Home » Posts tagged 'oil production'

Tag Archives: oil production

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase

Brazil Reserves and Production Update, 1H2018

Brazil Reserves and Production Update, 1H2018

brazil c&c production

Brazil and Petrobras show something in common with US LTO: even with a lot of debt and desire, and a strong resource base it is difficult to raise production in the face of high decline rates. It may also be a lesson for the world as oil prices rise and activity picks up; it is by far the most active conventional oil region with many major projects at various stages of completion, but facing delays and schedule crowding so oil production has continued a slow decline, contrary to expectations from last year. In July new production again did not quite match overall decline, mostly because of delays in start-ups of FPSOs planned for this year, and at 2575 kbpd was down 14 kbpd or 0.5% m-o-m and 48 kbpd or 1.8% y-o-y (data from ANP).

chart/

Two FPSOs were started in 2017: Lula Extension Sul (P-66) at 150 kbpd nameplate and Pioneiro de Libra, an extended well test project on the Mero field, at 50 kbpd. Both are now about at design throughput. Two other FPSOs completed ramp up in 2017. In 2018 three FPSOs have started up: Atlanta a small early production system at 20 kbpd, Bezios-1 (P-74) in the Santos basin at 150 kbpd and FPSO Cidade de Campos dos Goytacazes on the Tartaruga Verde field in Campos, also at 150 kbpd. There were three other FPSOs due for the Buzios field (P-75, 76 and 77) but at least one is delayed till next year. There are now four planned FPSOs remaining to be started up this year, all in the fourth quarter: P-75 and P-76 plus P-67 (Lula Norte) and P-69 (Lula Extremo Sul) in the Lula field (each 150 kbpd nameplate).

…click on the above link to read the rest of the article…

Saudi Arabia Calls The End Of Russia’s Oil Prowess

Saudi Arabia Calls The End Of Russia’s Oil Prowess

Putin MBS

Saudi Arabia has not only called the end of Russia’s prominence as a global oil behemoth, but anticipates that Russia’s oil exports “will have declined heavily if not disappeared” within the next 19 years, Mohammed bin Salman said in a recent interview with Bloomberg.

When asked whether Russia and Saudi Arabia had made a backroom deal to increase oil production, MbS was more tight-lipped, saying only that Saudi Arabia was “ready to supply any demand and any disappearing from Iran.” With Russia out of the game, Saudi Arabia would have plenty of oil demand to service, according to MbS.

MbS did not comment on his rationale for Russia’s exit as a major oil producer.

Russia’s oil production in August of 11.21 million barrels per day, near the post-Soviet era high reached the month prior to signing the OPEC+ deal that curbed its production. The 11.21 million barrels places the country in second place of the most prolific oil producers in the world, behind the United States, who overtook both Saudi Arabia and Russia earlier this year, according to EIA data as cited by CNN.

While America managed to rise from its third place seating in 2018, it did so unencumbered by the production-curbing agreement that both Saudi Arabia and Russia agreed to. Gazpromneft earlier today said it was no longer restricting its oil output, although it doubtful that either Russia or Saudi Arabia can reclaim their top spots.

Saudi Arabia has been at the forefront of oil news in recent weeks—almost neck and neck with Iran—as traders try to anticipate just how much spare oil production capacity Saudi Arabia has—if any—and if that spare capacity, whether it’s zero or a million barrels per day, will be sufficient to offset any losses sustained from Iran and Venezuela.

U.S. Shale’s Glory Days Are Numbered

U.S. Shale’s Glory Days Are Numbered

Fracking

There are some early signs that the U.S. shale industry is starting to show its age, with depletion rates on the rise.

A study from Wood Mackenzie found that some wells in the Permian Wolfcamp were suffering from decline rates at or above 15 percent after five years, much higher than the 5 to 10 percent originally anticipated. “If you were expecting a well to hit the normal 6 or 8 percent after five years, and you start seeing a 12 percent decline, this becomes more of a reserves issue than an economics issue,” said R.T. Dukes, a director at industry consultant Wood Mackenzie Ltd., according to Bloomberg. As a result, “you have to grow activity year over year, or it gets harder and harder to offset declines.”

Moreover, shale wells fizzle out much faster than major offshore oil fields, which is significant because the boom in shale drilling over the past few years means that there is more depletion in absolute terms than ever before. A slowdown in drilling will mean that depletion starts to become a serious problem.

A separate study from Goldman Sachs takes a deep look at whether or not the shale industry is starting to see the effects of age. The investment bank says the average life span for “the most transformative areas of global oil supply” is between 7 and 15 years.

