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Goldman Sees 15 Years of Weak Crude as $20 U.S Oil Looms

A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. There’s less than a 50 percent chance that prices will drop to $20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said in an interview in Lake Louise, Alberta. Goldman’s long-term forecast for crude is at $50 a barrel, he said. Goldman cut its crude forecasts earlier this month, saying the global surplus of oil is bigger than it previously thought and that failure to reduce production fast enough may require prices to fall near $20 a barrel to clear the glut. Prices may touch that level when stockpiles are filled to capacity, forcing producers in some areas to cut output, Currie said Wednesday. “When we think of the longer term oil price, yes we […]

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KKR’s Samson Resources Files Bankruptcy as Shale Bet Sours

Oil and gas driller Samson Resources Corp. filed for bankruptcy in Delaware Wednesday night, undone by a collapse in energy prices and billions in debt that KKR & Co. and other investors piled on to fund a 2011 takeover. Tulsa, Oklahoma-based Samson and its owners were stung by the price drop that put money into the pockets of consumers through lower gasoline and heating costs, while driving other producers, such as Sabine Oil & Gas Corp. and Quicksilver Resources Inc., into Chapter 11. Samson’s filing is among the biggest energy bankruptcies in the U.S. this year, but it probably won’t be the last. The shale-oil driller is, in a way, a victim of its own success. Samson and other producers have rushed to use hydraulic fracturing and horizontal drilling to tap previously hard-to-reach oil and gas deposits in shale formations, triggering a production boom that helped send prices tumbling. […]

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White House called on to act on oil exports

Responsibility lies with the White House to overturn a ban on crude oil exports, an industry group says. Photo by tcly/Shutterstock WASHINGTON, Sept. 16 (UPI) — If the White House opposes legislative action to overturn a ban on oil exports, the onus is on the executive branch to take action, an industry group said. A House energy committee pushed ahead with legislation that would end a ban on crude oil exports enacted when Arab members of the Organization of Petroleum Exporting Countries stopped shipping oil to the United States in the 1970s. In what industry supporters describe as an era of energy abundance brought on by U.S. shale oil deposits, Republican leaders in the House say U.S. policies are out of date. White House spokesman John Earnest said ending the ban is a matter for the Commerce Department, saying the office of President Barack Obama does not support legislative […]

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Continental Sidelines Bakken Rigs

Continental Resources Announces More Reductions Continental Resources continues to showcase their flexibility, announcing this week it will be sidelining rigs in the Bakken while reducing its CAPEX once again. Three week after reporting the “excellent results’ of their second quarter, Continental Resources, Inc. says it now plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 in order to deal with the current crude pricing environment. This adjusted spending will be $2.35 billion to $2.40 billion. Harold Hamm, Chairman and Chief Executive Officer commented, “While we do not believe today’s low commodity prices are sustainable long term, we are committed to living within cash flow until they recover. We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve.” Continental will also join other producers who are sidelining their rigs […]

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Alberta Regulator Allows Cnooc Oil-Sands Plant to Resume Full Production

CALGARY, Alberta—The Canadian unit of Chinese state-controlled energy giant Cnooc Ltd. CEO 2.76 % said Wednesday that it can resume full production at a troubled oil-sands operation after regulatory authorities eased a suspension order that had crimped its output. Cnooc subsidiary Nexen Energy ULC said Alberta’s chief energy regulator amended an order that threatened to shut down its 50,000 barrel a day Long Lake heavy oil extraction facility located in the province’s northeastern boreal forests. “Nexen is able to resume 100% of our operations” at its Long Lake oil sands plant, the company said in a statement. The Alberta Energy Regulator imposed the order late last month for suspected failure to comply with certain rules, effectively rendering the plant inoperable. The AER scaled back that order earlier this month [Sept. 6], which allowed Nexen to operate at three-quarters of its previous production levels. It further revised the order on […]

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Gulf Coast gasoline production jumps 9.2% week on week: EIA

US Gulf Coast gasoline blenders and refiners’ production of finished gasoline increased 190,000 b/d or 9.2% week on week to 2.249 million b/d in the week that ended September 11, posting a five-year high for the second week of September as refineries continue to run at high rates. Gulf Coast refiners bumped up production to utilize 92.3% of their refineries’ operable capacity, recovering from a spate of production issues in the previous week, when capacity utilization was 87.6%. US gasoline demand, however, did not live up to the market’s high expectations for the last major US driving holiday of the year — Labor Day. US product supplied, which is commonly used as a proxy for nationwide gasoline demand, was largely unchanged week on week, falling 34,000 barrels to 8.983 million b/d. Article continues below… Sign up for Global Alert today. Platts Global Alert is a complete real-time information service […]

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US EIA to estimate 70-74 Bcf gas storage injection: survey

