Oil Supply

US shale outlook seen at risk from more intensive fracking

21 Oct 2017   Shale Oil

US shale oil production is unlikely to peak before the middle of next decade, but current fracking techniques may be risking the prospect of faster decline rates from tight oil than many are forecasting, a top oil industry event was told this week. New techniques may offer short-lived gains Shale well productivity rates slipping Others more upbeat over late-life declines As the US shale industry continues to chase lower breakevens and boost productivity in the wake of the 2014 price downturn, shale players have turned to pumping much larger volumes of sand and water into horizontal wells. In addition to “bigger fracks”, drillers have also increased the density of their fracking stages in a bid to boost the volumes of tight oil drained from each well. Although the techniques have raised initial flows rates by up to 30% in some wells, the intensive fracking is depleting the source rocks […]

Top Oilfield Services Firms Signal Fourth-Quarter Uncertainty

21 Oct 2017   Oil Supply

The world’s top two oilfield service firms on Friday warned slower producer spending and weakness in offshore exploration may weigh on current-quarter earnings, but said activity could improve in the longer term as the global crude market comes into balance. The outlook drove shares in both companies lower, with Schlumberger NV hitting a 21-month low and Baker Hughes touching a 16-month low before retracing some losses. Schlumberger, the world’s largest oilfield service company, warned that Wall Street estimates for fourth-quarter earnings may be too high, with customer investments in North American production moderating due to investor pressure for improved shareholder returns. But global oil supply and demand is becoming more balanced and recent spending cutbacks on U.S. production could eventually boost crude prices, Schlumberger Chief Executive […]

Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices

20 Oct 2017   Shale Oil

The global oil market has not yet shown clear signs that it has reached a turning point, and if oil prices stay relatively stable, U.S. shale production will rise significantly next year and possibly destabilize the market again, Rosneft’s chief executive Igor Sechin said on Thursday. “The analysis shows that the announced goal of inventories stabilization has not been fully implemented and it is too early to talk about a watershed in the global market,” said Sechin, who is known for his criticism and skepticism toward OPEC’s ability to ‘fix’ the oil market. Also on Thursday, OPEC’s Secretary General Mohammad Barkindo said that the OECD stock overhang had dropped from 338 million barrels above the five-year average at the start of this year to 159 million barrels above the five-year average in September. According to Rosneft’s Sechin, the rebalancing of the oil market is further hampered by the lack […]

Have the US passed peak shale?

20 Oct 2017   Shale Oil, USA

The worm is turning for the crude oil price and American petroleum’s latest reporting season will likely announce a telling maturation of the US shale industry according to Woodside Petroleum chief executive, Peter Coleman. “The market is feeling pretty positive and we think there will be strengthening of crude prices before the end of the year,” Coleman said on Thursday after the release of Woodside’s wholly predictable but encouraging third quarter production numbers . “Oil demand is up this year by 1.6 [million barrels a day] and is expected to be up another 1.4 next year. And the US reporting season is going to be very interesting,” he recommended. “It will signal whether people are still free to chase volumes or capital preservation has started in earnest. Anadarko is first out of the blocks with that buyback. This is going to tell us how far shale has got to […]

Oil’s Biggest Rigs Headed to Junkyard as Daily Losses Mount

19 Oct 2017   Offshore

Transocean Ltd. is finally sending Pathfinder to its grave, after two years in a Caribbean purgatory that cost about $15,000 a day. The move by the world’s biggest offshore-rig operator signals just how bleak the future looks for deepwater drilling. Pathfinder is the most famous of six floating rigs the company is scrapping in burials that will add up to a bruising $1.4 billion write-off. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith. That’s how bad it is, with predictions crude prices won’t go much higher than $60 a barrel in the next year compared with around $50 recently. “Deepwater is going to be playing a much-reduced role on the global oil-supply […]

Continental Resources oil sale to China complex

19 Oct 2017   China, Shale Oil

Continental Resources CEO Harold Hamm said the sale of oil from the Bakken shale basin in North Dakota to China represents the “new normal.The head Continental Resources, Harold Hamm, said the sale of North Dakota oil to China was the “new normal,” through the move is complex, an analyst said. Continental said late Tuesday it sold 1 million barrels of oil from the Bakken shale basin to a Houston-based trading company, which intends to send the oil to China. Continental said daily sales of 33,500 barrels of oil per day would take place next month at the U.S. oil storage hub in Cushing, Okla., and the trader would then plan to put that on tankers at a Texas port for exports to China. “This is a historic day for Continental and begins a new chapter in […]

Total CEO: US Shale Oil Industry To See Wave Of Investment

19 Oct 2017   Shale Oil

The U.S. shale industry will see another production surge in 2018 as producers have sharply ramped up bets against a fall in oil prices, major oil executives and bankers said in London on Wednesday. Activity amongst small- and mid-sized producers is ahead of last year’s pace, analysts said, and a sharp increase in output could undermine the recent rally that in September pushed benchmark Brent crude to levels not seen since mid-2015. Patrick Pouyanne, the chief executive of Total, speaking at the Oil & Money conference in London, said he expected global oil demand to grow strongly again this year, by up to 1.6 million barrels per day (bpd). “Our U.S. colleagues are hedging […]