Examples of these rapid growth periods include the USSR in the 1960s-1970s, Mexico and the North Sea in the late 1970s-1980s, Venezuela’s heavy oil production in the 1990s, Brazil in the early 2000s, and U.S. shale and Canada’s oil sands in the 2010s. Each had their period in the limelight, but ultimately many of them plateaued and entered an extended period of decline, though some suffering steeper declines than others. Supply Soars

…click on the above link to read the rest of the article…

 

US Oil Exports Are Exceeding Almost All Predictions—Thanks to Fracking

US Oil Exports Are Exceeding Almost All Predictions—Thanks to Fracking

Oil tanker in the Houston ship channel

And crude oil exports are supposed to double by 2020, according to the San Antonio News-Express. That’s a lot of oil — and almost all of it is fracked.

That should come as no surprise. In August 2015, my story for DeSmog, “Lifting Ban On U.S. Crude Oil Export Would Enable Massive Fracking Expansion,” pretty much sums up what is happening now. However, that’s not what the industry experts at the time were predicting.

Last year I noted how quickly these experts, from energy consultants to academics, were proven wrong in their predictions about the effects of overturning the 40-year-old ban, which occurred in December 2015.

If exports double by 2020, those experts will be that much more wrong. Perhaps the best example of this phenomenon is from a December 2015 newsletter from CME Group — a commodities trading group that stood to profit greatly from trading U.S.exported oil. The newsletter, which takes a question-and-answer format, included the following:

Question #2: Will lifting the crude oil export ban result in greater U.S. production?

The answer: No.

Couldn’t get more wrong that, but CME now lists U.S. WTI crude on its website as one of the top commodities it trades. I guess there’s a lesson here about whether to trust a commodities trader.

…click on the above link to read the rest of the article…

OPEC September Production Data

OPEC September Production Data

The below charts were created with data from the OPEC Monthly Oil Market Report and the data through September 2018.

OPEC crude only was up 132,000 barrels per day in September to 32,761,000 bpd. that is still 650,000 barrels per day below their all time high in October of 2016.

August production was revised up by 63,000 bpd so production was actually up 195,000 bpd from what was reported last month.

…click on the above link to read the rest of the article…

Hurricane Michael Shuts In 40% Of Gulf Of Mexico Oil Production

Hurricane Michael Shuts In 40% Of Gulf Of Mexico Oil Production

Michael

Roughly 40 percent of the Gulf of Mexico’s oil production and 28 percent of its natural gas production was shut down as of Tuesday, as the region braced for a powerful hurricane to make landfall.

At least 75 platforms were evacuated, according to Reuters, including those operated by Anadarko Petroleum, BHP Billiton, BP, Chevron and ExxonMobil. Hurricane Michael strengthened to a Category 4 storm as it approached the Florida Panhandle, threatening catastrophic damage to Florida’s Gulf Coast. “Some additional strengthening is possible before landfall,” the National Hurricane Center said in a public advisory. The storm had maximum sustained winds of 140 miles per hour as of Wednesday morning.

An estimated 670,800 barrels per day of oil production and around 726 million cubic feet per day of natural gas production shut down. At least three drilling rigs were evacuated and eight more were moved out of the range of the storm, according to BSEE.

Also, the U.S.’ largest crude oil export terminal, the Louisiana Offshore Oil Port (LOOP), idled operations. LOOP is the only port in the United States that can handle fully laden very large crude carriers (VLCCs), which can carry 2 million barrels of oil.

The storm will be a very different one than Hurricane Florence, which inundated much of North Carolina a few weeks ago. Florence was a slow moving monster that dumped biblical volumes of rain on the region. Michael is expected to move much faster, moving out of the region and up the U.S. Southeast pretty quickly. That should reduce the extent of damage from catastrophic flooding, but the high speed winds are expected to do a lot of damage. As many as 200,000 people in Florida could be without power, according to Duke Energy.

…click on the above link to read the rest of the article…

US Demands For More Oil Could Backfire

US Demands For More Oil Could Backfire

drilling rig

This week the State Department accused OPEC of hiding spare capacity exceeding 1.4 million barrels daily. It urged the cartel to use it to stop the oil price rally that has continued uncomfortably close to midterm elections. The request—or demand, depending on your interpretation—is unprecedented and it might do more harm than good.

