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Offshore Oil And Gas Is Back With More Than $200 Billion In New Investment

The offshore oil and gas (O&G) sector is set for the highest growth in a decade in the next two years. It is with $214 billion of new project investments in line. Rystad Energy’s research shows that annual greenfield capital expenditure (capex) will break the $100 billion threshold. This is a projection in 2023 and in 2024 – the first breach for two straight years since 2012 and 2013.

As global fossil fuel demand remains strong and countries look for carbon-friendly production sources, offshore is back in the spotlight. Offshore activity is expected to account for 68% of all sanctioned conventional hydrocarbons in 2023 and 2024. This is up from 40% between 2015-2018. Comparisons against this period are prudent as it predates the Covid-19 pandemic and related oil price crashes. In terms of total project count, offshore developments will make up almost half of all sanctioned projects in the next two years. This is up from just 29% from 2015-2018.

The New Offshore Oil And Gas Investments

These new investments will be a boon for the offshore services market. With supply chain spending to grow 16% in 2023 and 2024, a decade-high year-on-year increase of $21 billion. Offshore rigs, vessels, subsea and floating production storage and offloading (FPSO) activity are all set to flourish.

One of the leading global drivers is the sizable expansion of offshore activities in the Middle East. For the first time, offshore upstream spending in the region will surpass all others, lifted by mammoth projects in Saudi Arabia, Qatar and the UAE. The area’s offshore spending growth looks set to continue at least for the next three years, growing from $33 billion this year to $41 billion in 2025. These countries are tapping into their vast offshore resources to meet rising global oil demand, backed by the necessary capital and infrastructure to outpace other producers.

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Source: Oil Price

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top energy trader

Top Energy Trader Expects Oil Prices To Enter The $90-$100 Range

Oil prices could hit the $90-$100 per barrel range in the second half of this year as global demand is set to reach record levels amid constrained supply, Russell Hardy, CEO at the world’s largest independent top energy trader, Vitol Group, told Bloomberg Television on Monday.

“The prospect of higher prices in the second half of the year, in the sort of $90-$100 range, is a real possibility”. This is what Hardy told Bloomberg in an interview.

According to Hardy, global oil demand will rise by 2.2 million barrels per day (BPD) in 2023. This is in comparison to 2022 and will reach a record level. It was driven by a jump in diesel, naphtha, and liquid petroleum gas (LPG) demand.

“You don’t have much room on the supply side is the reality. So the potential for a rally is certainly there”. Hardy told Bloomberg.

The Peak Oil Demand

Peak oil demand is expected to come around the end of this decade. This is amid rapid decarbonization, but investment in oil supply will still be needed, Vitol’s top executive said.

Major U.S. shale operator Pioneer Natural Resources also sees $100 per barrel by the end of the year. Meanwhile, some banks are not convinced prices will hit triple digits in 2023.

With a significant pickup in Chinese demand, Brent Crude prices “will break $90 this summer. It will climb back up to $100 sometime in the second half of the year”. Pioneer CEO Scott Sheffield said earlier this month.

Brent Crude prices are not expected to reach $100 per barrel in 2023. This is unless a major geopolitical event rattles markets again. This is what JPMorgan said this month. Russian crude oil production is expected to recover by June, while high price levels would prevent the U.S. from repurchasing crude to refill the Strategic Petroleum Reserve (SPR), according to the Wall Street bank.

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Source: Oil Price

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Oil Rebounds Almost 2% on China growth hopes

Oil prices rose nearly 2% on Tuesday. It erases the previous session’s losses as hopes for a strong economic rebound in China offset worries about U.S. interest rate hikes. It is dragging down consumption in the world’s biggest economy. Here is how oil rebounds

Brent crude futures for April, which expired on Tuesday, settled higher by $1.44, or 1.8%, at $83.89 a barrel. The more active May contract rose $1.41, or 1.7%, to $83.45.

U.S. West Texas Intermediate (WTI) crude futures gained $1.37, or 1.8%, to $77.05 a barrel.

“We’re getting to a point where we’re seeing some short-covering. It is because it’s the end of the month,” said Price Group analyst Phil Flynn.