Encana Calls End to Permian Race as Focus Turns to Output

19 Oct 2017   Shale Oil

Encana Corp. Chief Executive Officer Doug Suttles says drillers in Texas’s prolific Permian Basin can no longer impress investors with how much acreage they’re snapping up or how quickly they’re boosting production. Instead, investors will focus on how profitably companies are able to produce from their current holdings, Suttles said in an interview in New York. Encana, which has spent about four years reworking its portfolio of holdings to four top North American plays, expects to be a leader among its peers on that front, he said. “The race for the land is kind of over,” Suttles said. “Now it’s what are you going to do with the land.” Encana expects to increase cash flow about 25 percent a year through 2022, the Calgary-based company said Wednesday in a presentation […]

Summary of Weekly Petroleum Data for the Week Ending October 13, 2017

19 Oct 2017   Oil Supply, USA

U.S. crude oil refinery inputs averaged over 15.4 million barrels per day during the week ending October 13, 2017, 819,000 barrels per day less than the previous week’s average. Refineries operated at 84.5% of their operable capacity last week. Gasoline production increased last week, averaging over 10 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day. U.S. crude oil imports averaged 7.5 million barrels per day last week, down by 134,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.4 million barrels per day, 1.9% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 690,000 barrels per day. Distillate fuel imports averaged 107,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) […]

In charts: has the US shale drilling revolution peaked?

19 Oct 2017   Shale Oil

In the outlook for crude prices, a crucial factor is how far US shale oil production can grow. The shale revolution has transformed global oil markets over the past decade, reversing the long decline in US output, challenging Opec’s influence, and helping to trigger the plunge in prices that began in 2014. It has meant windfalls for oil consumers, and some painful adjustments for producers. The leap forward that made shale oil commercially viable for the first time was a revolution in productivity. EOG Resources and other pioneering companies worked out how to get oil to flow from wells at much higher rates than in the past, thanks to the application of improved techniques for horizontal drilling and hydraulic fracturing, and those productivity gains continued after the first breakthroughs. Exploration and production companies have been able to drill wells faster, and squeeze more oil out of them by targeting the right rocks more precisely and fracturing them more effectively. The outlook for the industry depends on how far those gains can be sustained and extended.  The track of the number of active rigs and oil production shows the huge productivity gains that have been made. A rush to drill in shale formations such as the Eagle Ford in Texas and the Bakken in North Dakota was followed by a flood of production, which mostly held up even after most rigs stopped running in 2014-16.  Share this graphic

Big Oil Touts Its Core Business: Fossil Fuels

19 Oct 2017   Oil Supply

Big oil company executives asserted that fossil fuels would remain the central part of their business for decades, despite recent investments in renewables and other energy sources made in response to efforts to curb carbon emissions. “Despite the attraction of renewables, the world can’t run on them alone and won’t be able to for some time,” BP PLC Chief Executive Bob Dudley told the Oil & Money conference in London Wednesday. The remarks by Mr. Dudley and other executives at Europe’s largest oil companies represented a defense of the industry’s traditional work at a time of growing pressure from investors and activists to manage their risks related to climate change. The optimism comes as oil prices are on […]

Big Oil To Bet On Petrochemicals As Demand Peak Looms

18 Oct 2017   Peak Oil

Remember that “This Ain’t Your Daddy’s Oil” commercial that blew up on Twitter at this year’s Super Bowl? It was about crude oil being used for things other than fuels—useful, sometimes indispensable things. Like it or not, this is what the future holds for the industry, according to a new report from Wood Mackenzie. The energy consultancy expects that petrochemicals will turn into the top driver for demand growth in crude oil in the long run as fuels lose their top spot. It’s actually demand for petrochemicals that will keep global oil demand growing until about 2035, Wood Mac says, adding that this growth, however, will slow to a crawl by that year. In places like Europe, Japan, the United States, and even China, crude oil consumption will plateau by 2035, while in India, some other Asian states, Africa, Latin America, and the Middle East, it will continue to […]

Half A Million B/D At Risk From Geopolitical Firestorm

18 Oct 2017   Oil Supply

It’s been a long time since geopolitical developments caused major movements in the oil price, but the escalating tension between the U.S. and Iran, combined with the sudden military clashes in Iraq, has pushed geopolitical risk back on to the agenda for the oil market. “Geopolitical risks to the oil market have continued to intensify,” Goldman Sachs wrote in an October 17 research note. In addition to Iraq and Iran, the decline in Venezuela’s oil production “appears to be accelerating,” while the resurgence in output from Libya and Nigeria continues to be fragile. “There remains high uncertainty on the potential impact of these new tensions on the oil market.” But it’s Iraq and Iran that have really raised fears of outages. As of October 17, preliminary reports suggest that about 350,000 bpd of oil production from the Kirkuk oil fields were disrupted, with conflicting reports about whether or not […]

