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rboyd

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Re: Oil and Gas Issues
« Reply #3600 on: February 29, 2020, 06:28:50 PM »
Dr Sarah Taber on Twitter:
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The agitprop surrounding the Wet'suwet'en rail blockage is out of control. There are really folks taking pics of these grocery store shelves & trying to spin them as "bare."
[twitpics of pretty full shelves...]
backstory: 1) Canada decided to build a pipeline across Wet'suwet'en land in British Columbia, which Canada doesn't have authority to do.
2) In solidarity, First Nations groups in Ontario (led by Mohawk nation I believe) blocked a rail line between Montreal & Toronto.
3) Canada's gov't & white nationalists don't see "follow treaty law & reroute the pipeline" as an option so instead they're squealing about how Native people are evil mean terrorists who are going to starve us all. Seems they have to call full shelves "empty" to make this claim.
Claims that "this blockade is starving Canada" are being used to justify why Canada "has" to remove the First Nations rail block [subtext: by violent force if necessary]. It's the making of excuses ahead of time. That's what we're witnessing.

...
https://mobile.twitter.com/sarahtaber_bww/status/1231611884870258690

Thread continues at the link....

Next Canadian election is October 16th 2023, so the craziness could continue until then. Lets hope Bernie gets in and starts changing the conversation to getting rid of fossil fuels, our weather vane Prime Minister will easily shift his position to match our southern neighbours.

With the increasing scientific consensus that NG (especially fracked) is as bad as coal, plus all the energy losses in liquefying NG, and the general global NG glut, pipelines to the Pacific are looking more and more stupid. The Chinese will happily get their NG from their domestic wells and their Russian friends.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3601 on: March 02, 2020, 05:45:10 PM »
Canada Native Group, Ministers Reach Possible Deal Amid Protests
March 1, 2020
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Members of the indigenous group at the center of protests that have threatened Canada’s economy in recent weeks have reached a proposed deal with the government regarding their grievances.

The potential agreement provides a way forward on issues including land rights and title, Sarah Plank, a spokeswoman for British Columbia Indigenous Relations Minister Scott Fraser, said in an email. The deal still needs to be ratified by members of the indigenous group, and further details of the proposal won’t be released until that occurs, Plank said. ...

Some of the Wet’suwet’en hereditary chiefs, along with Fraser and Federal Crown-Indigenous Relations Minister Carolyn Bennett, met over the weekend in Smithers, British Columbia, to try to resolve a conflict over a natural gas pipeline that has spurred demonstrations across the country.

Some members of the Wet’suwet’en First Nation sought to block the construction of TC Energy Corp.’s Coastal GasLink pipeline through their territory earlier this year, and some of the protesters were arrested. In the past three weeks, demonstrators showing solidarity with those Wet’suwet’en have blockaded rail lines, ports and other key economic arteries.

The blockades have backed up cargo-ship traffic and caused temporary halts to the nation’s passenger and freight train services, delaying shipments of goods and prompting concerns that the demonstrations may hobble the country’s economic growth.
https://www.bloomberg.com/amp/news/articles/2020-03-01/canada-native-group-ministers-reach-possible-deal-amid-protests
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3602 on: March 02, 2020, 06:55:53 PM »
The headline says it all.

https://oilprice.com/Energy/Crude-Oil/Shale-Drillers-Need-A-Miracle-To-Keep-Production-From-Falling.html

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Shale Drillers Need A Miracle To Keep Production From Falling
By Irina Slav - Mar 01, 2020

With West Texas Intermediate falling below $45 a barrel after the latest burst in coronavirus panic, U.S. shale oil and gas producers are feeling growing heat. Except for the Permian, where production of both oil and gas is still growing, the U.S. shale patch is retrenching. And the Permian may soon follow suit.

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This wasn’t all, either. According to Le Peuch, unless the oilfield service sector comes up with new extraction technology that works at lower than current costs, U.S. shale oil production will not return to growth at all, but plateau.

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The situation in gas is even worse. As the Enverus report notes, the breakeven cost for gas production in the Denver-Julesburg Basin and the Bakken are now higher than the Henry Hub benchmark and quite a bit higher, at that. Henry Hub futures prices are currently below $2 per million British thermal units until July, when the futures price tops $2 per mmBtu. The breakeven for producers in the Rockies and the Bakken, on the other hand, is more than $3 per mmBtu.

While for oil the biggest problem is the slump in demand in China and the fear of slumping demand elsewhere as the coronavirus conquers new territory, for gas the problem is a persistent overhang in inventories. To make matters worse, the coronavirus fallout is also affecting demand for gas.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3603 on: March 04, 2020, 01:26:05 AM »
The numbers for the end of 2019 are in, and they show that US oil production dropped in December 2019.

https://seekingalpha.com/article/4329072-usa-december-oil-production-drops

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USA December Oil Production Drops
Mar. 3, 2020

Summary

The data from the February EIA report shows that US production dropped from November by 84 kb/d (0.61 kb/d) to 12,779 kb/d in December.



