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shale-gas

The Dawn Of A New Era For U.S. Shale

Higher oil prices and capital expenditure discipline are setting the stage. This is for the highest free cash flow on record for the world’s exploration and production companies this year. And U.S. shale firms—set to generate $60 billion free cash flow—are primed for playing a key role. The record-breaking free cash flow from global upstream operations is the focus. The U.S. shale patch is expected to be the biggest beneficiary of CAPEX discipline and high oil prices. As well as the largest contributor to the highest-ever free cash flows from the upstream business globally. This is what the independent research firm Rystad Energy said in a new report. Let’s talk more about the US shale new era!

$70 oil can certainly help a lot, but it is also capital discipline at every single oil company—from supermajors to U.S. independents—that is contributing to record cash flows this year.

Free Cash Flow Set To Hit Record-Breaking $348 Billion in 2021

The world’s public oil firms are yet to see their combined free cash flow—all cash flows from upstream activity excluding such from financing or hedging effects—surge to a record-breaking $348 billion in 2021. According to estimates from Rystad Energy, this would be $37 billion higher than the previous all-time high of $311 billion. This was in 2008. Back then, just before the financial crisis, oil prices averaged $100 a barrel that year.

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Source: Oil Price

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july 4th gasoline shortage

Will There Be A Gasoline Shortage On July 4th?

Rising prices at the pump will not be the biggest problem for some drivers this holiday weekend. Their biggest problem will be empty pumps – the result of a shortage of tanker truck drivers. The question is, “Will there be a July 4th gasoline shortage?”

GasBuddy’s Patrick De Hann tweeted yesterday there were no issues with the production of fuels, but the shortage of tanker truck drivers was compromising supply in some parts of the United States.

The shortage is a national problem that emerged before the pandemic, but the pandemic made an already bad situation worse by shutting down tanker truck driving schools. As a result, CNN reports, about a quarter of U.S. tanker trucks are currently parked for lack of qualified drivers. This compares to 10 percent in 2019.

At the same time, demand for fuels is on the rise – and so are the prices. The national average hit the highest since October 2014, at $3.10 per gallon, and demand has returned to 2019 levels, based on Energy Information Administration data. This suggests the shortages may persist.

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Source: Oil Price

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major oil supply crisis

It’s Too Late To Avoid A Major Oil Supply Crisis

Is it really too late to avoid a major oil supply crisis? There are a number of observable trends in oil supplies and by extension prices, presently. I am going to discuss one of them in this article. A lack of capital investment in finding new supplies of oil and gas. A favorite analogy of mine comes to mind, the ship is nearing the dock. In nautical parlance that means the time for course corrections is at an end. So we shall see if that is the case for oil.

The massive “ship” that is world oil demand is on an unalterable collision. It is with the supplies that have profound implications for consumers.

This key metric reveals what the future is likely to hold for our energy security. This will happen as the world continues to recover from the virus to those who will listen.

The level of drilling and by extension capital investment is insufficient. It has been for a number of years to sustain oil production at current levels. It’s no secret that even with the lower break-even costs for new projects thanks to cost-cutting.

This cover a lot of industry the last few years where oil extraction is a capital-intensive business.

The message to oil and gas companies has been pretty clear from the market, investment funds like Blackrock seeking green “purity” in the allocation of financing of new energy sources, and government edicts mandating carbon intensity reduction across the entire swath of society, and a transformation to renewable energy, that new supplies of oil and gas are not wanted.

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Source: Oil Price

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shale oil

U.S. Shale Oil Output to Climb by 38,000 BPD in July: EIA

U.S. oil output from seven major shale formations is set to rise by about 38,000 barrels per day (BPD). This is set in July to about 7.8 million BPD. The highest since November, the U.S. Energy Information Administration said in a monthly forecast on Monday.

The biggest increase is set to come from the Permian. They are the top-producing basin in the country. The output will rise by 56,000 bpd to about 4.66 million bpd, the highest since March 2020.

The forecast increase in total output was attributable to the Permian and Appalachia basins. There are expectations for the other five basins to decline or remain flat.

Expectations are for it to register declines of 4,000 BPD. The Eagle Ford basin in South Texas and the Bakken basin in North Dakota and Montana.

Output in the Bakken will be sliding to about 1.1 million BPD, the lowest since July 2020.

U.S. producers have increased drilling activity as oil prices have rebounded to about $70 a barrel.

Natural gas production from the major shale basins will be increasing for the first time in four months. This is according to EIA’s drilling productivity report going back to 2007.

Total gas output will increase less than 0.1 billion cubic feet per day (bcfd) to 84.3 bcfd in July. That compares with a monthly record high of 86.6 bcfd in December 2019.

Click here to read the full article about U.S. Shale Oil Output.

Source: Reuters

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oil-price-demand

$100 Oil Is Now A Distinct Possibility

Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, some of the world’s largest commodity trading groups say.

There is a chance for $100 oil, Jeremy Weir, chief executive officer at commodity trader Trafigura, told the FT Commodities Global Summit on Tuesday.

“You need higher prices to incentivize… and also maybe to build on the cost of carbon in the future as well. You also need to attract capital in the business,” Weir told the online debate.

The largest commodity traders are bullish on oil in the near term, too.

Brent Crude traded at over $73.50 a barrel early on Tuesday, but the top executives of the trading houses see further upsides.

“Higher from here” for the next six months, Glencore’s Head of Oil Marketing, Alex Sanna, told the same event today. According to Sanna, these are what will contribute to rising oil prices. Better news about vaccination programs, inflation bringing in investor cash, and the demand recovery

Russell Hardy, the chief executive officer of the world’s biggest independent oil trader Vitol, also said that $100 per barrel oil is “of course a possibility,” but warned the overenthusiastic bulls that “we’re in a slightly artificial market at the moment,” as the OPEC+ group still has around 5.5 million barrels per day (bpd) to bring back to the market, by April 2022 per current plans

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Source: Oil Price

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oil-rig

The Age Of Oil Isn’t Over

Growing demand in Asia means that the age of oil isn’t over yet, although consumption in developed western economies has trended lower over the past decade, according to Karin Kneissl, a newly appointed director on the board of Russia’s oil giant Rosneft.

“I’ve always underlined that it’s the East that plays the decisive role, not the West. And the energy market is more dynamically developing in the East. And you shouldn’t also discount the African continent,” said Kneissl, who was Austria’s foreign minister between 2017 and 2019.

Continued growth in oil demand in Asia, due to increased economic prosperity and rising population, will shape the global trend in oil demand, Kneissl said at the St. Petersburg International Economic Forum, as quoted by Sputnik.

According to the new independent board member of Russia’s largest oil company, the current global push toward green energy and the stigmatization of fossil fuels and fossil fuel funding could result in a new supercycle for oil.

“Any type of energy has its implications for the environment. But political persecution of a certain industry leads to reduced investments. There will be a freeze of production, leading to the deficit. This marks the beginning of a new supercycle,” said Kneissl, as carried by Sputnik.

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Source: Oil Price

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oil demand growth

BP CEO: Strong Oil Demand Growth Is Here To Stay

Global oil demand is set to rebound and remain robust for some time. BP’s chief executive Bernard Looney told Bloomberg News on the sidelines of an economic forum in Russia. It is reiterating views expressed by most forecasters and analysts. Here’s the detailed statement about oil demand growth.

“There is a lot of evidence that suggests that demand will be strong, and the shale seems to be remaining disciplined,” Looney told Bloomberg News at the St. Petersburg International Economic Forum. “I think that the situation we’re in at the moment could last like this for a while,” the top executive of one of the world’s largest oil companies said.

Looney’s assessment of the oil market is similar to the views recently expressed by investment banks such as Goldman Sachs and Barclays, as well as OPEC and the International Energy Agency (IEA).

Goldman Sachs continues to see oil hitting $80 this year, despite the possible return of Iranian oil to the market.

Barclays, for its part, said two weeks ago that global oil demand was recovering with major economies reopening amid a cautious supply approach from OPEC+ and restraint in U.S. shale.

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Source: Oil Price

Image Credit: Public domain/Flickr

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oil-demand IEA

IEA Backpeddles, Says Oil Demand Will Soon Reach Pre-Crisis Levels

Oil demand is recovering faster than previously expected, and unless OPEC+ puts additional barrels on the market on top of the plans to restore 2 million barrels per day (bpd) by July, oil prices will be heading higher as the gap will widen, the Executive Director of the International Energy Agency, Fatih Birol, told Bloomberg Television in an interview on Tuesday.

According to Birol, global oil demand could return to the pre-crisis levels of 2019 as soon as in a year’s time.

“Demand in one year or so may well come back to the levels of before the crisis,” Birol told Bloomberg, noting the strong demand in the United States, Europe, and China.

This most recent proclamation regarding oil demand is in stark contrast to its forecast three months ago, when the IEA said in its annual Oil 2021 report with projections through 2026 that global oil demand would take until 2023 to return to the pre-pandemic levels of 100 million bpd. Back then, the Paris-based agency warned that COVID-19 would change parts of consumer behavior forever, with global gasoline demand likely past its peak already.

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Source: Oil Price

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oil-gas-news

Why Oil and Gas Exploration is Still Important

Do we still need to explore for oil and gas? One conclusion in our Horizons scenario analysis is that if the world gets onto a 2 °C pathway, there’s enough oil in existing discoveries to meet future oil demand. It’s a view the IEA NZE concurs with.

Dr Andrew Latham, Huang Tra Ho and Julie Wilson have just published their analysis of the Majors’ exploration performance for 2011-2020. In that tumultuous decade, exploration lost its way economically, before a pivot to value that got returns back to respectable levels – even at US$50/bbl. I asked them where exploration goes from here.

Is exploration still relevant?

It will still play a role in upstream. Even if we do get onto a 2 °C pathway, exploration can deliver new resource into the supply stack that’s lower cost and less carbon-intensive than existing resources. We also think the focus of exploration will progressively shift towards gas, for which demand will be more resilient through the transition.

There is still a likelihood that oil and gas demand holds up for some years. In that case, we’ll want exploration to find new resource to offset the natural decline in production from existing fields.

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Source: Hellenic Shipping News Worldwide

oil-well

Secret Meeting Between Saudi Arabia And Iran May Trigger Major Policy Change

A number of peculiar things have happened in the Middle East in the past few weeks involving the U.S., Saudi Arabia, and the UAE, all with some sort of focus on Iran. To begin with, at the end of April, the U.S’s designated main man in Saudi Arabia – Crown Prince Mohammed bin Salman – stated very publically that he seeks “a good and special relationship with Iran…We do not want Iran’s situation to be difficult, on the contrary, we want Iran to grow… and to push the region and the world towards prosperity.”

Such sentiments are in direct contrast to what might be expected from the effective ruler of Saudi Arabia, the historical archenemy of which is Iran. Bin Salman has previously launched numerous tirades against Iran accusing it of being the prime mover of instability and terrorism across the region. Stranger still, though, is the fact that these comments followed a secret meeting in Baghdad between senior figures from the Saudi and Iranian regimes, brokered by Iraq Prime Minister, Mustafa al-Kadhimi. These talks were subsequently confirmed by an Iraqi government official through various news services, although neither Riyadh nor Tehran formally acknowledged them.

The positive comments towards Iran from bin Salman came at around the same time as Saudi Arabia’s flagship oil and gas company, Aramco, let it be known that it is in the process of broadening and deepening its relationship with China, which is not only Iran’s chief sponsor via the 25-year deal signed back in 2019 but also the country most intent on replacing the U.S. as the key superpower in the Middle East.

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Source: Oil Price