U.S. shale producers ‘hedging like mad’, to boost investments: Total CEO

18 Oct 2017   Shale Oil

The U.S. shale industry will see another wave of investments as producers are “hedging like mad” against a fall in oil prices, the chief executive of Total Patrick Pouyanne said on Wednesday. Total Chief Executive Officer Patrick Pouyanne poses next to the logo of Total Spring during a news conference in Paris, France, October 5, 2017. REUTERS/Charles Platiau Pouyanne, speaking at the Oil & Money conference in London, said he expected global oil demand to grow strongly again this year by up to 1.6 million barrels per day. “Our U.S. colleagues are hedging like mad at $56 a barrel so we will see another wave of investment in U.S. shale, no doubt about it.” A sharp drop in investment since a collapse in oil prices in 2014 has led to a drop in development of new projects which could lead to an oil supply shortage after […]

Canada’s oil sands survive, but can’t thrive in a $50 oil world

18 Oct 2017   Tar Sands

Canada’s oil sands producers are stuck in a rut. The nation’s oil firms are retrenching, with large producers planning little or no further expansion and some smaller projects struggling even to cover their operating costs. Sponsored As the era of large new projects comes to a close, many mid-sized producers – those with fewer assets and producing less than 100,000 barrels of oil a day in the oil sands – have shelved expansion plans, unable to earn back the high start-up costs with crude at around $50 per barrel. Larger Canadian producers, meanwhile, focus on projects that in the past were associated with smaller names. The last three years have seen dozens of new […]

Shell Shale Leader Discusses the ‘Non-Moonshot’

18 Oct 2017   Shale Oil

Collaboration, repurposing tech will help company to achieve ‘shale field of the future,’ says exec. Like other major natural gas producers, Shell has a vested interest in ensuring that the fossil fuel remains a key component in the global energy mix – particularly as renewable elements within that mix gain prominence. “Shale is a future growth engine for Shell,” Greg Guidry, executive vice president of Shell’s Unconventionals business, told Rigzone on the sidelines of Energy Dialogues LLC’s North American Gas Forum earlier this month. “We characterize it as a future growth opportunity because of its long-term growth potential, and we are on path to achieve that strategic intent of being a material, sustainable growth engine for Shell within the next decade.” According to Guidry, ensuring natural gas is seen as a stable, reliable energy source – ideally placed to partner with an ever-increasing share of renewables – will require […]

Oil demand likely to peak by 2030

18 Oct 2017   Peak Oil

As electric vehicles are to increase their popularity, particularly beyond 2025, the world petrol demand is to peak within 13 years, says a report by UK-based analysis firm Wood Mackenzie. The analysis estimates that the demand for oil in developed countries will reduce by about four million barrels per day by 2035. But, on the other hand, the developing economies will increase their demand for oil by nearly 16 million barrels per day by 2035. Currently 60 million out of the 96 million barrels of oil consumed globally every day is used in transport. But this is to decline from 2030, according to the analysis. Factors such as development of more fuel efficient vehicles, climate change policies, maturing of developing economies, and restrictions such as fuel efficiency and pollution standards imposed by governments are the other reasons for the decline in the demand. OECD oil demand reverts to structural […]

U.S. shale output seen posting 11th straight rise in November: EIA

17 Oct 2017   Shale Oil, USA

U.S. shale production for November is forecast to rise for a 11th consecutive month, the U.S. government said on Monday, as U.S. prices CLc1 stabilize around $50 a barrel. U.S. oil output is expected to increase by 82,000 barrels per day (bpd) to 6.12 million bpd, according to U.S. Energy Information Administration’s drilling productivity report. North Dakota’s Bakken output is set to rise by 7,600 bpd to 1.1 million bpd, the most since March 2016, while Eagle Ford oil output in Texas is set to rise by 2,500 bpd to 1.2 million bpd. Permian production is forecast to rise by 50,000 bpd to 2.7 million bpd, a new record, the EIA said. Meanwhile, U.S. natural gas production was projected to […]

African Petroleum shaky, but confident, about oil offshore West Africa

African Petroleum upbeat about its prospects despite a series of setbacks with its West African portfolio. Photo courtesy of African Petroleum. Oct. 16 (UPI) — Some of the more promising oil basins off the coast of West Africa are close to the point of pay off despite recent setbacks, African Petroleum said Monday. African Petroleum has assets in Gambia, Senegal, Ivory Coast and Sierra Leone. Of those, Senegal holds the most oil in its territorial waters, but much of the region is unexplored and the full potential has yet to be realized. Hailed as one of the largest discoveries when declared in 2014, the companies tied to Senegal say the SNE offshore field, combined with other exploration developments, may hold more than 1.5 billion barrels of oil. Australian energy company FAR Ltd. and British company Cairn Energy, the operator, declared a new discovery offshore Senegal in August , just […]

