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

As the U.S. oil and gas industry slowly appears to be getting back on track, ramping up production in line with demand, the effects of the Texas storm earlier this year appear to have hit production levels harder than originally thought according to new figures.

Aging infrastructure is the reason for President Biden’s new national infrastructure plan. However, this comes after years of neglect which has cost the oil and gas sector billions of dollars, as well as wreaking havoc on both the environment and communities relying on vital energy supplies.

Every year, extreme weather hinders energy distribution across the U.S. During California’s hot summers we see wildfires halting energy production from the state’s aging electrical infrastructure. This is largely because it is common practice to wait until a component fails within the system for it to be replaced, rather than preemptively investing in better structures.

This February, the electrical grid shut down and refineries halted production as Texas was hit hard by a winter storm which saw freezing pipes and no energy supply for heat and water to many houses across the state. Many were left to rely on generators to heat their houses to escape freezing temperatures for up to a week.

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Source: Oil Price

BHP has commenced oil production in Trinidad and Tobago USA in the next big energy development in the Caribbean. There is a recent success in Guyana and Suriname’s energy sectors. Australian firm BHP has begun production on its $500m Ruby Project. It is located in shallow water in Block 3(a) within the Greater Angostura Field.

The project will see gas and oil production from the Ruby and Delaware reservoirs. This is via five production wells offshore Trinidad and Tobago USA. Several more wells are expected to be drilled in the area by the end of the year.

There is an expectation of Peak production levels that is around 16,000 BPD of oil.

Additionally, 2.26mn m³/d of gas, upon completion of the development.

Geraldine Slattery, President of BHP, stated “The start-up of Ruby represents the continued development of BHP’s oil and gas production facilities in Trinidad and Tobago, re-enforces the quality of the resource and its investment competitiveness.”

BHP will operate the Ruby development holding a 68.46 percent stake, with the National Gas Company of Trinidad and Tobago (NGC) holding a 31.54 percent stake.

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Source: Oil Price

If you have further questions on Trinidad and Tobago USA oil opportunities, feel free to reach out to us here.

M and A in U.S. oil and gas fell by 1.49 percent below the 12-month average last month, according to GlobalData. The biggest deal by far for the month was Chevron’s acquisition of Noble Midstream Partners, which fetched $1.32 billion.

The Noble Midstream Partners deal represented about a fifth of the total value of March deals, Offshore Technology reports, citing GlobalData figures, with the total standing at $5.14 billion across 66 deals. The number of deals in March was in line with the 12-month average, which stood at 67 deals.

In terms of types of deals, mergers and acquisitions were by far the most. These accounted for 66.7 percent of all dealmaking in March and 44 of the 66 deals. Venture capital funding came in second, accounting for 19 deals, and private equity financing came in third with barely three deals.

M&A activity in the U.S. oil and gas industry was slow to take off during the pandemic as everyone retrenched and waited to see how the situation developed before going on the hunt for discount assets. The second half of 2020 saw, however, some huge deals.

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Source: Oil Price

If you have further questions related to M and A, feel free to reach out to us here

Oil remains, by far, the most dominant source of energy worldwide, with the EIA estimating that the world consumed 92.2 million barrels per day (b/d) of petroleum and other liquid fuels in 2020, despite a 9% decline due to the pandemic.

As the world’s biggest polluters such as the U.S. and China become more aggressive with their climate goals, the biggest oil and gas companies that shoulder the biggest responsibility for GHG emissions and are likely to feel the heat the most.

Interestingly, the world’s 5 biggest oil and gas companies (in terms of revenue) are from China and Europe, with U.S.’ giants ExxonMobil (NYSE:XOM), Chevron Corp. (NYSE:CVX), and Marathon Oil (NYSE:MRO) coming in lower at #6, #8, and #9, respectively.

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Source: Oil Price

Image Credit: Wikipedia Commons