Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

« 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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple
Category:

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 […]

Posted On : Published By : Tom Whipple