U.S. Oil Production To Increase in November As Rig Count Falls

17 Oct 2017   Oil Supply, Shale Oil, USA

U.S. oil production is set to increase in November, according the Energy Information Administration’s (EIA) Drilling Productivity Report published on Monday. (Click to enlarge) The EIA has forecast an increase of 81,000 barrels per day in November over October levels, even as the number of active oil rigs in the United States dipped steadily over the third quarter, shedding 20 rigs over the last eight weeks. The EIA is also predicting that U.S. crude oil production will hit 9.9 million barrels per day in 2018, a new high for the United States, according to the agency’s Short-Term Energy Outlook. The previous high was 9.6 million barrels per day, which was reached in 1970. The largest increase to crude oil production is expected to come from the Permian Basin, where the EIA is predicting an increase of 51,000 barrels per day to hit 2.66 million bpd in November. Anadarko and […]

About 30 percent of Gulf oil production still offline because of Nate

14 Oct 2017   Oil Supply, USA

More than 30 percent of the oil production in the U.S. waters of the Gulf of Mexico is offline because of the shut-ins from Hurricane Nate, the government said. Nate bounced along the southern U.S. border during the weekend, making landfall twice as a Category 1 hurricane. On Monday, the government said about 92 percent of the total Gulf oil production and 77 percent of the natural gas production was offline because of the impact from Nate. Two refineries, which at a combined capacity of 587,000 barrels per day represented 6 percent of the total regional capacity, were closed down at the peak of the outage. In its latest incident report, the U.S. Energy Department […]

U.S. oil pipeline rivals look to consolidate West Texas projects

14 Oct 2017   Shale Oil

As shale oil producers have rushed back into the Permian Basin after a downturn, U.S. pipeline firms have scrambled to plot new pipelines to take all that petroleum from West Texas to refineries, export hubs and petrochemical plants. But operators with plans for up to 20 new lines are now selling stakes in some of those projects amid concerns that production could fall short of the volumes needed to fill them. “I suspect some projects will disappear altogether,” said Roberto Simon, Americas head of natural resources and infrastructure for investment bank Societe Generale. “Not every one is going to be viable.” The shakeout comes despite record crude volumes being pumped now in the […]

Goldman Sachs: Inventory Drawdowns Will Not Continue

13 Oct 2017   Oil Supply, Prices

The September oil price rally was predicated on improving oil market fundamentals, bolstering confidence that the rebalancing process was accelerating. But the inventory declines reported in the third quarter might be “as good as it gets,” with inventories returning to small increases next year, according to a new report from Goldman Sachs. The third quarter appeared to finally be the turning point for an oil market suffering from a more than three-year downturn. The OPEC deal was finally bearing fruit—inventories started posting substantial declines after a few years at or near record levels. That translated into a newfound bullishness in the market, and sizable price increases for WTI and Brent, particularly in September. But Goldman says that the third quarter could have been the peak for drawdowns, due to a variety of factors that could partially reverse going forward. For example, oil production outside of OPEC (excluding the U.S.) […]

House leadership supports U.S. offshore overhaul

13 Oct 2017   Offshore

An offshore drilling act critics said was “wish list” legislation for the oil and gas industry was hailed as a strategic win by House Republican leadership. The House Natural Resources Energy and Mineral subcommittee heard testimony Wednesday on the Accessing Strategic Resources Offshore Act or ASTRO. The measure would limit the presidential authority to put parts of the Outer Continental Shelf off-limits to oil and gas drillers and give the Interior Department the authority to move ahead with new lease sales “as soon as practicable,” but no later than a year after the announcement of intent. Subcommittee Chairman Paul Gosar, R-Ariz., said the offshore oil and gas industry is vital for U.S. economic success, generating […]

Offshore US operators continue restarting shut-in Gulf of Mexico output:

13 Oct 2017   Oil Supply

Offshore operators in the Gulf of Mexico continued to restart production on Thursday after as much as a week of shut-ins from Hurricane Nate last weekend, the US Bureau of Safety and Environmental Enforcement said. By noon CDT (1700 GMT) Thursday, 343,539 b/d of oil was still shut in, or about 20% of all Gulf of Mexico production, as well as 399,920 Mcf/d of natural gas, or 12% of all gas produced in the Gulf. By contrast, on Wednesday, 571,854 b/d of oil, or 33% of the US Gulf’s total, and 660,550 Mcf/d of gas, or 21%, was shut in. Late Wednesday, Chevron said it had resumed normal operations in all its Gulf of Mexico fields that had been shut in prior to Nate’s approach. That included the company’s Jack/St. Malo, Tahiti, Petronius, Genesis and Blind Faith fields, spokeswoman Veronica Flores-Paniagua said. Nate, a fast-moving hurricane, moved ashore late […]

Short-Term Energy Outlook

12 Oct 2017   Oil Supply

Forecast Highlights Winter Fuels Outlook EIA forecasts that average household expenditures for all major home heating fuels will rise this winter because of expected colder weather and higher energy costs. Average increases vary by fuel, with natural gas expenditures forecast to rise by 12%, home heating oil by 17%, electricity by 8%, and propane by 18%. Most of the increase reflects expected colder weather rather than higher energy costs. A warmer-than-forecast winter would see lower increases in expenditures, and a colder-than-forecast winter would see higher increases in expenditures ( Winter Fuels Outlook ). Global liquid fuels North Sea Brent crude oil spot prices averaged $56 per barrel (b) in September, an increase of $4/b from the average in August. EIA forecasts Brent spot prices to average $52/b in 2017 and $54/b in 2018, which is $1/b higher in 2017 and $2/b higher in 2018 compared with last month’s forecast. […]