For the month of February, Brent fell about 0.7%, while WTI dropped about 2.5%.

Expectations of demand recovery in China underpinned gains, with the market awaiting key data over the next two days. Economists polled by Reuters expected that factory activity in the world’s second-largest economy grew in February.

“China’s economic recovery will drive its demand for commodities higher, with oil positioned to benefit the most,” JPMorgan analysts said in a client note.

Urals crude exports to China from Russia’s Western ports rose in February from the previous month, on lower freight costs and rising demand, Reuters sources said.

Oil prices are expected to rise above $90 a barrel toward the second half of 2023 as Chinese demand recovers and Russian output falls, a Reuters poll showed on Tuesday.

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Source: Reuters

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Oil Prices Rise Amid Fears Over Russian Supply Cuts

Oil prices rise on Thursday on expectations that Russia will cut its oil exports more than previously announced.

International benchmark Brent crude traded at $80.79 per barrel at 9.35 a.m. local time (0635 GMT), up 0.24% from the closing price of $80.60 a barrel in the previous trading session.

At the same time, American benchmark West Texas Intermediate (WTI) traded at $74.14 per barrel, a 0.26% rise after the previous session closed at $73.95 a barrel.

A bigger output cut by major oil producers will put pressure on global supply.

Russia is expected to cut oil production by 500,000 barrels per day in March, but reports indicate that the country may cut supply even further. The country is reducing its supply in response to Western sanctions against Russian oil exports.

The EU ban on Russian seaborne oil products, as well as a price cap of $100 per barrel on premium Russian oil products such as diesel, and a price cap of $45 per barrel on discounted products such as fuel oil, went into effect on Feb. 5.

Russian Deputy Prime Minister Aleksandr Novak warned at the beginning of the month that Western countries’ price caps on Russian oil and petroleum products could cause supply problems on the market.

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Source: AA

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Texas Oil and Natural gas

Several Bills Filed to Support Texas Oil and Natural Gas Industry

Several bills are supporting the Texas oil and natural gas industry. The goal is to protect consumers from California-style regulatory policies.

State Sen. Brian Birdwell, R-Fort Worth, and Rep. Brooks Landgraf, R-Odessa, filed companion bills. The bills are SB 1017 and HB 2374 which will protect Texans’ energy choices. If enacted into law, local government entities would be prohibited from banning the sale of engines. This is based on their fuel source according to the bill language.

Restrictions in Texas Oil and Natural Gas Industry

“California-style restrictions on engines or fuel sources that limit consumers and business owners from being able to access the energy sources they need have no place in Texas,” Birdwell said.

The legislation would prevent political subdivisions from adopting or enforcing ordinances, orders, and regulations. This includes similar measures to limit access to specific fuel sources or prohibit the sale of engines based on their fuel source. Political subdivisions include counties, municipalities, special districts, school districts, junior college districts, or housing authorities. The purpose is to prevent these entities from banning the sale of gas-powered lawn equipment, generators, and other small engines similar to what was done in California in 2021. The following year, California moved to restrict the sale of gasoline-powered cars.

The Legislation

The legislation will “ensure that Texans are free to make their own choices. This is without interference from government,” Landraf, said, and “protect energy choice.”

The Texas Oil & Gas Association praised the proposal. They issue a statement saying, “Misguided attempts to ban the use of particular types of engines or even specific fuel sources only serve to disrupt the lives of consumers and business owners who rely on affordable, reliable energy sources.”

Rep. Tom Craddick, R-Midland, and Landgraf also filed bills to redirect tax money to the oil and natural gas industry. It pays back to their local communities by creating a new fund. Craddick’s is the Generate Recurring Oil Wealth (GROW).

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Source: The Center Square

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Oil and Gas Industry Earned $4 Trillion Last Year, Says IEA Chief

The global oil and gas industry profits in 2022 jumped to some $4 trillion. It is from an average of $1.5 trillion in recent years. This is what the head of the International Energy Agency (IEA), Fatih Birol said on Tuesday.

