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Oil Major: 70% Of Crude Can Be Left In The Ground

November 25, 2017

Oil Major: 70% Of Crude Can Be Left In The Ground

Oil

Canada’s oil sands are too dirty to be produced, and should probably stay in the ground.

That has long been the sentiment of environmental groups, but it is also gaining acceptance even among some of the largest oil companies in the world.

“A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands. It is really about accessing the most carbon-efficient barrels.”

Meanwhile, Statoil is under pressure at home on another front: its Arctic wells in the Barents Sea have come up dry, capping off a highly disappointing drilling season.

If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

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

Norway Doubles Down On Arctic Oil

February 20, 2017

Norway Doubles Down On Arctic Oil

Statoil oil operation

While Canada and the U.S. ban Arctic drilling for oil and gas motivated by environmental concerns, and majors such as Shell pull out of their Arctic projects due to financial pressures, Norwegian energy companies are planning to increase drilling in the country’s Arctic shelf in the Barents Sea.

It seems that the limited oil price increase that followed OPEC’s production cut deal has been enough for Statoil and Lundin to decide to allocate more funds to Arctic drilling, especially since the price rise has been accompanied by a major discovery for Lundin and a likely future major discovery for Statoil.

Lundin announced earlier this month that it had struck a deposit holding between 35 and 100 million barrels of oil equivalent in its Filicudi prospect in the southern Barents Sea. According to the company, which is exploring the prospect in partnership with Aker BP and Dea, Filicudi may contain as much as 700 million barrels of oil equivalent.

Statoil, for its part, is gearing up for a major drilling campaign focusing on what could turn out to be the largest field in Norway’s Arctic shelf: the Korpfjell field. Dubbed an elephant, Korpfjell may hold up to 10 billion barrels of crude, not least because of its immediate proximity to another promising deposit, the Perseevsky oil prospect in the Russian section of the Arctic. Perseevsky is being explored by Rosneft in partnership with Statoil.

Naturally, there is major environmental opposition to this Arctic foray: Greenpeace, Bloomberg recalls, last year launched a lawsuit against the Norwegian government for awarding exploration licenses in the Barents Sea. The case will be heard this fall.

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

 

Obama Slams The Door On Future U.S. Arctic Drilling

October 20, 2015

Obama Slams The Door On Future U.S. Arctic Drilling

The Obama administration officially shut the door on Arctic drilling, a move that could prevent any new drilling for years to come.

The U.S. Department of Interior announced on October 16 that it would cancel two lease sales for offshore acreage, which had been scheduled to take place in 2016 and 2017. Environmental groups have been doggedly criticizing the Obama administration for allowing Royal Dutch Shell to drill in the Arctic to begin with, citing the potential catastrophe if an oil spilled occurred. They had called upon the President to deny any permits to Shell.

But it wasn’t environmental protest that killed off Shell’s drilling campaign. What really forced the Anglo-Dutch company to retreat was low oil prices and disappointing drilling results.

Similarly, the Obama administration is now shutting the door on future lease sales not because of concerns over the environment, but “In light of current market conditions and low industry interest,” as Interior put it in a statement.

Related: Airstrikes Have Yet To Stop ISIS Oil Industry

On its face, the move is a logical one. Few other companies were interested in drilling in the Chukchi or Beaufort Seas, despite several having purchased leases years ago. Statoil and ConocoPhillips, two other large oil companies interested in the Arctic, had previously put their Arctic ambitions on ice because of the difficulty and high costs associated with drilling in the region. With Shell announcing that it would suspend U.S. Arctic exploration for the “foreseeable future” there are now zero companies that are viably interested in drilling anytime soon.

Remarkably, however, the interest in new leases had dried up even before the downturn in oil prices. Interior said that it put a “Call for Information and Nominations” in September 2013, which is essentially a way for the government to solicit interest from the industry on which areas to auction off based on their interest.

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

What On Earth Are We Doing Looking For Oil In The Arctic?

February 18, 2015

What On Earth Are We Doing Looking For Oil In The Arctic?

Shell is back in; Statoil is pensive, but eager; and Russia is pushing ahead. Low prices have stunted exploration, but the Arctic is still a hotbed (read: marginally warm-bed) of activity. With so much to lose in the fragile and costly environment, why are we there?