Bloomberg quoted a veteran energy analyst from Jefferies, Jason Gammel, as saying, “This is the lowest level of spare capacity in the global system relative to demand that I’ve ever seen. Spare capacity is moving to a precariously low point.” The problem is, nobody seems to be certain exactly how much OPEC’s spare capacity is.

In its latest Short-Term Energy Outlook, the EIA estimated OPEC’s spare production capacity at 1.66 million bpd. But the International Energy Agency last month estimated OPEC’s spare capacity at 2.7 million bpd and is fast declining. What we do know, however, is how much spare capacity Saudi Arabia has: 1.3 million bpd, as revealed by the Energy Minister of the Kingdom during the Russian Energy Week in Moscow.

This is bad news. Until now, various sources, including the Saudis themselves and the EIA, put the Kingdom’s spare capacity at between 1.5 and 2 million bpd. In June, President Trump said the Saudis could pump 12 million bpd. The IEA concurred. Saudi Arabia’s September production rate rose to 10.7 million bpd.

From this level of production, with 1.3 million bpd in spare capacity, we get a maximum production rate of 12 million bpd, indeed. However, Khalid al-Falih delivered a worrying message: Saudi Arabia will spend US$20 billion on maintaining and boosting its spare capacity in the coming years. The news naturally cast doubt on whether the current capacity will be sufficient to cover demand.

…click on the above link to read the rest of the article…

IEA Asks Majors Oil Producers To Boost Production

IEA Asks Majors Oil Producers To Boost Production

oil drilling

Rising oil prices are hurting consumers, Fatih Birol, the Executive Director of the International Energy Agency (IEA), says, calling on major all producers to do the best they can to further boost production and ease persistent supply concerns that pushed Brent Crude to above $86 a barrel on Wednesday.

“Some countries have been making efforts to increase production but this is far from comforting the markets right now,” Birol told the Financial Times on Thursday, adding that his “hope is that all the producers are aware of the sensitive situation and make their best efforts.”

Although higher energy prices may look like a boon for oil exporting countries today, tomorrow the economies of oil exporters will also suffer because of the lower demand growth stemming from high oil prices, Birol told FT.

In an interview with Reuters, also today, Birol said that:

“It is now high time for all the players, especially those key producers and oil exporters, to consider the situation and take the right steps to comfort the market, otherwise I don’t see anybody benefiting.”

Earlier this week, the IEA chief also took to Twitter to comment on the oil price rally in recent weeks and its implications on global economy.

“Rising oil prices are hurting consumers & economic growth prospects today – globally but particularly in the emerging economies – but in a rapidly changing energy world could also have implications for producers tomorrow,” Birol tweeted on Tuesday. Related: A New Era Of LNG Megaprojects

U.S. President Donald Trump has also used Twitter several times this year to slam OPEC for keeping oil prices too high.

Birol’s comments on oil prices and what oil producers should do come just after Saudi Energy Minister Khalid al-Falih said earlier this week that Saudi Arabia would be pumping 10.7 million bpd in October—just below the Kingdom’s highest-ever production level—and would slightly raise production volumes in November.

…click on the above link to read the rest of the article…

Oil Slides After Russia, Saudi Arabia Agree To Boost Output: Report

Rumors that Saudi Arabia might raise oil production spread across financial media last week, prompting representatives of the Kingdom to eventually step in and confirm that the Kingdom planned to ramp up production to try and compensate for the expected hole in global supply left by Iranian exports once US sanctions are reimposed. And as it turns out, Saudi may not be the only major exporter preparing to ramp up production.

China

With oil prices reaching ever-greater highs this week, angering President Trump, who again lashed out at Saudi Arabia during a rally Tuesday night (he reminded the kingdom that it wouldn’t last two weeks without US protection), crude dropped from the highs following reports that Saudi Arabia and Russia had told the US earlier this year that they had planned to boost production through December. What’s more, they had reportedly informed the US of their plans before the OPEC+ meeting in Algiers.

  • RUSSIA AND SAUDI ARABIA AGREED IN SEPTEMBER TO BOOST OIL OUTPUT THROUGH DECEMBER – SOURCES FAMILIAR WITH TALKS
  • RUSSIA AND SAUDI ARABIA TOLD U.S. OF PLANS TO RAISE OUTPUT BEFORE ALGIERS MEETING IN SEPTEMBER -SOURCES

The news prompted crude oil future to slide off the highs.

Oil

The Oil Industry Needs Large New Discoveries, Very Soon

The Oil Industry Needs Large New Discoveries, Very Soon

Transocean

Market participants and analysts are all focused on the imminent oil supply gap that is opening with the U.S. sanctions on Iran just five weeks away.

