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U.S. drillers

As oil nears $100 a barrel, U.S. drillers get busy in costly shale basins

As U.S. oil rises toward $100 a barrel, producers in some high-cost shale basins are buying properties and adding rigs and frack crews in places that fell silent when prices crashed early in the pandemic two years ago. U.S. drillers get busy in costly shale basins now.

Benchmark U.S. prices last week topped $93 a barrel, up around 65% in the last 52 weeks and the highest since 2014. U.S. producers are cranking up spending at double-digit rates as fuel demand has soared and fears have waned that OPEC will again punish them by flooding the market with crude that is cheaper to produce.

Some executives say current high prices and relatively low service costs make production economics the best in years. Firms are buying U.S. oil, pipeline, and gas processing rivals in a bet that higher prices will more than cover rising costs of labor and equipment.

New activity is stirring in secondary oilfields like Colorado’s DJ Basin, Wyoming’s Powder River, Louisiana’s Haynesville, and North Dakota’s Bakken shale, which last year lost its spot as the second-largest U.S. oil-producing region.

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Source: Reuters

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Permian Basin Oil

Permian Basin oil and gas deals getting bigger as market recovers from COVID-19

There are three recent acquisitions of oil- and gas-producing assets in the Permian Basin. And yes, it moved more than $1 billion in the last week! This is as the market for fossil fuels in the U.S. grows along with production in the basin. This is one of the nation’s most active.

Domestic oil was trading at about $88 per barrel. It goes up from about $85 a barrel a week ago, per data from Nasdaq.

The increased value in oil was followed by growth in oil and gas rigs with the Permian Basin adding one rig in the past week for a nation-leading total of 293 rigs – an increase of 101 from a year ago, as of Friday per the latest data from Baker Hughes.

New Mexico and Texas, which share the Permian, had 94 and 294 rigs, respectively – holding the top two rig counts in the nation, Baker Hughes reported.

Amid that growth more companies sought to increase their presence in the leading basin in early 2022.

Earthstone Energy announced Monday it acquired lands in the eastern Midland Basin, a section of the greater Permian in West Texas, for about $860 million from Bighorn Permian Resources.

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Source: Carlsbad Current-Argus

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Oil News

Oil Posts Its Strongest January in Decades as Market Tightens

LATEST OIL NEWS – Oil had its biggest January gain in at least 30 years as robust demand outpaced fresh supply.

The global benchmark settled above $91 a barrel, posting a 17% gain this month. The combination of booming demand, scratchy supply and dwindling stockpiles has helped crude soar this month, with top banks and oil companies saying prices may soon pass $100 a barrel.

Crude’s rally is really “a supply story,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “Crude is flying in the face of a strong U.S. dollar and a weak global stock market. It comes down to its own fundamentals more than anything else.”

Traders were greeted Monday with a familiar set of drivers, from the weather to stockpiles. Low temperatures in the U.S. have been boosting demand for fuels, as Boston reported a daily snow record over the weekend and New York’s Central Park received more than 8 inches (20 centimeters.) An oil pipeline in Ecuador was damaged by a rockslide, potentially endangering supply. Meanwhile, oil held on tankers fell by more than 20% last week, the latest sign of ebbing inventories.

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Source: Bloomberg

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United States Natural Gas

United States Natural Gas Is No Longer Too Dirty for France

In October 2020, the French government blocked a $7 billion deal between Engie, a partially state-owned French energy enterprise, and NextDecade, a U.S. liquefied natural gas (LNG) company, because the gas was too dirty. But recently, it was revealed that a new, 11-year deal was quietly signed for that same fuel last June—this time between Engie and Cheniere Energy, a different U.S. LNG company.

Most of the details of the new deal came from a recently unsealed letter by the U.S. Energy Department, in which Cheniere asks for “confidential treatment” of the purchase. Neither company has announced the agreement, and Cheniere has declined comment on the multibillion-dollar LNG deal. Meanwhile, French news outlets have reported that Engie did its best to keep things “under the radar” and might have gone so far as to use a code name to limit publicity.