A consensus of analysts surveyed by Platts Wednesday expects the US Energy Information Administration on Thursday will estimate a natural gas storage injection of 70-74 Bcf for the reporting week that ended September 11. The EIA plans to announce its storage report at 10:30 am EST Thursday. An injection within expectations would be less than the 90-Bcf injection reported at this time in 2014 and comparable to the 75-Bcf five-year average injection, according to EIA data. Article continues below… Platts Natural Gas Alert provides global coverage of the major natural gas and LNG markets, including real-time spot market transactions reported as deals are done and key end-of-day crude and product assessments. The wider range of analysts’ expectations for this week was for a build of 66-77 Bcf. Last week, the EIA reported a 68-Bcf injection that increased inventories to 3.261 Tcf, which was 473 Bcf, or 17%, more than […]

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Vanishing CFOs: Why So Many in Oil, Gas are Choosing to Leave

In the months following the sudden dip in crude oil prices that began late 2014, the oil and gas industry has been challenged with finding ways to cope and maintain until the market turns around. The whole “do more with less” approach to work has been adopted by many companies who have had to downsize and restructure within their organizations . But in addition to layoffs and other cost-cutting measures, several companies have had to deal with a few surprises. The most recent downturn has seen a shakeup of many C-suite executives, as some have entered – and departed – their companies. While many smart and resourceful oil and gas companies already have succession plans in place to prepare for senior-level employee departures , for companies that don’t, now is an opportune time to visit the topic and implement some strategies, as the industry can expect to see several […]

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Eni sees larger European gas role

Eni Chief Executive Officer Claudio Descalzi hosted European Commissioner for Energy and Climate Action Miguel Arias Canete to discuss European natural gas needs. Photo courtesy of Eni. ROME, Sept. 16 (UPI) — A natural gas discovery off the Egyptian coast and recent cooperation with Cyprus could translate to European energy security, Italian energy company Eni said. Eni Chief Executive Officer Claudio Descalzi hosted European Commissioner for Energy and Climate Action Miguel Arias Canete in Rome to discuss regional energy issues. Descalzi said connecting regional markets and ensuring future supplies could help ensure European energy demands are met without interruption. "Eni’s super giant gas discovery offshore Egypt, along with other important discoveries made in recent years offshore Israel and Cyprus, will allow the East Mediterranean gas hub to contribute significantly to European energy security," the company said in a statement on the meeting. Descalzi met last week with Cypriot President […]

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Category: Uncategorized

Oil crimping Norway’s economy

Norwegian economy facing downward pressure from lower crude oil prices, statistics office says. File photo by num_skyman/UPI OSLO, Norway, Sept. 16 (UPI) — The low price of crude oil has led to clear downturns in the Norwegian economy and that pressure should persist, government data show. "The Norwegian economy has been in a clear, petroleum-driven cyclical downturn for a year," a statement from Statistics Norway said. Crude oil prices are down more than 50 percent from last year, forcing many energy companies to cut back on spending. In many basins, that means less overall production. Preliminary production figures from the Norwegian Petroleum Directorate, the nation’s energy regulator, show an average daily production of around 1.9 million barrels of oil, natural gas liquids and condensate. That’s about 2 percent less than July. The government’s statistics office said the decline in investment in the petroleum industry is one of the key […]

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U.S. oil extends gains on stock-draw, Brent lags with Asian economies

A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. U.S. oil prices extended gains in Asia on Wednesday on an unexpected stockpile draw and higher gasoline prices, while international crude markets were weaker on the back of low Asian economic growth expectations. Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $44.91 per barrel at 0453 GMT on Wednesday, up 32 cents from their last settlement. Internationally traded Brent futures were a bit weaker in comparison, gaining only 9 cents to $47.84 a barrel. The recent divergence in American and international markets has cut the discount of the U.S. oil to the Brent global benchmark by nearly two-thirds during the past month to around $2.50 per barrel. "We believe that this could be the market’s reaction to the decline in U.S. crude production (drilling) … further exacerbated […]

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Brent crude premium to U.S. WTI futures narrowest since January

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. The premium of Brent crude oil futures to U.S. WTI oil prices reached its narrowest since the start of the year on Tuesday, driven by expectations for lower U.S. production over the coming months. The Brent/WTI spread touched $2.00 a barrel, the smallest gap between the two contracts since January, before easing back a touch to $2.19 by 1303 GMT. The front-month Brent futures contract, which expires later on Tuesday, was up 33 cents on the day at $46.7 a barrel, while WTI futures were up 51 cents at $44.51. Both benchmarks have lost roughly half their value over the last year, under pressure from rising global supply and faltering demand from key consumers such as China. Key forecasters have this week predicted a decline in U.S. output next year, particularly from higher-cost shale producers.

