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Atlantic Hurricane Season

Atlantic Hurricane Season 2024: Oil & Gas Impact

With Hurricane Milton making landfall in the early hours of Thursday 10th October (EST). These are the two most significant hurricanes to make landfall so far. Francine and Helene have already impacted oil and gas operations in the Gulf of Mexico. Now, the inland United States. So what are the impacts of Atlantic Hurricane Season?

As analysts were gauging the many ways in which these hurricanes will affect oil and gas. Three different aspects of this can be considered. Tracking storm paths, shut-ins in production, and assessment of recovery timelines.

As of Tuesday evening (8th October), Hurricane Milton has strengthened once again. With that, agencies across the US, including a direct message from the White House itself, have said the hurricane could be the worst to hit Florida. President Biden addressed the issue by stating “evacuations are a matter of life and death”. It is in a stark warning to the residents of Florida. There are also official reports suggesting it has the potential to be the worst hurricane in a century to hit the US. The state agencies also say, “some areas”, of the storm surges will be “not survivable”.

The Closures

Further closures have been made to oil and gas facilities including Kinder Morgan’s Central Florida Pipeline systems. This carry gasoline and diesel between Orlando and Tampa. In addition to this, due to Tampa’s coastal position, Kinder Morgan have closed all bulk-fuel delivery terminals. Refiner Citgo has also followed suit and shut down its Tampa terminal, along with Buckeye, who have suspended Orlando based operations.

As of now there is not much that can be said until landfall takes place, and impact assessments can be made. For now, wind speeds will reach 160 mph at their peak, and storm surges are expected to be around 12-15 feet. With business insider already reporting US natural gas futures have fallen by 8% in recent days, this serves as an indicator of how serious hurricanes have become, not just bringing natural catastrophe and humanitarian disaster, but also increased economic shock felt domestically, and globally.

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Source: Energy Monitor

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Rising oil prices

Rising oil prices after Iran strike could increase US gas prices, experts say

Rising oil prices climbed more than 3% on Tuesday in the immediate aftermath of an Iranian missile attack on Israel. The spike in prices is expected to push up the price of U.S. gasoline, experts told ABC News.

Drivers could face a price increase of between 10 and 15 cents per gallon, experts estimated. The national average price of a gallon of gas currently stands at $3.20, AAA data showed.

A further escalation of the conflict between Israel and Iran could send oil and gas prices significantly higher, said Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston.

“Clearly this will have a huge impact on gas prices,” Krishnamoorti told ABC News. “There’s no doubt about that.”

Iran said the attack on Tuesday was retaliation for a wave of assassinations carried out by Israel over the last several weeks targeting Hezbollah leaders. Israel will have a “significant response” to Iran’s attack, an Israeli official told ABC News.

While sanctions have constrained Iranian oil output in recent years, the nation asserts control over the passage of tankers through the Strait of Hormuz, a trading route that facilitates the transport of about 15% of global oil supply.

Important shipping route

Passage through the Suez Canal, another important shipping route for crude oil, could be impacted by further attacks. This is what happened with Yemen-based Houthi attacks on freight ships earlier in the war, Krishnamoorti said.

Despite a recent uptick, the price of oil stands well below a 2022 peak reached when the blazing-hot economic rebound from the pandemic collided with a supply shortage imposed by the Russia-Ukraine war. Gas prices, meanwhile, have plummeted in recent months.

The U.S. set a record for crude oil production in 2023, averaging 12.9 million barrels per day, according to the U.S. Energy Information Administration, a federal agency.

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Source: ABC News

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OPEC+ made no changes to plans to start gradually reviving oil production towards the end of the year, despite signs of an impending surplus.

OPEC+ remains committed to reviving production despite possible surplus

A statement from 23-nation the group after an online monitoring meeting on Wednesday didn’t announce any alterations. Led by Saudi Arabia and Russia, OPEC+ plans a series of monthly increases beginning with a 180,000 bpd hike in December — two months later than originally scheduled because of fragile market sentiment.

Oil prices have rallied more than 5% in the past two days after Iran, an OPEC member, launched strikes against Israel in an escalation of the Middle East’s year-long conflict. But at around $75 a barrel, prices remain 14% down from July as traders focus on weak demand in China and swelling supplies from the Americas.

