in its overall output has been rising at the expense of oil. Investors love their crude, after all, and are much less excited about gas. Amid the worry, which some say is not as widespread as it may seem, the upbeat forecasts of these analysts […]

Oklahoma shale production could increase

15 Aug 2017   Shale Oil

After mixed results for the second quarter, U.S. shale player BNK Petroleum said it was anticipating more production from its assets in Oklahoma. BNK Petroleum Inc., which has headquarters in California, said Monday it completed the hydraulic fracturing process at a well in the SCOOP shale basin in Oklahoma and expects stable flows by next month. “We anticipate that this will lead to a highly productive well,” President and CEO Wolf Regener said in a statement . Oklahoma is home to about 4 percent of the total petroleum reserves in the country and accounts for as much as 5 percent of the total crude oil production in the United States. BNK reported net average production for the second quarter was 16 […]

A future of cheap oil

14 Aug 2017   Peak Oil

An ongoing price slump is rattling the industry and weakening petrostates. How will low prices change the world? Here’s everything you need to know: How cheap is oil? Prices have hovered between $40 and $50 a barrel for the past year — far below the pre-collapse high of $147 a barrel in 2008. The U.S. shale revolution continues to cause a global glut in supplies of the liquid fossil fuel, depressing the price, and energy company Shell says it is bracing for a world where oil prices might stay “forever low.” Oil prices have historically been highly volatile, and demand for the commodity is higher than ever. But if the glut continues, it will pose an existential threat to the monarchy ruling Saudi Arabia, which relies on oil for as much as 70 percent of the kingdom’s income. Other petrostates, including Venezuela and Russia, are already in a state […]

U.S. shale output poised to keep rising despite investor concerns

12 Aug 2017   Shale Oil

Shale production in the largest U.S. oilfield should rise by as much as 300,000 barrels per day by December, according to updated forecasts following the industry’s latest quarterly results. The higher outlooks, amid worries the recent breakneck pace of gains may not be sustained, come on the heels of one high-profile Permian Basin producer’s oil output miss last quarter and decisions by several other energy companies to trim annual budgets. Oil production from the Permian Basin of West Texas and New Mexico is closely watched because its low costs and rapid growth have pressured efforts by the Organization of the Petroleum Exporting Countries to drain a global crude supply glut. Consultancy Wood Mackenzie sees another 300,000 barrels per day (bpd) coming from […]

North Dakota oil production slips about 1 percent in June

12 Aug 2017   Shale Oil

North Dakota’s oil output slipped about 1 percent in June but should remain above 1 million barrels per day for the foreseeable future, state officials said on Friday. The optimistic outlook comes as the state’s shale producers have found a way to survive low oil prices with new technology and process improvements. North Dakota, the No. 2 U.S. oil-producing state, has largely taken a back seat in the past year as companies in the Permian Basin of Texas and New Mexico – the largest U.S. oilfield – battle with the Organization of the Petroleum Exporting Countries for global energy market dominance. “That’s two elephants fighting it out and North Dakota gets caught in the middle,” Lynn Helms, head of the North Dakota Department of Mineral Resources, said on a Friday conference call with reporters. The state pumped 1.03 million barrels of oil per day in June, down […]

U.S. drillers add oil rigs for second week in three: Baker Hughes

12 Aug 2017   Shale Oil

U.S. energy companies added oil rigs for a second time in the last three weeks, extending a 15-month drilling recovery, but the pace of additions has slowed in recent months as firms cut spending plans in reaction to declining crude prices. Drillers added 3 oil rigs in the week to Aug. 11 bringing the total count up to 768, the most since April 2015. General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. That compares with 396 active oil rigs during the same week a year ago. Drillers have added rigs in 56 of the past 63 weeks since the start of June 2016. The rig count is an early indicator of future output. U.S. production is expected to rise to […]

Texas rig permitting nearly doubles from 2016

12 Aug 2017   Shale Oil

Accounting for about half of all the active rigs in the United States, the energy regulator in Texas said total drilling permits nearly doubled from last year. The Railroad Commission of Texas, the state energy regulator, said it issued 1,011 original drilling permits last month, compared with the 631 issued in July 2016. Of those, 893 were for drilling new oil or natural gas wells. According to the U.S. Energy Information Administration, Texas shale is the most productive in the nation. Based on its latest drilling productivity report, the EIA expects production from the Permian shale basin to increase 2.5 percent from July for about 2.5 million barrels per day. Eagle Ford production would increase 2 percent to 1.38 million barrels per […]