But beyond the shortest term, a larger and more alarming gap in global oil supply is looming—experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s.

The latest such prediction comes from energy consultancy Wood Mackenzie, which sees a supply gap opening up in the middle of the next decade. At the current level of low oil discoveries and barring technology breakthrough beyond WoodMac’s assumptions, that supply gap could soar to 3 million bpd by 2030, to 7 million bpd by 2035, and to as much as 12 million bpd by 2040.

It’s not that discoveries aren’t being made, they just aren’t enough to offset the natural decline at mature fields while global oil demand is still expected to continue to rise.

The main reason for lower discoveries is that spending on exploration has drastically plunged since the 2014 oil price crash. The good news is, according to Wood Mackenzie, that the volume of new discoveries is correlated with spending on exploration. So if spend were to increase, the chance of more and major oil discoveries gets higher.

As early as the beginning of this year, WoodMac said that the share of exploration of upstream investment has slipped to below 10 percent since 2016 and is not about to recover. “This could be the new normal, with the days of one dollar in six or seven going to exploration forever in the past,” the consultancy said in its ‘5 Things to look for in 2018.’

…click on the above link to read the rest of the article…

How Much Spare Capacity Does Saudi Arabia Really Have?

How Much Spare Capacity Does Saudi Arabia Really Have?

Hawtah field

Saudi Arabia has pledged to cover any supply gap that may emerge as Iranian oil goes offline, but how much spare capacity does it really have?

The massive reserve of spare capacity located in the Saudi desert is the stuff of legend, taken as gospel in the world of oil. After all, Saudi Arabia is the only country in the world that can ramp up or down millions of barrels of production on short notice. And the Saudis have never let us down.

But Saudi Arabia’s mythical spare capacity may finally be tested. Saudi officials insist that they can produce up to between 12.0 and 12.5 million barrels per day (mb/d) if needed. With output at about 10.4 mb/d in August, the latest month for which data is available, that suggests that they have around 1.5 to 2 mb/d of spare capacity.

Not everyone buys that figure. Indeed, the precise amount of spare capacity has been the subject of much debate for years and even decades. Now, because Iranian supply is going offline at a rapid clip, the world may soon find out if Saudi Arabia’s confidence is backed up by reality or if it has all been a bunch of bluster.

The EIA says that total OPEC spare capacity is set to average 1.49 mb/d in the fourth quarter, which is rather low by historical standards. The EIA sees OPEC spare capacity falling to 1.19 mb/d by the fourth quarter of 2019.

There are a few times in the relatively recent past when spare capacity was that low, including two years ago, when spare capacity plunged to 1 mb/d. However, this was during the depths of the oil market downturn, and it was a reflection of Saudi Arabia producing flat out in order to flood the market in an attempt to edge out U.S. shale. Spare capacity was low, but there was a glut of supply.

…click on the above link to read the rest of the article…

GoM Reserves and Production Update, 1H2018

GoM Reserves and Production Update, 1H2018

crude and condensate reserves

chart/

BOEM remaining C&C reserve estimates for GoM increased by 649 mmbbls for 2016 (i.e. to 31st December 2016). This was 112% reserve replacement and followed a similar growth of 618 mmbbls (111% reserve replacement) for 2015. The BOEM reserve calculation method appears to give highly conservative estimates. The increasing reserves followed several years, from 2006, of less than 100% reserve replacement, and actually negative numbers in 2006 and 2008. Current total original reserves (i.e. ultimate recovery) are a new high beating 2006 values, though deep water numbers are still below that year with the main growth appearing to be coming from: 1) older fields that were downgraded because of changes in SPE rules in 2007 (i.e. that reserves could only be booked if there were clear plans for their development within five years); and 2) newer discoveries, mostly smaller fields that are developed through tie-backs to existing hubs. These newer fields often do not get shown as new discoveries because BOEM records production and reserves against leases and each lease is recorded against a single field, even if there are deposits of different depth, age, geology and significant spacial separation within in it.

Current oil reserves are 3.569 Gb, which is 15% of the estimated original reserve (aka ultimate recovery). BOEM give the reserves as 2P (i.e. proven and probable) but they look very conservative and are actually lower than the EIA numbers, shown below, given for proven only and based on the operators own numbers, although the two are converging. The historical reserve histories look closer to how 1P (proven) numbers often appear, for example with some fields maintaining near constant R/P numbers, some showing large early drops that then come back over time, and some numbers being suspiciously low on fields obviously not near run out production rates (e.g. Mad Dog and Son of Bluto 2).