While the retreat offers relief to consumers after years of rampant inflation — and for central banks as they pivot to lowering interest rates — it poses a financial threat to the Organization of Petroleum Exporting Countries and its allies.

Saudi Arabia slashed growth forecasts this week and projected deeper budget deficits than previously estimated as the cost of efforts to overhaul the kingdom’s economy outpaces revenue. Russia, meanwhile, relies on energy income to finance President Vladimir Putin’s war against Ukraine.

JMMC meeting

The JMMC meeting on Wednesday mainly focused on the failure of Iraq, Kazakhstan and Russia. It is for the implementation of their agreed cutbacks, according to delegates who asked not to be identified.

While the countries “reiterated their strong commitment” to the agreement, they mostly continue to pump above their output quotas. They haven’t yet started extra cutbacks pledged as compensation for cheating. The countries held individual workshops to discuss output levels in September.

OPEC+ plans to restore roughly 2.2 MMbpd in monthly tranches between December and late 2025, and allow the United Arab Emirates to make an extra hike in recognition of its increased production capacity.

The alliance has several more weeks to decide whether to go ahead with the December increase. Ministers are scheduled to gather on Dec. 1 to review policy for next year.

With oil markets poised to deteriorate further, analysts including JPMorgan Chase & Co. and Citigroup Inc. have expressed skepticism. It is that OPEC+ will press on with its scheduled supply increases.

Consumption is due to grow by less than 1 MMbpd in 2025. Supplies are set to swell by 50% more. It wil be leaving a glut even if OPEC+ continues to restrain output. This is according to estimates from the International Energy Agency.

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Source: Oil & Gas 360

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Upstream oil and gas employment in Texas rose by 1,000 jobs month/month in August, marking a third straight month of sequential gains

Texas upstream employment swells amid soaring natural gas, oil production

Upstream oil and gas employment in Texas rose by 1,000 jobs month/month in August. It marks the third straight month of sequential gains. The Texas Oil & Gas Association (TXOGA) said and cited data from the Texas Workforce Commission.

“Month after month, Texas continues to demonstrate its strength as a production powerhouse. It is rising to meet the growing energy needs of our state, nation, and allies around the world”. This is what TXOGA President Todd Staples. says

“Upstream job growth reflects the sustained demand for these indispensable resources. It underscores the industry’s unwavering commitment to energy leadership. Morover, it is keeping Texas at the forefront of the global energy landscape.”

The group highlighted that since the pandemic-induced low point of September 2020, the industry has added 37,400 upstream jobs in the state, averaging growth of 791 jobs/month.

“Since the Covid low point, months with upstream oil and gas employment increases have outnumbered those with [decreases] by 36 to 11,” TXOGA researchers said. “These jobs pay among the highest wages in Texas, with employers in oil and natural gas paying an average salary of approximately $124,000 in 2023.”

The Texas Independent Producers and Royalty Owners Association (TIPRO) touted the job growth as well, noting that it was driven by the oilfield services segment.

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Source: NGI

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The United States is exporting gasoline more than any other nation in the world, supplying more than 16% of all exports of the fuel globally

The US Is the world’s top gasoline exporter

Last year, U.S. motor gasoline exports (finished gasoline plus gasoline blending components) averaged 900,000 barrels per day (bpd). This is equivalent to about 10% of domestic consumption and enough to fill up the tanks of over 1.5 million SUVs per day, assuming an average tank size of 24 gallons, the EIA noted.

Although China and India are boosting their refining capacity and have raised their exports, the U.S. is the undisputed leader in gasoline exports.

Even large exporters of gasoline such as Singapore and the Netherlands have never exceeded 700,000 bpd in gasoline exports, the U.S. administration said.

The U.S. has been a net exporter of gasoline since 2016. Between 1961 and 2015, America was a net importer of gasoline for more than half a century.

Over the past decade, the U.S. has become a net exporter of gasoline as U.S. exports of refined petroleum products have grown, reaching records in both 2022 and 2023, the EIA said.

Higher refinery utilization and increasing refining capacity have been key factors in growing U.S. petroleum products exports, including of gasoline.

Even as U.S. refining capacity has increased, domestic gasoline consumption has not, which has made more gasoline available for export, the EIA noted. U.S. motor gasoline consumption in 2023 was flat compared with 2010, and 400,000 bpd lower than its peak in 2018.