Oil Rig Count Rises Despite Ballooning Shale Debt

12 Aug 2017   Shale Oil

The number of active oil and gas rigs in the United States rose this week by 5 rigs as drillers in the United States continue to add rigs in defiance of low oil prices, albeit at a slower rate. Combined, the total oil and gas rig count in the US now stands at 949 rigs, up 468 rigs from the year prior, with oil rigs in the United States increasing by 3 and gas rigs declining by 8. Oil rigs in the United States now number 768—372 rigs above this time last year. Canada, which lost 3 oil and gas rigs last week, gained three this week—all three oil—for a total of 220 oil and gas rigs—94 above the year ago levels. Prices fell on Thursday and Friday as the weak stock market and word of OPEC’s faltering compliance battered the unstable oil market. Despite Friday’s jawboning from Saudi […]

Continental Resources says it will do more with less

10 Aug 2017   Shale Oil

Continental Resources, one of the larger U.S. shale players, said it would be cash neutral in the current market, but raised its forecast for annual production. Continental is active in the Bakken shale oil basin, centered mostly in North Dakota, the No. 2 oil producer in the nation behind Texas. CEO Harold Hamm said the company took a disciplined approach during the second quarter, which saw oil prices hold in the mid- to upper-$40 range per barrel. “The results have been exceptional, raising our production guidance for 2017 and lowering our guidance for operating costs,” he said in a statement . “We now expect to exit 2017 with production up 24 percent to 31 percent over the […]

Investors Question Oil Output in Permian Basin, America’s Fastest-Growing Field

10 Aug 2017   Shale Oil

Investors helped turn West Texas’ Permian Basin into America’s fastest-growing oil field, but their confidence is cracking over whether drillers can keep production rising.  Questions mounted last week after Pioneer Natural Resources Co. PXD 1.60% reported that its Permian wells are producing more gas and natural gas liquids such as propane than expected. That worried investors, who care a lot more about oil.  Shares of Pioneer and other Permian producers tumbled as a result. Pioneer ended the week down 16%, while Parsley Energy Inc. PE -0.78% and Concho Resources Inc.CXO 0.76% both declined more than 9% over that stretch  The main issue for Wall Street is whether the Permian, where nearly half the rigs drilling for oil in the U.S. are located, will continue apace or will fall short of the expectations of investors, who in recent years crowded into companies drilling there.  “The Permian is going to have some growing pains,” Scott Hanold, an analyst at RBC Capital Markets, said this week.

The concerns aren’t universal, and some say they are overblown. “I don’t think anything has changed in the Permian. It’s the lowest cost, best basin to be in, with the best rock,” said Bill Costello, portfolio manager at investment firm Westwood Holdings Group. “If people are going to give me the opportunity to buy more, I’m going to buy more all day long.”  Some Permian stocks have partly recovered since last week’s plunge. Cimarex Energy Co.was the S&P 500’s biggest gainer Wednesday, rising about 7.5% after it reported more oil production than expected.  But the selloff, and analyst notes that followed, reveal that some investors are questioning whether they were overly confident in the resilience of the Permian, and perhaps overpaid for it.

Summary of Weekly Petroleum Data for the Week Ending August 4, 2017

10 Aug 2017   Oil Supply, USA

U.S. crude oil refinery inputs averaged 17.6 million barrels per day during the week ending August 4, 2017, 166,000 barrels per day more than the previous week’s average. Refineries operated at 96.3% of their operable capacity last week. Gasoline production increased slightly last week, averaging 10.3 million barrels per day. Distillate fuel production increased last week, averaging 5.3 million barrels per day. U.S. crude oil imports averaged about 7.8 million barrels per day last week, down by 491,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.0 million barrels per day, 4.9% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.1 million barrels per day. Distillate fuel imports averaged 41,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum […]

Big Oil Might Be In Better Shape Than U.S. Shale

10 Aug 2017   Shale Oil

For much of the past three years, the oil majors have struggled to adapt to the new reality of low oil prices, while at the same time, their smaller and nimbler rivals deftly pivoted to the ebbs and flows of oil price movements. Big Oil, it has been said, was ill-equipped to deal with $50 oil, dragged down by the enormous expenses on their billion-dollar megaprojects. Shale, on the other hand, was the future, and production surged in places like the Permian Basin. The oil majors finally saw the writing on the wall, and followed their smaller competitors by pouring money into the shale patch . But, ironically, the outlook for the oil majors looks better – at least in the short run – than it does for some shale drillers. The recently released second quarter numbers were relatively strong for the largest oil companies, most of which emerged […]

