PwC Q2 report: $37.01 billion was the third-highest Q2 value of the past 8 years for U.S. O&G mergers and acquisitions. Upstream sector led with 29 deals, accounting for 58% of the total deals volume, worth $19.98 billion. Shale accounted for 21 deals worth $17.13 billion, a 124% year-over-year increase in deal value. Big rise in activity in low-cost gas basins, particularly in the Marcellus, where four deals took placed totaling $10.22 billion. Downstream activity was the strongest since Q2 2014. E&P portfolios: companies raising cash by divesting non core assets, sometimes redeploying it into investments in core basins.
Future US Offshore Development Plans To Bring Vast Energy Wealth
05/07/17 •lweb.es/f2877 •bit.ly/2tgGGSH
The Trump administration is beginning work on a new five-year offshore oil and gas leasing plan – the federal blueprint for future offshore development – in the Atlantic and Pacific Oceans, the Eastern Gulf of Mexico and the Arctic. This is a redo of the Obama administration’s programme for 2017-2022 and seeks public input before officials begin drafting proposals. Currently, 94 percent of federal offshore acreage is off limits to development, with natural gas and oil production being hindered by a lack of access to areas controlled by Washington.
US crude exports averaged more than 1 million barrels a day in April, driven by the significant discount of US crude prices relative to global benchmarks. New infrastructure, like the 520,000 barrels a day Dakota Access Pipeline, has reduced costs to move crude to the Gulf Coast, while major projects are underway at US Gulf Coast ports that will increase the region’s export capacity. These outward flows have served as an outlet for rising US crude production and have displaced other barrels that have struggled to then find a home.
This article considers three principal drivers for the oil trade: technology, weather and OPEC policy: • Fracking technology is highly influential: The graphs “Crude oil historical patterns”, showing changes over the last 5 years compared to the last 15 and 30 years, and the graph “US Crude oil production” from1983 to 2017, show the relevant impact.• Extreme weather: A growing number of weather events costing $1 billion have been experienced, as well as significant losses in production. • OPEC strategy is less effective now… The graphic “Does OPEC policy influence prices anymore?” asks a very pertinent question.
A new agreement between the U.S. and China has the potential to alter global LNG trade, opening the door of the world’s largest LNG growth market to the world’s fastest-growing LNG supplier. Falling under the framework of the U.S.-China Comprehensive Economic Dialogue, Chinese companies can now negotiate long-term contracts to source liquefied natural gas from U.S. suppliers. According to Wood Mackenzie: “The wider agreement represents a win for both sides. It allows President Trump to deliver on his pledge of redressing global trade imbalances and China to show its commitment to becoming an equal trade partner.”
Lavrov-Tillerson Meeting With Putin: Frank And Extensive Talks
04/14/17 •lweb.es/f2767 •bit.ly/2q8bYK4
Key points from the Lavrov-Tillerson meeting with Putin in Moscow: When Moscow and Washington cooperate, the world benefits, Both nations are focused on an uncompromising war on terror, Both nations share a common interest in achieving a political settlement in the Syrian conflict, Moscow can see Washington’s readiness to continue contacts to implement the Minsk agreements, Washington and Moscow agree that North Korea has to be denuclearized, Russia expects the United States to take part in the Moscow conference on Afghanistan in April, Both nations are interested in close cooperation in the fight against crimes in cyberspace.
New U.S. Clean Coal Power Plants: Carbon Capture For Oil Fields
04/13/17 •lweb.es/f2775 •bit.ly/2qgZdMN
“While the Petra Nova project will certainly benefit Texas, it also demonstrates that clean coal technologies can have a meaningful and positive impact on the nation’s energy security and economic growth,” said Energy Secretary Rick Perry. The opening of the plant will be followed by the opening of the Mississippi Power carbon capture coal plant, an entirely new advanced integrated gasification power plant that uses a different technology to Petra Nova. Both coal plants sell their captured carbon for use in nearby oil fields.
Citgo: PDVSA Made Lien In Exchange For $1.5 Billion Loan From Rosneft
04/11/17 •lweb.es/f2761 •bit.ly/2q96AJR
A deal to give Russia’s Rosneft 49.9% ownership of US refiner Citgo if Venezuela’s cash-strapped national oil company PDVSA defaults on its loans threatens US national security and should be investigated by the Committee on Foreign Investment in the United States, two US congressmen have said. “This would give Russia clear control over the sixth-largest refinery in our country, the ability to impact gas prices for the American people, and a strategic advantage over US freedom of action globally,” Representative Jeff Duncan, Republican-South Carolina, said in a statement.
Due to a surge in oil hedges, the oil-price weakness will not prompt US producers to pull back on drilling. The producers rushed to lock in oil prices above $50 a barrel after the OPEC production cuts announcement in November, and will use hedging gains to help plug any budget deficits caused by sub-$50 spot prices. However, most of the hedges expire by 2018, and oil futures prices must recover before producers can lock in prices over $55 a barrel for next year – a level needed for significant tight-oil production growth.
