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Oil Giants

Oil Giants Invest in Exploration as Profits Trump Climate

Oil and gas companies are reinvesting record profits from the fossil fuel price surge driven by the Ukraine war to intensify the hunt for new deposits despite repeated calls by the United Nations to phase out hydrocarbons to avoid a climate crisis. What will these oil giants do?

Data and industry executives found the exploration revival responds to pressure from a majority of investors to maximize their oil and gas profits rather than invest in lower-margin renewable energy businesses.

The International Energy Agency forecasts global upstream oil and gas investments to increase by about 11 percent to $528bn in 2023, the highest level since 2015.

Barclays said it expected the number of offshore projects to get approval this year to reach a 10-year high.

The renewed appetite for oil and gas reserves and production – among European majors in particular – comes after Shell and BP slowed down plans to shift away from their legacy business and invest in renewables as part of the energy transition.

Upstream oil and gas have historically had returns of 15 to 20 percent while most renewables projects have delivered up to 8 percent.

An analysis of data from oil services firm Baker Hughes showed the number of offshore drilling vessels used to explore and produce oil and gas recovered in May to pre-pandemic levels, rising by 45 percent from October 2020 lows.

Wood Mackenzie analysts predicted a continued increase in activity, forecasting offshore exploration and drilling activity to grow by 20 percent by 2025.

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Source: ALJAZEERA

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Oil Demand Will Hit 110 Million BPD in 2045 – OPEC says

Global oil demand will rise to 110 million barrels a day in about 20 years, pushing the world’s energy demand up by 23%, said OPEC on Monday.

″Oil is irreplaceable for the foreseeable future,” Secretary-General Haitham Al Ghais of the Organisation of the Petroleum Exporting Countries said while addressing the inaugural Energy Asia conference held in the Malaysian capital of Kuala Lumpur.

“In our worldwide outlook, we see global oil demand rising to 110 million barrels a day by 2045,” he said, adding that oil will still comprise about 29% of the energy mix by then.

The forecast contradicts the International Energy Agency’s predictions of annual demand growth thinning down from 2.4 million barrels per day in 2023 to 400,000 barrels per day in 2028.

Two weeks ago, the IEA projected that global oil demand will increase by 6% from 2022 to 105.7 million barrels per day in 2028 on the back of the petrochemical and aviation sectors.

OPEC’s secretary general added that underinvestment in the oil industry will only challenge the viability of current energy systems and lead to “energy chaos.”

From now till 2030, Al Ghais predicts another half a billion people will move to cities worldwide as the global economy continues to expand.

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Source: CNBC

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oil supply

Oil Supply Worries Drive Prices Higher

Crude oil prices began trade with a gain today as supply worries returned to the table amid the rebellion news from Russia and expectations of demand growth during peak driving season in the United States.

In midday trade in Asia Brent crude was moving toward $75 per barrel with West Texas Intermediate climbing above $70 per barrel.

News about a rebellion in Russia by private military contractor Wagner added fuel to oil prices at the start of the week. The group was quick to agree to a deal ending the rebellion, basically ending it before it really started, but concern has lingered as the market watches what happens next.

“There’s a possibility of supply disruption any time you get a serious geopolitical event in a major oil supplier,” Stephen Innes, managing partner at SPI Asset Management, told the Financial Times. “It opens up a can of worms and we’re going to have to see how that plays out.”

There is also the production cut that Saudi Arabia will implement from the start of next month and that will tighten supply globally.

“An additional 1 million barrels per day (bpd) unilateral cut by Saudi Arabia, set to take effect in July, coupled with seasonally stronger demand, should help to physically tighten the market in Q3,” BIM Research said in a note cited by Reuters.

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Source: Oil Price

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Against Expectations, Oil and gas Remain Cheap

In the months after Russia’s invasion of Ukraine any hint of bad news sent energy prices into the stratosphere. When a fire forced an American gas plant to close, strikes clogged French oil terminals, Russia demanded Europe pay for fuel in roubles or the weather looked grimmer than usual, markets went wild. Since January, however, things have been different. Will oil and gas remain cheap?

Brent crude, the global oil benchmark, has hovered around $75 a barrel, compared with $120 a year ago; in Europe, gas prices, at €35 ($38) per megawatt-hour (mwh), are 88% below their peak in August.

It is not that the news has suddenly become more amenable. Oil and gas remain cheap despite the trends. The Organisation of the Petroleum Exporting Countries (opec) and its allies have announced swingeing cuts to output. In America, the number of oil and gas rigs has fallen for seven weeks in a row, as producers respond to the meager rewards on offer. Several of Norway’s gas facilities—now vital to Europe—are in prolonged maintenance. The Netherlands is closing the largest gas field in Europe. Yet any uptick in price quickly fades away. What is keeping things steady?