Kemp: US Shale Breakeven Price Revealed Around $50

10 Aug 2017   Prices, Shale Oil

U.S. shale producers need a WTI oil price around $50 per barrel to break even, according to an analysis of financial statements for the second quarter. Fifteen of the largest shale oil and gas producers reported total net losses of $470 million for the three months between April and June when benchmark WTI prices averaged $48. Total losses were down from $3.7 billion in the first three months of the year and $7.4 billion in the same period in 2016, according to earnings statements published in the last week ( http://tmsnrt.rs/2ftmgnd ). Nine of the companies in the sample reported positive net income in the second quarter, down […]

Shale-rich Oklahoma sees widespread economic growth

9 Aug 2017   Shale Oil

Oklahoma reports broad economic gains, with tax receipts from oil and gas up more than 25 percent from last year. File photo by Jim Parkin/Shutterstock Aug. 8 (UPI) — Gross domestic product and production taxes from oil and gas in Oklahoma reveal the state economy is expanding, the state treasurer said. In its latest estimate, the federal Bureau of Economic Analysis reported gross domestic product increased in Oklahoma for the second quarter in a year, following four straight quarters of contraction. “The body of evidence supporting economic recovery is growing,” State Treasurer Ken Miller said in a statement . “Gross receipts show ongoing expansion, as do employment reports and broader measurements.” Oklahoma accounts for as much as 5 percent of the total national output of crude oil and is the fifth-largest shale natural gas producer in the country, making it one of the more shale-rich states. The slump in […]

EIA cuts U.S. oil production growth forecast for 2018

9 Aug 2017   Oil Supply, USA

The U.S. Energy Information Administration said on Tuesday it expects U.S. crude oil production in 2018 to rise by less than previously expected. The agency forecast that 2018 crude oil output will rise by 560,000 barrels per day to 9.91 million bpd. Last month, it expected a 570,000 bpd year-over-year increase to 9.9 million bpd. For 2017, it forecast a rise of 500,000 bpd to 9.35 million bpd. Last month, it expected a 460,000 bpd increase to 9.33 million bpd, according to the EIA’s monthly short-term energy outlook. Meanwhile, the agency forecast that U.S. oil demand for 2017 is set to grow by 340,000 bpd compared with a 310,000 bpd previously. For 2018, oil demand is expected to rise by 330,000 bpd vs 360,000 bpd previously.

API Reports Major Crude Inventory Draw, Surprise Gasoline Build

9 Aug 2017   Oil Supply

The American Petroleum Institute (API) reported a major draw of 7.839 million barrels in United States crude oil inventories, compared to analyst expectations of a modest draw of 2.272 million barrels for the week ending August 4. Gasoline inventories rose by 1.529 million barrels for the week ending August 4, compared to analyst expectations that inventories for the fuel would fall by 1.5 million barrels. Crude prices fell on Tuesday despite Saudi Arabia’s promise to curb in September crude oil exports to its prime market—Asia. Oil markets were holding onto a small sliver of hope that the most recent OPEC meeting would result in additional cuts, but the meeting was destined to be only about compliance—or noncompliance as the case may be—matters. Last week, reports surfaced that OPEC’s crude oil exports rose 388,000 bpd in July, according to figures from energy data provider Kpler. At 2:21pm, WTI had fallen […]

Continental becomes latest U.S. shale producer to cut budget

9 Aug 2017   Shale Oil

Continental Resources Inc ( CLR.N ) cut its 2017 capital budget on Tuesday, the latest U.S. shale oil producer to cut back on drilling and fracking equipment amid tepid crude prices. The company, which is majority controlled by Chief Executive Harold Hamm, said it would spend $1.75 billion to $1.95 billion this year, down from a prior $1.95 billion target. Continental said it can be cash flow neutral – that is, spend as much as it makes – with oil prices CLc1 between $45 and $51 per barrel. By cutting its budget, Continental is following the direction of many of its U.S. shale peers, who have already cut more than $1.2 billion from their spending plans for the year. Shares of Continental rose 1.1 percent to $32.80 in after-hours trading. Yet even as it cut spending and said it would use fewer drilling rigs and fracking crews […]

