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Burn, Pay, Or Shut It Down: Three Evils For Permian Drillers

Burn, Pay, Or Shut It Down: Three Evils For Permian Drillers

Evil Permian Drillers

There was a time when natural gas was a welcomed byproduct of crude oil drilling, and drillers in the prolific Permian basin enjoyed this consolation prize–at least when natural gas prices were on the rise. All good things come to an end, though, and the amount of natural gas now exceeds the capacity to get rid of it.

With pipeline capacity fully exploited and natural gas prices squarely in the red, Permian drillers today are faced with three lousy choices: burn off the natural gas, pay to have the gas removed, or slow oil drilling activities to staunch the flow of natural gas.

Crude oil and natural gas are like two peas in a pod: when you find oil, you often find gas. 

Crude oil is pumped out of the well, and a small amount of natural gas comes almost inevitably comes with it. 

But over time, this ratio changes: less oil, more natural gas. 

Now, there is simply too much natural gas, and drillers in the American shale patch must face the not-so-pleasant music, with only one question remaining: which shale drillers can hold on until more pipeline capacity comes online?

Burn, Baby, Burn

The first option for drillers trying to weather the natural gas storm is to burn it off. 

This is flaring–and it’s a rather unpopular method, publicly speaking, due to the negative impact on the environment. For drillers, though, it’s a cost-effective way of dealing with the glut, and since they all must answer to shareholders and lenders, flaring is the first choice when it comes to watching the bottom line. 

Flaring has increased exponentially in recent years as the discrepancy between natural gas and pipeline capacity increased, creating unfavorable market conditions and leaving drillers holding a bag of unwanted natural gas. 

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

The Top 5 Ways We Use Oil & Gas

The Top 5 Ways We Use Oil & Gas

Petchem

If climate change and the use of fossil fuels is starting to worry you, consider this: The lion’s share of the petroleum in the United States is being used just to get around–to get people and things from point A to point B. 

Industrial, residential, commercial and electrical power usage of petroleum pales in comparison.   

Fossil fuels–which include crude oil and other liquids–are refined into petroleum products for a multitude of uses, and last year, the United States consumed over 20 million barrels per day. 

A whopping 69 percent of that was consumed by transportation. Industry, which the masses like to villainize most in terms of fossil fuel consumption and greenhouse gas emissions, used only 25 percent. Residential usage accounted for only 3 percent of our petroleum consumption, and commercial, only 2 percent. 

What about electricity? American electricity generation used only 1 percent of those petroleum products. 

Source: EIA

So, for anyone looking to pinpoint where we need to start cheerleading for renewables or fossil-fuels shaming, here are the top 5 uses of petroleum products to help redirect the debate: 

#5 Oceans of Plastic: Still Gas, 0.703M BPD

While primarily referring to methane and ethane, “still gas” is any form or mixture of gases produced in refineries by distillation, cracking, reforming, and other processes. That means it also includes ethylene, normal butane, butylenes, propane, propylene, and others. 

It’s used most as refinery fuel or petrochemical feedstock. 

The conversion factor is 6 million Btus per fuel oil equivalent barrel.

U.S. refineries burned nearly 240 million barrels of still gas in 2018. 

But petrochemicals are one of the largest drivers of global oil demand, so it’s a circular competition here for still gas. 

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

Iran Claims To Have Video Evidence Of Oil Tanker Attacks

Iran Claims To Have Video Evidence Of Oil Tanker Attacks

By – Oct 16, 2019, 2:30 PM CDTJoin Our Community

Drone

Iran has claimed that it has footage of last week’s attack on its oil tanker while off the Saudi Arabian Jeddah port, and it proves that the attacks were carried out by Israel, Saudi Arabia, and the United States, according to Mehr news agency, who quoted Abolfazl Hassan Beigi, Iran’s National Security and Foreign Policy Commission member.

This evidence, Hassan Beigi said, will be provided to the UN and Security Council.

