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oil-gas-spending

World’s Largest Economies Are Still Spending Big On Oil & Gas

Spending on oil and gas, and coal is still higher among members of G20 than spending on renewable energy, a data update from the Energy Policy Tracker has revealed. Across the group, since the start of the pandemic, governments had pledged at least $160.95 billion in fossil fuel investments, versus $123.75 billion in renewable energy investment, the tracker, which updates government spending data on energy every week, said. This translates into $35.10 per capita in oil and gas spending, and $26.99 per capita for cleaner energy spending.

Most of the so-called unconditional fossil fuel investment was on oil and gas, unsurprisingly, with just $10.20 billion of the total allocated for coal. While this may sound like ten billion dollars too much to spend on the most polluting fossil fuel, G20 governments also allocated $38.44 billion on unconditional renewable energy. This was, however, the smaller portion of the total renewable energy spending; the bulk was pledged for so-called clean conditional energy, the Energy Policy Tracker said.

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Source: Oil Price

Saudi Arabia Oil

$40 Oil Isn’t Enough For Saudi Arabia

There was a recommendation of the OPEC+ JMMC to ease the oil output cuts by 2 million bbl/d. With that, oil markets maintained their bullish sentiment over the past week. This is as Brent was trading above $43 while WTI was trading above $40. A surge in COVID-19 cases in several counties including the US, Spain, and Australia capped oil price gains.

Bullish figures from the EIA

Markets were primarily supported by a continued withdrawal in commercial crude inventories. This declined by 7.5 million barrels w/w to stand at 531.7 million barrels. Gasoline inventories also declined by 3.1 million barrels w/w reflecting a significant rise in demand levels. Along with the decline in inventories, crude imports fell by 1.83 million bbl/d w/w and are currently standing at 5.57 million bbl/d, which may be part of the reason for the drop in inventories. The other reason for the decline in inventories is the balance in the markets where demand now exceeds supply, something we had anticipated, last April, to take place in July.

We currently expect commercial inventories to continue to decline especially during July and August as these months historically are the peak of driving season. U.S. oil production continues to be fixed at 11 million bbl/d for the 3rd consecutive week. The decline in oil rigs continues, with the latest figure being 1 rig w/w, and it may have already reached its lowest level at around 180 rigs.

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Source: Oil Price

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noble energy cheveron

Chevron Acquires Noble Energy In First Major COVID Oil Deal

In the first major U.S. oil deal since the pandemic hit the industry. Supermajor Chevron announced on Monday that lit had entered into a definitive agreement. It is to buy Houston-based Noble Energy in an all-stock transaction valued at US$5 billion.

Under the terms of the deal, Noble Energy shareholders will receive 0.1191 shares of Chevron for each Noble Energy share. The total enterprise value of the transaction is US$13 billion, including debt, Chevron said.

The rationale for the deal is a low-cost acquisition of quality Energy. It is proving reserves that will fit strategically into Chevron’s plans in the U.S. shale patch and abroad.

Chevron and Noble Energy’s boards have unanimously approved the deal. They are expecting to close in Q4 2020. It is subject to shareholder approval of Noble Energy shareholders, regulatory approvals, and other customary closing conditions.

Last year, Chevron bid to buy Anadarko. Moreover, there is an outbid by Occidental in what analysts now see as an ill-timed decision for Oxy to pursue such a huge and leveraged transaction.

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Source: Oil Price

Image Credit: David Herrera/Flickr

If you have further questions, feel free to reach out to us here. 

goldman sachs oil

World Biggest Oil Majors Set Collective Goal To Cut Carbon Emissions

Some of the biggest oil companies in the world set their first joint target to cut their collective carbon emissions from upstream operations in a move that saw Saudi Aramco and ExxonMobil joining European majors in pledging reduced carbon intensity.

The Oil and Gas Climate Initiative (OGCI), a CEO-led voluntary alliance of some of the world’s biggest oil and gas companies, said on Thursday that it would aim to reduce the collective average carbon intensity of member companies’ aggregated upstream oil and gas operations to between 20 kg and 21 kg carbon dioxide equivalent per barrel of oil equivalent (CO2e/boe) by 2025, from a collective baseline of 23 kg CO2e/boe in 2017.

The initiative’s members include BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Saudi Aramco, Shell, and Total.

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Source: Oil Price

natural gas

Why The Hydrogen Boom Is Good News For Natural Gas

After decades of stagnation and multiple false dawns, the hydrogen economy is finally taking off, with some experts predicting that hydrogen could become a globally-traded energy source, just like oil and gas. A growing number of countries and industries are proactively investing in hydrogen technologies; none, however, can rival the EU’s zeal.

The European Union has set out its new hydrogen strategy as part of its goal to achieve carbon neutrality for all its industries by 2050.

In a big win for the hydrogen sector, the EU has outlined an extremely ambitious target to build out at least 40 gigawatts of electrolyzers within its borders by 2030, or 160x the current global capacity of 250MW. The EU also plans to support the development of another 40 gigawatts of green hydrogen in nearby countries that can export to the region by the same date.

The EU aims to have at least 6 gigawatts of clean hydrogen electrolyzers installed by 2024.

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Source: Oil Price

moon-mining

Moon Mining Could Begin As Early As 2025

Plans to start mining the Moon as early as 2025 became more attractive this week. This is after a US National Aeronautics and Space Administration (NASA) team found evidence. First is that the Earth’s natural satellite may, underneath its surface, be richer in metals than previously thought. A team of researchers came to the conclusion that the lunar subsurface contains a higher concentration of certain metals. This is through using data from the Miniature Radio Frequency (Mini-RF) instrument onboard NASA’s Lunar Reconnaissance Orbiter (LRO). Metals include iron and titanium than estimated.