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The data from the February EIA report shows that US production dropped from November by 84 kb/d (0.61 kb/d) to 12,779 kb/d in December. Since June, the US has increased output by an average of 164 kb/d/mth. Is this drop the beginnings of slowing LTO growth going into 2020? Today's low oil prices are not providing any incentive to increase drilling activity. Maintaining current production and lowering expenses may be the new mantra.

For the lower 48 states, production decreased by 81 kb/d.



The article provides graphs for several of the states.  Looking at North Dakota, where most of the wells are fracked, is very illuminating, especially when looking at the number of completed wells.  (Wells can be drilled and then plugged.  When they are needed for production, they are "completed", which means that the fracking occurs and the pumps are set up to collect the oil and bring it to market.)



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North Dakota's oil production was down by 40 kb/d in December to 1,437 kb/d. Since August the number of rigs operating each month has almost remained constant as it wandered between 47 and 55 with 52 operating since late January and into February.



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The number of completed wells in the Bakken started to drop in September 2019 and has continued to decline up to January. In January 70 were completed, whereas 145 were completed in August. Since August, with completions in decline, output has been essentially flat wandering around 1,440 kb/d up to November. However, as noted above, there was drop in December of 40 kb/d. Will the drop continue as the number of completions continues to decline and the price of oil stays below $50?



oren

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Re: Oil and Gas Issues
« Reply #3604 on: March 04, 2020, 11:14:39 PM »
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The numbers for the end of 2019 are in, and they show that US oil production dropped in December 2019.
Seeing as how US oil production has trended upwards since mid-2016, gaining about 50% in that period, I must say the little blip at the end of the chart is not very encouraging.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3605 on: March 04, 2020, 11:26:17 PM »
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The numbers for the end of 2019 are in, and they show that US oil production dropped in December 2019.
Seeing as how US oil production has trended upwards since mid-2016, gaining about 50% in that period, I must say the little blip at the end of the chart is not very encouraging.

The fact that it's started to decline is promising.  It shows that the bankruptcies and exploration cutbacks in the shale patch that were occurring last fall are starting to have an impact.  Add to that the demand destruction and low prices due to pandemic economic disruptions this year and the small blip could become a significant downturn.

kassy

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Re: Oil and Gas Issues
« Reply #3606 on: March 05, 2020, 02:01:22 PM »
Is the U.S. Fracking Boom Based on Fraud?

...

Sounding the Alarm
Bethany McLean was the first reporter to question whether Enron was a financially sound company in a 2001 article for Fortune magazine. McLean went on to co-author the book The Smartest Guys in the Room, which documented the fall of Enron due to its fraudulent practices, including the ones Fastow engineered.

In 2018, McLean also published the book Saudi America, which highlighted many of the financial challenges the fracking industry has faced. In a recent interview for Texas Monthly's podcast Boomtown, McLean explained one of the very accepted and blatantly misleading practices of the fracking industry:

“I’d raise a couple of points. One is that companies have long hyped these break-even numbers. They say we can break even at $25 a barrel, we can break even at $20 a barrel. And then you look at their consolidated financial statements and they are losing money. And so something is going wrong … the people called it to me [sic] … corporate math or investor economics. So they were trying to put together these investor pitch decks that would show investors a set of economics that weren’t real. So they would show you that they could break even on a well at $25 barrel of oil but then yet you’d go to the corporate financial statements and they were losing money.”

Is that a loophole? Where you can openly misrepresent to investors the financial reality of your business? Or is it fraud?

As more and more players in the fracking industry run out of options and file for bankruptcy, investors are beginning to ask questions about why all the money is gone.

...


https://www.desmogblog.com/2020/03/05/us-shale-fracking-boom-fraud-alta-mesa-enron
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ArcticMelt2

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Re: Oil and Gas Issues
« Reply #3607 on: March 05, 2020, 03:39:43 PM »
New record for US oil production

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

13.1 million barrels per day

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3608 on: March 05, 2020, 05:49:52 PM »
Exxon Mobile lays out steps it will take to reduce harmful methane emissions
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“With the climate crisis upon us, companies can’t afford to ignore their contributions to climate change,” said Ben Ratner, senior director at the Environmental Defense Fund. “In at least one or two parts of (Exxon’s methane) framework, what they are recommending appeared to fall considerably short of what would be considered the best available operational practice and regulatory requirements.”

Exxon’s model framework included establishing a leak detection and repair program to identify and fix gas leaks as soon as possible, with inspections for leaks happening at least once per year. Some major oil companies are conducting inspections monthly, using sensors mounted on drones, Ratner said.