“Saudi Arabia and the U.S. are trying to put the blame on the ISIL [Islamic State] or the Taliban for the attack, but the documents dismiss such a notion as no ISIL or Taliban terrorists are present in the Red Sea,” Hassan Beigi said, adding that both ISIS and the Taliban were created and sponsored by Saudi Arabia and Israel.

Iran’s President Hassan Rouhani on Tuesday, in his first media conference in over a year, that the attack on the tanker would not go unpunished, adding that it was “carried out by a government” rather than an individual.

Rouhani stopped short of naming that state actor, however.

“If a country thinks that it can create instability in the region without getting a response, that would be a sheer mistake,” Rouhani said.

The Iranian tanker, the Sabiti, was attacked last Friday in the Red Sea, damaging the vessel and causing oil to spill into the water. The Sabiti belongs to the National Iranian Oil Company.

The attack on the Iranian oil tanker follows the September 14 attack on Saudi Aramco’s oil infrastructure that took offline nearly 6 million bpd of production. Tensions in the Middle East have been flaring up as the United States continues to sanction Iran’s oil industry for noncompliance with the nuclear deal.

Russia Considers Possibility Of $25 Oil Next Year

Russia Considers Possibility Of $25 Oil Next Year

MBS Putin

Russia is considering the notion that oil prices may be as low as $25 per barrel in 2020, the country’s central bank said in its new forecast published on Monday, as cited by Reuters.

Russia’s Central Bank has forecast in its macroeconomic forecast that oil could possibly hit that low due to falling demand for oil and oil products worldwide, as well as from disappointed global economic growth.

The doom and gloom scenario was just one proposed by the bank. If that risk scenario actually materializes, Russia’s inflation could increase to 7% or 8% next year, on the back of falling gross domestic product to 1.5%– 2%.

Russia is perhaps uniquely positioned to withstand low oil prices, although $25 per barrel is pretty bleak.

One of the reasons why Russia is more impervious to low oil prices compared to its competition is that its currency weakens when oil prices fall. This provides some type of a cushion—at least to some extent—for its lower oil revenues. Russian oil companies can pay their expenses in this weaker ruble, but still rakes in US dollars for its oil exports. Further allowing it to withstand lower prices, are that Russia’s oil company’s taxes are designed to be less as oil prices fall.

So much so is Russia’s ability to adapt to lower oil prices, that it actually struggles with higher oil prices, which dent demand for its oil. Russia’s budget for 2019 was based on $40 oil.Meanwhile, Saudi Arabia needs $80—some say even $85—per barrel.

In August, Russia said its 2019 budget breakeven was at a Urals price of $49.20—the lowest breakeven in more than a decade.  This has Russia and Saudi Arabia—colleagues in the current production quotas designed to rebalance the market—at odds, and likely working toward perhaps different goals.

Decline In U.S. Oil Rigs Sends WTI Higher

Decline In U.S. Oil Rigs Sends WTI Higher

oil rig

The the number of active oil and gas rigs fell in the United States this week according to Baker Hughes.

The total number of active oil and gas drilling rigs fell by 3 according to the report with the number of active oil rigs gaining 2 to reach 833 and the number of gas rigs falling 5 to reach 189.

The oil and gas rig count is now just 14 up from this time last year, with oil seeing just a 18-rig increase year on year, gas rigs down on the year by 3, and miscellaneous rigs seeing a 1-rig decrease for the year.

Oil prices were trading significantly up earlier on Friday leading up to the data release as bullish factors excited the market after a massive shakeup deal between Chevron and Exxon was announced, and on tightening supply signals from Libya, Algeria, and Venezuela.

WTI was trading up $0.60 (+0.94%) at $64.18—inching closer to $70 per barrel that some analysts predict would hurt demand. The Brent benchmark was trading up $0.67 (+0.95%) at $71.50 at 12:22pm EST, comfortably over the $70 threshold. Prices for both represent a significant gain week on week.