The seeming about-face is evidence that the oil and gas landscape is evolving. Some exporters, such as Cheniere, have been able to position themselves as responsible companies. For instance, Cheniere has launched initiatives to work more closely with natural gas suppliers on managing greenhouse gas emissions. Its operations also go beyond the proposed methane regulations of the U.S. Environmental Protection Agency (EPA), and the company has even gone so far as to promise carbon-neutral LNG shipments to Europe (though it’s not clear how many).

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Source: FP  (Foreign Policy)

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Oil and Gas Expansions

Oil and Gas Expansions Planned in Permian Basin as Production Forecast to Rise This year

Another oil and gas operator sought expansions into the Permian Basin. It is in southeast New Mexico and West Texas. This is as the fossil fuel markets continued to grow in early 2022.

Split Rock Resources, based in Fort Worth, Texas, announced on January 18. The purchase is about $97.5 million worth of non-operated lands in the basin from a private seller. They are hoping to begin producing oil in western Delaware and eastern Midland sub-basins of the Permian.

The assets included in the deal were located in Eddy and Lea counties. It is in southeast New Mexico and Midland and Glasscock counties in Texas. Currently producing about 2,000 barrels of oil equivalent (Boe) per day.

They also included about 1,000 net acres targeting the productive Wolfcamp and Bon Spring formations.

The company hoped to double that production in 2022.

“The assets are operated by a diverse group of top-tier companies and 2022 development activities are expected to increase daily production rates to over 4,000 Boe per day,” read a statement from Split Rock.

Hydrocarbon processing capacity in the Permian was also set to expand. It is as Odessa, Texas base Saulsbury Industries receive an award. These are contracts to build and install a cryogenic gas processing facility in the Permian. Partnering with an unnamed “major” oil and gas producer, per a news release.

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Source: Carlsbad Current-Argus

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Energy Independence

In Quest for Energy Independence, Mexico Is Buying a Texas Oil Refinery

DEER PARK, Texas — Two giant murals, on storage tanks at an oil refinery here, depict the rebels led by Sam Houston. They secured Texas’ independence from Mexico in the 1830s. This week those murals will become the property of the Mexican national oil company. This means acquiring full control of the refinery. Let’s talk more about energy independence below.

The refinery purchase is part of President Andres Manuel López Obrador’s own bid for the independence of sorts. This is an effort to achieve energy self-sufficiency. Now, the president of Mexico is investing heavily in state-owned oil companies. They are placing a renewed emphasis on petroleum production and retreating from renewable energy. This is even as some oil giants like BP and Royal Dutch Shell are investing more in that sector.

Mr. López Obrador aims to eliminate most Mexican oil exports over the next two years. Above all that, the country can process more of it domestically. He wants to replace the gasoline and diesel supplies the country currently buys from other refineries in the United States with fuel produced domestically or by the refinery in Deer Park, which would be made from crude oil it imports from Mexico. The shift would be an ambitious leap for Petroleos Mexicanos, the company commonly known as Pemex.

Firstly, the company’s oil production is comparable to Chevron’s in recent years. As a result, this has been falling for more than a decade. Basically, it shoulders more than $100 billion in debt, the largest of any oil company in the world.

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Source: The New York times

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oil prices current

White House Helpless As Oil Prices Climb Higher

President Joe Biden announced plans to release up to 50 million barrels of oil from the strategic petroleum reserve. This is to lower retail fuel prices. Many analysts warned that any effect this move would have would be short-lived. Indeed, prices dropped for a very short. On the other hand, it is now on the climb again. This is with the number of three-digit price forecasts growing.

The strategic reserve release was already a desperate attempt to put a lid on gasoline prices, pushed up by crude oil prices, themselves the result of a faster rebound in global demand and production constraints among OPEC members. The Omicron variant of the coronavirus, like the SPR release plans, had a transitory negative effect on benchmarks, but before long, they were once again on the rise.

Morgan Stanley expects Brent crude to reach $90 per barrel later this year. This is also the price forecast of Goldman. JP Morgan recently said that crude could reach and exceed $100 this year, noting the decline in OPEC spare production capacity. The latest to join the bullish choir is Vitol, whose head for Asian operations told Bloomberg last week that oil had further up to go because of tight supply.