“The truth is it needs to be much more, and we need to be driving to a world of continuous, real-time monitoring and rapid mitigation of this highly potent greenhouse gas,” Ratner said. “Once-a-year inspection is not a serious proposal for regulatory requirements that are up to the magnitude of the challenge.”
https://www.marketwatch.com/story/exxon-mobil-lays-out-steps-it-will-take-to-reduce-harmful-methane-emissions-2020-03-03
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3609 on: March 05, 2020, 06:32:27 PM »
Earlier this year, when the Covid-19 outbreak was shutting down China, oil market forecasters were talking about lower oil demand growth.  Now we're starting to see the first forecasts of negative demand growth, or demand contraction.  How low will it go?

https://oilprice.com/Energy/Energy-General/Will-We-Really-See-Negative-Oil-Demand-Growth-This-Year.html

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Will We Really See Negative Oil Demand Growth This Year?
By Nick Cunningham - Mar 04, 2020

The outlook for the global economy continues to darken, and a growing number of analysts see oil demand contracting in 2020.

The article first discusses the interest rate cuts by various central banks and how they're now being perceived as desperation moves attempting to head off recession.  It then goes into oil demand forecasts.

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“While such cuts will help normalize oil demand and inventories later this year, they can’t prevent an already started large oil inventory accumulation,” Goldman Sachs wrote in a note. “Further, the expected size of the OPEC+ cut of c. 1.0 mb/d will remain well short of our newly increased -2.1 mb/d expected global demand loss in 1H alone.”

The investment bank once again slashed its oil demand forecast, this time down to -0.15 million barrels per day (mb/d). That is, the bank sees demand contracting this year by 0.15 mb/d, down from expected growth of 0.55 mb/d previously, and 1.1 mb/d in a pre-coronavirus estimate. “Given this higher demand hit, we are once again lowering our oil price forecast, expecting Brent prices to trough in April at $45/bbl before gradually recovering to $60/bbl by year-end,” Goldman said.

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FGE, a consultancy, also predicts a contraction of about 220,000 bpd this year.

Negative demand growth was an extremely pessimistic outlook until only the past few days. That view is now rapidly becoming the prevailing wisdom, or at least a very reasonable prediction, rather than an outlier.


Ken Feldman

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Re: Oil and Gas Issues
« Reply #3610 on: March 05, 2020, 06:39:41 PM »
New record for US oil production

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

13.1 million barrels per day

Note that the data linked to is for "Petroleum & Other Liquids".  Going to the referring page indicates that it's measuring crude oil plus "lease condensate".  Also, it's not actual production numbers but forecast estimates.

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Domestic crude oil production includes lease condensate and is estimated using a combination of short-term forecasts for the lower 48 states and the latest available production estimates from Alaska


https://www.eia.gov/dnav/pet/PET_SUM_SNDW_A_EPC0_FPF_MBBLPD_W.htm

Lease condensate includes natural gas.  The natural gas from oil wells contributes to the glut which is lowering natural gas prices and forcing natural gas companies into bankruptcy.

The US shale oil and gas companies are in terrible financial shape and production is going to decline rapidly with the decreased oil demand.  Investors are tired of losing money and there isn't sufficient capital to drill and complete the new wells needed to offset the rapid decline of fracked wells.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3611 on: March 05, 2020, 06:41:58 PM »
Another forecast of lower oil demand.  This one is for the largest decline in history.

https://oilprice.com/Energy/Energy-General/IHS-Oil-Demand-Set-For-Largest-Decline-In-History.html

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IHS: Oil Demand Set For Largest Decline In History
By Irina Slav - Mar 05, 2020

Crude oil demand during this quarter will likely register the largest decline on record, larger even than the slump that accompanied the 2008 financial crisis, IHS Markit has forecast.

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With pretty much every industry suffering the blow of the outbreak, IHS Markit said it expected oil demand to drop by as much as 3.8 million bpd this quarter, to 96 million bpd.

rboyd

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Re: Oil and Gas Issues
« Reply #3612 on: March 05, 2020, 07:58:48 PM »
This could produce a very big drop in oil prices:
- Domestic US production still edging up
- OPEC doing a cut of 1.7 Mbpd in Q2, but that may be well below the actual drop in demand
- Usually very difficult to force through OPEC cuts, if they don't cut further in Q2 they could get overtaken by fast dropping demand
- As this starts really hitting the global airline and transport industries oil demand could really crater

There could also be a big jump in oil inventories, due to the supply/demand mismatch, which will mean that any price recovery may be slow. Painful for the oil exporters and the US and Canadian oil patches.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3613 on: March 06, 2020, 08:48:20 PM »
Big drop in oil prices today as OPEC+ fails to come to an agreement to cut production.

https://oilprice.com/Energy/Energy-General/The-Worlds-Most-Powerful-Oil-Alliance-Is-Falling-Apart.html

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Oil Price Armageddon As OPEC+ Disintegrates
By Tom Kool - Mar 06, 2020

Oil prices plunged by more than 8 percent after the OPEC+ meeting broke up with no deal. Saudi Arabia and Russia negotiated behind closed doors in Vienna, but Moscow refused to sign on to deeper production cuts. Now there is uncertainty about whether the OPEC+ alliance will survive. A day earlier, OPEC essentially issued an ultimatum, calling for 1.5 mb/d of production cuts, but suggested that no deal would occur without Russia. At the time of this writing, oil prices were in freefall. WTI was below $43 and Brent near $46.