Despite those profits, countries depending on oil and gas revenue should prepare to reduce their reliance on petroleum. This is as demand is going to fall in the longer term, Birol told a conference in Oslo while speaking via video link.

“Especially the countries in the Middle East have to diversify their economies. In my view, the COP28 (climate summit) could be an excellent milestone. It will change the destiny of the Middle East countries” Birol said.

“You cannot anymore run a country whose economy is 90% reliant on oil and gas revenues. It is because oil demand will go down,” he added.

United Arab Emirates as an OPEC Member Oil and Gas Industry

This year’s United Nations climate talks will be hosted by the United Arab Emirates, a member of the OPEC group of oil-producing countries.

The United Arab Emirates comprises seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah, and Umm Al-Quwain – located along the southeast coast of the Arabian Peninsula. The country covers an area of around 84 thousand square kilometers and has a population of around 9.5 million. More than one million people live in the capital, Abu Dhabi. Arabic is the country’s official language.

Since the discovery of oil in the UAE, the country has become a modern state with a high standard of living. The currency is the dirham.

The United Arab Emirates President is HH Sheikh Mohammed bin Zayed Al Nahyan. The country joined OPEC in 1967.

Did you know?

  • Desert Park in the Sharjah Emirate is a center for the breeding of the endangered Arabian leopard. It is thought that very few of these cats exist in the wild.
  • The first commercial oil was discovered in 1958 – onshore in the Bab-2 well and offshore at Umm Shaif.

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Source: Reuters

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Permian Strategic Partnership: oil and gas has a “positive impact” on communities across Permian Basin

Permian Strategic Partnership (PSP) President and CEO Tracee Bentley made a compelling case. It is for the positive impact of oil and natural gas production. The impact on local communities during her testimony before the U.S. House Subcommittee on Energy and Mineral Resources at The University of Texas Permian Basin Midland Campus on Feb 13.

The hearing “Federal Energy Production Supports Local Communities,” shows an opportunity for Bentley. They are to showcase the Permian Strategic Partnership’s extensive contributions towards education, healthcare, and workforce initiatives. This was helping them to strengthen the communities where the PSP operates.

In her remarks, Bentley highlighted the PSP’s nearly $125 million worth of investments and $975 million in collaborative investments for the Permian Basin. In 2022 alone, the PSP invested $32.6 million in education, workforce, healthcare, and road-building initiatives. These programs will support crucial social and economic infrastructure in both West Texas and Southeastern New Mexico.

“Our work is made possible through our members’ vision and long-term commitment to our region and communities,” Bentley said. “By supporting responsible energy development, you are supporting our efforts and investment in an area that the U.S. and the world will rely on for decades to come.”

Permian Strategic Partnership Focus

The Permian Strategic Partnership has focused significant efforts on improving public education, healthcare, and workforce development since its founding five years ago. The partnership of twenty oil and gas companies operating in the Permian Basin in West Texas and Southeastern New Mexico has invested over $47 million in education initiatives across the Permian Basin, supporting local public schools, universities, teachers, and students.

“Our work for future generations begins with investing in education. Polling of PSP’s member company employees has shown that public education is the single greatest factor in evaluating a location change, and it is equally important to families already living in the Permian Basin,” Bentley said.

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Source: World Oil

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Oil and Gas Companies Moving Into Permian Basin in $100M String of Deals, as Region Expands

Oil and gas companies and producers based on the Texas side of the Permian Basin looked to capitalize on the growth. Growth in the New Mexico portion of the region, looking to buy lands in the southeast corner of the state.

Permian Resources Corporation announced an agreement. They will see it purchase about 4,000 leasehold acres and 3,300 royalty acres, mostly in Lea County for $98 million.

The lands were estimated to produce about 1,100 barrels of oil equivalent per day. It is 73 percent oil according to a company announcement.

The price reflected about $8,000 per leasehold acre and $7,000 per royalty acre. This is what the release read, including operated and non-operated assets the company said it could include in future trading.

James Walter, co-chief executive officer at Permian Resources said the move was part of a broader effort by the company to manage its portfolio and shift its footprint to areas of the basin expected to bring higher production and revenue returns.