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Source: Oil Price

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Oil and Natural Gas

Oil and Natural Gas Contribute to Economic Growth

Wyoming’s economy continued to rebound in the third quarter of 2021, but its growth has slowed down. And thanks to the highest prices of oil and natural gas seen in several years, the mining industry had a relatively good quarter.

On the whole, Wyoming recorded about 6,800 or 2.4% more payroll jobs in the third quarter of 2021 compared to 2020. Leisure and hospitality led this growth with 4,300 more jobs, an 11.9% increase, during that time.

Even with that growth, Wyoming trailed behind the nation as a whole, which saw job growth of 4.6%

On the bright side, the state’s top industry, mining, saw moderate growth, increasing 5.9% in the third quarter thanks to a rebound in oil and natural gas activities. It was the first year-over-year increase for mining since the second quarter of 2019, said Wenlin Liu, chief economist with Wyoming Division of Economic Analysis, in a press release.

In the third quarter, $185.4 million was generated in mineral severance taxes. That was about a 26% increase from 2020, and the highest quarterly amount since the fourth quarter of 2014.

Liu noted that it was due to oil and natural gas, which saw their highest prices since 2014 and 2008, respectively.

Total taxable sales grew by just 1.5% in the third quarter of 2021. Liu attributed this weak performance to the fading activities in wind power construction. Otherwise, both leisure and hospitality and retail trade had strong expansions, passing 2020 levels by double digits.

In Campbell County, taxable sales grew by 18%, the sixth-highest in the state.

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Source: The Sheridan Press

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Global Oil

Global Oil, Natural Gas Investments Seen Rising 4% in 2022

Global oil and gas investment is expected to grow by $26 billion this year. This is as the industry continues to recover from the worst of the coronavirus. All of this is according to a new analysis from Rystad Energy.

Overall oil and gas investment is forecast to climb by 4% to $628 billion this year. It is a high jump from $602 billion in 2021.

“The pervasive spread of the Omicron variant will inevitably lead to restrictions. This is specifically on movement in the first quarter of 2022. Capping energy demand and recovery in the major crude-consuming sectors of road transport and aviation. But despite the ongoing disruptions caused by Covid-19, the outlook for the global oil and gas market is promising”. This was said by Rystad’s Audun Martinsen, head of energy service research.

Natural gas and liquefied natural gas (LNG) investment is seen leading the way, rising 14% in 2022 to $149 billion from $131 billion in 2021. Although still short of pre-pandemic totals, Rystad sees investment in the LNG and gas segment surpassing 2019 levels of $168 billion in only two years, reaching $171 billion in 2024.

Upstream oil investments, meanwhile, are projected to rise from $287 billion in 2021 to $307 billion this year, a 7% increase, while midstream and downstream investments are projected to fall by 6.7% to $172 billion.

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Source: Natural Gas Intelligence

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Oil Rises

Oil Rises 1.5% as OPEC+ Agrees to Planned Output Increase

Oil rises by 1.5% on Tuesday as OPEC+ producers agreed to stick with their planned increase for February based on indications that the Omicron coronavirus variant would have only a mild impact on demand.

Brent crude was up $1.15, or 1.5%, at $80.13 a barrel, its highest since November, by 13:33. p.m. EST (1833 GMT) and U.S. West Texas Intermediate (WTI) crude rose $1 cents, or 1.31%, to $77.09. So what does oil rises?

“The oil market is bullish today as a result of optimism sourced from today’s monthly OPEC+ meeting, which is helping oil prices trade higher,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.

OPEC+, comprising of the Organization of the Petroleum Exporting Countries and allies, agreed to stick to its planned increase of 400,000 barrels per day (BPD) in oil output in February.

Its decision reflects easing concerns over a big surplus in the first quarter, as well as a wish to provide consistent guidance to the market.

Crude stockpiles in the United States, the world’s top consumer, were forecast to have dropped for a sixth consecutive week, analysts polled by Reuters estimated ahead of weekly industry data due at 4:30 p.m. EST (2130 GMT), followed by the government’s report on Wednesday.

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Source: Reuters

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