OPEC+ facing demand “trap.”Moscow has balked at deeper production cuts not only because it has a stronger stomach for lower prices than Riyadh, but also because the oil market is suffering from a demand trap. That is, restraining supply may not rescue prices when global oil demand has fallen so sharply.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3614 on: March 08, 2020, 05:24:59 PM »
OPEC deal collapse sparks price war: '$20 oil in 2020 is coming'
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• Oil prices are down 30% for the year as the new coronavirus, COVID-19, slashes global demand forecasts.
• With previously agreed OPEC+ production cuts expiring at the end of March, Saudi Arabia and Russia can theoretically pump as much crude as they want.
• International and U.S. oil benchmarks plummeted to multiyear lows on Friday, with Brent crude closing at $45.27, down more than 9%, and West Texas Intermediate down more than 10%.

″$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc - may prove existential 1-2 punch when paired with COVID19.”
https://www.cnbc.com/2020/03/08/opec-deal-collapse-sparks-price-war-20-oil-in-2020-is-coming.html
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3615 on: March 09, 2020, 05:05:38 PM »
The linked article is lengthy, but a good read on the overall state of the US fracking industry.

https://oilprice.com/Energy/Energy-General/Whats-Next-For-North-American-Shale.html

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What’s Next For North American Shale?
By David Messler - Mar 08, 2020

The world has become accustomed to ever-increasing production from U.S. shale reservoirs. As you can see in the chart in the next section production from these tight reservoirs has increased six-fold over the last ten years. It surprised everyone as it grew. Now it’s about to surprise everyone with the rate of its decline.

In this article we will discuss some of the fundamental flaws and misconception the market has about the ability of shale to continue to grow. We will compare and contrast shale reservoirs with the conventional reservoirs that have traditionally supplied most of our energy needs, as well as the reasons why they have been under-funded for the last half-decade. Finally, I will offer a look a little bit down the road for the energy markets as these realities set in.

The article explains that not all shale reservoirs are created equal (which is why only the Permian in Texas and New Mexico is resisting the general decline in production now), has graphs on investment, debt financing and bankruptcy rates, and shows the differences in cost of production between different countries.  That final graph is worth examining in light of the recent plunge in oil prices.



With the price of oil at around $30 per barrel now, a lot of deep sea production (South America, Africa and the North Sea) is now uneconomic.  The Canadian tar sands are close to losing money and most US fracked fields have become uneconomic.  Oil companies wont be investing in new projects in these basins with such low prices.

In fact, the article predicts that there will be a lot of consolidation in the industry as more companies go bankrupt.

oren

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Re: Oil and Gas Issues
« Reply #3616 on: March 09, 2020, 07:10:55 PM »
Many/most private oil producers are partially hedged on their future output for a year or more by selling it in advance using financial instruments. Thus the real pain begins after a while, not on short-term spikes or drops. Of course, the big question is how long oil will stay down.

Alexander555

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Re: Oil and Gas Issues
« Reply #3617 on: March 09, 2020, 07:58:41 PM »
And in many cases there is plenty of debt involved.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3618 on: March 09, 2020, 08:12:37 PM »
And in many cases there is plenty of debt involved.

Yes, and much of that debt will mature (payments be owed) within the next few years.  These low oil prices couldn't come at a worse time for the oil companies.

And with the price war between Saudi Arabia and Russia, stock prices are crashing.  So companies wont be able to sell stock to get more cash.

https://oilprice.com/Energy/Energy-General/Investor-Exodus-Leaves-Oil-Stocks-In-Disarray.html

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Investor Exodus Leaves Oil Stocks In Disarray
By Tsvetana Paraskova - Mar 09, 2020

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Then came the oil price crash of 2020, as Saudi Arabia and Russia abruptly ended on Friday their three-year-long partnership in trying to fix oil prices, or as they said, ‘bring stability back to the market.’ 

An all-out oil price war is on again, and oil stocks are set for worse pain ahead.

First, shares in oil firms typically follow the oil price movements. Even before Russia and the Saudis broke up their oil bromance, oil prices and oil stocks had been hit by depressed demand amid the coronavirus outbreak and fears of significantly slowing economies. The energy sector has been the worst performing sector of the S&P 500 index this year. 

And if the end of the OPEC+ coalition on Friday is any indication for what’s ahead for oil stocks, they are in for some very ugly weeks and months.

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Nearly a month ago, when the main concern on the oil market was the coronavirus outbreak, Moody’s warned that North American E&P firms will face high debt maturities and tighter access to capital over the next few years, with US$86 billion cumulative debt due between 2020 and 2024. Since most of the debt is held by speculative-grade companies, this implies “an elevated level of default risk for the industry,” Moody’s said on February 19.

On March 9, WTI Crude prices had plummeted to below $30 per barrel. U.S. producers will have a much lower value of their oil and gas resources against which they could borrow more money. 