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Oil Prices Rise Amid Signs of U.S. Output Cuts

Oil prices rose Tuesday, as signs of U.S. production cuts and bargain buying helped lift the market from a two-week low. Light, sweet crude for October delivery gained 59 cents, or 1.3%, to close at $44.59 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 26 cents, or 0.6%, to $46.63 a barrel on ICE Futures Europe. The U.S. Energy Information Administration said Monday that production from several important shale-oil fields is likely to fall by 80,000 barrels a day by next month. Crude oil output from the Eagle Ford shale in Texas, one of the hottest spots during the U.S. drilling boom, has dropped for seven straight months, down 17% over that time, according to ClipperData’s analysis. It was surprising that Eagle Ford has had the steepest declines, Simmons & Co. International said in a research note. Many speculators have made big bets throughout […]

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Oil edges up towards $47, weaker Asian demand outlook weighs

A customer fills the tank of her car at a fuel station in Sint Pieters Leeuw, Belgium December 5, 2014. Oil edged higher towards $47 a barrel on Tuesday, supported by the prospect of lower U.S. inventories and production although concern about weaker Asian demand kept prices in check. While analysts expect reports this week to show no change in U.S. crude stocks overall, an estimate from market intelligence company Genscape that they fell by 1.8 million barrels at Cushing – U.S. crude’s delivery point – lent oil some support. Brent crude LCOc1 was up 26 cents at $46.63 a barrel, after declining in the previous two sessions. U.S. crude CLc1 was trading 38 cents higher at $44.38 at 0849 GMT. "Genscape is forecasting a large stock draw in Cushing," said Olivier Jakob, analyst at Petromatrix. "The supply and demand numbers suggest that the low oil prices are starting […]

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Oil price curve may hint at higher prices at last

An employee changes a price sign at a petrol station in Hanoi, Vietnam September 3, 2015. Cautious oil market bulls are stirring, sensing higher prices for future months after a first whisper that the glut may be set to slowly shrink. The International Energy Agency (IEA) on Friday said lower prices will force non-OPEC producers including the United States to cut output by the steepest rate in over 20 years next year. This helped push the difference in price between oil for delivery in October and for delivery in one year’s time to its widest in six months, at $8.0 a barrel on Monday. "People are getting ready to press the ‘buy’ button, but the thing is we are probably just still a couple of months too early," Saxo Bank commodities strategist Ole Hansen said. The outperformance of longer-dated crude prices seems to be more about a pickup in […]

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Oil Traders Hire Tanks on Tiny Island to Profit From Global Glut

To see how oil traders are profiting from the longest-lasting glut in three decades, look at the tiny Caribbean island of St. Lucia. Glencore Plc hired tanks at the island’s only oil terminal to stow crude, joining Vitol Group, people familiar with the matter said last week. They’re responding to the market’s deepening contango, a situation where prices today are lower than those in future months, allowing traders with access to storage to lock in a profit. From St. Lucia to South Africa to Rotterdam, they’re seizing the opportunity. “Contango opportunities are emerging,” Ian Taylor, chief executive officer of Vitol, the world’s largest independent oil trader, said in an interview earlier this month. While the oil market has been in contango since August 2014, in the last month prices have moved in a direction that makes the trade more profitable. The price difference between a Brent oil contract for […]

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Decline rates will ensure oil output falls in 2016

An oil pump is seen in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 18, 2015. “It takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast,” the Red Queen told Alice in Lewis Carroll’s novel “Through the Looking-Glass”. Oil companies have to invest heavily simply to offset the impact of natural decline rates on their existing fields, and even more if they want actually to increase production. The need for continued investment and drilling to maintain output as a result of the rapid decline rates on shale wells has been widely discussed. But decline rates on conventional oil fields are even more important because they account for more than 90 percent of global production. Decline rates on conventional fields will play a critical part rebalancing the oil market […]

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Genel makes grab for Kurdish gas

British company Genel Energy takes on larger stake in gas assets in the Kurdish north of Iraq. Photo courtesy of Genel Energy. LONDON, Sept. 15 (UPI) — British energy company Genel Energy said it was buying the minority share of a Kurdish natural gas field form its partners at Austria’s OMV. Genel said it struck a deal to buy the 36 percent stake in the Bina Bawi gas field in the Kurdish north of Iraq. The British company said the deal is dependent only on the approval of the semiautonomous Kurdish government, with it expects shortly. "The consideration comprises an upfront payment of $5 million," Genel said in a statement. "A contingent payment of $70 million is payable once gas production exceeds agreed threshold volumes from the Miran and Bina Bawi fields." Genel in 2012 paid $156 million to take on Miran assets from Heritage Energy Middle East Ltd., […]

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U.N. Sends Experts to Iran to Discuss Past Nuclear Work