Global oil market seen balanced in 2018, even with rising output: IEA

12 Oct 2017   Oil Supply

Global supply and demand for crude oil will be largely balanced next year, as growth in consumption helps erode a three-year-old overhang of unused fuel and should mostly offset a steep rise in output, the International Energy Agency said on Thursday. FILE PHOTO: An Iraqi worker opens a pipe at Sheaiba oil refinery in Basra, 550 km (340 miles) south of Baghdad, March 29, 2007. REUTERS/Atef Hassan In its monthly oil market report, the Paris-based IEA said it continues to see global demand for crude growing by 1.6 million barrels per day (bpd) in 2017, before moderating to 1.4 million bpd in 2018. “Looking into 2018, we see that three quarters out of four will be roughly balanced — again using an assumption of unchanged OPEC production, and based on normal weather conditions,” the agency said. Sponsored “Taking 2018 as a whole, oil demand and non-OPEC […]

Why 2017 will go down as the beginning of the end of the internal combustion engine

12 Oct 2017   Peak Oil

General Motors outlined an all-electric path to zero emissions with at least 20 new all-electric vehicles by 2023. Electric vehicles no longer seem like a futuristic fever dream, but they remain a rarity on most American city streets, accounting for less than 1 percent of the nation’s auto sales, according to the automotive website Edmunds.com. Yet, when future auto historians look back, they may pinpoint 2017 as the year electric vehicles went from a promising progressive fad to an industry-wide inevitability. The tipping point, experts say, follows three developments, each rippling outward with economic and cultural consequences. China’s flexing: In addition to setting aggressive production quotas for EVs, China plans to scrap internal combustion engines entirely as soon as 2030. By taking a lead role in the shift to plug-ins, the world’s largest auto market is forcing the rest of the international community to follow in its footsteps. The […]

Oil, gas executives see reduced US rig deployment in 2018: Deloitte survey

12 Oct 2017   Oil Supply, USA

A majority of oil and natural gas company executives polled in a survey released Wednesday expect a net decrease in rig deployment next year compared with 2016 levels, as spending by operators slides amid a forecast that US commodity prices will remain cheap. The survey by consulting firm Deloitte of over 250 industry professionals highlights the uncertainty producers, processors, pipelines and exporters see in the energy sector heading into 2018, even as the Trump administration promises new opportunities for projects. Half of upstream oil and gas executives surveyed expect up to a 10% decline in capital expenditures next year versus last year, including 4 in 10 expecting exploration spending to fall, Deloitte said. Some 58% expect a net decrease in rig deployment. On the midstream side, 56% of executives expect a decrease in capital expenditures in 2018 versus 2016, while only one in eight expect an increase over the […]

France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects

12 Oct 2017   France, Shale Oil

As part of efforts to support energy transition, France’s biggest listed bank, BNP Paribas, said on Wednesday that it would no longer do business with companies whose main business is exploration, production, trading, or marketing of oil and gas from shale or tar sands projects. In one of the latest signs that the banking industry is evaluating the wisdom of doing business with the oil and gas industry in the face of mounting pressure from investors, BNP Paribas also said that it wouldn’t finance any oil or gas exploration or production projects in the Arctic region. The bank will also no longer finance LNG terminals that predominantly liquefy and export gas from shale projects, and choke off funding for pipelines that carry oil and gas from shale and/or tar sands. It doesn’t stop there. BNP Paribas won’t finance coal mines and coal-fired power plants either, and will be no […]

Oil: We still need (plenty) more supply

12 Oct 2017   Peak Oil

Analysts at HSBC suggest that despite a likely peak in LDV demand in 2025-30, the peak in total oil demand still looks much further off and they see a looming shortage of supply as a more pressing issue, pointing to upside in prices from current levels. Key Quotes “The rate of climate policy progress and technological advances in alternative transport means the outlook for global oil demand has become subject to an unusually high level of uncertainty.” “Our model indicates that on most scenarios, a combination of higher Electric Vehicle (EV) sales and improving fuel efficiency in the internal combustion engine (ICE) fleet leads to a peak in light duty vehicle (LDV) demand for oil in the period 2025-30, albeit with limited demand erosion before 2030 or so due to the scale of the existing LDV fleet.” “Total oil demand has the potential to continue growing for much longer, […]

Over 1 mil b/d of Gulf of Mexico crude output still shut-in after Nate:

11 Oct 2017   Oil Supply, USA

More than 1 million b/d of crude remains shut-in in the US Gulf of Mexico Tuesday after Hurricane Nate passed through the region over the weekend, although a couple of companies have publicly said they have begun to restart production.   Shut-in production of 1.024 million b/d represents nearly 59% of the US Gulf’s crude output, the US Bureau of Safety and Environmental Enforcement said Tuesday.  In addition, 1.485 Bcf/d of natural gas output is also still shut-in, which is 46% of the US Gulf’s gas output, BSEE said. Also, 66 platforms and one rig remain evacuated, which are 9% of the total platforms and 5% of the total rigs in the Gulf, respectively.

