OPEC sees no respite from shale’s onslaught before the second half of the next decade. Until then, the cartel will stick with the one weapon it still has to prevent another oil price collapse: austerity. Although the group’s historic output limits have fueled a 42% price rally since late June, OPEC Secretary-General Mohammad Barkindo on Tuesday signaled the producers’ determination to stay the course through the end of 2018. The bogeyman haunting the Saudis, Russians and other major suppliers: U.S. shale, which shows no signs of backing off until at least 2025.
Shale monster besets OPEC's resurgence through next decade
The state, which covers a smaller part of the oil-soaked shale formation, is the fourth-largest U.S. producer and luring industry giants including ExxonMobil, Chevron Corp., EOG Resources Inc. and Occidental Petroleum Corp. Their investments -- while small compared with Texas -- are increasing as activity in the rest of the Permian starts to slow down.
Buying Texas oil at New Mexico prices: Majors go west for shale
Upstream oil and gas activity in Texas sustained a modest expansion into the 10th straight month in September, according to the Texas Petro Index, which rose to 181.4, 21.4% higher than in September 2016 and 22.4% higher than in November, when the TPI hit bottom at 148.2.
Oil and Gas Index shows Texas producers continuing to recover
A larger-than-expected boom in electric vehicle sales could cause global oil demand to peak and flatten out in the late 2030s, OPEC said. If a quarter of the world’s cars have batteries, global oil demand would reach a plateau of about 109 million barrels a day during the second half of the 2030s, the Organization of Petroleum Exporting Countries said in its annual World Oil Outlook. The group’s main forecast is still for consumption to increase for decades to come as the electric car fleet expands at half that pace. Yet the inclusion of the faster-growth scenario shows they are starting to take the threat more seriously.
OPEC Says Oil Use Could Peak in Late 2030s If Electric Cars Boom - Bloomberg
Shale drillers are promising to add a new wrinkle to their world-shaking oil boom: they may finally make money. In third-quarter earnings reports, explorers including Pioneer Natural Resources Co., EOG Resources Inc. and Anadarko Petroleum Corp. said they’re on the cusp of shrinking or even eliminating the gap between operating expenses and the cash they take in. That would mark a turning point for an industry that’s piled up losses and lived on borrowed money for years, as drillers plowed resources into developing new oil plays across the U.S.
Shale goal in sight: Pump with a profit, without hurting growth
Rosneft, as a member of Sakhalin-1 Consortium, successfully completed drilling of the world's longest well from Orlan platform at Chaivo field in the Sea of Okhotsk. Photo: Rosneft. The length of the well with horizontal completion is 15,000 m, which currently is a world record. This is a supercomplex well with DDI (Directional drilling index) of 8.0 and 14,129-m stepout.
Rosneft drills world's longest well in Sakhalin
The boom in U.S. shale-oil production requires "more sophisticated" forecasting than ever, billionaire oilman Harold Hamm said in an interview. Hamm, who is set to speak Thursday during a U.S. Energy Information Administration event, blames overly optimistic government production predictions for depressing U.S. oil prices. "It just disadvantages the U.S. market," said Hamm, the founder and chairman of Continental Resources Inc. The EIA is "a very powerful market mover, and so it’s necessary they understand all of these things."
Shale boss Hamm gives oil forecasters a reality check
A bid for Santos Ltd. may trigger counter offers for the Australian oil and gas producer that has stakes in some of the world’s cheapest liquefied natural gas. The Adelaide-based company surged the most in a year after saying it received and rejected a A$9.5 billion ($7.2 billion) takeover approach from Harbour Energy led by former Royal Dutch Shell executive Linda Cook. Harbour is preparing to make another cash offer of about A$5.30 a share within weeks, the Australian Financial Review reported, without citing sources.