US crude oil production for week ending April 5 was 12.2 million barrels for the second week in a row.

Canada, too, saw a decline in the number of active rigs this week. Canada’s total oil and gas rig count fell by 2 after falling by 20 last week, and is now just 66, which is 36 fewer rigs than this time last year as Canada’s oil industry continues to face steep uphill battles over its constrained pipeline capacity that is necessary to get its heavy crude to market along with production caps instituted to keep Western Canadian Select prices from falling further.

By 1:06pm EDT, WTI was trading up 0.82% (+$0.52) at $64.10 on the day. Brent crude was trading up 0.99% (+$0.70) at $71.53 per barrel.

Sharp Rise In Rig Count Pressures Oil Prices

Sharp Rise In Rig Count Pressures Oil Prices

Pioneer rig

The the number of active oil and gas rigs rose by 19 after two weeks of big losses in the United States this week according to Baker Hughes, in a sign that US production is still set for increases.

The total number of active oil and gas drilling rigs rose by 20 rigs­ according to the report with the number of active oil rigs gaining 15 to reach 831 and the number of gas rigs gaining 4 to reach 194.

The oil and gas rig count is now just 22 up from this time last year, with oil seeing just a 23-rig increase year on year, gas rigs holding flat, and miscellaneous rigs seeing a 1-rig decrease for the year.

Oil prices were trading up earlier on Friday leading up to the data release as early figures came in for OPEC’s March oil production from S&P Platts, which showed that its oil production had fallen by 570,000 barrels per day from February levels as Venezuela and Saudi Arabia saw steep declines in production levels.

WTI was trading up $0.49 (+0.79%) at $62.59—well above the psychologically important $60 per barrel mark. The Brent benchmark was trading up $0.48 (+0.69%) at $69.88 at 12:18pm EST, after easing off the $70 per barrel mark earlier this week. Prices for both represent a significant gain week on week. Related: Is This The End Of Colorado’s Shale Boom?

Despite the drop off in the number of active rigs, US crude oil production for week ending March 29 was 12.2 million barrels—another new all-time high.

Unlike in the United States, Canada saw a decline in the number of active rigs this week.

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

Slipping Rig Count Can’t Keep Oil Prices From Falling

Slipping Rig Count Can’t Keep Oil Prices From Falling

BHGE rig

Baker Hughes reported a 4-rig decrease for oil and gas in the United States this week—a loss in rigs for the third week in a row. The four-rig decline was all on the oil-rig side, with gas rigs holding steady.

The total number of active oil and gas drilling rigs now stands at 1,071 according to the report, with the number of active oil rigs decreasing by 4 to reach 873 and the number of gas rigs holding steady at 198.

The oil and gas rig count is now 141 up from this time last year, 126 of which is in oil rigs.

Crude oil prices fell sharply near the close of the week on Friday despite production losses in OPEC’s Libya and an agreement within OPEC+ to cut 1.2 million bpd from the expanded cartel’s October production.

The WTI benchmark was trading down 2.26% (-$1.19) at $51.39—a loss of more than $2 per barrel week over week—at 11:39am EST. Brent crude was trading down 1.84% (-$1.13) at $60.32—also down more than $2 per barrel from last week

Canada’s oil and gas rigs for the week decreased by 12 rigs this week after losing 17 rigs last week, bringing its total oil and gas rig count to 174, which is 64 fewer rigs than this time last year, with a 7-rig decrease for oil rigs, and a 5-rig decrease for gas rigs.

The EIA’s estimates for US production for the week ending December 7 continues to weigh on prices, averaging 11.6 million bpd­—a drop off from the previous 11.7 million bpd for the previous four weeks.

By 1:07pm EDT, WTI had decreased by 2.68% (-$1.41) at $51.17 on the day. Brent crude was trading down 2.03% (-$1.25) at $60.20 per barrel.

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.

