OPEC, for some quiet moments..

[jft310]

Supply of oil and gas

WASHINGTON, D.C. -- Estimated total U.S. oil and natural gas well completions fell by 51% in the fourth quarter of 2015 as compared to year-ago levels, according to API's 2015 Quarterly Well Completion Report, Fourth Quarter.

Estimated development oil well completions in the fourth quarter fell 55% as compared to fourth-quarter 2014 estimates. Estimated development gas completions decreased 37% over the same period.

For 2015, total well completions decreased 35% overall as compared to 2014 levels. Oil completions were down 37% and natural gas completions were down 28%. Total footage drilled was down 27% overall.

“Our growth as a global energy superpower has been a game-changer for U.S. energy security while making energy cheaper for American consumers,” said Hazem Arafa, director of API's statistics department. “We can’t expect that growth to continue if our own outdated energy polices stand in the way. Reducing unnecessary regulations and speeding up permitting on federal lands will help U.S. producers to compete effectively in the global market under the low-price environment.

[admin]

Key findings from Wood Mackenzie’s 2015 LNG review include: • Global LNG production reached 250 million tonnes in 2015. • China's LNG demand declined 2% in 2015 following years of double digit growth. • Australia's key CSG LNG projects added 18.5 MMtpa of nameplate capacity. • New entrants Jordan, Pakistan and Egypt imported 5.8 million tonnes in 2015. • Asia spot prices reached a low of $6.90/MMbtu.  • Atlantic to Pacific LNG trade flows fell by 16%, from 96 MMtpa to 82 MMtpa. • Weak demand translated into lower shipping rates of $30,000/day—the lowest since 2010. • The potential to optimize U.S. LNG flows saw 19 new LNG vessels ordered in 2015. • Shell's proposed acquisition of BG would create the largest LNG marketer—supplying 15% of global demand.

U.S., Australian LNG start-ups in 2016, but real LNG growth yet to come

Australia, forecast to overtake Qatar as the world’s largest supplier of super-cooled gas by 2020, is boosting its exports just as those prices sink. The value of Australia’s LNG shipments is forecast to rise 23% to almost A$21 billion in the year ending in June as a lower LNG price outlook tempers the expected 45% surge in export volumes, according to a government report last month. Oil should rise to about $70/bbl by the end of the decade, according to FGE. Low prices in the first few years hurt the cash flowing into a development like Gorgon, but they “do not make a project bad overnight,” given Chevron has supply contracts spanning 25 years, Taverner of IHS said.

Chevron's costly LNG project to start in shadow of oil collapse

Oil bulls suffering with the lowest prices since 2003 got a glimmer of hope as the government said the U.S. shale patch will lose as much output as an OPEC member. Unfortunately, it’s one of the small ones. Volume from the seven major shale regions in the U.S. will drop by 116,000 bopd in February, contributing to a drop of about 640,000 bopd since the end of last March, according to the U.S. Energy Information Administration. That’s more oil than either Ecuador or Libya produced last year on average.

Shale patch about to lose oil output equivalent to OPEC member

U.S. shale explorers will be able to bring new supply to market this year even with most of the rig fleet idled and drilling budgets cut to the bone. Their secret: thousands of mothballed wells. Companies from Exxon Mobil Corp. to EOG Resources Inc. have 3,994 wells drilled between Jan. 1, 2014, and Aug. 31 with active permits that had not been completed as of Dec. 18, according to William Foiles and Andrew Cosgrove, analysts at Bloomberg Intelligence.

Shale explorers pump oil on the cheap from slumbering U.S. wells

[admin]

Oil has some ways to go before a price rout technically ends. While futures in New York are extending an advance for the second day to near $30 a barrel, rebounding from the lowest level since May 2003, they must breach $34 to show the rally is more than a momentary bounce, according to CMC Markets.

Oil Must Go Past $34 to Show Rally Is No Fleeting Rebound: Chart - Bloomberg Business

Stick with oil, it could be the “trade of the year,” according to Citigroup Inc. QUICKTAKE Oil Prices The outlook for crude isn’t all bad, even as prices head for the worst start to a year since 1991 and there are dire warnings of the world drowning in supply. Forecasters from UBS Group AG to Societe Generale SA are predicting a rebound in the second half and Citigroup says the market just needs to weather a surge of exports from Iran after the removal of sanctions.

Oil Is `Trade of the Year' for Citigroup After Iran Export Surge - Bloomberg Business

Moody's Investors Service (Moody's) placed the ratings of 69 US exploration and production (E&P) and oilfield services companies on review for downgrade. A list of the companies and rating actions appears below. RATINGS RATIONALE Oil prices have deteriorated substantially in the past few weeks and have reached nominal price lows not seen in more than a decade. Moody's has adjusted its view downward for the likely range of prices. We see a substantial risk that prices may recover much more slowly over the medium term than many companies expect, as well as a risk that prices might fall further. Even under a scenario with a modest recovery from current prices, producing companies and the drillers and service companies that support them will experience rising financial stress with much lower cash flows.