A sustained bout of low oil prices will further reduce cash flow and investment into the US oil patch, causing further hits to Lower 48 production growth later this year. It takes at least six to nine months for reductions in spend to lead to lower oil production in the US Lower 48,” Ann-Louise Hittle, vice president, Macro Oils, at Wood Mackenzie, said on Friday.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3619 on: March 09, 2020, 08:40:26 PM »
2:51 pm: Oil prices plummet more than 20% in worst day since 1991
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Oil prices cratered on Monday after tensions rose between Saudi Arabia and Russia over the weekend, prompting fears of an oversupply. U.S. West Texas Intermediate tumbled 24.59%, or $10.15, to settle at $31.13 per barrel.
It was WTI’s worst day since 1991, and second worst day on record. During the session the contract traded as low as $30.
On Friday, OPEC ally Russia rejected additional production cuts proposed by the 14-member cartel, which prompted Saudi Arabia to retaliate. On Saturday, the kingdom announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day. —Stevens
https://www.cnbc.com/2020/03/09/stock-market-today-live.html
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rboyd

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Re: Oil and Gas Issues
« Reply #3620 on: March 10, 2020, 04:12:57 AM »
Saudi Arabia needs about $80 to balance its budget, its been running a big deficit for the past few years and running down its reserves. One of the reasons why MBS has shaken down other leaders for contributions to the Treasury. He seems to have recently taken out some possible challengers - maybe battening down the hatches for hard times.

With Russia saying that they can deal with $25 for an extended period, the oil price will probably at lest goal seek that level. Russia has a budget surplus, tons of foreign exchange reserves, and little foreign debt. Very painful for Saudi (and Iraq, Iran and the US shale oil). With NG prices also very low, bad all round for the fossil fuel industry.

A lot less money for the Saudis etc. to finance the fundamentalist terrorists in Syria and elsewhere, and maybe Russia gets to deliver the coup de grace on US shale oil. Maybe worth the gamble on their part.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3621 on: March 10, 2020, 04:57:09 PM »
Chevron Corp...would probably look to cut rigs in the Permian basin in Texas, home to most of North America’s oil and gas production.

How to cope with $30 oil: producers ready more cuts
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A price war between Saudi Arabia and Russia pushed oil prices down about a third lower on Monday, sending another shockwave through an industry that has been scaling back aggressively for years.
...
Research firm Rystad Energy predicted total spending on oil exploration and production would be cut by $100 billion in 2020 and another $150 billion in 2021 if oil prices remained around $30.
...
That may all add up to a worrying outlook for the service companies like Halliburton that provide equipment as well as drilling and completion services to oil companies.

“If these oil prices persist, the only real discussion is whether or not to continue operations in North American land,” said Ian Bryant, who runs small services firm Packers Plus Energy Services.

“We had already given price concessions to protect market share, so we’re running close to breakeven in North America before the oil price crash.”
https://www.reuters.com/article/us-global-oil-shale/how-to-cope-with-30-oil-producers-ready-more-cuts-idUSKBN20X27J
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Ken Feldman

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Re: Oil and Gas Issues
« Reply #3622 on: March 10, 2020, 06:42:53 PM »
With Saudi Arabia and Russia both planning to add millions of barrels per day into the markets while demand crashes due to transportation shutdowns to combat the Coronavirus, the debt-ridden US Shale patch is looking at an economic collapse.

https://oilprice.com/Energy/Crude-Oil/Oil-Price-Crash-50-Of-US-Shale-Could-Go-Bankrupt.html

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Oil Price Crash: 50% Of U.S. Shale Could Go Bankrupt
By Nick Cunningham - Mar 09, 2020

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Second, there is a brewing economic crisis. China shut down parts of its economy in January and February. Parts of Europe followed. The U.S. is next.

The Dow Jones has fallen by more than 16 percent in the past week, and markets have quickly shifted from concern to full blown panic.

Third, if all of that is not enough, OPEC and Russia just added on an oil supply crisis. The collapse of talks last week and the ensuing price war has WTI down to $33 per barrel as of midday on Monday, down from $45 last Thursday on the eve of the OPEC+ talks. OPEC and Russia have said that all restraints on production expire at the end of the month, and everyone can produce at will. Oil could easily be in the $20s at any moment (and might be by the time this piece is published).

For the U.S. oil industry, this is a historic crisis. It has the ingredients to be far worse than the 2008 financial meltdown. At that time, a sharp contraction in the global economy blew a hole in the market. But OPEC responded by cutting production.

Quote
A decade ago, the shale industry barely existed, and falling oil prices cushioned the blow to the U.S. economy by making energy cheaper. Today, an oil market bust could pretty quickly plunge Texas, North Dakota and Appalachia, among other places, into a recession.

Quote
“Not one company in our coverage can keep production flat for more than a few months while spending within cash flow at $35 WTI,” Charles Meade of Johnson Rice & Co. said, according to Bloomberg.