The United Nations atomic agency has sent a team of experts to Iran to discuss Tehran’s past nuclear work, according to a person familiar with the situation, while the chief of the agency could visit Iran in coming days. Sept. 15 marks the start of a critical one-month period for the International Atomic Energy Agency probe aimed at shedding light on Iran’s past nuclear work. Under an agreement struck in July , Iran and the agency have until Oct. 15 to finish that work. IAEA Director-General Yukiya Amano is supposed to report his findings to the agency’s board by Dec. 15. Many Western officials say Iran has worked on developing nuclear weapons know-how. Tehran denies this, claiming evidence given to the IAEA was forged. Iran has stonewalled agency efforts to probe its past activities for years. Iranian cooperation with the IAEA probe is a prerequisite for the lifting of […]

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Iraq warns big oil groups on spending curbs in southern oilfields

Sign up for quick access to a wealth of global business news, including: Iraq warns big oil groups on spending curbs in southern oilfields Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes […]

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Libya’s Internationally Backed Government May Block Exports by Some Oil Companies

MALTA—Libya’s internationally recognized government may block exports via oil companies that won’t deal with its new state oil company, an official said Tuesday. The government has been trying to consolidate power since the United Nations recognized it as Libya’s rightful ruling body in the wake of a civil war that split the country last year. Based in the war-torn North African nation’s eastern city of Baida, the government has formed its own national oil company, among other institutions. But the existing Libya National Oil Co. is based in Tripoli , where a group of militias known as Libya Dawn holds power. International oil companies and traders have maintained their longtime contacts with the established National Oil Co. and shunned the new one in the east, which is also called National Oil Co. Speaking to reporters Tuesday ahead of a meeting with oil companies the next day, the chief of […]

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Crude Below $50 Throws East Africa’s Oil Projects Into Doubt

Kenya and Uganda ended months of debate in August to sign an agreement on an oil pipeline costing almost $4 billion. Finding the money to build it and companies to start pumping crude may be a harder task. The 1,500-kilometer (930-mile) pipeline is key for exporting the region’s crude when production finally begins — 2018 in Uganda’s case. With oil prices languishing below $50 a barrel, there’s little incentive for companies such as Tullow Oil Plc, Africa Oil Corp., China’s CNOOC Ltd. and France’s Total SA to keep investing. “The lower oil price has created a great deal more of uncertainty around future oil production, given that additional capital expenditure will be required to make oil production a reality,” Razia Khan, head of Africa economic research at Standard Chartered Plc in London, said in an e-mailed response to questions. Just before prices collapsed, oil held great promise for both […]

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Venezuelan leader says to travel to push for OPEC, non-OPEC meeting

Venezuelan President Nicolas Maduro said on Tuesday he would travel shortly to seek support for his push for a summit between OPEC and non-OPEC producers on lower oil prices. Maduro has lobbied for months for an emergency meeting and coordination with non-OPEC nations, but OPEC’s Middle East producers have pledged to maintain high output in a fight to defend market share against rising competition. This week Maduro reiterated calls for action within OPEC and beyond OPEC, mentioning controls on output and price bands. "Probably in coming days I will travel to reinforce work to achieve this historic summit between OPEC producers and non-OPEC producers," Maduro said after a four-hour televised broadcast. His calls for action come as Venezuelan oil prices, which averaged $41.08 last week, exacerbate a dire economic crisis that has goods ranging from cancer medication to car batteries in short supply, while raging inflation slams purchasing power […]

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U.S., China Build on Plan to Cut Emissions

Next week, President Barack Obama and Chinese President Xi Jinping will add to earlier pledges to cut greenhouse-gas emissions with specific guidance on what the two countries will do at home to keep climate change at bay, officials said. The United States and China announced Tuesday that cities, states and provinces in both countries would commit to taking parallel steps to address climate change. The participating Chinese cities and provinces, which represent about 25% of total urban emissions in that country, will offer plans to have their emissions peak sooner than the national target of 2030. Beijing and Guangzhou, two of China’s largest cities, will aim for their peak emissions to come as early as 2020. Climate officials and leaders from both countries are meeting in Los Angeles this week to lay out the steps the regions will take and to set the groundwork for next week’s summit between […]

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« The Party is Over For Tight Oil but Raymond James Says, “Party On, Dude!”