Santos seen luring more bids after rejecting $7.2-billion offer
Major oil companies are under pressure, unloved and on sale. Energy giants from ExxonMobil to Royal Dutch Shell are struggling back to their feet after a three-year oil slump, while also fighting to prove they can survive for decades to come amid an accelerating shift to clean energy. So getting dumped by the world’s biggest investment fund wouldn’t be welcome news. Norway’s $1 trillion sovereign wealth fund said on Thursday that it wants to sell about $35 billion of shares in oil and gas companies to make the nation “less vulnerable” to a drop in crude prices. Global energy giants favored by long-term investors including Italy’s Eni SpA, PetroChina and Russia’s Gazprom account for more than $20 billion of that total.
For sale: $20 billion of unwanted oil shares seek new owner
Can Norway dump $35 billion in oil and gas investments, and simultaneously convince that same industry to throw money into the country’s own fossil-fuel future? After the initial shock of learning that Norway’s $1 trillion wealth fund wants nothing to do with it, the petroleum industry says both are in fact possible. But the mood is shifting. While the fund said its proposal is about spreading risk and doesn’t imply a negative outlook on the oil industry, the plan reverberated as a nod from western Europe’s biggest oil producer to the uncertain future facing oil.
Norway's oil bosses insist end isn't nigh after $35-billion shock
Saudi Arabia’s Energy Minister said OPEC and its allies should announce an extension of their output curbs when they gather at the end of this month. The Organization of Petroleum Exporting Countries is unlikely to reduce excess oil inventories to average levels by the time the current deal expires in late March, said Minister Khalid Al-Falih, speaking at the United Nations climate talks in Bonn, Germany. Russia, allied with OPEC in the deal, isn’t convinced it’s necessary to make a decision when the producers meet on Nov. 30, people familiar with the matter said this week.
Saudi Arabia says OPEC should extend cuts in meeting this month
Short-selling is rearing its head in the oil market again. After bullish bets on Brent crude hit a record and futures surged to two-year highs, hedge funds are pulling back with a sense that the rally reached its limit for now. Wagers on lower prices rose by the most since June as Middle East tensions took a backseat, while uncertainty looms over Saudi Arabia’s push to extend OPEC’s output curbs this month. "We’re at levels where the market appears to have crested," said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. "Continuing to see supply draw-downs is probably what the next leg of the rally will be predicated on."
Oil short-sellers return as doubts loom on OPEC's horizon
Big oil companies and giant auto makers are teaming up to preserve the internal combustion engine, as tough regulation and electric vehicles put the car industry’s century-old technology at risk. Their secret weapon: high-tech engine oil. Exxon Mobil Corp., BP PLC, Royal Dutch Shell PLC and other oil companies are spending millions of dollars a year in concert with auto makers such as Ford Motor Co. and Fiat Chrysler Automobiles NV to create the next generation of super-slick engine lubricants.
Big Oil and Auto Makers Throw a Lifeline to the Combustion Engine - WSJ
After bullish bets on Brent crude hit a record and futures surged to two-year highs, hedge funds are pulling back with a sense that the rally reached its limit for now. Wagers on lower prices rose by the most since June as Middle East tensions took a backseat, while uncertainty looms over Saudi Arabia’s push to extend OPEC’s output curbs this month. "We’re at levels where the market appears to have crested," said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. "Continuing to see supply draw-downs is probably what the next leg of the rally will be predicated on."
Oil Short-Sellers Return as Doubts Loom on OPEC's Horizon - Bloomberg
OPEC has an Iraq problem: the group’s second-biggest exporter is lurching between quota busting and production-crimping crisis, clouding the policy-making picture as ministers decide how long they need to extend output curbs. Exports from Iraq’s northern fields plunged by about 40 percent in the first half of November after clashes between the federal army and fighters from the semi-autonomous Kurdish region disrupted fields in the disputed Kirkuk province. After consistently exceeding its output quota all year, Iraqi production dropped in October when the fighting started.
Iraq Is Giving OPEC a Headache - Bloomberg
Natural gas is gushing out of West Texas, a byproduct of frenzied drilling for oil. That is a problem for energy producers, who are running out of places to send it all. Pipelines running from the region’s Permian Basin to the Gulf Coast’s chemical plants, cities and export terminals are essentially full. Drillers in the Rockies and Canada already supply markets in the north and west.