Quote
“The U.S. is going to be the collateral damage here. The producers here are going to be suffering so much,” Amrita Sen, chief oil analyst at Energy Aspects, told Bloomberg from Houston. “They were already suffering and there’s no lending. There’s no money right now for them. This is really going to crush them.”

On Monday, Diamondback Energy said that it would “immediately” slash capex and cut back on completion crews and rigs.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3623 on: March 10, 2020, 06:47:38 PM »
The headline speaks for itself.

https://oilprice.com/Latest-Energy-News/World-News/Only-5-Shale-Drillers-Are-Still-Profitable-At-31-Oil.html

Quote
Only 5 Shale Drillers Are Still Profitable At $31 Oil
By Irina Slav - Mar 10, 2020

Most shale oil wells drilled in the United States are unprofitable at current oil prices, Rystad Energy has warned. The Norwegian consultancy said, as quoted by Bloomberg, that drilling new wells would be loss-making for more than 100 companies.

Just five shale drillers—Exxon, Chevron, Occidental, and Crownquest—can drill new wells at a profit at $31 per barrel of West Texas Intermediate.

Quote
The situation is more positive for drilled but uncompleted wells, according to Rystad. The consultancy said yesterday that as much as 80 percent of DUCs in the U.S. shale patch have a breakeven price of less than $25 per barrel of WTI. Yet this is dangerously close to current prices.

Keep in mind that shale wells deplete quickly, losing more than 75% of their initial production rate (which is less than 1,000 barrels per day for most fracked wells) over the first 18 months of production.  So even the DUCs aren't going to be able to maintain US production levels for more than a few months.

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3624 on: March 10, 2020, 07:41:06 PM »
Quote
Just five shale drillers—Exxon, Chevron, Occidental, and Crownquest—can drill new wells at a profit at $31 per barrel of West Texas Intermediate.

Isn’t that only four?
People who say it cannot be done should not interrupt those who are doing it.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3625 on: March 10, 2020, 07:50:41 PM »
Quote
Just five shale drillers—Exxon, Chevron, Occidental, and Crownquest—can drill new wells at a profit at $31 per barrel of West Texas Intermediate.

Isn’t that only four?

Hey, they're journalists, not mathematicians ;D

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3626 on: March 10, 2020, 07:54:48 PM »
Remember back a few weeks ago when the projections (by the fossil fuel shills) for the US shale patch was an increase in production of over a million barrels per day?

https://seekingalpha.com/news/3550186-u-s-oil-production-take-20-hit-on-shale-retreat-pioneer-ceo-says

Quote
U.S. oil production could take 20% hit on shale retreat, Pioneer CEO says
Mar. 10, 2020

Quote
The U.S. could lose 2M-2.5M bbl/day in output - a nearly 20% drop - by the end of 2021 if oil prices stay around current levels as companies go into "maintenance mode," CEO Scott Sheffield tells Bloomberg.

Most shale producers will be forced to cut as many as half of their drilling rigs by the end of this year, when current hedges expire, the CEO says.


Ken Feldman

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Re: Oil and Gas Issues
« Reply #3627 on: March 10, 2020, 08:00:08 PM »
Russian and the US oil companies aren't the only ones that will be crushed by Saudi Arabia opening the spigots.  China has a large oil industry too.

https://www.scmp.com/business/commodities/article/3074308/chinese-oil-giants-face-steep-losses-set-cut-production

Quote
Chinese oil giants face steep losses, set to cut production, dividends as Saudi Arabia stokes price war, analyst says

Eric Ng
Published: 9 Mar, 2020

China's state-backed oil giants, facing potential steep losses, are likely to slash spending on projects and pay smaller dividends to stock investors this year after oil prices plunged
to the lowest level in four years, according to Sanford C. Bernstein.

Quote
PetroChina and China Petroleum & Chemical or Sinopec, are expected to trim their annual production by 2 to 3 per cent, similar to that seen in the last oil recession in 2014, according to Neil Beveridge, senior analyst in Hong Kong at Sanford C. Bernstein & Co. Both producers are less competitive on costs than China’s offshore major CNOOC, he said.

Quote
“What makes things worse this time around is that we are facing a possible global recession amid the coronavirus pandemic,” said Neil Beveridge, senior analyst at US brokerage Sanford C. Bernstein. “It will take a few quarters to work this [oversupply correction] out.”

Beveridge estimates PetroChina and Sinopec’s break-even costs at US$50 to US$60 a barrel, and they face a big dent on their bottom line if oil prices are sustained at current levels. On the other hand, CNOOC’s production cost was at about US$30 during the first half of 2019, having declined from US$45 in 2013, according to company documents.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3628 on: March 10, 2020, 08:05:52 PM »
The tarsands in Canada are feeling the pinch.

https://www.cbc.ca/news/canada/calgary/cenovus-cuts-oil-prices-calgary-coronavirus-1.5492192

Quote
Cenovus Energy's huge cut to spending expected to set trend as sector adjusts for oil prices
Calgary-based energy company now plans between $900M and $1B in spending
The Canadian Press · Posted: Mar 10, 2020

Analysts expect to see lower Canadian oil production this year as producers follow the example of Cenovus Energy Inc. in slashing capital spending budgets amid tumbling oil prices.