The party is over for tight oil. Despite brash statements by U.S. producers and misleading analysis by Raymond James, low oil prices are killing tight oil companies. Reports this week from IEA and EIA paint a bleak picture for oil prices as the world production surplus continues. EIA said that U.S. production will fall by 1 million barrels per day over the next year and that, “expected crude oil production declines from May 2015 through mid-2016 are largely attributable to unattractive economic returns .” IEA made the point more strongly. “..the latest price rout could stop US growth in its tracks .” In other words, outside of the very best areas of the Eagle Ford, Bakken and Permian, the tight oil party is over because companies will lose money at forecasted oil prices for the next year. Global Supply and Demand Fundamentals Continue to Worsen IEA data shows that […]

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Obama Opposes Bill to Lift Oil Export Ban Set for House Vote

President Barack Obama opposes a measure poised to advance in the House of Representatives this week that would end the four-decade U.S. ban on oil exports. “We wouldn’t support legislation like the one that’s been put forward by Republicans,” White House spokesman Josh Earnest said Tuesday at a briefing. While House Majority Leader Kevin McCarthy is pushing for a vote this month, Earnest criticized him for trying to “cozy up to oil interests” by making his announcement to an industry group in Houston. Instead of pushing oil exports, Earnest said McCarthy should advocate ending tax breaks for oil drillers and use the cash to invest in solar and wind energy. Oil companies including Continental Resources Inc. and ConocoPhillips have spent much of the past two years urging Congress to change the export policy. They have relied on a series of economic analyses concluding that ending the restrictions won’t mean […]

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Republicans oppose new safety rules on offshore drilling

NEW ORLEANS (AP) — Republican lawmakers on Tuesday criticized an Obama administration move to toughen standards for offshore drilling, saying the new rules would be costly for drillers and threaten to shut down oil and gas exploration off the nation’s coasts. The Interior Department is preparing to issue standards to close what it says are gaps in blowout preventer rules. A blowout preventer is a piece of equipment designed to shut an out-of-control well. Such a device failed catastrophically when a BP well blew out in 2010, causing a massive oil spill. But the Republicans blasted the new rules at a field hearing of the U.S. House Committee on Natural Resources in New Orleans. No Democratic members showed up. The Republicans complained the rules are too government-driven and costly to industry. The Republicans also questioned whether the new rules would make drilling safer. They also argued that drillers have […]

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Upton: U.S. oil policies should match shale era

Rep. Fred Upton, R-Mich., said U.S. crude oil export policies should match what some describe as the era of abundance. File photo by Brian Kersey/UPI WASHINGTON, Sept. 15 (UPI) — As the full House Energy and Commerce Committee considers lifting a ban on U.S. crude oil exports, a congressman said it’s time policies match the shale era. By a voice vote last week , the Republican-led House Subcommittee on Energy and Power advanced legislation that would lift the ban on crude oil exports. The full House Energy and Commerce Committee considers the measure late Wednesday afternoon. "It is time for our energy policies to catch up to our new era of abundance," Committee Chairman Fred Upton, R-Mich., said in a statement. Upton and Subcommittee Chairman Ed Whitfield , R-Ky., issued a joint statement last week, saying the "benefits of lifting the ban are many," from domestic economic stimulus to […]

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North Dakota oil sector under pressure

North Dakota Industrial Commission expects slump in crude oil prices to last into next year. Photo by David Gaylor/Shutterstock BISMARCK, N.D., Sept. 15 (UPI) — A weak crude oil market that’s expected to last into 2016 should contribute to downward pressure on oil activity in North Dakota, a state regulator said. The state reported 68 rigs actively exploring for or producing oil or natural gas as of Tuesday, one less than the previous day and down 65 percent from this date in 2014. That North Dakota Industrial Commission in its latest update said oil production in July, the last full month for which data are available, was 1.2 million barrels per day, a decline of about three quarters of a percent from the previous month. More than 95 percent of the oil produced in the state comes from the Bakken and Three Forks shale region in the Williston basin […]

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House Plans Vote on Bill to Lift Ban on Oil Exports

WASHINGTON—House Republicans plan to vote on a bill in the coming weeks to lift the nation’s four-decade ban on oil exports, setting up a clash with the Obama administration later this year over what to do with oil from a boom in domestic production in the past decade. The vote would please more than a dozen oil companies lobbying Congress, and if successful, it could rattle global oil markets facing volatility and lower prices. House Majority Leader Kevin McCarthy (R., Calif.) announced the vote, which is being scheduled for the last week of September, at a Tuesday speech before the Houston-area Chamber of Commerce. While the legislation is likely to pass the GOP-controlled House, its prospects in the Senate are less clear, and the White House said it opposes it. “If there was ever a time to lift the oil export ban, it’s now,” Mr. McCarthy said in Houston. […]

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U.S. job market and automotive sales trends support growth in gasoline use

graph of monthly U.S. product supplied of finished motor gasoline, as explained in the article text U.S. motor gasoline product supplied , a proxy for gasoline use in the United States, has been rising after reaching an 11-year low in 2012. Although lower gasoline prices have been an important factor in the increase in gasoline use so far in 2015, changes in the labor market and in the vehicle sales mix over the past few years also have contributed to the rise in gasoline use. Because more than 90% of U.S. motor gasoline is used in light-duty vehicles (LDVs), factors that affect vehicle miles traveled (VMT) and the average fuel economy of the LDV fleet can also lead to changes in gasoline consumption. In addition to lower gasoline prices, a stronger U.S. job market and higher wage growth may have contributed to record-high VMT , and sales trends in […]