Growing Gas Glut Threatens West Texas Oil Boom - WSJ
Oil climbed to a two-year high as U.S. industry data showed crude stockpiles resumed declines and investors awaited a decision by OPEC on extending output cuts. January futures rose as much as 2.2% in New York, the highest since mid-2015. U.S. inventories fell by 6.36 MMbbl last week, the API was said to report. That’s more than forecast in a Bloomberg survey, which shows a drop of 2.2 MMbbl ahead of government data later Wednesday.
Crude climbs to two-year high as stockpiles fall before OPEC meets
As the price of oil rises, an international rush is on for Mexico’s untapped deepwater riches. The who’s who of the oil world -- led by ExxonMobil Corp. and Royal Dutch Shell Plc, the world’s two biggest drillers by market value -- are lining up to bid in the country’s Jan. 31 deepwater auction. And the interest is international in scope, drawing Chevron Corp. from the U.S., the UK’s BP Plc, Norway’s Statoil ASA, France’s Total SA, Australia’s BHP Billiton Ltd, Russia’s Lukoil PJSC and China’s Cnooc Ltd, among others.
As oil prices rise, global majors eye Mexico's deep waters
Statoil Brasil Oleo e Gas Ltd., a subsidiary of Statoil ASA, ExxonMobil Exploracao Brasil Ltda., a subsidiary of ExxonMobil Corporation, and PETROGAL BRASIL, SA, a subsidiary of Galp, were the high bidders for a production sharing contract for the Carcará North Block in Brazil’s second pre-salt offshore licensing round held on Oct. 27. The consortium comprising Statoil (operator, 40%), ExxonMobil (40%) and Galp (20%) presented the winning bid (67.12% of profit oil) for the Carcará North Block in the Santos basin. The pre-determined signature bonus to be paid by the consortium is BRL 3.0 billion, approximately $910 million. Statoil’s share is $364 million.
Statoil strengthens its position in Brazil's Carcará oil discovery
The 20 percent increase in oil prices since September led to a wave of hedging by U.S. shale drillers eager to lock in future production at prices not seen in years. The flip side of that hedging wave is that locking in prices could cut the price rally off at the knees, ensuring that more supply will be forthcoming in the next few quarters.
Shale Hedges Threaten The Oil Rally | OilPrice.com
OPEC will have to decide whether to extend global oil cuts without knowing whether they’re triggering a new flood of rival supply from U.S. shale producers. Analysts gave differing outlooks for U.S. shale output in a briefing to officials from the Organization of Petroleum Exporting Countries, stoking concern ahead of OPEC’s planned meeting on Nov. 30, according to people with knowledge of the discussions. The analysts included Andy Hall, the veteran crude trader who closed his hedge fund this year, said the people, who asked not to be identified because the briefing was private.
OPEC said to get few answers on shale before decision on production cuts
Oil extended its rally above $58/bbl as supply disruptions on the Keystone pipeline added to optimism that the U.S. glut is waning and that OPEC will prolong its output curbs. Futures gained as much as 0.7% in New York to a two-year high. TransCanada Corp. was said to have cut 85 percent of Keystone’s November shipments because of last week’s spill in South Dakota. The line’s shutdown means that between 550,000 and 600,000 bpd of crude is not heading to the Cushing, Oklahoma distribution hub, said Michael Loewen, a commodities strategist at Scotiabank.
Oil extends rally above $58 as Keystone outage cuts U.S. supply
A week after Norway’s $1-trillion sovereign wealth fund said it wanted to get out of oil and gas investments, the latest spending plans from oil companies show how the country’s not about to quit petroleum. Oil companies operating offshore Norway increased their investment forecast for next year and could add billions of kroner more over the next months as a wave of new projects is expected to be green-lighted, according to a quarterly survey from Statistics Norway. Investments are seen reaching 144 billion kroner ($18 billion) next year, up from an August estimate of 142 billion kroner, it said in a statement on Thursday. Spending this year is seen at 151 billion kroner, down from 156 billion kroner in the previous survey.