Quote
Kevin Birn, an analyst with IHS Markit in Calgary, said the Canadian oilpatch can expect to see other companies also reduce their spending plans in the wake of weaker crude prices.

"Lower prices simply mean they're generating less revenue and so they're going to have to pull back on what they were planning to spend initially in the year," Birn said.

Quote
"Back in 2014 when the Saudis last decided to wage a market share battle, (West Texas Intermediate crude) fell from $80 US per barrel on U.S. Thanksgiving to a low of $28 US per barrel in 2016," pointed out analyst Robert Catellier of CIBC in a report.

"The result was a cancellation of as many as nine oilsands projects."

AbruptSLR

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Re: Oil and Gas Issues
« Reply #3629 on: March 10, 2020, 08:33:40 PM »
Remember back a few weeks ago when the projections (by the fossil fuel shills) for the US shale patch was an increase in production of over a million barrels per day?

https://seekingalpha.com/news/3550186-u-s-oil-production-take-20-hit-on-shale-retreat-pioneer-ceo-says

Quote
U.S. oil production could take 20% hit on shale retreat, Pioneer CEO says
Mar. 10, 2020

According to the Washington Post, the White House will likely pursue federal aid to help support the U.S. shale industry.


Quote
The U.S. could lose 2M-2.5M bbl/day in output - a nearly 20% drop - by the end of 2021 if oil prices stay around current levels as companies go into "maintenance mode," CEO Scott Sheffield tells Bloomberg.

Most shale producers will be forced to cut as many as half of their drilling rigs by the end of this year, when current hedges expire, the CEO says.
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
― Leon C. Megginson

Tor Bejnar

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Re: Oil and Gas Issues
« Reply #3630 on: March 10, 2020, 11:41:49 PM »
ASLR,
I just read about that on Political Wire.  Horrors!  :'(
Arctic ice is healthy for children and other living things.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3631 on: March 10, 2020, 11:59:25 PM »
According to the Washington Post, the White House will likely pursue federal aid to help support the U.S. shale industry.

For those who aren't aware, the US Government is a representative democracy, with a bi-carmel legislative branch that must draft and pass legislation before it is sent to the President for signature (or to be vetoed).

The odds of a bail-out for billionaires being passed in this political climate (and with an election coming in November) are lower than winning a national lottery!


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Re: Oil and Gas Issues
« Reply #3632 on: March 11, 2020, 12:02:58 AM »
KF:
Hope you’re right, but billionaires have a funny way of getting their way in this country.
SHARKS (CROSSED OUT) MONGEESE (SIC) WITH FRICKIN LASER BEAMS ATTACHED TO THEIR HEADS

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Re: Oil and Gas Issues
« Reply #3633 on: March 11, 2020, 01:03:10 AM »
Shale Drillers Are Staring Down Barrel at Worst Oil Bust Yet
https://www.bloomberg.com/amp/news/articles/2020-03-09/shale-drillers-are-staring-down-the-barrel-of-worst-oil-bust-yet

America’s shale drillers have never faced an oil bust quite like this.

The split between Russia and its one-time OPEC allies last week has ignited an all-out price war. U.S. crude prices plunged the most since the 1990s, falling to less than $28 a barrel and rendering vast swathes of the U.S. oil industry unprofitable. Shares and bonds of shale producers plunged Monday, with the S&P 500 Energy Index posting its worst intraday decline on record.

It’s a disaster for U.S. frackers including Chesapeake Energy Corp. and Whiting Petroleum Corp., who were already trading at distressed levels -- and makes more defaults and bankruptcies all but certain. After burning through hundreds of billions of dollars in cash over the past decade, the industry has consistently disappointed investors while accumulating huge debts. It now finds itself backed into a corner, increasingly shut out of capital markets. Banks were already poised to cut credit lines after writing off as much as $1 billion in shale loans last year, more than they have in 30 years of making them.

This could mark the end of a historic boom that vaulted the U.S. to predominance in world crude production. On Monday, shale producers Diamondback Energy Inc. and Parsley Energy Inc. said they’re cutting the number of drill rigs in response the price slump.

The current price crash has echoes of 1986, when Saudi Arabia abandoned attempts to prop up a glutted market and pumped at will, sending oil futures plunging by more than half in a matter of months.

But never before has so much U.S. output been in such peril -- and never has demand for that supply been so uncertain. When financial markets collapsed in 2008-2009, dragging crude demand and prices down with them, America’s shale patch as it is now didn’t exist. Oil drillers in the Permian were just warming up to the idea of hydraulic fracturing and pumping less than 1 million barrels a day.

When oil tumbled to a 13-year low in early 2016, driven by a glut of supplies worldwide, the fracking revolution was indeed in full swing. But demand was strong and the region had still not yet topped 2 million barrels a day.