Trump’s “Energy Independence” Order: Both Uncertainty And Opportunity
03/28/17 •lweb.es/f2693 •bit.ly/2ocvx54
President Trump has issued an executive order to dismantle the Obama administration’s Clean Power Plan. The “Energy Independence” order lifts a moratorium on federal coal leasing, triggers a review of methane and hydraulic fracturing restrictions, and eliminates use of the Environmental Protection Agency’s “social cost of carbon” in policymaking. From a climate action perspective, there is widespread agreement that the order is bad news for U.S. emissions. Interestingly, 62 percent of Trump voters support taxing and/or regulating pollution causing global warming, and nearly three-quarters think the U.S. should use more renewable energy in future.
Exxon Mobil, Royal Dutch Shell and Chevron plan to spend a combined $10 billion this year in American shale. If successful, they’ll scramble the U.S. energy business, boost American oil production, keep prices low, and steal influence from big producers. Furthermore, they are transforming shale drilling into a more economical operation. At Bongo 76-43, Shell is drilling five wells in a single pad for the first time, each about 20 feet apart, and is now able to drill 16 wells with a single rig every year, up from six in 2013.
American oil explorers are shrugging off the 14% slide in prices this year. The price would have to drop to the $30s or lower to dent the bottom line of many drillers now working U.S. shale fields. That’s because many producers have already locked in future returns with financial contracts that guarantee the price of their oil for most of the rest of the decade. “We’re in a boom again in Texas…” said Michael Webber of the University of Texas’ Energy Institute in Austin. “The cowboy spirit is back. Hedging is playing a big role.”
A pioneer of the U.S. shale revolution, Paul Basinski, wants to take fracking to America’s final frontier – Alaska. His venture, Project Icewine, has gained rights to 700,000 acres inside the Arctic Circle and they could hold 3.6 Billion barrels of oil, rivaling the legendary Eagle Ford. “The oil is there,” he said, “Now it’s a question of how quickly we can get it to flow and whether we can get the economics to work.” One exploratory well has been drilled, he added, and a second is planned by mid-year.
Last year the Federal Energy Regulatory Commission (FERC) certificated 17.6 billion cubic feet per day of new natural gas pipeline capacity, and so far this year the Commission has certificated more than 7 Billion cubic feet per day. The seven projects certificated during the first few weeks of 2017 include more than 1,500 miles of natural gas pipeline construction and expansions. The pipeline projects are concentrated in the eastern half of the United States to improve access to markets for growing eastern natural gas production, and they have projected 2017 and 2018 in-service dates.
Gulf Of Mexico Lease Sale To Reduce Dependence On Foreign Oil
03/06/17 •lweb.es/f2717 •bit.ly/2nWZ0NX
73 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida will be offered for oil and gas exploration and development. The proposed lease sale scheduled for August this year would include all available unleased areas in federal waters of the Gulf of Mexico, and is part of President Trump’s plan to make the United States energy independent. The estimated amount of resources projected to be developed as a result of the proposed lease sale ranges from 0.211 to 1.118 Billion barrels of oil and from 0.547 to 4.424 Trillion cubic feet of gas.
The largest U.S. government agency – the Department of Defense, which is also the world’s largest single petroleum buyer – plans to forge ahead under the new administration with a decade-long effort to convert its fuel-hungry operations to renewable power. Why? In combat zones, green energy saves lives. The military’s zeal for renewable power has already had broad impacts on energy contractors, generating hundreds of millions of dollars in contracts for solar companies and helping to reduce fuel consumption. Trump’s Secretary of Defense, Jim Mattis, has long supported efforts to reduce troop dependence on petroleum.
EIA: U.S. Expected To Become Net Exporter Of Natural Gas By 2018
02/29/17 •lweb.es/f2648 •bit.ly/2peDp3W
The transition of the U.S. to net exporter of natural gas by 2018 is to be driven by declining pipeline imports, growing pipeline exports, and increasing exports of liquefied natural gas. The Sabine Pass facility in Louisiana became the first operating LNG export facility in the Lower 48 states in 2016. By 2021, four LNG export facilities are expected to be completed with a combined operational export capacity of 9.2 billion cubic feet per day. The EIA also projects the U.S. to become a net exporter of total energy in the 2020s.
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.
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.
Oil expert T. Boone Pickens says that America is in the midst of an energy renaissance, and President Donald Trump will have the opportunity to set the nation on a course toward self-sufficiency: “We are still a long way from securing our nation’s energy future and are not without risk of failing” he states. “I suggest President Trump pursue an energy plan with two parts. The first part is to not screw up what we have going for us. The second part is to not settle for what we’ve done so far.”