Rig Count Drops As U.S. Crude Output Hit 11 Million Bpd

Rig Count Drops As U.S. Crude Output Hit 11 Million Bpd

Oil rig

Baker Hughes reported a decreased number of active oil and gas rigs in the United States on Friday. Oil and gas rigs decreased by 8 rigs, according to the report, with the number of active oil rigs falling by 5 to 858 this week, while the number of gas rigs dipped by 2, hitting 187.

The oil and gas rig count now stands at 1,046—up 96 from this time last year, with the number of oil rigs accounting for 94 of that 96.

Canada gained 14 oil and gas rigs for the week, 11 of which were gas rigs. Canada’s oil and gas rig count is now up just 5 year over year. Oil rigs are up by 24 year over year in Canada, while the number of gas rigs are down by 19.

The biggest loser by basin this week was Granite Wash, which lost 3 rigs. The only basin to gain rigs this week were Cana Woodford (+2), and Utica (+1). The Permian basin, which saw neither an increase or a decrease this week, and Cana Woodford, saw the biggest increases year over year. Cana Woodford now has 12 more rigs than this time last year, while the Permian has 102 rigs more than this time last year.

WTI crude was trading down on Friday afternoon while Brent crude was trading up—widening the WTI discount to Brent. WTI was trading down 0.18% (-$0.12) at $68.12 at 12:34 pm EDT. Brent crude was trading up 0.25% (+$0.18) at $72.76 per barrel.

Both benchmarks are trading significantly down week on week as the market treads carefully after OPEC committed to increasing production in order to more closely stick to its production cut agreement after months of under producing, and despite US production that this week, for the first time, hit a new psychologically important high of 11 million bpd, after hovering at 10.9 million bpd for multiple weeks.

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

Rig Count Falls As U.S. Oil Output Flatlines

Rig Count Falls As U.S. Oil Output Flatlines

Eagle ford rig

Baker Hughes reported another dip in the number of active oil and gas rigs in the United States today. Oil and gas rigs decreased by 7 rigs, according to the report, with the number of oil rigs decreasing by 1, and the number of gas rigs decreasing by 6.

The oil and gas rig count now stands at 1,052—up 111 from this time last year.

Canada, for its part, gained 21 oil rigs for the week—after last week’s gain of 27 oil and gas rigs. Despite weeks of significant gains, Canada’s oil and gas rig count is still down by 10 year over year.

Oil benchmarks surged on Friday afternoon as the market processed OPEC’s agreement to stick more closely to the production cuts by holding the feet to the fire of those members who had underproduced its quota under the OPEC deal that went into effect in January 2017. The OPEC meeting on Friday resulted in OPEC agreeing to increase production to get back to agreed upon levels, which is about 1 million bpd more than the cartel produced in May, when compliance to the quota was about 150%. Missing from the events of the day was OPEC’s agreement to undo the production cut deal, or to gradually increase production beyond the contractual amount of 32.4 million bpd. The absence of any real change to the production quota proceeded a significant price spike of 4%, as relief set in that OPEC deal would either fall apart or come to an early end.

At 11:44am EDT, the WTI benchmark was trading up 3.83% (+$2.51) to $68.05, with Brent up 2.31% (+$1.68) to $74.48. Both benchmarks are up week over week as well as on the day.

US oil production continues putting downward pressure on oil prices, and for the second week in a row, US production reached 10.900 million bpd—close to the 11 million bpd production that many had forecast for the year. This week is the first week in over a quarter that wasn’t an increase.

At 6 minutes after the hour, WTI was trading up 4.81% at $68.69, with Brent trading up 2.18%at $74.39.

Rig Count Falters Amid Oil Price Correction

Rig Count Falters Amid Oil Price Correction

Oil rigs

Baker Hughes reported a dip in the number of active oil and gas rigs in the United States today. Oil and gas rigs decreased by 3 rigs, according to the report, with the number of oil rigs increasing by 1, and the number of gas rigs decreasing by 4.

The oil and gas rig count now stands at 1,059—up 126 from this time last year.