Moody's reviews energy companies in the US for downgrade

Geopolitical risk premiums are likely to return to oil markets as the possibility of an attack on a large petroleum facility grows significantly amid rising tensions in the Middle East, possibly putting a floor on prices. "The risk of an attack is greater than 50pc, which means it is more likely than not," president of consultancy ESAI Sarah Emerson said on the sidelines of the Argus Americas Crude Summit.

Risk Premium Returns To Oil Markets As Geopolitical Tensions Rise | OilPrice.com

[ArtM72]

Last night I was rummaging through some old DVDs and came upon a copy of an IMAX original, "The Fires of Kuwait". about Saddam's sabotage of Kuwait's oil fields. Scary but awesome.

[admin]

Hedge funds and private equity groups armed with $60bn of ready cash are poised to snap up the assets of bankrupt US shale drillers, almost guaranteeing that America’s tight oil production will rebound as soon as prices start to recover. Daniel Yergin, founder of IHS Cambridge Energy Research Associates, said it is impossible for OPEC to knock out the US shale industry though a war of attrition even if large numbers of frackers fall by the wayside over coming months.

Saudis ‘will not destroy the US shale industry’ - Telegraph

“It takes $10bn and five to ten years to launch a deep-water project. It takes $10m and just 20 days to drill for shale,” he said, speaking at the World Economic Forum in Davos.

Saudis ‘will not destroy the US shale industry’ - Telegraph

Yet even if scores of US drillers go bust, the industry will live on, and a quantum leap in technology has changed the cost structure irreversibly. Output per rig has soared fourfold since 2009. It is now standard to drill multiples wells from the same site, and data analytics promise yet another leap foward in yields. “$60 is the new $90. If the price of oil returns to a range between $50 and $60, this will bring back a lot of production. The Permian Basin in West Texas may be the second biggest field in the world after Ghawar in Saudi Arabia,” he said.

Saudis ‘will not destroy the US shale industry’ - Telegraph

Saudi Arabia's oil minister Ali al-Naimi Yet oil demand is still growing briskly. The world economy will need 7m b/d more by 2020. Natural depletion on existing fields implies a loss of another 13m b/d by then. Adding to the witches’ brew, global spare capacity is at wafer-thin levels - perhaps as low 1.5m b/d - as the Saudis, Russians, and others, produce at full tilt.

Saudis ‘will not destroy the US shale industry’ - Telegraph

[Kaliboo]

Hedge funds and private equity groups armed with $60bn of ready cash are poised to snap up the assets of bankrupt US shale drillers, almost guaranteeing that America’s tight oil production will rebound as soon as prices start to recover. Daniel Yergin, founder of IHS Cambridge Energy Research Associates, said it is impossible for OPEC to knock out the US shale industry though a war of attrition even if large numbers of frackers fall by the wayside over coming months.

Saudis ‘will not destroy the US shale industry’ - Telegraph

“It takes $10bn and five to ten years to launch a deep-water project. It takes $10m and just 20 days to drill for shale,” he said, speaking at the World Economic Forum in Davos.

Saudis ‘will not destroy the US shale industry’ - Telegraph

Yet even if scores of US drillers go bust, the industry will live on, and a quantum leap in technology has changed the cost structure irreversibly. Output per rig has soared fourfold since 2009. It is now standard to drill multiples wells from the same site, and data analytics promise yet another leap foward in yields. “$60 is the new $90. If the price of oil returns to a range between $50 and $60, this will bring back a lot of production. The Permian Basin in West Texas may be the second biggest field in the world after Ghawar in Saudi Arabia,” he said.

Saudis ‘will not destroy the US shale industry’ - Telegraph

Saudi Arabia's oil minister Ali al-Naimi Yet oil demand is still growing briskly. The world economy will need 7m b/d more by 2020. Natural depletion on existing fields implies a loss of another 13m b/d by then. Adding to the witches’ brew, global spare capacity is at wafer-thin levels - perhaps as low 1.5m b/d - as the Saudis, Russians, and others, produce at full tilt.

Saudis ‘will not destroy the US shale industry’ - Telegraph

No one seems to be getting it yet.  It's still early, but a year later since my first posting.

The Telegraph in the link above is correct in their assessment except for one thing.  True, finding capital and willing investors to take over and restart failing oil companies and assets is unlikely to be a problem in this country and perhaps elsewhere until the most attractive assets are acquired.  The real problem will be getting people who are capable of doing the highly technical work.  Also oilfield equipment which has been in use and is then stacked does not store well.  And maintenance work to keep it in good condition for future use is the first cost that is cut in hard times.  In fact rental companies often do poor in this regard in busy times as there is too much money to be made to have returned equipment being delayed due to scheduled maintenance. This is not the case for safety equipment but is for much other.  So if prices were to quickly rebound, an equipment shortage will immediately occur.  That and worse - a severe people shortage will collectively act like a huge anchor delaying projects and falling further behind on oil production.  This is what always happens with severe, protracted busts.