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Source: Economist

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Oil and Gas Fabrication Market Size to Hit USD 6.93 Billion, Globally, by 2029 at a CAGR of 4.7%

The global oil & gas fabrication market size was worth USD 4.86 billion in 2021. The market value is slated to rise from USD 5.03 billion in 2022 to USD 6.93 billion by 2029 at 4.7% CAGR during the forecast period. The infrastructure of the oil & gas industry is complex. An oil rig or platform is a large structure with facilities for drilling wells and extracting and processing oil and natural gas. Some of these oil platforms even have facilities to house workers. There are different oil platforms such as fixed platforms, semi-submersible platforms, compliant towers, and others. All of these structures are built on steel legs. Fortune Business Insights presents this information in their report titled “Oil & Gas Fabrication Market, 2022-2029.”

Growing Demand and Consumption of Oil & Gas to Foster Market Growth

The rising oil & gas production & exploration activities, along with increasing investments in the services market, surges the demand for oil & gas fabrication. The necessity to enhance the efficiency of established and fresh reserves is increasing. Rising investments in ultra-deepwater and deepwater projects and growing emphasis on emerging unconventional hydrocarbons propel the global oil & gas fabrication market growth during the forecast period.

However, the oil & gas industry production results in rising pollution levels and increasing global warming threats. Governments have imposed regulations on oil & gas companies.

Global Market Experienced a Downward Trend Due to Decreased Oil & Gas Demand

In March 2020, oil prices plunged due to geopolitical events along with the global impact of the COVID-19 pandemic. As a result, in 2020, the average number of the U.S. rigs fell 52% from 2019. The U.S. rig count hit a low of 244 in mid-August since then it has risen to 397 as of February 19, 2021. In 2020, industrial participants’ business was impacted by the COVID-19 pandemic as customers delayed purchases and planned projects, citing COVID-19-related market uncertainties, permitting delays and logistical constraints.

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Source: GlobeNewswire

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eia

EIA Sees Record U.S. Shale Output Despite Slow Growth

The biggest U.S. shale regions are expected to produce a record-high level of crude oil in July. Growth is sputtering and set to be the slowest since December 2022. With that, data from the Energy Information Administration (EIA) showed on Monday.

The seven main shale-producing regions in the United States are expected to pump 9.375 million barrels per day (bpd) of crude oil next month. It is a record high, according to estimates in the EIA’s Drilling Productivity Report.

While output could reach an all-time high, it would be only 8,000 BPD higher than the estimated June crude oil production of 9.367 million bpd.

TOP Producing Region by EIA

The Permian, the top-producing region, is set to see only a 1,000-bpd increase in output. This is even July production is expected at a record 5.763 million bpd. The rise in output would be the smallest in the Permian since February 2023.

The Bakken region will lead the gains with crude oil production set to rise by 7,000 bpd. This is from June to 1.214 million bpd in July. According to EIA’s forecasts, the estimated production from the shale basin in North Dakota and Montana would be the highest since November 2020.

While small gains are expected in the other regions, Eagle Ford is expected to see its crude oil production drop by 5,000 bpd to 1.117 million bpd. This would be the lowest output level since April 2023.

In natural gas output, the Permian will lead gains in July. This will be followed by Bakken and Appalachia. The output in the Anadarko and Eagle Ford basins is set to decline next month compared to June, according to the EIA estimates.

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Source: Oil & Gas 360

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Oil Prices Rise

Oil Prices Rise As China’s Crude Imports Jump

Oil prices rise early on Wednesday as Chinese data showed crude imports. It is the world’s top oil importer jumped in May, recovering from a weak April.

As of 8:13 a.m. EDT on Wednesday, ahead of the EIA weekly inventory report, WTI Crude prices were up by 0.99% at $72.45. The international benchmark, Brent Crude, traded at $76.98, up by 0.94% on the day.

Following a slump on Tuesday, oil prices recovered some of the losses early on Wednesday. This is as China’s data showed crude oil imports jumped in May by 12.2% year-on-year. Then by 17.4% compared to April. China imported a total of 12.11 million barrels per day (BOP) of crude in May. This is the data from the General Administration of Customs showed. This is as refiners returned from maintenance and moved to stockpile crude.

The building of crude inventories has supported crude oil imports and demand despite the mixed macroeconomic data coming out of China in recent weeks.

“Demand slowdown from China has been a major concern for the crude oil market recently, and a recovery in oil imports is likely to provide some comfort to the oil market,” ING strategists Warren Patterson and Ewa Manthey said on Wednesday.

“Higher refinery utilization has also increased refined product supplies in the Chinese market, with China reverting to being a net exporter of refined products last month.”