Canada, for its part, gained 27 oil rigs for the week—after last week’s gain of 13 oil and gas rigs. Despite weeks of significant gains, Canada’s oil and gas rig count is still down by 20 year over year.

Oil benchmarks experienced a huge slide on Friday as Russia and Saudi Arabia proclaimed their willingness to increase output ahead of the June 22 OPEC/NOPEC meeting in Vienna, even if the oil production cut deal were to fall apart. The loose commitment by two of the largest signees to the production cut deal was enough to drag down prices that were earlier being pulled upwards by Venezuela’s freefalling oil production that some think will fall below 1 million barrels per day, and continuing reports that Iran may face multiple obstacles on the road to exporting its oil in the wake of renewed sanctions levied by the United States. Related: The Permian Faces A Long Term Natural Gas Crisis

At 12:07pm EDT, the WTI benchmark was trading down a massive 3.36% (-$2.25) to $64.64, with Brent down 3.48% (-$2.64) to $73.30. Both benchmarks are down week on week as well as on the day.

US oil production continues putting downward pressure on oil prices, and for the week ending June 08, production reached 10.900 million bpd—just a hair shy of the 11 million bpd production that many had forecast for the year.

At 7 minutes after the hour, WTI was trading down 2.93% at $64.93, with Brent trading down 3.29% at $73.44.

U.S. Rig Count Continues To Rise As Canadian Rig Count Plunges

U.S. Rig Count Continues To Rise As Canadian Rig Count Plunges

Sunset oil rig

Baker Hughes reported another 5-rig increase to the number of oil and gas rigs this week.

The total number of oil and gas rigs now stands at 995, which is an addition of 186 rigs year over year.

The number of oil rigs in the United States increased by 4 this week, for a total of 804 active oil wells in the U.S.—a figure that is 152 more rigs than this time last year. The number of gas rigs rose by 1 this week, and now stands at 190; 35 rigs above this week last year.

The oil and gas rig count in the United States has increased by 71 in 2018.

Canada continued its severe losing streak, with a decrease of 58 oil and gas rigs, after losing 54 rigs on top last week, and a 29-rig loss the week before. At 161 total rigs, Canada now has 84 fewer rigs than it did a year ago.

Oil prices managed to climb substantially this week and were up again today prior to data release as the Saudi Energy Minister, Khalid al-Falih, said that he expected the production cuts to last into 2019. Other factors buoying prices are tensions in the Middle East after Saudi Arabia insisted that it would pursue nuclear power plans with or without the support of the United States, and would even work on developing nuclear weapons should Iran do the same. Weighing on prices this week is U.S. crude oil production, which continued its uptick in the week ending March 16, reaching 10.407 million bpd.

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

 

U.S. Oil Rig Count Falls As Gas Rig Count Soars

U.S. Oil Rig Count Falls As Gas Rig Count Soars

Fracking rig

Baker Hughes reported another 3-rig increase to the number of oil and gas rigs this week.

The total number of oil and gas rigs now stands at 984, which is an addition of 216 rigs year over year.

Despite the overall increase, the number of oil rigs in the United States decreased by 4 this week, for a total of 796 active oil wells in the US—a figure that is 179 more rigs than this time last year. The number of gas rigs rose by 7 this week, and now stands at 188; 37 rigs above this week last year.

The oil and gas rig count in the United States has increased by 60 in 2018.

Canada continued its losing streak, with a decrease of 29 oil and gas rigs for the week. Canada now has fewer rigs than it did a year ago.

Despite multiple bearish events this week, oil prices managed to climb, buoyed in part on Friday by positive job reports and reports about a possible meeting between President Donald Trump and North Korea’s leader, Kim Jong Un.

Neither the threat of steel tariffs—which some analysts opine could increase pipeline and other oil infrastructure costs—nor US crude oil production, which rose again in the week ending March 2nd to 10.369 million bpd, according to the EIA were able to keep oil prices down.