‘Nothing To See Here’ – Frackers Ignore Rising Well Decline Rates

7 Aug 2017   Shale Oil

Shale wells suffer from steep decline rates. A rush of output occurs at first, but almost immediately after the well comes online, the flow rate drops off precipitously. And within just a few months the well is a shadow of its former self. That is typical. But putting a bunch of wells close to each other can induce even steeper decline rates than normal because they can rob pressure from each other. If that occurs, the wells can suffer irreparable damage, and ultimately, the volume of oil and gas that can eventually be recovered could potentially be permanently diminished. Such a scenario appears to be playing out in the U.S. shale patch, with the white-hot Permian, in particular, falling victim to what is a byproduct of such a massive boom in activity. Bloomberg reports that the decline rate from “legacy” wells – those already online – is accelerating rapidly, […]

Shale Producers Hedge At Much Lower Prices

7 Aug 2017   Prices, Shale Oil

Shale oil producers are hedging again – this is the latest message coming from investment banks and analytical firms, according to Bloomberg . After hedging largely died down when WTI fell into a bearish market in June, now the risk-curbing activity is again on the rise. There is, however, a difference from the last hedging spree that took place after OPEC and Russia struck their output cut deal. Now, some E&Ps are hedging at prices as low as US$45 a barrel. Last December, shale boomers rushed to lock-in higher prices for their future output encouraged by the quick rise in Brent and WTI on expectations that the cut deal would take care of the global glut. This didn’t happen, however, and prices have been declining relatively steadily since February. Over the last two weeks, though, crude has enjoyed a rally on the back of renewed hopes for the success […]

Is The Shale Rebound Causing A Return Of Flaring?

7 Aug 2017   Shale Oil

Underneath the surface of North Dakota is the Bakken Formation, which is part of the Williston Basin that also lies underneath parts of South Dakota, Montana, southwestern Manitoba and southern Saskatchewan. Last week I was in Bismarck, North Dakota at the 2017 Bakken Conference and Expo . I spoke about my company’s efforts to eliminate natural gas flaring in oil fields and then drove around the state to observe the most recent drilling activity there. The Bakken was known to contain oil for many years, but it just wasn’t economical to produce. Hydraulic fracturing and horizontal drilling changed that. Up until about 2008, North Dakota hadn’t produced much more than 100,000 barrels per day (BPD). But in 2008 the shale oil boom started to pay dividends. In late 2008, North Dakota’s oil production reached 200,000 BPD and then climbed steadily to a peak of 1.2 million BPD in late […]

Is The EIA Exaggerating U.S. Oil Production?

7 Aug 2017   Oil Supply, USA

Oil is back at $50 per barrel, restoring some semblance of confidence in the market. But that is just about as much as we can expect in terms of a rally, according to most analysts, with momentum likely to dissipate from here. But not everyone agrees. Many are worried that oil prices will crash again next year as OPEC scrambles for an exit strategy, but there is actually a bullish case for oil that is not outlandish. First, crude oil inventories continue to fall. The EIA just released another week’s worth of data, showing another drawdown in inventories. It was a bit more modest last week – 1.5 million barrels – compared to previous four weeks, but the drawdowns continue. U.S. crude oil inventories are now down more than 50 million barrels from the peak hit in March, with stocks back within the five-year range. But a larger reason […]

Has Gulf Of Mexico Production Peaked?

3 Aug 2017   Offshore

Production for May by BOEM was 1673 kbpd and by EIA 1661, compared with 1661 and 1658 kbpd, respectively in April. March looks like the peak, at least near term, for the basin, especially with Hurricane Cindy impacting the coming June figures. (Click to enlarge) The combined new fields added from late 2014 look to be peaking as well. Great White came back on line but xxx and yyy declined. In previous data I had omitted one big producing lease in Mars, which included the new Deimos field. With this added the production growth through 2017 is higher (and as shown later the decline in mature fields faster) than previously shown. There may be more increase to come: The Mars leases had three rigs operating through June, one dedicated for Deimos, which has now gone. The two platforms on the field each have a dedicated platform rig, so they […]

Poll: Shale drilling a new concept to the British public

British polling data show only a handful of respondents claim to know much about hydraulic fracturing. Photo courtesy of Cuadrilla Resources Aug. 3 (UPI) — With shale drilling about ready to go for the first time ever in the country, British opponents said public sentiment was moving against the practice. Cuadrilla Resources said the drilling rig used to tap wells at a shale basin in Lancashire arrived at its destination in late July . The industry is in its infancy in the country, though the British government estimates there may be enough natural gas locked in shale to offset gas imports on pace to increase from 45 percent of demand in 2011 to 76 percent by 2030. Polling data from the British government found only about 13 percent of those responding to its surveys said they knew “a lot” about hydraulic fracturing, also known as fracking. Support and opposition […]