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Bakken Flat but the EIA Predicts Decline

The North Dakota Industrial Commission has published the July production data for The Bakken and for all North Dakota . Bakken production was down 5,430 barrels per day while all North Dakota was down 9,410 bpd. Bakken Amplified Here is a more amplified view of what has happened during the last 12 months. Bakken BPD Per Well Bakken barrels per day per well has been falling faster than for all North Dakota. This is because a lot of very low producing conventional wells are being shut down. North Dakota BPD This is chart reflects the monthly change in North Dakota barrels per day of production. It is quite noisy but the 12 month trailing average reflects a steady decline since December of 2014. From the Director’s Cut , bold mine. June Sweet Crude Price1 = $47.73/barrel July Sweet Crude Price = $39.41/barrel Aug Sweet Crude Price = $29.52/barrel Today’s […]

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Offshore drilling woes to last through 2017, Moody’s says

The offshore drilling industry will remain under severe distress through 2017, predicts Moody’s Investors Service . Most troubling for the industry is overcapacity, as the number of idle rigs climbs despite delivery deferrals and retirements and as newbuild deliveries loom over the market. “Drillers will increasingly contend with diminished backlogs, rig values, fleet sizes, and margins if oil prices do not bounce back to the $70-80/bbl range, which we believe could support an increase in shallow-water as well as deepwater and ultradeepwater drilling,” writes Moody’s in an industry report. The firm expects crude oil prices to remain volatile and to “rise minimally” through 2017. “Even if rig demand stabilizes, persistent excess capacity will likely keep day rates low for several more years.” Average day rates have fallen by more than 35% for new-generation floating rigs from a cyclical peak early in 2014 and by more than 25% for jack […]

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Texas Railroad Commission: Drilling Permits in Texas Down 65% in August

Along with oil prices and the rig count, the issuance of new drilling permits has dropped off dramatically in the last 12 months, according to numbers from the Texas Railroad Commission report of 864 permits issued in August. The commission, which regulates oil and gas activity in the state, said in a release that the issuance of drilling permits declined 65 percent year-over-year in August 2015. Among the 864 permits, the breakdown for August this year included 222 oil wells; 59 for gas; 518 for oil or gas; 54 injection wells and 11 other permits. Total well completions for 2015 year to date are 14,665, down from 20,657 recorded during the same period in 2014. At less than $45 per barrel Sept. 15, oil prices are less than half their price from 12 months ago, which was near the beginning of their descent. The rig counts in the United […]

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Senate Democrats again block Iran nuclear deal disapproval

Speaker of the House John Boehner (R-OH) pauses during a news conference on Capitol Hill in Washington, in this September 10, 2015 photograph. U.S. Senate Democrats on Tuesday, for the second time in a week, blocked legislation meant to kill an Iran nuclear deal negotiated by the Obama administration and other world powers with Tehran. With the voting continuing, there were 41 Democrats voting to block the measure to disapprove the Iran deal from advancing in the Senate, enough to deny Republicans the 60 votes they need in the 100-member Senate. Senate Majority Leader Mitch McConnell staged the second vote in an attempt to lure at least a couple Democrats into voting for the resolution of disapproval. McConnell also moved to arrange a third procedural Iran vote, possibly this week, on an amendment preventing Obama from lifting economic sanctions against Iran until that country’s government formally recognizes Israel’s right […]

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Expect U.S. oil output to slump? Better not overlook vertical wells

Easy money, super-sized frack jobs, and desperate drillers offering deep discounts to oil producers – all three have been credited for sustaining U.S. crude output during the worst price slump in six years. Now there appears to be a new factor in the mix: old vertical wells that can quickly be drilled, injected with water or fracked for a second time to increase production at low cost. Overshadowed by the fracking boom that delivered record oil and gas volumes, vertical wells are making a comeback as investors and producers shift focus away from production growth to capital discipline in the downturn. "It makes more sense to develop vertical wells in a lower price environment because they are not growth plays but they are a very strong cash flow asset," said Benjamin Shattuck, principal analyst at Wood Mackenzie. "They are going to give you that cash flow that you need […]

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Low oil price reducing US offshore drilling interest: Secretary Jewell

Low oil and gas prices have lessened pressure from producers for the Obama administration to expand the plays it plans to offer in its five-year plan for offshore leasing, US Interior Secretary Sally Jewell said Tuesday. Prices have had a "significant impact" on efforts from the offshore industry to expand offshore leasing and likely diminished interest in last month’s Gulf of Mexico lease sale, Jewell said during a Christian Science Monitor event. That US Western Gulf sale yielded total high bids of $22.7 million, the smallest Western sale in over 30 years and just 20% of the $110 million yielded in last year’s comparable sale. Jewell said it was a "reasonable conclusion" that low prices caused that relatively low interest from producers and indicated interest in future lease sales likely would not grow if prices remained low. Oil and gas companies, she said, have become "pickier" about where they […]