Earlier Tuesday, ExxonMobil said it had restored production at its Julia and Hadrian South deepwater platforms, and was working to restore its shallow-water Mobile Bay production. Late Monday, Murphy Oil said it was restoring the output of Front Runner and Medusa, two deepwater production facilities it operates.
Nate, a fast-moving storm, made landfall late Saturday as a Category 1 hurricane and raced east across Louisiana, Mississippi and Alabama on Sunday. So far it appears to have caused little or no damage to oil infrastructure.

U.S. shale producers called to OPEC balancing effort

11 Oct 2017   OPEC, Shale Oil

OPEC Secretary General Mohammad Sanusi Barkindo calls North American shale producers to do their part in the effort to balance an oversupplied market for crude oil. Photo courtesy of the Organization of Petroleum Exporting Countries Oct. 10 (UPI) — Operators working in shale basins in the United States are called on to do their part to bring the oil market back to balance, OPEC’s secretary general said. Members of the Organization of Petroleum Exporting Countries and a handful of non-member states started an effort to drain the surplus on the five-year average in global crude oil inventories through managed production declines in January. The agreement stands until March. Speaking at an energy conference in New Delhi, OPEC Secretary General Mohammad Sanusi Barkindo said oil demand growth in 2018 should be “quite robust,” while commercial oil stocks in the world’s advanced economies continues to fall. Barkindo said the effort in […]

U.S. oil output may be set for last spike in 2018: Vitol

11 Oct 2017   Oil Supply, USA

U.S. oil output could be set for a last spike in 2018 before growth flattens for a number of years as rising costs make a big chunk of production uneconomic, the head of top oil trader Vitol, Ian Taylor, told Reuters. The United States has turned into a major oil exporter in recent years on the back of a shale revolution, which created a global oil glut and sent prices plunging to below $30 per barrel last year from as high as $110 in 2014. “I think the question, a little bit in the longer term is – is this the last big rise in U.S. production?” said Taylor, chief executive at Vitol, which trades more than 7 percent of global oil and has a large presence in U.S. markets. He said Vitol expected U.S. output to climb by 0.5-0.6 million barrels per day (bpd) next […]

Saudis to Make Deepest Cut to Crude Supply Despite Demand

Aramco plans to cut 560,000 barrels a day from November supply Kingdom urges producers to comply at “high levels” with limits Saudi Aramco plans to make “the deepest customer allocation cuts in its history” in oil supplies in November to help reduce global inventories and balance the market. State-run Saudi Arabian Oil Co., known as Aramco, will make an “unprecedented” cut of 560,000 barrels a day in its allocations to customers next month, the Saudi energy ministry said in a statement. Aramco plans to supply 7.15 million barrels a day “despite very strong demand” that exceeds 7.7 million barrels a day, it said. “Saudi Arabia is once again demonstrating extraordinary leadership in its commitment to re-balancing the market, as we approach the upcoming key meeting of November 30 in Vienna, by restraining not only the top-line of production volume, but even more importantly the bottom line of exports, which […]

Is The Bakken Profitable At $50 Oil?

10 Oct 2017   Shale Oil

This is followed with economic life cycle analysis for the average LTO well of the 2014, 2015 and 2016 vintages in the Bakken. This analysis found that companies in aggregate continue to outspend net cash flows from operations and for 2017 this is now expected to total $2 – $3 Billion. • The strong growth and sustained high LTO extraction from the Bakken were facilitated by considerable amounts of debts. The growth in total debts outstanding (employed capital) continues to grow, albeit at a slower pace. • With oil prices sustained at present levels the total employed capital (primarily debt) constitutes severe obstacles for the profitability for the Bakken. • In a scenario where no wells were added post 2017 and the wellhead (at WH) price remained at $40/bo [~ $50/bo WTI] estimated losses for the project would be $20 – $22 Billion. • In a scenario where no […]

The “Amazon Effect” Is Coming To Oil Markets

10 Oct 2017   Oil Supply

While OPEC mulls over further steps to once again support falling oil prices, tech startups are quietly ushering in a new era in oil and gas: the era of the digital oil field. Much talk has revolved around how software can completely transform the energy industry, but until recently, it was just talk. Now, things are beginning to change, and some observers, such as Cottonwood Venture Partners’ Mark P. Mills , believe we are on the verge of an oil industry transformation of proportions identical to the transformation that Amazon prompted in retail. According to Mills, the three technological factors that actualized what he calls “the Amazon effect”, which changed the face of retail forever, are evidenced in oil and gas right now. These are cheap computing with industrial-application capabilities; ubiquitous communication networks; and, of course, cloud tech. The Internet of Things is entering oil and gas, and so […]