The Price Reflection

The price reflected about $8,000 per leasehold acre and $7,000 per royalty acre, the release read, including operated and non-operated assets the company said it could include in future trading.

James Walter, co-chief executive officer at Permian Resources said the move was part of a broader effort. This is by the company to manage its portfolio and shift its footprint. They will shift to areas of the basin. There is an expectation to bring higher production and revenue returns.

He said the deal included 45 operated locations and was expected to generate about $100 million. Take note that this is in net cash proceeds.

The company also planned to divest oil and gas properties on the Texas side of the basin in Reeves County, Texas. This is along the New Mexico border.

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Source: Carlsbad Current-Argus

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TIPRO Report Finds Texas Leading in Oil and Gas Production, Activity

The Texas Independent Producers & Royalty Owners (TIPRO) Association’s eighth edition of its State of Energy Report found Texas in the driver’s seat. This is when it comes to oil and gas production and oil industry-related jobs for 2022. Oil production in Texas was 1.83 billion bbl in 2022.

New Mexico with 534 million bbl was a distant second, followed by North Dakota with 393 million bbl. Texas also led the country in natural gas production with a record 11.2 Tcf produced in 2022. This is followed by Pennsylvania with 7.6 Tcf. The Lone Star state had the highest rig count in the country in 2022. It has an average of 380 active rigs. The number of rigs in Texas increased from 332 in January 2022 to 410 in December 2022.

The Texas Oil and Natural Gas Industry

The Texas oil and natural gas industry paid a record $24.7 billion in state taxes. This includes state royalty payments in 2022. Royalty funds support all aspects of the state economy. This includes schools and education, first responders, and transportation infrastructure investment.

“Despite facing a number of unique challenges, including supply chain bottlenecks, inflationary pressures, workforce shortages, and an adversarial federal policy environment, the US oil and gas industry continued to offer significant economic support in 2022,” said Jud Walker, chairman of TIPRO and president and CEO of EnerVest Ltd. “Oil and natural gas development, led by Texas operators, will play an important role in meeting growing global energy demand for decades to come under any realistic scenario.”

The report found the state’s oil and gas industry supported a total of 948,943 direct jobs in the US last year, with total direct and indirect jobs tied to the industry exceeding 19 million. The US oil and natural gas sector paid a national annual wage averaging $120,665 during 2022, 74% higher than average private sector wages. Payroll in the US oil and gas industry meanwhile totaled $114 billion and direct Gross Regional Product (GRP) was $854 billion in 2022 or around 3% of the nation’s economy.

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Source: JPT

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Oil and Gas Saw Record Profits in 2022

Last year, President Biden slammed Exxon Mobil for making “more money than God”. But guess what, oil and gas saw record profits in 2022.

That moment underlined a sharp turnaround from 2020 when the pandemic slashed oil prices and ground energy companies to a near-halt. That year, Exxon posted a $22B loss — its first in decades.

Last year, though — as global demand skyrocketed while supply remained tight, especially amid Russia’s invasion of Ukraine — the industry boomed.

Here comes the scrutiny

The record profits have sparked renewed pressure on the industry, which has plowed ahead with tens of billions of dollars in dividends and stock buybacks, per NPR.

On Tuesday, the White House called out oil companies for this, and President Biden has previously threatened higher taxes on energy companies that don’t reinvest money into increasing supply.

Interestingly, Europe has imposed a 33% tax on “surplus profits” from energy firms to redistribute to consumers. Exxon sued to block that tax, which it estimates would cost ~$1.8B for 2022.

What about renewables?

Some oil giants are reportedly scaling back renewable energy plans as they look to maintain high-performing legacy oil-and-gas businesses, per The Wall Street Journal.

But that doesn’t mean companies aren’t transitioning away from gas in the long term. BP has said it plans to reduce fossil-fuel production by 40% from 2019 levels by 2030, though it’s also considering dialing back investments in solar and wind.

Along those lines, this week, Cathie Wood’s asset management firm Ark Invest released its popular “Big Ideas” report for 2023. The group forecasts that by 2030, with the rise of EVs, oil demand for cars could dip 30%.

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Source: the HUSTLE

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