The beginning of a long-tern drop in upstream oil and gas investment could be seen if low oil prices are sustained. Such upstream investment is highly sensitive to changes in oil prices.
OEF REVIEW: Decline rates in conventional fields will play a critical part in rebalancing the oil market and determining where oil prices settle in the longer term. Decline rates will cut output by several million barrels a day in 2016 and 2017 unless oil producers invest to maintain production levels from existing fields and develop replacement fields.
Baker Hughes Incorporated announced that the worldwide rig count for August 2015 was 2,226, up 59 from the 2,167 counted in July 2015, and down 1,416 from the 3,642 counted in August 2014. The average U.S. rig count for August 2015 was 883, up 17 from the 866 counted in July 2015, and down 1,021 from the 1,904 counted in August 2014.
“Drillers will increasingly contend with diminished backlogs,rig values,fleet sizes, and margins if oil prices do not bounce back to the $70-80/bbl range, which we believe could support an increase in shallow-water, deepwater, and ultra-deepwater drilling”, says Moody’s in an industry report.
Total has entered a special licensing agreement with Eni for use of Eni Slurry Technology (EST), which has been developed by the Italian operator to convert heavy bottom-of-the-barrel feedstock into lighter, high-value products.
The OPEC Reference Basket fell to average $45.46 a barrel in August. This was mostly attributed to sell-offs amid enduring oversupply and Chinese economic turbulence. Demand for OPEC crude is estimated at 29.3 million barrels per day in 2015, up 0.4 million barrels per day from the previous year.
Russia’s Energy Minister, Alexander Novak, expects that cuts in global shale oil production will help stabilize the oil market. He adds that Russia would not cut its own production which is currently standing around 10.7 million barrels per day.
“Oil’s price collapse is closing down high cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day – the biggest decline in 24 years.”
Iranian oil minister Bijan Namdar Zanganeh has said that most OPEC members would like to see crude prices at $70 to $80 a barrel. He considered that this price would be “fair” and added that Iran would boost output at any cost: “It’s our right to return to the level of production we historically had”.
Research and analysis company Statistics Norway expects oil prices “to remain low going forward”, before increasing to around $60 in 2018. The company aded that they expected the slump in Norway’s oil and gas sector to level off from 2016.
The North Sea and Nigeria will ship the most crude in more than three years in October, adding to downward pressure on oil prices. Output of North Sea grades will reach the highest since May 2012 in October, and supplies from Nigeria are set to reach a level not seen since August of the same year.
Venezuelan President Nicolas Maduro has said that the price of oil should be a minimum of $70 a barrel in order for the necessary oil investments to be made. He added: “If that’s not the case, take note, investments will fall, and stocks will not be replaced by investment, and in one year we will have a price of $200”.
When the oil price halved last year the cause was obvious: Saudi Arabia’s decision to increase its share of the global oil market by expanding production. But what accounts for the further plunge in oil prices in the last few weeks to lows last seen in the aftermath of the 2008 global financial crisis, and how will it affect the world economy?
The United States is moving away from the necessity to import large volumes of natural gas for its domestic requirements. Over the last few years it has become possible to produce vast amounts of shale gas that was previously uneconomic to extract. Between 2007 and 2012, shale gas production in the U.S. rose from 1.3…
The following table is a combination of the information provided by the study “An Assessment of 137 Shale Formations in 41 Countries outside the United States”, June 2013, produced by the Energy Information Administration and Advanced Resources International, Inc (EIA-ARI), and the “British Petroleum Statistical Review of World Energy, 2013”. In order to make the…
Russia and China will lead the way in the production of resources from shale after the US according to executives at the Financial Times Global Commodities Summit in Lausanne, Switzerland, as reported in April by Rigzone. Torbjorn Tomqvist, chief executive of trading house Gunvor said (…) it was clear that shale production on a similar…
A General View Starting From The U.S.A. Are other countries going to have the same experience with regard to shale oil and gas as the United States has had recently? What about China, Russia, and Europe, and the other parts of the world? Shale’s potential can be appreciated by a brief examination of the…