Oil industry shows signs of life after Norway wealth fund shock
Saudi Arabia’s status as the biggest oil supplier to China has been usurped by Russia. OPEC’s biggest producer is now trying to regain ground in the world’s largest crude importer. State-run Saudi Arabian Oil Co., known as Aramco, is in supply talks with petrochemical conglomerates that are building some of the world’s biggest plants in China, said Mushabab Al-Qahtani, V.P. of the marketing department at its Asia unit, without identifying the firms. He also sees the country expanding imports of sulfurous sour crude -- the type typically pumped by the Middle East nation.
Saudis eye oil sales to world's biggest plants emerging in China
Crude production from the Organization of Petroleum Exporting Countries dropped again in November to a six-month low. Total production fell 80,000 bpd to 32.47 MMbpd last month, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That was the lowest level since May, when output was 32.29 million.
OPEC crude output drops to six-month low on Angola maintenance
The clash between OPEC and America’s oil industry is reaching a day of reckoning. The U.S. shale revolution is on course to be the greatest oil and gas boom in history, turning a nation once at the mercy of foreign imports into a global player. That seismic shift shattered the dominance of Saudi Arabia and the OPEC cartel, forcing them into an alliance with long-time rival Russia to keep a grip on world markets. So far, it’s worked -- global oil stockpiles are draining and prices are near two-year highs. But as the Organization of Petroleum Exporting Countries and Russia prepare to meet in Vienna this week to extend production cuts, ministers have little idea how U.S. shale production will respond in 2018.
OPEC clash with U.S. for oil supremacy near day of reckoning
Oil dropped below $58/bbl as investors weighed an increase in U.S. drilling rigs against OPEC’s promise to extend output cuts through the end of next year. Futures fell as much as 1.3% in New York after adding 1.7% Friday. OPEC and its allies including Russia last week agreed to keep supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya. Executives from three of the biggest independent U.S. drillers said that while they won’t increase activity just because prices rise, they’ll still grow.
Oil falls below $58 as OPEC deal risks a new wave of shale
OPEC and its allies outside the group will maintain their cuts in oil output until global production meets demand, Saudi Arabia’s Energy Minister Khalid Al-Falih said. The Organization of Petroleum Exporting Countries and its partners agreed last week to extend the cuts until the end of 2018, a strategy that has boosted prices to near the highest level in more than two years. Now the focus is shifting to how production will ramp up when the agreement expires.
Saudi oil minister says cuts to stay until market balanced
Eni, together with its Area 4 Partners, announces that the Coral South FLNG multi-sourced project financing achieved financial close, for a total amount of $4,675,500,000. Coral South FLNG is the first project sanctioned by the Area 4 Partners for the development of the considerable gas resources discovered by Eni and its partners in the Rovuma basin offshore Mozambique. It targets the production and monetization of the gas contained in the southern part of the Coral gas reservoir, by means of a floating LNG plant with a capacity of 3.4 mtpa. A Sale and Purchase Agreement was signed in 2016 for the sale of 100% of the LNG production to BP.
Eni secures project financing for Coral South FLNG
Oil declined after industry data showed U.S. gasoline stockpiles expanded for the first time in four weeks. Futures dropped 1.2% in New York after rising 0.3% on Tuesday. Motor-fuel inventories climbed by 9.2 MMbbl last week, the American Petroleum Institute was said to report. That would be the biggest gain since January 2016 if replicated in government data due later on Wednesday. Nationwide crude stockpiles declined, according to the API data.
Oil drops as industry data show U.S. gasoline stockpiles grew
For America’s shale drillers, the tipping point to boost production looks to be $60/bbl. It’ll take a sustained run above that price in New York before drillers rethink their spending plans for 2018, according to JPMorgan Chase & Co. Until then, activity looks to be “range-bound," said analysts led by Arun Jayaram in a Wednesday research note detailing their talks with operators in the Permian shale basin in Texas and New Mexico.
Magic number for new shale surge: $60/bbl, JPMorgan says
Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 Bcfd since 2012. Overall Appalachian natural gas production grew from 7.8 Bcfd in 2012 to 22.1 Bcfd in 2016 and was 23.8 Bcfd in 2017, based on EIA data through October 2017.