But the most difficult problem to solve will be finding skilled, experienced oil field professionals.  Like me, many have volunteered for enhanced severance "packages"or were forced out.  The function of the number of these people they can hire back decreases with each new day at low oil prices.  So a bidding war for talent and service providers who can do the work will begin.  In the meantime oil demand and supply curves will shift to much higher oil prices as ability to increase supply will lag.

If Iran succeeds in ramping up and all others continue to max out, then this could make the situation more severe and prolong it, making it harder,  longer to catch up.   The magnitude of staff reductions and equipment stacking already appears too great for any "soft recovery".

Increasing chaos in the weak exporting countries is a "wild card" that will increase volatility and could shift the picture quickly.

Best to all,

Kaliboo

[ArtM72]

Kaliboo -
Yes, when you add the growing lack of available men and machines to the fundamental characteristics of fracked wells' rapid loss of it is pretty clear the longer the wait the harsher the force of the rebound when it occurs.

The biggest high stakes poker players in the world are likely the ones closely monitoring and, in some instances, controlling the information flow from the world's oil patches and storage facilities..

Ya think there are people lying through their shorts? Ha!

[Putncalls]

Oil looks like your run of the mill boom bust cycle with some cheap money and new technology to liven it up. Susan Rice probably knows more secrets than anybody in the oil patch.

[admin]

The head of the Organization of Petroleum Exporting Countries said he wants oil producers outside the group to assist in reducing the global oversupply, signaling once again that OPEC won’t make output cuts alone. “It is vital the market addresses the issue of the stock overhang,” Secretary-General Abdalla El-Badri said Monday at a conference in London. “It should be viewed as something OPEC and non-OPEC tackle together.”

OPEC’s El-Badri calls on global oil producers to help curb glut

Russia could work with the Organization of Petroleum Exporting Countries on removing supply from the market if a political decision was taken to cooperate, OAO Lukoil Vice President Leonid Fedun said in an interview with state news agency Tass. At current prices, it makes more sense to preserve oil fields at optimum working levels than to push Russian output to new records, Fedun said. He didn’t specify how Russia should work with OPEC.

Russia could work with OPEC on supply, Lukoil’s Fedun tells Tass

Saudi Arabian Oil Co. is pumping at high levels as it sees demand growing, and the state-run company may open a possible share offering to international investors. Saudi Aramco, as the world’s largest oil business is known, is still considering “all options” in any future public offering, including the sale of shares internationally, Chairman Khalid Al-Falihsaid in an interview on Al Arabiya television. The company isn’t considering selling its oil reserves, he said.

Saudi Aramco may open IPO to foreigners as it keeps output high

The pace of drilling in the North Sea, the center of UK oil production for the past 40 years, has sunk to a record as crashing energy prices force explorers to abandon costly projects. Just 63% of oil and gas rigs in the UK North Sea were being used as of Jan. 19, according to data provider RigLogix. That’s the lowest since the Houston-based company started tracking their operation in 2000. In the Norwegian North Sea, the 71% rate is also the worst on record.

Oil drilling at record low spells doom for North Sea’s revival

[admin]

Saudi Arabia and Russia, the world’s biggest oil producers, are now more flexible about cooperating to cut output as crude prices have fallen to levels that hydrocarbon-rich nations didn’t foresee, Iraq’s Oil Minister Adel Abdul Mahdi said. “This flexibility should be finalized, and we should hear some solid suggestions coming from all parties,” Abdul Mahdi told reporters at a conference in Kuwait City. He didn’t give details about what the increased Saudi and Russian flexibility entailed, nor did he say how he knew about it.

Saudis, Russia seen by Iraq as more flexible on oil-output cuts

Royal Dutch Shell, Total and Statoil, three of Europe’s biggest oil producers, were among more than 100 energy companies whose credit ratings were placed on review for possible downgrade by Moody’s Investors Service. The reviews come after the rating company cut its oil-price forecasts and should for the most part be completed this quarter, Moody’s said in a statement on Friday. Prices may recover more slowly than companies expect and there is a risk they may fall further, it said.

Oil rout prompts Moody’s to consider Shell, Total for downgrade

Pierre Andurand, the founder of the $615 million Andurand Capital Management who correctly predicted the slump in oil prices, said the commodity has probably hit bottom and will end the year higher. The price of oil will probably rise to $50/bbl this year and $70/bbl in 2017, though investors should expect heightened volatility along the way, he said Friday in an interview on Bloomberg TV.

Oil trader who predicted the decline says price has bottomed

Investment fell 20pc last year worldwide, and is expected to fall a further 16pc this year. “This is unprecedented: we have never seen two years in a row of falling investment. Don’t be misled, anybody who thinks low oil prices are the ‘new normal’ is going to be surprised,” he said.

Saudis ‘will not destroy the US shale industry’ - Telegraph