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Russia’s Turkish Stream pipeline on hold

Russian energy company Gazprom facing delays in build on its Turkish Stream natural gas pipeline. File photo by Igor Golovniov/UPI MOSCOW, Sept. 15 (UPI) — Development of the Turkish Stream natural gas pipeline from Russia is on hold because of installation delays, an official with Russia’s Gazprom said. Alexander Medvedev , the deputy chairman of Russian natural gas company Gazprom, said the late 2016 launch of the pipeline through Turkey was no longer achievable . "Due to the fact that the installation [of the pipeline] did not begin as planned, we are no longer speaking of December 2016," he said. The Kremlin sent two offers to the Turkish government for consideration on a pipeline project in mid-2015. In August, the government said there was still no word on the project from Ankara. Gazprom surveyed the Turkish land route for the 110-mile section of pipeline from the Black Sea last […]

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Decline Rates Will Ensure Oil Output Falls in 2016

“It takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast,” the Red Queen told Alice in Lewis Carroll’s novel “Through the Looking-Glass”. Oil companies have to invest heavily simply to offset the impact of natural decline rates on their existing fields, and even more if they want actually to increase production. The need for continued investment and drilling to maintain output as a result of the rapid decline rates on shale wells has been widely discussed. But decline rates on conventional oil fields are even more important because they account for more than 90 percent of global production. Decline rates on conventional fields will play a critical part rebalancing the oil market and determining where oil prices settle in the longer term. Decline rates will cut output by several million […]

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The receding tide of oil price foreshadows the incoming DEFLATION TSUNAMI.

The receding tide of oil price foreshadows the incoming DEFLATION TSUNAMI. Nothing grows indefinitely in a finite system, not even debt! Almost all (90%) of ‘money’ in existence today is debt (credit) . This debt is created from thin air with every form of loan, from credit cards, through corporate debt to Treasury Notes. All this debt comes with an interest component that demands never ending growth in order to repay it. Again, the current monetary system REQUIRES that we have never ending economic growth. It is one massive pyramid scheme because, if we ever stop growing, who is paying the interest? Total U.S. debt has soared over the last 35 years: Debts are claims on future goods and services with interest and are essentially a bet that the future economy will be bigger than the present. However: The economy is the summation of all goods and services and […]

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Oil edges up towards $47, weaker Asian demand outlook weighs

A customer fills the tank of her car at a fuel station in Sint Pieters Leeuw, Belgium December 5, 2014. Oil edged higher towards $47 a barrel on Tuesday, supported by the prospect of lower U.S. inventories and production although concern about weaker Asian demand kept prices in check. While analysts expect reports this week to show no change in U.S. crude stocks overall, an estimate from market intelligence company Genscape that they fell by 1.8 million barrels at Cushing – U.S. crude’s delivery point – lent oil some support. Brent crude LCOc1 was up 26 cents at $46.63 a barrel, after declining in the previous two sessions. U.S. crude CLc1 was trading 38 cents higher at $44.38 at 0849 GMT. "Genscape is forecasting a large stock draw in Cushing," said Olivier Jakob, analyst at Petromatrix. "The supply and demand numbers suggest that the low oil prices are starting […]

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Worries Rise Over Global Trade Slump

A sharp drop in global trade growth this year is underscoring a disturbing legacy of the financial crisis: Exports and imports of goods are lagging far behind the pace during past expansions, threatening future productivity and living standards. For the third year in a row, the rate of growth in global trade is set to trail the already sluggish expansion of the world economy, according to data from the World Trade Organization and projections from leading economists. Before the recent slump, the last year trade underperformed during an economic expansion was 1983. “We have seen this burst of globalization, and now we’re at a point of consolidation, maybe retrenchment,” said WTO chief economist Robert Koopman. “It’s almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should.” Since rebounding sharply in 2010 after the financial crisis, trade […]

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Asian shares tread water as Fed meeting looms

A man holding an umbrella walks past an electronic board displaying graphs showing recent movements of the Nikkei share average outside a brokerage in Tokyo September 8, 2015. Asian shares and the dollar inched higher on Tuesday but caution reigned after Wall Street skidded as investors awaited this week’s U.S. Federal Reserve policy decision. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent, after Wall Street logged losses, with U.S. trading volume at its lowest in a month as markets awaited the Fed outcome. Japan’s Nikkei stock index .N225 rose 0.6 percent as investors awaited the outcome of the Bank of Japan’s two-day policy meeting later this session, as well as BOJ Governor Haruhiko Kuroda’s post-meeting speech. A few investors were betting that Japan’s central bank would muster additional easing measures. But the majority believe that the BOJ will simply warn of heightening global risks while […]