…click on the above link to read the rest of the article…

Is The Bakken Close To Breaking?

Is The Bakken Close To Breaking?

Bakken

While the Permian has experienced a drilling boom and has received tons of media attention, a lesser-known but still remarkable revival has been underway in the Bakken this year. At the same time, the increased rates of drilling in North Dakota are starting to reveal signs of strain on the basin, as drillers are increasingly forced into less desirable locations.

The Bakken was hit harder than the Permian during the oil market downturn that began in 2014, with rigs and capital diverted away from North Dakota and rerouted to West Texas. Oil production hit a temporary peak in late 2014 at 1.26 million barrels per day (mb/d), declining for much of the next two years.

However, production began to rise again in early 2017 before accelerating this year. In October, the EIA expects Bakken production to hit 1.33 mb/d, a new record high.

In some ways, the Bakken is enjoying a bit of a revival because the Permian has become overcrowded. The pipeline bottleneck, the strain on rigs and equipment, completion services, labor, water and even on road traffic has caused a lot of headaches for shale drillers in West Texas. Some shale executives have decided to shift resources elsewhere, and the Bakken has received a boost as a result.

The Bakken took over as the most profitable place for shale drillers on average this summer, at least temporarily surpassing the Permian. That may not last as the steep discounts for WTI in Midland drags down the profitability of the Permian, a situation that will resolve itself over the next few years as pipelines come online. But the improved outlook for the Bakken is notable nonetheless.

…click on the above link to read the rest of the article…

What Will Trigger The Next Oil Price Crash?

What Will Trigger The Next Oil Price Crash?

Rig

Are we nearing another financial crisis?

The supply-side story for oil prices is heavily skewed to the upside, with production losses from Iran and Venezuela causing a rapid tightening of the market. But the demand side of the equation is much more complex and harder to pin down.

Economists and investment banks are increasingly sounding the alarm on the global economy, raising red flags about the potential dangers ahead. Goldman Sachs and JPMorgan Chase recently suggested that a full-scale trade war would lead the steep corporate losses and a bear market for stocks.

The Trump administration just took its trade war with China to a new level, adding $200 billion worth of tariffs on imported Chinese goods. That was met with swift retaliation. Trump promised another $267 billion in tariffs are in the offing.

JPMorgan said that after scanning through more than 7,000 earnings transcripts, the topic of tariffs was widely discussed and feared. Around 35 percent of companies said tariffs were a threat to their business, JPMorgan said, as reported by Bloomberg.

But the risks don’t stop there. The Federal Reserve is steadily hiking interest rates, making borrowing more expensive around the world and upsetting a long line of currencies. The strength of the U.S. dollar has led to havoc in Argentina and Turkey, with slightly less but still significant currency turmoil in India, Indonesia, South Africa, Russia and an array of other emerging markets. Currency problems could morph into bigger debt crises, as governments struggle to repay debt, and companies and individuals get crushed by dollar-denominated liabilities.

…click on the above link to read the rest of the article…

OPEC, Russia Defy Trump Demand To Boost Oil Production

Less than three months after Trump’s latest tweet slamming OPEC, in which he warned the petroleum cartel that it must “REDUCE PRICING NOW!”, Trump was at it again and on Thursday morning, with Brent hitting $80 per barrel and higher gasoline prices creating another headache for Republicans ahead of the midterm elections, the president lashed out at OPEC, saying that the US protects the countries of the Middle East, and warning these nations that “they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember.

Trump’s latest threat, however, was summarily ignored on Sunday when OPEC leader Saudi Arabia and its biggest non-OPEC oil-producer ally, Russia, ruled out additional increase in crude output, defying Trump’s calls for action to cool the market.

“I do not influence prices,” said the Saudi Energy Minister Khalid al-Falih during a press conference in Algiers for a meeting that ended with no formal recommendation for any additional supply boost, Reuters reports.

In recent weeks, oil prices have moved back to 4 year highs, a rally that according to analysts has been mostly due to a perceived decline in oil exports from Iran due to fresh U.S. sanctions, stemming from Trump’s decision to pull out of the Iran Nuclear deal. As a result, as much as 1.5 million barrels of output are in danger of being taken off the market.

And while Falih said Saudi Arabia had spare capacity to increase oil output, he said that no such move was needed at the moment. Instead, Falih blamed refiners for not converting enough product: “My information is that the markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it” he said.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase