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Growing well productivity suggests that operators in the Permian are successfully implementing more advanced drilling & completion techniques

Permian production forecast growth driven by well productivity, pipeline capacity

In our latest Short-Term Energy Outlook (STEO), we forecast that crude oil production in the United States. It will grow to an average of 13.7 million barrels per day (b/d). The market for natural gas production will grow to an average of 114.3 billion cubic feet per day (Bcf/d) in 2025. Most of the forecast growth in oil and natural gas production comes from the Permian region of western Texas and eastern New Mexico. It is where we expect productivity gains, new and expanded infrastructure, and high crude oil prices will support rising production.

In order to better capture drilling activity in several onshore U.S. regions, our STEO now makes use of multiple drilling productivity metrics. The number of active rigs is the first in a sequence of metrics that affects regional production; currently more rigs are active in the Permian region than in the rest of the Lower 48 states combined. We also capture and report the number of new wells that those rigs have drilled each month.

Drilled but uncompleted wells (DUCs) have been drilled but have not yet undergone well completion activities to start producing hydrocarbons. The well completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures required to produce crude oil or natural gas. Ultimately, when these wells are completed, they begin producing crude oil, natural gas, or both.

Producers make decisions on drilling and completion operations based on market conditions, prices, and infrastructure. A downward trend in the DUC count means producers are completing more wells than they are drilling.

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Source: EIA

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oil and gas industry

Oil and Gas Industry – Elon Musk warns against vilifying the oil and gas industry

The world should stop vilifying the oil and gas industry, Elon Musk told Donald Trump in an interview on X, reiterating previous similar calls.

“My views on climate change and oil gas […] are pretty moderate,” Musk told Trump during the conversation.
“I don’t think we should vilify the oil and gas industry and the people that have worked very hard in those industries to provide the necessary energy to support the economy,” added the Tesla CEO billionaire, who has endorsed Trump for president.

Musk also said that realistically the world could transition to a sustainable economy in 50 to 100 years—a timeframe which Trump extended to “100 to 500 years” later on in the interview, without Musk correcting him.

Tesla’s boss and the face of the energy transition for many enthusiasts also said that regarding oil and gas “it’s not like the house is on fire immediately.”

Faster than Slower Oil and Gas Industry

“It’s probably better to move there faster than slower. But like without vilifying the oil and gas industry and without causing hardship in the short term,” Musk added.

That’s not the first time the billionaire has called on the public to stop “demonizing” fossil fuels. He did that at the end of last year when he told an Italian right-wing summit that it was time to be “pragmatic” and “sensible”, instead of demonizing oil and gas–at least in the medium term.

Donald Trump, for his part, has been a staunch supporter of the U.S. oil and gas industry and has claimed for years that the Biden Administration’s EV mandate will wreck good-paying American auto industry jobs.

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Source: Oil Price

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New drilling technology

New drilling technology to put billions of barrels of oil in reach, analysts say

In a groundbreaking development for the oil industry, Chevron has announced a significant advancement in the extraction of crude oil. This is from ultra-high pressure fields of the new drilling technology.

Potentially unlocking up to 5 billion barrels of previously inaccessible resources. This revelation comes as Chevron successfully commenced oil production from its Anchor project. It is where the first well is operating at an unprecedented pressure of 20,000 pounds per square inch (psi). It is a remarkable increase of one-third over any prior well. The significance of this achievement cannot be overstated. This may reshape the landscape of oil production and expand the boundaries of what is currently considered recoverable oil.

The success of the Anchor project represents an investment of $5.7 billion. It provides an attribution to the deployment of cutting-edge technology. The design of the equipment is from industry leaders such as NOV, Dril-Quip, and Transocean. According to Bruce Niemeyer, the head of Americas oil exploration and production at Chevron, the company began pumping oil from the first Anchor well on Sunday. It is with preparations already underway for the activation of the second well. Drilling is ongoing and is nearing readiness. This innovative approach promises to enhance production capabilities and underscores Chevron’s commitment. This will leverage advanced technology to access complex and challenging oil reserves. Ultimately, it will be contributing to the energy security of the United States and the global market.

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Source: Natural Gas World

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The US will continue buying crude at $70s per barrel or lower and plans to add millions of barrels to the SPR early next year.

SPR – US set to slowly refill SPR as crude buys extend into 2025

The United States will continue to buy crude when prices are in the $70s a barrel or lower and plans to add several million barrels of crude to the Strategic Petroleum Reserve (SPR) early next year.

The U.S. Department of Energy (DOE) is continuing its efforts to bolster the depleted SPR with new oil purchases. DOE’s Office of Petroleum Reserves has recently announced a call for bids to supply up to 1.5 million barrels of oil to the Bayou Choctaw site in January 2025. An additional solicitation will follow on August 12, 2024, for another 2 million barrels destined for the Bryan Mound site, also for delivery in January 2025.

This move is part of a strategic plan to replenish the SPR while taking advantage of favorable oil prices.

The DOE’s stated goal is to buy crude oil at or below $79 per barrel.

The replenishment strategy comes in the wake of the SPR’s critical role in stabilizing the market during global supply disruptions, notably the release of more than 180 million barrels of oil from the SPR starting in 2021, as gasoline prices remained high. The Department of Treasury claims that these releases, along with coordinated international efforts, helped reduce gasoline prices by up to 40 cents per gallon in 2022.

The SPR currently houses 375 million barrels of crude—a figure that is 263 million barrels less than oil in the SPR at the beginning of President Joe Biden’s term in office. The SPR, capable of storing as many as 714 million barrels of crude oil, is kept in underground salt caverns at four sites in Texas and Louisiana and was designed to protect the economy and American livelihoods during oil shortages.

In June, U.S. Secretary of Energy Jennifer Granholm told Reuters in an interview that the Administration could accelerate the pace of buying crude to refill the SPR, as all four sites would be available by the end of the year after a maintenance period.

“All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market,” Secretary Granholm said, commenting on the current pace of buying about 3 million barrels of crude for the reserve per month this year.

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Source: Oil Price

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US crude oil rallies

US crude oil rallies more than 4%, tops $80 as Pentagon sends more forces to Middle East

US crude oil rallies Monday to top $80 per barrel as the Pentagon dispatched more forces to the Middle East in anticipation of an Iranian attack on Israel.

Defense Secretary Lloyd Austin ordered a carrier strike group, including F-35 warplanes, to accelerate its deployment to the region. Austin also ordered a guided-missile submarine to the Middle East.

Israel has put its military on high alert, a person familiar with the matter told The Wall Street Journal.

“We see allocations to oil and gold as the main means to add some protection to portfolios. It is  against a further escalation in geopolitical tensions,” UBS analysts told clients in a Monday research note.

U.S. crude oil is trading higher even as OPEC lowered its global demand growth forecast by 135,000 barrels per day.  This is citing softening consumption in China.

“The oil markets reacted strongly to the increased geopolitical risk even as OPEC has shown some concern about its demand growth”. This is what Phil Flynn said. Hi is the senior market analyst at the Price Futures Group. He said the market is still on track for a deficit as inventories fall.

U.S. crude oil finished last week more than 4% higher, snapping a 4-week decline, as the stock market recovered most of its losses from a flash sell-off caused by mounting fear of a recession and after the Bank of Japan lifted interest rates a fraction.

Don’t miss the

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Source: CNBC

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Oil Driller Increases '24 Production Target on Permian Success

Another Driller Increases ’24 Production Target on Permian Success

Ovintiv Inc., one of the leading oil driller companies in the shale drilling sector, has recently updated its production forecast for 2024, marking itself as the second oil and gas company to make such an adjustment this year. The firm now projects a production range of between 570,000 and 580,000 barrels of crude oil per day, a notable increase from its previous estimate, which ranged from 545,000 to 575,000 barrels. This revision, calculated from the midpoint of the newly established range, indicates a 2.7% increase in anticipated production levels. Furthermore, Ovintiv has also raised its target for the oil and condensate segment, adjusting it upward by approximately 1%, with a goal of reaching around 208,000 barrels per day. This strategic adjustment reflects the company’s confidence in its operational capabilities and the overall market conditions.

Ovintiv’s decision to enhance its production outlook follows a similar move by Matador Resources Co., highlighting a trend among U.S. drillers who are cautiously navigating the current energy landscape. While many companies are focusing on maintaining stable or modest growth in output, this shift in forecast underscores Ovintiv’s strategic emphasis on maximizing production efficiency while balancing capital allocation to shareholders. As the industry gradually transitions towards a more disciplined approach to growth, Ovintiv’s proactive stance may position it favorably for future opportunities, enabling the company to strengthen its drilling assets and enhance shareholder returns in a competitive market environment.

Oil Driller Performance

The performance of oil wells in the prominent Permian Basin, which extends across Texas and New Mexico, has consistently surpassed industry expectations, presenting a complex challenge for the Organization of the Petroleum Exporting Countries (OPEC) and its allies. These countries have been actively engaged in a strategic effort to gradually unwind coordinated production restrictions that were initially implemented to support and stabilize crude oil prices in response to volatile market conditions. However, the unexpected surge in output from the Permian Basin may complicate these efforts, as increased production can lead to an oversupply in the market, potentially undermining the pricing strategies that OPEC and its allied nations have meticulously crafted. This development raises questions about the sustainability of current pricing levels and may prompt OPEC to reconsider its production policies in light of the new dynamics introduced by the Permian’s robust performance.

Production Comprises Oil and Condensate

In the context of this evolving market landscape, Ovintiv, a prominent player in the region, has strategically positioned its production portfolio to capitalize on the diverse hydrocarbon resources available in the Permian Basin. Currently, approximately one-third of Ovintiv’s production comprises oil and condensate, while the remaining two-thirds consists of natural gas and natural gas liquids. This balanced approach not only allows the company to mitigate risks associated with fluctuations in oil prices but also aligns with the growing demand for natural gas as a cleaner energy alternative. By maintaining a diversified portfolio, Ovintiv is well-positioned to navigate the complexities of the current market environment, adapting to changes in consumer preferences and regulatory landscapes while contributing to the ongoing discourse around energy production and sustainability in the context of the larger global energy transition.

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Source: World Oil

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Oil Prices Rise Amid Growing Fears of a War in the Middle East

Oil Prices Rise Amid Growing Fears of a War in the Middle East

Crude oil prices saw an upward trend today, building on a significant rise the previous day following reports of Israel’s targeted killings of Hamas political leader Ismail Haniyeh in Iran and a high-ranking Hezbollah official in Lebanon.

The assassination of Haniyeh in Iran particularly heightened market concerns, prompting Tehran to issue threats of retaliation that analysts suggest could push Brent crude prices into triple-digit levels.

“We are concerned that the region may be teetering on the edge of full-scale war,” remarked Japan’s deputy representative to the United Nations, as the Security Council urged member states to intensify diplomatic efforts to resolve the escalating conflict between Israel and its neighboring countries.

China’s UN ambassador emphasized the need for influential nations to exert greater pressure and act decisively to quell the ongoing violence in Gaza.

Iran’s representative condemned the assassination of Haniyeh as an act of terrorism, as reported by Reuters amid the unfolding situation.

The Tensions in the Middle East Due to Oil Prices Rise

With tensions in the Middle East remaining elevated, Brent crude prices exceeded $81 per barrel before slightly retracting earlier today, while West Texas Intermediate approached $79 per barrel.

In further positive news for the oil market, the Energy Information Administration (EIA) disclosed that U.S. oil demand reached a seasonal high of 20.80 million barrels per day in May, a noteworthy upward revision from earlier estimates of 20 million barrels per day.

Moreover, global oil inventories are currently in decline, reflecting a significant deficit compared to historical averages, according to Eric Nuttall, senior portfolio manager at Ninepoint Partners, who spoke to Bloomberg this week. Nuttall also highlighted improvements in OPEC+ production cut compliance as a contributing factor to the optimistic outlook for oil prices.

Should diplomatic efforts fail to alleviate tensions in the Middle East, oil prices may continue to rise, driven by fundamental market dynamics and geopolitical risk factors.

Source: Oil Price

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Oil and gas mergers

Oil and gas mergers total $250 billion in just 12 months

Are you updated with the latest Oil and gas mergers? We have been in the habit of somewhat cavalierly discussing things like the federal budget or U.S. debt in terms of trillions of dollars. In recent years, numbers are so enormous that they defy the human mind’s ability to comprehend them. One number jumps off the page of the latest quarterly review of oil and gas upstream mergers and acquisition activity from energy data and analysis firm Enverus Intelligence Research (EIR).

EIR finds that over the past 12 months, upstream consolidation deals have totaled to an unprecedented $250 billion. This equates to a quarter of a trillion. So, we haven’t reached $1 trillion, but the very fact this number can be reasonably expressed as a meaningful fraction of that level is somewhat astonishing. It shows just how intense this latest rush to consolidate and grow larger in America’s shale patch has been.

have you heard the $22.5 billion merger between oil giants ConocoPhillips and Marathon Oil? it is the most current quarter of April through June saw more than $30 billion in new deals transacted. Andrew Dittmar. The principal analyst at EIR, notes that upstream M&A activity has reached that level in just three previous quarters since EIR began tracking this information.

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Source: Forbes

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oil rig count

Oil rig count jumps as drilling activity picks up

The oil rig count of active drilling rigs for oil and gas in the United States rose this week, according to new data that Baker Hughes published on Friday.

The total rig count rose by 3 to 589 this week, compared to 664 rigs this same time last year.
The number of oil rigs rose by 5 this week, after falling by a single rig in the week prior. Oil rigs now stand at 482—down by 47 compared to this time last year. The number of gas rigs fell by 2 this week to 101, a loss of 27 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 6.

Crude Oil Production

Meanwhile, U.S. crude oil production stayed the same for the week ending July 19. Current weekly oil production in the United States, according to the EIA, is now on par with the all-time high of 13.3 million bpd.

Primary Vision’s Frac Spread Count, an estimate of the number of crews completing wells that are unfinished, fell sharply in the week ending July 19, from 238 to 228—the lowest levels since June 2021.

Drilling activity in the Permian fell by 1 this week at 304, a figure that is 30 fewer than this same time last year. The count in the Eagle Ford rose by 1 this week, rising to 49 after climbing by 1 rig in the week prior. Rigs in the Eagle Ford are now 5 below where they were this time last year.
Oil prices were down sharply on Friday. At 1:00 p.m. ET, the WTI benchmark was trading down $1.19 (-1.52%) on the day at $77.09. The Brent benchmark was trading down $1.29 (-1.57%) on the day at $81.08.

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Source: Oil Price

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US oil and gas

US oil and gas drilling activity sees rebound

The total number of active drilling rigs for oil and gas in the United States rose this week. This is according to new data that Baker Hughes published on Friday.

The total rig count rose by 2 to 586 this week, compared to 669 rigs this same time last year.

The number of oil rigs fell by 1 this week, falling by a single rig in the week prior. Oil rigs now stand at 477—down by 53 compared to this time last year. The number of gas rigs rose by 3 this week to 103, a loss of 28 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 6.

Meanwhile, U.S. crude oil production rose 1 million bpd to 13.3 million bpd for for the week ending July 12. Current weekly oil production in the United States, according to the EIA, is now on par with the all-time high of 13.3 million bpd.

Primary Vision’s Frac Spread Count

Primary Vision’s Frac Spread Count an estimate of the number of crews. It is completing wells that are unfinished, fell in the week ending July 12, from 242 to 238.

Drilling activity in the Permian stayed the same this week at 305. This is a figure that is 28 fewer than this same time last year. The count in the Eagle Ford rose by 1 this week, rising to 49 after falling by 1 rig in the week prior. Rigs in the Eagle Ford are now 8 below where they were this time last year.Oil prices were down sharply on Friday. At 1:10 p.m. ET, the WTI benchmark was trading down $2.13 (-2.57%) on the day at $80.69. The Brent benchmark was trading down $1.99 (-2.34%) on the day at $83.12.

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Source: Oil Price

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