Hess CEO Sees Global Oil Supply Crunch Looming

03/06/17 •lweb.es/f2714 •bit.ly/2okjF1o

A significant, years-long oil supply crunch may be approaching due to insufficient investment in exploration and production, Hess CEO John Hess said at the IHS CERAWeek, and this will begin showing up in declining offshore supply. He added that “The shale business is back in business and starting to grow again,” but such growth in US shale would not be enough to meet global oil demand, which the International Energy Agency has projected to grow between 1.4-1.6 million barrels a day over this year and the next.

Shale Break-Even Price Drops 55% On Average

lweb.es/f2644 02.28.2017

Since 2013, the average wellhead break-even price (BEP) for key shale plays has decreased from $80 a barrel to $35/bbl. This represents a drop of over 55%, on average. The wellhead BEP decreased across all key shale plays, with Permian Midland falling by over 60% from $98/bbl in 2013 to $38/bbl in 2016 (for horizontal wells only). Rystad Energy forecasts an average WTI oil price of $60/bbl, which implies a 40% improvement in the cash from operations. This improvement will result in higher investments of the shale operators.

$70 Billion Each For Shale Plays And Offshore Projects This Year

lweb.es/f2650 02.20.2017

For every dollar invested this year in North American shale plays another dollar will be allocated for planned projects offshore racking up spending of $70 billion in each sector, analysts at Rystad Energy said: “Offshore projects that were uncommercial at $110 per barrel in 2013 are now commercial at an oil price of $50 per barrel.” However, Rigzone Data Services said offshore investment declined 30-35% in 2016 and offshore capital expenditure is expected to decline for the current year. According to Diamond Offshore, it’s difficult for deepwater operators to compete with the unconventional space.

Permian Basin: $60,000 An Acre, But A Gold Mine For Oil Drillers

lweb.es/f2664 02.09.2017

Record prices for drilling rights in the Permian Basin, the most fertile U.S. shale field – where wells can generate profit with crude selling for less than $40 a barrel – are prompting oil companies and private equity investors to look elsewhere for the next big gushers. Explorers eager to tap the basin’s mile-thick stack of oil-soaked rock layers have paid as much as $60,000 an acre. That marks a 50-fold explosion in deal prices over four years. It also pushes the cost 10 times higher than in the Bakken of North Dakota.

Spectre Haunts OPEC Deal: How Fast Will U.S.Shale Come Back?

lweb.es/f2501 12.26.2016

After the biggest oil-market deal in a decade, OPEC faces a new balancing act in 2017: boosting prices without igniting shale. But the biggest threat to OPEC’s plan could come from within: if Nigeria and Libya were to reach their potential next year, then their additional barrels would almost wipe out OPEC’s supply cuts; and Iran could be making up for several years of sanctions. Another challenge could come from the now leaner and more efficient U.S. drillers – a bigger boost in prices could mean a million-barrel shale surge.