EIA: Appalachia drives growth in U.S. natural gas production since 2012
U.S. natural gas exports could find buyers in the oil-rich Persian Gulf as countries there look to meet surging demand. Growing U.S. exports of liquefied natural gas could be an additional source of gas supply to the region, U.S. Secretary of Energy Rick Perry and UAE Energy Minister Suhail Al Mazrouei said Wednesday at a news conference in Abu Dhabi. Jordan, the UAE and Egypt have been buyers of LNG from the Sabine Pass complex in the U.S. the past two years, according to Bloomberg vessel tracking, IHS Markit and Genscape.
U.S. ready to ship more natural gas to Middle East as Saudis get offer
China is ahead of schedule on its way to becoming the second-largest importer of liquefied natural gas. The nation, already the world’s top energy user, is on the verge of passing South Korea to become the No. 2 buyer of LNG behind Japan, as environmental measures and winter heating needs boost demand. Tankers with total capacity of 33.6 million metric tons have visited China this year, just 1.7 million below South Korea’s total, according to vessel-tracking data compiled by Bloomberg. The gap was more than 24 million tons in 2011.
China on its way to becoming second-largest importer of LNG
OPEC appeared to score a diplomatic coup last week by persuading Libya, its most troubled member, to accept production limits. In reality, the agreement probably means little for the oil market. The Organization of Petroleum Exporting Countries and its partners agreed on Nov. 30 to persevere with supply curbs until the end of next year, in a bid to drain oversupplied world markets. In a surprise addition, an output cap was imposed on members Libya and Nigeria, which had previously been spared any obligations while they struggled to recover barrels lost to armed conflict and sabotage.
OPEC's surprise oil deal with Libya seen as empty gesture
Santos has announced it will acquire a 20% equity in the PPL 339 licence in Papua New Guinea via a farm-in agreement with Kina Petroleum Limited. The license is located within the Aure Fold Belt, southeast of Elk/Antelope fields in an area with active natural seeps and represents Santos’ first entry into this new play in PNG. The farm-in is subject to customary government and joint venture partner approvals.
Santos strengthens PNG growth with farm-in to Aure Fold Belt
Total announces that the first cargo of liquefied natural gas (LNG) from Yamal LNG is ready to leave Sabetta. This first shipment is a major milestone for Yamal LNG, one of the biggest liquefied natural gas projects in the world. Yamal LNG will produce reserves of 4.6 Bboe in Northern Russia. At full capacity, the three-train facility will supply 16.5 million tons of LNG per year to Asian and European markets.
Yamal LNG project begins gas exports
Pilot production at Egypt’s Eni SpA-operated Zohr natural gas field will begin “in the coming few days,” the oil ministry said, as the country nears its goal of commercial output from the biggest gas discovery in the Mediterranean Sea by the end of this year. Gas is being pumped from the national distribution system to test pipelines in preparation for output from the offshore field, Oil Minister Tarek El-Molla said Sunday in an emailed statement. Production will start before year-end at about 350 MMcfd, he said. Output will rise to some 1 Bcfd by mid-2018 and reach 2.7 billion by the end of 2019, the ministry said Dec. 1 by email.
Egypt sees pilot production at Eni's Zohr gas field in just days
Shawn Reynolds is sticking to shale, with the $4-billion fund manager unshaken in his resolve that the U.S. industry’s stocks are due for a rebound after a lackluster 2017. The veteran energy investor, whose main $2-billion fund holds about half its assets in energy and oil-services stocks, says American shale producers are now due to reap profits after years of overspending. The companies have more potential to grow compared with conventional explorers as they face fewer risks related to the extraction of resources, the fund manager at Van Eck Associates Corp. said.
Dogged $4-billion investor roused by shale's zeal for thrift
It seemed at the time like a somewhat random, and amazingly fortuitous, coincidence. Just as the Panama Canal was unveiling a new, fatter set of locks, U.S. shale drillers were readying their very first exports of liquefied natural gas. While the wide-body tankers that transport LNG would’ve had no chance of squeaking through the original steel locks built a century ago, they could easily traverse the bigger channel and shave 11 days off the trip to primary markets in Asia.
U.S. shale has a Panama Canal problem that's got no easy fix