Last year, U.S. petroleum product exports averaged a record 6.1 million bpd, up by 2.5% compared to 2022, EIA data showed earlier this year.

In 2020, the United States became a net exporter of petroleum for the first time since at least 1949.

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Source: Oil & Gas 360

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US oil and gas production

US oil and gas production boom gets “surprising” endorsement from Biden’s top climate advisor

America’s oil and gas boom received an unexpected endorsement from John Podesta, the president’s top climate adviser, who praised the surge in domestic production as an economic benefit for the nation. This increase in production has positioned the United States as the world’s largest oil producer, with daily output nearly 50% higher than that of Saudi Arabia. Podesta emphasized that this growth has not only been advantageous for American consumers, but it has also bolstered national security. By enhancing the nation’s energy independence, the U.S. has been able to mitigate some of the geopolitical risks associated with foreign oil supplies, particularly in light of global tensions and rising energy demands.

Addressing the energy crisis

Furthermore, Podesta pointed to the significant role of U.S. gas production in addressing the energy crisis in Europe following Russia’s invasion of Ukraine, as American exports have effectively filled the supply gaps left by disrupted Russian sources. He noted that the increase in domestic crude output has contributed to a reduction in inflationary pressures, with current gas prices reflecting a 20% decrease compared to the previous year. These remarks align with the broader strategic messaging from Vice President Kamala Harris, who is actively promoting both increased oil production and the development of clean energy jobs.

The dual approach being employed by the administration is strategically designed to resonate with a wide array of voter bases, especially in regions abundant in natural resources such as Pennsylvania. This state, known for its significant reserves of natural gas, presents a unique landscape where economic interests and environmental concerns often intersect. By emphasizing policies that advocate for energy production and job creation in the fossil fuel sector, the administration seeks to win the support of workers and local communities that depend on these industries for their livelihoods. Simultaneously, the administration is committed to implementing initiatives that promote environmental sustainability, thereby ensuring that economic growth does not come at the expense of ecological integrity. This balancing act is crucial in fostering a sense of trust and collaboration among constituents who may have differing priorities regarding energy policy.

Understanding of the complexities of US oil and gas production

Moreover, this approach reflects an understanding of the complexities inherent in energy politics, particularly in a state like Pennsylvania, where the energy sector plays a pivotal role in the economy. By leveraging the advantages of gas production—such as job creation, energy independence, and regional economic stability—the administration can appeal to voters who prioritize immediate economic benefits. At the same time, by promoting renewable energy initiatives and stricter environmental regulations, it addresses the concerns of constituents who are increasingly aware of climate change and its implications. This comprehensive strategy not only aims to unite diverse political factions but also positions the administration as a forward-thinking leader capable of navigating the intricate dynamics of energy policy in a way that is both economically viable and environmentally responsible. Such a nuanced approach is essential for fostering long-term support and ensuring sustainable development in gas-rich regions.

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Source: World Oil

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Fed rate cut

Fed rate cut hikes oil and gas prices

While markets expected the US Federal Reserve to cut (Fed rate cut) interest rates this week, the magnitude of the change, a 0.05% reduction, was unexpected. The announcement sent higher equities, which spurred crude markets as economic growth cannot occur without an increase in energy consumption.

Stepped-up attacks on Hezbollah by Israel and an inventory draw also played a role in supporting the rally. Furthermore, the US is back in the oil market as the US Department of Energy (DOE) announced its intent to purchase up to 6.0 million bbl to replenish the Strategic Petroleum Reserve (SPR) with deliveries occurring during first quarter 2025.

However, while higher week-on-week, prices remained capped by ongoing concerns over demand in China as its central bank decided not to lower key interest rates despite a sluggish economy and despite the move by the US government. The high for WTI of $72.50/bbl was set on Thursday while the low was Monday’s $68.65/bbl.

Brent crude also stair-stepped higher with $75.20/bbl as its high on Thursday and the week’s low of $71.50 on Monday. Substantial buying interest was seen when Brent dipped below $70/bbl the prior week, suggesting a key level of support. Both grades of oil look to settle higher week-on-week. The WTI/Brent spread tightened to -$3.52.

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Source: Oil & Gas Journal

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U.S Oil and Gas Rig Count Jumps

U.S Oil and Gas Rig Count Jumps

The total number of active drilling U.S Oil and Gas rig count jumps rose substantially this week, bucking the recent downward trend, according to new data that Baker Hughes published on Friday.