U.S. Shale Heavyweights To Boost Production This Year

3 Aug 2017   Shale Oil

In a sign that the U.S. shale patch is boosting output that has been keeping a lid on oil prices, four U.S. shale companies reported second-quarter production that beat targets and increased their respective full-year output growth guidance. EOG Resources reported on Tuesday Q2 total crude oil volumes rising 25 percent to 334,700 barrels of oil per day, setting a company oil production record. The company raised its full-year 2017 U.S. crude oil growth target to 20 percent from 18 percent and total company production growth target to seven percent from five percent, keeping capital spending plans intact. “EOG can continue to grow at strong rates within cash flow,” Chairman and CEO Bill Thomas said. Devon Energy beat its midpoint guidance with Q2 net production averaging 536,000 oil-equivalent barrels per day, and said that it was on track to achieve its full-year 2017 production targets. The company cut full-year […]

The Reported Death of Peak Oil Has Been Greatly Exaggerated

3 Aug 2017   Peak Oil

Production for May by BOEM was 1673 kbpd and by EIA 1661, compared with 1661 and 1658 kbpd, respectively in April. March looks like the peak, at least near term, for the basin, especially with Hurricane Cindy impacting the coming June figures. The combined new fields added from late 2014 look to be peaking as well. Great White came back on line but xxx and yyy declined. In previous data I had omitted one big producing lease in Mars, which included the new Deimos field. With this added the production growth through 2017 is higher (and as shown later the decline in mature fields faster) than previously shown. There may be more increase to come: the Mars leases had three rigs operating through June, one dedicated for Deimos, which has now gone. The two platforms on the field each have a dedicated […]

Despite Cuts in CAPEX & Revenue, Silver Linings Exist for US Oil, Gas

3 Aug 2017   Oil Supply

A new EY study reveals opportunities still exist for US oil and gas, despite a year of declines. “2016 results are not good, but they are less bad than they were a year ago,” Herb Listen, EY’s U.S. oil and gas insurance partner said during an August 2 webcast focused on results from EY’s U.S. oil and gas reserves study. Looking at the exploration and production results for the largest 50 companies from 2012-2016, the study shows that capital expenditures (CAPEX) in 2016 were $85.7 billion, 27 percent lower than 2015. Company revenues dropped to $103 billion, down 21 percent from 2015. Exploration and development spending saw cuts of 35 percent and 52 percent, respectively, in 2016. These figures aren’t surprising, considering oil price declines. Although 2016 saw declines from the previous year in CAPEX, revenue and property impairments, there were some silver linings, one being technology, said James […]

Summary of Weekly Petroleum Data for the Week Ending July 28, 2017

3 Aug 2017   Oil Supply, USA

U.S. crude oil refinery inputs averaged 17.4 million barrels per day during the week ending July 28, 2017, 123,000 barrels per day more than the previous week’s average. Refineries operated at 95.4% of their operable capacity last week. Gasoline production decreased last week, averaging 10.3 million barrels per day. Distillate fuel production increased last week, averaging over 5.2 million barrels per day. U.S. crude oil imports averaged about 8.3 million barrels per day last week, up by 209,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 8.0 million barrels per day, 3.8% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 549,000 barrels per day. Distillate fuel imports averaged 108,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) […]

Drilling Consultant Believes Reported Layoff Numbers Too Low

2 Aug 2017   Shale Oil

The devastation in the form of industry job loss due to the downturn may be higher than reported, says a pair of industry professionals. The last time Rigzone reported global layoff numbers due to the oil and gas industry’s downturn was Feb. 2017 . At the time, the world had seen more than 440,000 layoffs (441,371 to be exact), according to Graves & Co., a Houston-based consulting firm. But there’s at least a couple of industry professionals who think those numbers are a bit conservative and maintain that they have numbers that are “closer to the truth.” Citing email threads with supporting sources and references, Robin A. Davies, worldwide drilling consultant; drilling supervisor and DWOC fluids specialist, said he and his friend Alan Fortune have compiled a figure of around 688,000 publicized global oil and gas layoffs since 2014. The pair also believe that nearly 1.2 million jobs have […]