The study, published in the journal Earth and Planetary Science Letters, contends the most popular theory surrounding the Moon’s origins. The hypothesis contends the satellite was formed when a Mars-sized object collided with Earth, vaporizing large portions of the Earth’s upper crust.

Click here to read the full article.

“By improving our understanding of how much metal the moon’s subsurface actually has, scientists can constrain the ambiguities about how it has formed, how it is evolving, and how it is contributing to maintaining habitability on Earth,” lead study author Essam Heggy said in a statement.

The evidence was discovered while the scientists were looking for ice at the bottom of craters in the lunar north pole region, NASA said. It means that fine dust found at the base of those holes are parts of the deeper layers of the Moon, ejected during meteor impacts. As such, this dust represents the composition in deeper Moon layers.

Source: Oil Price

If you have further questions related to moon mining, feel free to reach out to us here. 

oil industry

Under new management, Texas Alliance of Energy Producers plans for growth

The Texas Alliance of Energy Producers, one of the largest oil and natural gas industry associations in the state, named Jason Modglin its new president on June 3.

Succeeding John Tintera, who retired last year, Modglin is stepping into his new role as the coronavirus pandemic and industry downturn have resulted in tens of thousands of layoffs over the past three months.

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Source: Houston Chronicle

oil and gas royalties by state

Oil and Gas Royalties By State

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In the United States, landowners have the ability to earn money from the resources below their property. If you own the subsurface below your land, then oil and gas companies may be interested in leasing or buying your mineral rights. Let us talk more about the oil and gas royalties by state.

Of course, not every plot in America is going to make you rich. The values of oil and gas royalties by state vary greatly. Above all, the size of your oil and gas royalty checks will depend on the size of your lot, your percentage share, and the amount of resources that are extracted and sold in a defined timeline.

Here is the list of oil and gas royalties by state, with the highest potential:

Texas

Everything is bigger in Texas, including its oil production. Texas produces, on average, over 2 billion more barrels of oil per day than any other U.S. State. And guess what, Texas also leads the country in natural gas production. All in all, the Lone Star State has the most opportunities to earn oil and gas royalties.

Pennsylvania

This may surprise some people, but the Keystone State is actually the 2nd largest producer of natural gas in the United States. Titusville, Pennsylvania is famous as the location for the first ever successful oil drilling on U.S. soil. However, since then, the state’s oil production has been overshadowed by many states to the West.

North Dakota

Besides Texas (and occasionally New Mexico), the only other state in the country that typically produces over a million barrels of oil per day is North Dakota. The Bakken formation in North Dakota’s western plains produces the majority of the state’s oil. In terms of natural gas production, North Dakota ranks 10th in the country.

Wyoming

If you were to look at each state’s total energy production (gas and oil combined), Wyoming ranks number three overall. This is impressive because Wyoming typically ranks between the fifth and tenth annual production of crude oil or natural gas alone. Overall, the state has a consistent amount of opportunities to earn oil or gas royalties.

Oklahoma

Lastly, we must mention the Sooner State, Oklahoma. Oklahoma sits in the dead center of the country with ample oil and gas resources below the state’s surface. Consistently, Oklahoma ranks in both the top five for the annual production of oil and natural gas. The state is also investing heavily in wind power and is slowly becoming an electricity powerhouse.

new-oil-world

Preparing for New Oil World

It’s clear COVID-19 is having a profound impact on the cornerstone industries of our economy.

Regardless of the industry they operate in, all firms will need to plan to anticipate the shape of recovery and prepare for the next normal. This is particularly complex for the energy industry. With global lockdowns cutting demand and social distancing measures set to impact ways of working for the foreseeable future, how should oil companies adapt their operations to protect and create jobs for the future?

For several years, it’s been widely accepted that technology is the way forward for oil and gas. Due to the pandemic, it is likely social distancing will become standard practice for years, meaning firms should invest in automation technologies now, to allow for improved remote working in the future.

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Source: Energy Digital

Oil and Gas Royalty Deductions

Oil and Gas Royalty Deductions Guide for Tax Season

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There are only a few better feelings than getting your oil and gas royalty check in the mail. Whether you have decided to lease your mineral rights or you have aided in an operation’s production, the extraction and sale of oil or gas earn you a nice bit of money each month. Of course, all is fun and games until tax season. In this article, we will outline the most important things to know about oil and gas royalty deductions.

Depletion Allowances for Oil and Gas Royalties

Mineral rights are very valuable, that is until the resources have all been depleted. The IRS recognizes this and permits a depletion allowance on oil and gas royalty payments. Depletion allowances let property owners deduct the loss of value in the property’s subsurface, as well as any incurred expenses associated with owning the royalties.

Here, taxpayers can write off a portion of their income. Most commonly, people choose the standard 15% depletion deduction from the gross income. In other cases, heavily invested individuals can calculate the approximate remaining oil reserve. From there, they base their deduction on the amount of extraction that tax year.

Oil and Gas Royalty Deductions

Once your royalty checks start coming in, you may notice something. Usually, it is that there are some taxes that are out of your payment. Although the amounts vary between states, most U.S. states take out a severance tax on oil or gas production. This amount can be a deduction from your gross income. This includes any other business taxes or fees that have an association with the production.

Bonus Deductions

If you signed an oil and gas lease, then you may have received a nice upfront bonus payment. In the eyes of the IRS, this is considered ordinary income, in the rental property classification. There can be a deduction on your Schedule E on any bonus payment you receive. This includes any costs (like legal fees) in association with the lease negotiation.

If you have further questions about oil and gas royalty deductions, feel free to reach out to us here.