Oil prices recovered early on Wednesday, helped by the higher Chinese crude imports and the market shifting focus from macroeconomic concerns to a looming supply deficit in the second half of the year.

On Tuesday, concerns about the economy erased all the Saudi cut-induced gains from Monday. The 1 million bpd Saudi cut has failed to move oil prices in any meaningful way so far. In addition, a bearish industry report on inventories from the American Petroleum Institute (API) also weighed on prices on Tuesday. Although the API reported a crude inventory draw, it also found that gasoline and distillate inventories increased.

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Source: Oil Price

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Column: US Oil and Gas Output Still Rising in Response to High Prices Last Year

US oil and gas output continued to rise strongly in March – the delayed impact of very high prices that prevailed until the third quarter of 2022.

Oil output increased by 171,000 barrels per day (b/d) in March compared with February, according to the U.S. Energy Information Administration (“Petroleum supply monthly”, EIA, May 31).

The gains were led by the Lower 48 states (+137,000 b/d) and Gulf of Mexico (+45,000 b/d), which more than offset lower production from Alaska (-11,000 b/d).

Output rose by almost 10% in the first three months of 2023, compared with the same period a year earlier, and was the second-highest for the time of year after 2020.

On the gas side, dry production hit record 3,171 billion cubic feet in March and was more than 7% higher than in the same month a year earlier (“Natural gas monthly”, EIA, May 31).

Gas output climbed to a record 9,180 billion cubic feet in the first quarter and was also 7% higher than a year before.

Shale production is often characterised as “short cycle” because wells have a relatively rapid decline rate and new ones must be drilled constantly to replace the dwindling output from older ones.

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Source: Reuters

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federal regulations code

Texas Republicans want to shield oil and gas from federal climate regulations. Their bill would have little impact, experts say.

Texas could soon have a new law based on the federal regulations code on climate. It aims to make the state a sort of safe haven for the oil and gas industry. It is by shielding it from federal climate and environmental regulation. But experts say the measure would do little to change environmental enforcement in Texas. It would be more symbolic than anything.

Texas Republicans in both chambers have supported House Bill 33. It was authored by state Rep. Brooks Landgraf, R-Odessa. Moreover, it is as a way to ward off federal climate rules under President Joe Biden. They pledged that the U.S. would cut its greenhouse gas emissions in half by 2030. This is just among other goals to slow climate change. The president’s climate agenda has been viewed by many Texas Republicans as disastrous. Mainly for the nation’s biggest oil and gas state.

HB 33

HB 33, which was approved by the House before being altered by a Senate committee. It seeks to shelter the industry from what Republicans have called “federal overreach”. This will be done by barring state agencies from enforcing federal regulations on oil and gas operations. This is if those regulations do not exist under Texas law. Texas lawmakers used a similar approach in 2021. It is when they passed a law to make Texas a “Second Amendment sanctuary state.”

The language is similar to a bill proposed in Louisiana two years ago that would have made it a “fossil fuel sanctuary state.”

When the Environmental Protection Agency creates a new rule, states can decide whether they’ll enforce it or leave that to the EPA. Typically, Texas agencies have opted to enforce federal rules themselves — for example, the EPA delegates its authority to enforce many rules under the Clean Air Act to Texas. The State Railroad Commission, which regulates the oil industry in Texas, is currently seeking authority from the EPA to regulate carbon dioxide wells for geological storage, known as carbon sequestration.

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Source: The Texas Tribune

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US Oil and Gas Auction Yields Nearly $80 Million for Federal Coffers

The U.S. on Thursday held its first sale of oil and gas drilling rights on federal lands. This was since the passage of President Joe Biden’s landmark climate change law. It is attracting more than $78 million in high bids for leases in New Mexico and Kansas. Let’s talk more about this US Oil and Gas Auction.

The federal auction was just the second to be held in New Mexico. It is the nation’s second-largest oil-producing state since Biden became president in 2021.

Promontory Exploration LP of Midland, Texas, and Devon Energy Corp (DVN.N) of Oklahoma City were the auction’s top spenders, each picking up leases in New Mexico.

Biden’s Interior Department had attempted to suspend federal oil and gas leasing to study its environmental and climate impacts, but the Inflation Reduction Act that passed last year requires some oil and gas auctions if federal rights of way are offered for renewable energy projects.

The 19 offered parcels on 3,300 acres (1,335.5 hectares) in New Mexico garnered 99.9% of the high bid total of $78.81 million, according to sale information published by the U.S. Bureau of Land Management.

The highest price paid for a parcel was $16.2 million by Devon for 280 acres in the state’s Eddy County. It was also the auction’s highest price paid per acre at $57,901. It was Devon’s only parcel purchased in the sale.

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Source: Reuters

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