One – albeit simple – answer numbers around 90 billion or 1,670 trillion depending on your business. The United States Geological Survey estimates that the area above the Arctic Circle holds 90 billion barrels (bbl) of undiscovered, technically recoverable oil and 1,670 trillion cubic feet of technically recoverable natural gas. That’s good for 13 percent of the undiscovered oil and 30 percent of the undiscovered natural gas in the world. Still, it’s not easily accessible – or easy to market – with most of the hydrocarbons occurring under the inhospitable and often frozen Arctic seas.

Another – more hopeful – answer involves the belief that the Arctic offers some semblance of a path toward energy independence. More specifically, for the largest consumer of all, the United States. US Arctic production began in earnest in the mid 70s following the ’73-74 oil embargo by the Organization of Arab Petroleum Exporting Countries, which sent prices up over 75 percent. Project Independence, as the Nixon Administration designed it, aimed to promote domestic energy independence, including the Trans-Alaska Pipeline System. Ultimately, the efficiency and production initiatives sent oil imports tumbling more than 50 percent by 1985.

Related: Arctic Oil On Life Support

Today, US shale has revived the nation’s hope of energy independence – no matter how off base it may be. Still, the Arctic’s role in furthering this goal is yet to be determined. Its oil-to-gas ratio – approximately 3:1 in favor of gas – limits any widespread appeal. Moreover, the Obama administration has been hesitant to expand leasing opportunities, instead favoring the Atlantic coast and Gulf of Mexico.

 

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

Arctic Oil On Life Support

February 2, 2015

Arctic Oil On Life Support

Oil companies have eyed the Arctic for years. With an estimated 90 billion barrels of oil lying north of the Arctic Circle, the circumpolar north is arguably the last corner of the globe that is still almost entirely unexplored.

As drilling technology advances, conventional oil reserves become harder to find, and climate change contributes to melting sea ice, the Arctic has moved up on the list of priorities in oil company board rooms.

That had companies moving north – Royal Dutch Shell off the coast of Alaska, Statoil in the Norwegian Arctic, and ExxonMobil in conjunction with Russia’s Rosneft in the Russian far north.

But achieving the goals of tapping the extensive oil reserves in the Arctic has been much harder than previously thought. Shell’s mishaps have been well-documented. The Anglo-Dutch company failed to achieve permits on time, had its drill ships run aground, and saw its oil spill containment dome “crushed like a beer can” during testing. That delayed drilling for several consecutive years.

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

Arctic Explorers Retreat From Hostile Waters With Oil Prices Low

January 14, 2015

Arctic Explorers Retreat From Hostile Waters With Oil Prices Low

When Statoil ASA (STL) acquired the last of three licenses off Greenland’s west coast in January 2012, oil at more than $110 a barrel made exploring the iceberg-ridden waters an attractive proposition.

Less than two years later, the price of oil had been cut by almost half and Norway’s Statoil, the world’s most active offshore Arctic explorer in 2014, relinquished its interest in all three licenses in December without drilling a single well, Knut Rostad, a spokesman for the state-controlled company, said by e-mail.

Statoil’s decision shows how the plunge in oil, with Brent crude trading at about $45 a barrel, has dealt another blow to companies and governments hoping to tap the largely unexplored Arctic. That threatens to demote the importance of a region already challenged by high costs, environmental concerns, technological obstacles and, in the case of Russia, international sanctions.

“At $50, it just doesn’t make sense,” James Henderson, a senior research fellow at the Oxford Institute for Energy Studies, said in a Jan. 12 phone interview. “Arctic exploration has almost certainly been significantly undermined for the rest of this decade.”

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

 

Oil Losses Force Norway to Consider Measures to Back Economy

January 9, 2015

Oil Losses Force Norway to Consider Measures to Back Economy

Norway is considering tapping reserve funds to shield westernEurope’s biggest oil producer from the worst slump in crude prices in more than half a decade.

Prime Minister Erna Solberg said the government is now “on alert” to respond to the rout. “If the economic situation requires it, we can react quickly,” she said yesterday at a conference in Oslo organized by Norway’s confederation of industry.

A 56 percent plunge in the price of Brent crude since a June high has undermined Norway’s currency and beaten back its stock market. The krone has lost 20 percent against the dollar over the period. Norway’s benchmark equity index is down 9 percent. Oil producers including the country’s biggest,Statoil ASA (STL), and service companies have already cut thousands of jobs to adjust and unions are calling for government measures to protect the industry.

“The decline has been stronger and gone faster than we had expected,” Eldar Saetre, chief executive officer of state-backed Statoil, said yesterday in an interview. “The development we’re seeing is a reminder that we’re in a cyclical industry, and that we need to have a cost level in this industry that can sustain these types of cycles and let us be competitive over time.”

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

 

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