The total rig count rose by 8 to 590 this week, compared to 641 rigs this same time last year.

The number of oil rigs rose by 5 this week after staying the same in the three weeks prior. Oil rigs now stand at 488—down by 27 compared to this time last year. The number of gas rigs rose by 3 this week to 97, a loss of 24 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 5.

Meanwhile, U.S. crude oil production stayed the same for the week ending September 6, according to weekly estimates published by the Energy Information Administration (EIA). Current weekly oil production in the United States, according to the EIA, is just 100,000 from its all-time high.

Primary Vision’s Frac Spread Count, an estimate of the number of crews completing wells that are unfinished, fell again in the week ending September 6, from 222 to 220, adding onto the last four weeks of losses.

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Source: Oil Price

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U.S Natural Gas Power Is Booming Thanks to AI

U.S Natural Gas Power Is Booming Thanks to AI

U.S. power-generating companies are announcing plans for the highest volume of new natural gas-fired capacity. This is after years as the AI boom is driving electricity demand.

During the first half of 2024, electricity-generating firms unveiled plans for the new gas-powered capacity. According to data from the Sierra Club cited by Bloomberg, this is equal to all capacity announced in 2020.

The increase in gas-fired generation jeopardizes the current U.S. emissions and ‘clean grid’ goals.

Natural gas-fired electricity generation in the United States has jumped year-to-date compared to last year. This is as total power demand rose with warmer temperatures and demand from data centers.

Natural gas could be a big winner in the AI-driven power demand surge in the U.S. Many tech companies prefer to power their AI development centers with solar and wind. The need to get these data centers built and powered fast would boost demand for natural gas.

After more than a decade of flatlining power consumption in America, the AI boom, chip, and other tech manufacturing are leading to higher U.S. electricity demand.

For years, natural gas has accounted for the largest share of U.S. power generation, at around 40% of all electricity-generating sources.

This year, natural gas is expected to provide around 42% of America’s electricity, similar to last year, as total consumption is set to grow by 3% in 2024 and another 2% in 2025, per data from the U.S. Energy Information Administration (EIA).

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Source: Oil Price

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New Oil and Gas Discovery Pops Up in Gulf of Mexico While Ongoing Drilling Ops Hint Another May Come Soon

New Oil and Gas Discovery Pops Up in Gulf of Mexico While Ongoing Drilling Ops Hint Another May Come Soon

Have you heard of the drilling activities at the Ewing Bank 953 well (EW 953 well)? It led to the discovery of commercial quantities of oil and natural gas and it is encountering approximately 127 feet of net pay. The target sand is at approximately 19,000 feet true vertical depth (TVD).

The preliminary data indicates an estimated gross recoverable resource potential of around 15 – 25 million barrels of oil equivalent (MMBoe). It is from a single subsea well with an initial gross production rate of 8 – 10,000 barrels of oil equivalent per day (MBoe/d). The first production will be on mid-2026.

The Ewing Bank 953 well is set to be tied back to the South Timbalier 311 Megalodon host platform. It is a facility in which Talos Energy holds a partial ownership stake. This strategic tie-back is anticipated to optimize operational efficiencies and enhance production capabilities. The EW 953 well is under the operation of Walter Oil & Gas. It possesses a significant 56.7% interest in the project. Talos Energy holds a substantial 33.3% working interest. Gordy Oil Company retains the remaining 10% stake in the venture. This collaborative effort among the stakeholders underscores the importance of joint investment and resource-sharing. in the evolving landscape of offshore oil exploration and production.

Initial Findings

Joe Mills, the Interim President and Chief Executive Officer of Talos Energy, expressed enthusiasm regarding the initial findings from the Ewing Bank 953 well. He noted, “We are excited about the results of the Ewing Bank 953 well. The well-logged better than expected rock properties, which we believe should lead to a robust initial flow rate.” These promising geological characteristics are crucial as they suggest a potentially high-yield output, which could significantly contribute to the overall production portfolio of Talos Energy and its partners. The anticipated flow rate, combined with the strategic positioning of the well within an established infrastructure, not only enhances the immediate economic outlook but also supports the long-term sustainability goals of all operators involved in this project.

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Source: Offshore Energy

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