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Canadian Oil Sands Halts Crude Production at Oil-Sands Giant Syncrude

A dump truck is loaded with oil sands at the Syncrude Canada Ltd. mine. CALGARY, Alberta— Canadian Oil Sands Ltd. COSWF 2.60 % , the largest owner of the giant Syncrude oil-sands project, said on Sunday that it has halted production after a fire damaged equipment at its synthetic crude oil processing facility in northern Alberta. The company said the fire, which occurred early Saturday and was extinguished without any injuries, affected pipes connected to a water treatment unit at Syncrude’s heavy oil upgrader on the site of its Mildred Lake oil-sands surface mine. The cause of the blaze is under investigation, it said. While the upgrader’s core machinery wasn’t damaged and the strip mine continues to operate, Canadian Oil Sands said in a statement issued late Sunday that “synthetic crude oil production has been temporarily suspended while a recovery and repair strategy are being developed.” Canadian Oil Sands […]

Posted On : Published By : Tom Whipple
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US Oil Production Nears Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015. US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008. Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also? US Recent US Production was down 96,000 barrels per day in July to 9,503,000 bpd. That is 190,000 bpd below the March level of 9,693,000 bpd. US Crude Oil Production Here is what the last 50 years of US production looks like. The peak was in […]

Posted On : Published By : Tom Whipple
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Texas oil production increased in June

Texas energy regulator reports a net increase in June oil production year-on-year. File Photo by UPI/Shutterstock/Lilac Mountain. AUSTIN, Texas, Aug. 28 (UPI) — A Texas energy regulator said total crude oil production for June, the last full month for complete data, was up around 12 percent year-on-year. The Railroad Commission of Texas said crude oil production in June averaged about 2.43 million barrels per day, up from the 2.15 million bpd reported in June 2014. June data show the third straight month for gains for the No. 1 oil producer in the nation. April crude oil production of 2.31 million bpd was a 13 percent increase year-on-year. Decreases were posted, however, in early 2015. The railroad commission, the state’s energy regulator, said the average Texas rig count as of Aug. 21 was 383, which represented about 45 percent of all U.S. onshore rig activity. A report from Fitch Ratings […]

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Creditors Squeeze the Last Drop Out of Oil-and-Gas Companies

Cash-starved oil-and-gas companies are getting a lot of mileage out of their assets these days. A severe slump in commodity prices has sent energy explorers and producers scrambling to shore up their balance sheets, leading to a flurry of debt sales this year by the industry’s most financially strained firms. The new bonds typically promise creditors ownership of the company’s assets, should it default. But in many cases, that claim sits behind the liens of one or even two higher-priority slices of debt. Halcon Resources Corp. highlighted the trend late Thursday, exchanging $1.57 billion in unsecured bonds for $1.02 billion in new “third-lien” debt , backed by a claim on the company’s assets that sits behind those of its credit line and $700 million in bonds the company sold in May. Halcon followed Midstates Petroleum Co., a Tusla oil-and-gas company that in May issued $504 million in bonds with […]

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Reduced offshore share in U.S. oil and natural gas production lowers risk from hurricanes

graph of monthly U.S. crude oil and natural gas production, as explained in the article text Offshore energy production in the Gulf of Mexico has experienced relatively minor disruptions because of tropical storms and hurricanes in recent years, and the National Oceanic and Atmospheric Administration (NOAA) has predicted a below-normal 2015 hurricane season in its updated Atlantic Hurricane Season Outlook , released on August 6. Hurricane-related risk to total U.S. crude oil and natural gas production has decreased over recent years as the share of total U.S. production originating in the Gulf of Mexico has declined sharply. In 2003, 27% of the nation’s crude oil was produced in the Gulf of Mexico; by 2014, that share had declined to 16%. The Gulf of Mexico’s share of natural gas production has also declined from a high of 26% in 1997 to 5% in 2014. This decline in the Gulf of […]

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Oil Exploration Companies Scramble to Cut Costs

Genel Chief Executive Tony Hayward speaks at a conference in May. LONDON—When oil prices started falling last summer, Genel Energy GENL 13.53 % PLC, a small exploration company listed here, asked the government of Ethiopia to extend its exploration license, so it could put off drilling and save some cash. Across the industry, international wildcatters like Genel are renegotiating drilling commitments, selling off stakes in licenses and canceling plans to drill exploration wells—whatever it takes to pare back budgets that once hinged on expensive drilling programs. “When capital becomes very scarce, you end up having sensible discussions with governments about how to re-phase activity to reflect the realities of the day,” says Tony Hayward , former chief executive of BP BP 6.21 % PLC and now chairman of Genel. The move by these exploration companies reflects a much broader scramble by the industry—from the world’s biggest integrated oil companies […]

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What West Texas producers are saying about $40 oil

The aerial view from a Midland, Texas -bound airplane tells the story: thousands of well pads carved into the desert shrubbery as far as the eye can see. It’s all about oil in West Texas. The area is home to the Permian Basin, the most prolific oil-producing formation in the U.S., a hydrocarbon-rich collection of formations that stretch from Texas into New Mexico. Once written off as a place for tumbleweeds, the area has become a boom region in the past decade as the advent of horizontal hydraulic fracturing—"fracking"—brought new investment to waning, vertically drilled oil fields. Crude production in the Permian Basin is at near-record levels, around 2 million barrels per day, according to the Energy Information Agency, for the first time since the early 1970s. But as crude prices have collapsed over the last year amid oversupply and waning global demand, cutbacks have once again starkly taken […]

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Oil Industry Needs Half a Trillion Dollars to Endure Price Slump

At a time when the oil price is languishing at its lowest level in six years, producers need to find half a trillion dollars to repay debt. Some might not make it. The number of oil and gas company bonds with yields of 10 percent or more, a sign of distress, tripled in the past year, leaving 168 firms in North America, Europe and Asia holding this debt, data compiled by Bloomberg show. The ratio of net debt to earnings is the highest in two decades. If oil stays at about $40 a barrel, the shakeout could be profound, according to Kimberley Wood, a partner for oil mergers and acquisitions at Norton Rose Fulbright LLP in London. West Texas Intermediate crude was up 2.8 percent at $39.68 a barrel at 8:10 a.m. in London. “The look and shape of the oil industry would likely change over the next five […]

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Transocean mulls steps to navigate weak market

Rig company Transocean considers scrapping dividends as it works to navigate weak energy market. File Photo by UPI/Shutterstock/James Jones Jr. ZUG, Switzerland, Aug. 26 (UPI) — Offshore rig company Transocean said it plans to cancel issuance of stock dividends and record $2.1 billion in impairments because of the weak market. The company, which has headquarters in Switzerland, announced plans to hold an emergency general meeting of shareholders in October to consider the cancellation of the third and fourth installments of its dividend. The company noted "the deterioration of the offshore drilling market and concerns regarding the timing of the market’s recovery" where behind that proposal and the expected impairment of more around $2.1 billion. The steady decline in crude oil prices, off more than 50 percent from last year, has forced most major oil and gas companies to cut back on spending in exploration and production, leading in turn […]

Posted On : Published By : Tom Whipple