OPEC Says ‘Extraordinary’ Steps Needed for Stable Market in 2018

9 Oct 2017   Oil Supply, OPEC

Re-balancing of oil market is underway: OPEC Secretary-General More measures may be needed to sustain recovery into next year Oil producers are succeeding in re-balancing an oversupplied market, though they may need to take further steps to sustain the recovery into 2018, OPEC Secretary-General Mohammad Barkindo said. Saudi Arabia and Russia are currently leading consultations between the Organization of Petroleum Exporting Countries and other major suppliers about the future of their agreement to cut oil output, Barkindo said Sunday in New Delhi. The pact expires in March, and oil producers are debating whether to extend it later into the year. “There is a growing consensus that, number one, the re-balancing process is underway,” he said after meeting with Indian Oil Minister Dharmendra Pradhan. “Number two, to sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis […]

China Study Warns Of Impending Oil Production Peak & World Oil Market Squeeze, + Peak Recoverable Coal ~2020

9 Oct 2017   China, Peak Oil

China is rapidly approaching peak fossil fuel extraction according to a new state-funded study led by the China University of Petroleum in Beijing. The study findings include the assertion that China will experience a peak in its total oil production (conventional + unconventional) by as early as 2018. As a result, world oil markets and geopolitics are likely to be greatly affected as China seeks to meet the widening demand shortfall through trade. Accompanying this reality, China will also be reaching peak commercially recoverable coal around 2020, according to the study. The study notes, though, that even though coal currently accounts for around 66% of China’s total energy consumption, a shift away from the resource has been underway in recent years, and that if this shift is accelerated, then demand may fall fast enough that peak coal may not occur there. For more on that, see: China Halts Construction […]

Most ‘Competitive’ Oil In The World Befuddles Analysts

9 Oct 2017   Shale Oil, USA

U.S. oil exports hit record highs last week, doubling over the course of a week as the Gulf Coast clears out product backed up because of Hurricane Harvey. The high level of crude exports won’t last forever, but there appears to be a little more life left in the export boom. The surge in exports led net import totals to plunge to levels never seen in EIA data dating back to 2001. Over the last few years, weekly net imports tend to fluctuate between 6 and 8 million barrels per day (mb/d). But September was a highly unusual month. Net imports fell to 5.7 mb/d in the week ending on September 8 before recovering a bit mid-month. By September 29, however, net imports plunged to 5.2 mb/d, the lowest weekly total on record. (Click to enlarge) As mentioned, those low import figures were the direct result of an explosion […]

A little on the Profitability of the Bakken

9 Oct 2017   Shale Oil

In the first part of this post I present an update on the profitability for Light Tight Oil (LTO) extraction in the Bakken (ND) as one big project. This is followed with economic life cycle analysis for the average LTO well of the 2014, 2015 and 2016 vintages in the Bakken. This analysis found that companies in aggregate continue to outspend net cash flows from operations and for 2017 this is now expected to total $2 – $3 Billion. The strong growth and sustained high LTO extraction from the Bakken were facilitated by considerable amounts of debts. The growth in total debts outstanding (employed capital) continues to grow, albeit at a slower pace. With oil prices sustained at present levels the total employed capital (primarily debt) constitutes severe obstacles for the profitability for the Bakken. In a scenario where no wells were added post 2017 and the wellhead (at […]

World’s Biggest Oil Trader Questions Its Own Fate

7 Oct 2017   Peak Oil

Vitol’s chief executive, Ian Taylor, said he expected the shift to electric vehicles and non-fossil fuel sources of energy to shrink the oil industry. Speaking at an event in London, the executive said crude oil demand could peak some time around 2028-2030. Vitol is responsible for the trade of around 7 percent of global oil, which makes it the biggest oil trading firm in the world. Taylor admitted he is concerned about the company’s place in a new, less oil-dependent, world. An additional cause for worry is the shrinking pool of talent, as more young people opt for a career in technology, he said. A third cause for worry for one of the world’s top oil traders is the low price of the commodity, although Taylor said that he expected prices to improve to about US$60-65 in the next two to three years. Before that, however, Taylor said , […]

Consultant: Permian plays are marginally profitable

7 Oct 2017   Shale Oil

Companies are dependent on outside capital, Art Berman says Opening the West Texas Geological Society’s annual fall symposium Wednesday, keynote speaker Art Berman threw a bucket of cold water on the red-hot Permian shale plays. More accurately, the geological consultant and well-known questioner of the nation’s shale plays attempted to put the Permian in perspective and highlight the long-term debt cycle. “This doesn’t in any way diminish the importance of the achievement,” Berman said after his presentation at the Horseshoe. “I know people are mindful of the past, but they tend to be exuberant.” The most important fact to remember is that, on balance, the Permian Basin shale plays are, in most cases, marginally profitable “because costs are very high and you have to balance the costs with the results,” he said. “These wells, these companies, these plays are totally dependent on outside capital.” If companies spend more than […]