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Iraq Seen Raising Southern Oil Exports Amid War, Pay Dispute

Iraq plans to increase exports of Basrah crude by 26 percent next month, as the country continues to raise output amid fighting with militants and a payment dispute with the northern Kurdish region, according to a loading program obtained by Bloomberg News. The Middle Eastern country plans to export a combined 81 cargoes of Basrah Light and Basrah Heavy grade crudes totaling 114 million barrels in October, according to the program. That’s an increase from the 90.5 million barrels planned for shipment in September. Loading programs are planned schedules for shipments during a given month. The October program would mean a record for exports if Iraq made all the shipments planned for the month. However, loading programs are subject to change, and the country’s actual exports can vary from the plan. Total exports in June were 3.19 million barrels a day, Oil Ministry data show, falling short of the […]

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Iraq Warns Oil Companies of Spending Cuts

Iraq’s oil ministry has issued a stark warning to the international oil companies running its energy sector that it will slash spending in 2016 as the country feels the full effect of low crude prices and the fight against Islamic State . A Sept. 6 letter from an oil ministry official is fresh evidence that Iraq is struggling to maintain a swift expansion of its energy sector that has made it the Organization of the Petroleum Exporting Countries’s second-largest producer with 4 million a barrels a day or more this summer. “Because of the drop in our oil-sales revenues, the Iraqi government has sharply reduced the funds available to the Ministry of Oil,” the official, Abdul Mahdy al-Ameedi, wrote. “This will…reduce the funds available for the reimbursement of petroleum costs to our contractors.” Mr. Ameedi also wrote that the oil ministry didn’t expect lower funding to “reduce production from […]

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Iraq Asks Oil Companies to Cut Spending After Drop in Prices

Iraq asked oil companies to reduce their 2016 spending plans in the country by Sept. 30, citing lower oil prices and government revenue. The reduced budgets shouldn’t affect 2015 production, Abdul Mahdy Al-Ameedi, director of licensing at Iraq’s oil ministry, said by phone Tuesday, citing a letter that the ministry sent to companies. Iraq is now producing more than 3 million barrels a day, he said. “We’ve asked them in a letter we sent them to take into consideration the drop in oil prices and the low revenues of the government that may not cover their investments,” al-Ameedi said. “There was a stipulation that this investment reduction must not affect oil output from the fields that was in the 2015 schedule.” OPEC’s second-largest crude producer is facing a slowdown in investment due to lower oil prices while fighting a costly war on Islamist militants who seized a swathe of […]

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Syria peak oil weakened government’s finances ahead of Arab Spring in 2011

While the attention of the world is on the refugee crisis we need to look at the causes of this mass exodus. Fig 1: Refugees walking on Hungarian motorway towards Austria in Sep 2015 In May 2013 the Guardian had an article “Peak oil, climate change and pipeline geopolitics driving Syrian conflict” http://www.theguardian.com/environment/earth-insight/2013/may/13/1 In March 2015, a group of researchers led by climatologist Colin Kelley (University of California) published a study in the Proceedings of the National Academy of Sciences with the title “Climate change in the Fertile Crescent and implications of the recent Syrian drought” “Between 2006 and 2009, the people of Syria suffered during the most severe drought that country has experienced since the beginning of its instrumental record. As water became scarce, crops failed and cattle died on a huge scale. As many as 1.5 million Syrians, out of a population of just over 20 million, […]

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Saudi copes with oil drop by selling FX

Look out world—China’s not the only central bank in town selling its currency reserves to cope with a tumultuous global economy. With crude prices having shed more than half their value over the past year, oil producing economies are feeling the sting of cheaper oil. More importantly, Saudi Arabia—OPEC’s largest member and the world’s top oil producer—bears watching as oil stays below $50 and a global glut depresses oil prices, analysts say. Even before China surprised markets by announcing a record drawdown of its foreign currency denominated assets, Saudi Arabia had already begun selling its reserves to plug a hole in its budget and support its flagging currency, the riyal. In February and March, the world’s largest oil exporter saw net foreign assets drop by more than $30 billion, the biggest two- month drop on record. These asset sales are important because Saudi holds one of the world’s largest […]

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OPEC says the world will want more of its oil next year

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. OPEC on Monday predicted higher demand for its crude oil next year, sticking to its view that a strategy of letting prices fall will tame the U.S. shale boom and cut a global surplus. The monthly report from the Organization of the Petroleum Exporting Countries also said a weaker outlook for China would contribute to slower global oil demand growth next year. "U.S. oil production has shown signs of slowing," OPEC said in the report. "This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come." OPEC said it expected demand for its crude next year to average 30.31 million barrels per day (bpd), up 190,000 bpd […]

Posted On : Published By : Tom Whipple