At 11:45 am EST, the price of a WTI barrel was resilient, trading up $1.72 (+2.86%) to $61.84—a significant increase from last week’s prices. The Brent barrel was also trading up on the day, by $1.76 (+2.77%) to $65.37.

Alaska, Louisiana, New Mexico, Oklahoma, and Utah all lost rigs this week, with Texas adding 7 rigs for a total of 490 active rigs—an increase of 98 over this time last year.

At 1:09pm EST, both benchmarks had lost some ground, with WTI trading at $61.77 (+$1.65) and Brent trading at $65.13 (+$1.52).

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

U.S. Rig Count Inches Higher As Canadian Rig Count Slips

U.S. Rig Count Inches Higher As Canadian Rig Count Slips

Oil rig

Baker Hughes reported another 3-rig increase to the number of oil and gas rigs this week.

The total number of oil and gas rigs now stands at 981, which is an addition of 225 rigs year over year.

The number of oil rigs in the United States increased by a single rig this week, and now stands at 800, or 191 over this time last year. The number of gas rigs, which rose by 2 this week, now stands at 181, or 35 rigs above this week last year.

Canada lost another 4 rigs this week after losing 12 last week. The losses were 6 for gas, while oil gained 2.

At 11:45 am EST, the price of a WTI barrel was trading down $0.22 (-0.36%) to $60.77—dollars below last week’s price. The Brent barrel was also trading down on the day, by $0.02 (-0.03%) to $63.81. That represents a $3 fall for the benchmark in a week. The market bristled in early trading after President Donald Trump on Thursday announced his plan for imposing tariffs on steel and aluminum. Many in the oil industry spoke out against the plan, on the grounds that the tariffs would kill jobs in the energy industry as costs for infrastructure projects would likely skyrocket.

US crude oil production rose in the week ending February 23 to 10.283 million bpd—resuming its steadfast climb of recent weeks after a tiny hiccup last week when it fell from a high of 10.271 million bpd to 10.270 million bpd. This week is the highest production figure for the U.S. ever.

By basin, the Marcellus gained two rigs. The Williston basin lost 2. Cana Woodford, DJ-Niobrara, and the Permian all lost a single rig.

At 1:11pm EST, oil had rallied somewhat, with WTI trading at $61.14 (+$0.15) and Brent tradingat $64.17 (+$0.34).

Oil Prices Tank As U.S. Drillers Add Massive Number Of Rigs

Oil Prices Tank As U.S. Drillers Add Massive Number Of Rigs

rigs

As if the recent nosedive that oil prices have taken in the last few days wasn’t bad enough—Baker Hughes reported a staggering increase to the number of rigs. The number of active oil and gas rigs increased by 29 to Baker Hughes data. This brings the total number of oil and gas rigs to 975, which is an addition of 234 rigs year over year.

The number of oil rigs in the United States rose this week by 26 with the number of gas rigs increasing by 3. The number of oil rigs now stands at 791 versus 591 a year ago. The number of gas rigs in the US now stands at 184, up from 149 a year ago.

At 11:24 am EST, the price of a WTI barrel was trading down $1.35 (-2.21 percent) to $59.80—almost a staggering $5.00 under this same time last week. The Brent barrel trading down $1.39(-2.14 percent) to $63.42, also almost $5 per barrel under last week, and a loss of 9 percent since the highs in late January.

Pressing on prices are robust US production. US crude oil production rose again, to 10.251 million bpd, from 9.919 million bpd the week before, setting another new high and surpassing the psychological threshold of 10.0 million bpd.

Last week, the EIA pressured prices even further when it changed its US production forecast, with their prediction that the US would reach 11 million bpd by the end of 2018—a full year earlier than its previous estimates that it had made just last month.

The Permian basin rig count saw the greatest increase to the number of rigs at 10.

At 1:09pm EST, WTI was trading at $59.03 (-$2.12) with Brent trading at $62.68 (-$2.13).

Olduvai IV: Courage
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