Energy producers gain breathing room to borrow amid price uptick: survey

7 Oct 2017   Shale Oil

U.S. oil and gas producers have gained more flexibility to borrow money as crude prices have modestly rebounded, according to a survey of the companies, lenders and others released on Friday. Greater room to borrow means energy producers are under less immediate pressure to cut costs or output. Only 26 percent of energy producers with loans are likely to see a decrease this fall in their borrowing bases, according to the survey by Dallas-based law firm Haynes and Boone. Borrowing base redeterminations are a measure that lenders use to determine available credit according to property value. A year ago, the same survey showed 41 percent were expected to see a decline. The calculations factor in banks’ price projections for producers’ oil and gas reserves. Abundant crude oil inventories, which have driven prices down by half since 2014, are starting to dwindle. NYMEX futures have gained about […]

About 71.1 percent Of U.S. Gulf oil output offline ahead of Nate: BSEE

7 Oct 2017   Offshore, USA

About 71 percent of U.S. Gulf of Mexico oil production is offline ahead of Tropical Storm Nate, the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) said on Friday. Nate is forecast to enter the Gulf and strengthen into a hurricane before making landfall late Saturday in Louisiana, near several major refineries. Oil companies have evacuated staff from Gulf platforms and curtailed output ahead of the storm, with production equaling 1.24 million barrels of crude per day already offline, according to BSEE. About 53.2 percent of Gulf natural gas production remains offline, BSEE said.

Early pressure mounts on overhaul of U.S. offshore oil and gas rules

7 Oct 2017   Congress, Offshore, USA

Members of the U.S. House next week take up a measure on offshore drilling that advocates say checks off the wish-list for the oil and gas industry. The House Natural Resources Energy and Mineral subcommittee scheduled a hearing for Oct. 11 to take up the Accessing Strategic Resources Offshore Act, or ASTRO. The measure would limit the presidential authority to put parts of the Outer Continental Shelf off limits to oil and gas drillers and give the Interior Department the authority to moved ahead with new leases sales “as soon as practicable,” but no later than a year after the announcement of intent. In one of his final moves in office, former President […]

Time running out on closing budget gap in shale-rich Oklahoma

7 Oct 2017   Shale Oil

The governor of shale-rich Oklahoma said time is running out to address budget problems, even as the state treasurer said oil market recovery has led to gains. House Minority Leader Scott Inman, who is running to fill Fallin’s seat after she leaves office on term limits, said Thursday afternoon there was a bipartisan agreement to raise sin taxes, cut a tax on wind energy producers and raise the rate for gross production taxes. Fallin responded by saying that maybe there were agreements on common goals, but if there were a budget deal, should would’ve announced it herself. Fallin called lawmakers to a special session in late September to address budget strains […]

Tax Breaks Make $50 Oil Profitable In The U.S.

6 Oct 2017   Shale Oil

While the U.S. administration is pushing for a tax code overhaul and supports American “energy dominance”, an environmental group suggests in a new study that at the current oil prices of $50, the development of U.S. oil resources may be much more dependent on tax deductions and provisions than previously thought. The study , conducted by researchers at the Stockholm Environment Institute and Earth Track, concludes that at a $50 oil price, around half of discovered and yet-to-be developed oil resources in the U.S. would depend on existing tax deductions to go from unprofitable to profitable. The researchers divided U.S. fields into four groups: the Permian Basin, the Williston Basin, the Gulf of Mexico, and a fourth group to include all other basins. Then they studied how each of the tax provisions influence the return on investment for new U.S. oil resources of more than 800 fields that have […]

The Permian Boom Is Coming To An End

6 Oct 2017   Shale Oil

The pressure on shale drillers to throttle back on their aggressive drilling continues to crop up in new places, and there are growing signs that the Permian is slowing down. Shale companies spent just $5 billion on land deals in West Texas in the last six months, a fraction of the $35 billion spent in the prior nine-month period, according to the Houston Chronicle , citing Wood Mackenzie data. It’s the latest piece of evidence to suggest that “Permania” might be easing. The hottest shale basin on the planet has suffered from rising costs as too many companies pour money into West Texas. The crowded field has pushed up the price of land, labor, oilfield services, rigs and more. That has led to a rude awakening for a lot of shale drillers. “It’s just taken the edge off the Permian,” said Greig Aitken, head of upstream oil and gas […]

U.S. Shale Juggernaut Shows Signs of Fatigue

6 Oct 2017   Shale Oil

American shale companies are starting to tap the brakes on drilling. U.S. oil output remains robust and may still surpass the record annual average of 9.6 million barrels a day, set in 1970. But companies, confronting technological, operational and financial obstacles, are starting to ease up on drilling. The pace of innovation that allowed shale drillers to maintain production even as prices fell appears to be slowing, experts say. The cost of labor and services, meanwhile, is rising in the most popular oil fields, driving up drilling expenses. And companies are facing a backlash from investors , who have grown weary of drillers focusing on growth over profit and insist they live within their means. “There’s always a lot of exuberance,” said Robert Clarke, an analyst with energy consulting firm Wood Mackenzie. “But then something happens that kind of puts the brakes on.” Future oil production is notoriously difficult […]