Today, the Permian churns out more than 5 million barrels, exceeding Iraq and accounting for more than one-third of America’s total production. Shale companies weathered the last major downturn in 2018 by getting lean and plowing forward with drilling plans. This time around, they’re in a more precarious financial position and can’t afford to keep adding to a glut.

“This industry shot itself in the foot with dramatic shale production growth,” said Dan Pickering, founder and chief investment officer of Houston-based asset manager Pickering Energy Partners. Drillers need “a dose of self help,” he said. “It’s kind of them against the world right now.”



American shale companies are largely responsible for years of swelling world supply. Indirectly, they’ve been supported by OPEC nations and their allies cutting production to prop up prices. But the key Saudi-Russia “bromance,” as it was once described by Citigroup Inc. oil analyst Ed Morse, is over. No longer is Russia willing to bail out U.S. shale.

Ominously, Russian Energy Minister Alexander Novak said in Vienna on Friday that his nation’s producers will be free to pump at will when current production caps expire at the end of the month. Saudi Arabia in turn started an all-out oil price war on Saturday, slashing its official selling prices by the most in 20 years in an effort to push as many barrels into the market as possible.

That leaves American shale drillers scant time to prepare for an onslaught from the rest of the world’s oil behemoths.

“The vultures already are circling,” said Amy Myers Jaffe, a senior fellow at the Council on Foreign Relations, who is frequently sought out by OPEC ministers and industry leaders for her views on oil. “What is the appetite for investors to refinance a new round of shale?”

Shale drillers large and small are being pummeled by equity investors. After big drops on Friday, most of the 57 members of the S&P Oil & Gas Exploration & Production Select Industry Index fell Monday. Shale producers Oasis Petroleum Inc., California Resources Corp. and Occidental Petroleum Corp. tumbled more than 40%.

Energy bonds also plummeted, with the average spread over Treasuries for companies in the Bloomberg Barclays High Yield Energy index surging above 10% for the first time since 2016, a threshold typically associated with distress. SM Energy Co. and Oasis Petroleum Inc. led high-yield declines. SM’s 6.625% notes due 2027 fell 34 cents to 36 cents on the dollar, to yield about 28%.



With oil at about $30 a barrel, some shale explorers will find it impossible to pay lenders and support newly minted dividend programs adopted to entice retail investors. In addition, promises to finally generate free cash flow -- which has become something of an obsession in parts of the industry -- may be for naught.

“There’s the old joke about the sign in the bar that says ‘free beer tomorrow,’” said Michael Roomberg, who helps manage $4 billion at Miller Howard Investments Inc. For shale drillers, “becoming free cash flow positive is something similar. And clearly this price reaction may delay that inflection point even further.”

For many observers, the path ahead for the U.S. shale sector appears to be painful and uncertain. Even before Friday’s dramatic events, some forecasters, including Goldman Sachs Group Inc., expected global oil demand to shrink in 2020 for only the fourth time in nearly 40 years due to the effects of the coronavirus. A rationalization of the hundreds of independent U.S. producers currently active appears inevitable, according to Ian Nieboer, managing director of RS Energy, now part of Enverus.

“What we’re going to end up with is a major hollowing out of the industry,” he said.
“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” ― Leonardo da Vinci

Insensible before the wave so soon released by callous fate. Affected most, they understand the least, and understanding, when it comes, invariably arrives too late

gerontocrat

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Re: Oil and Gas Issues
« Reply #3634 on: March 11, 2020, 10:13:54 PM »
Yesterday's (10 March) crude price rebound was a dead cat bounce.
Today fear & loathing return...

WTI crude at $ 33 a barrel.

Headlines from Bloomberg's commodities page

38 MINUTES AGO Oil Tumbles Amid OPEC Market Share Battle, Virus Pandemic

10:39 AM Oil War Escalates Again After Saudi and U.A.E. Promise Flood of Crude

6:10 AM Saudi Arabia Pledges to Expand Oil Output Capacity

3/10/2020 Shale’s New Reality: Almost All Wells Drilled Now Lose Money
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3635 on: March 12, 2020, 08:03:21 PM »
It looks like the shaleout is DOA.

[url] https://oilprice.com/Energy/Energy-General/Will-Trump-Bail-US-Shale-Out.html/url]

Quote
Will Trump Bail U.S. Shale Out?

By Nick Cunningham - Mar 11, 2020

The White House is considering a rescue package for the U.S. shale industry, although the idea is getting pushback from so many sides that it faces challenging odds of passing into law.

Quote
The help would involve low interest loans to shale companies because access to credit has been largely choked off, the Post said.

Indeed, with much of the industry heavily indebted, access to capital is a critical issue. During the 2014-2016 downturn, so many drillers survived and returned to growth due to a nearly endless supply of credit and equity supplied by banks, investors and private equity. The major recapitalization effort revived shale drilling after a brief downturn.

This time around, investors are no longer interested in financing unprofitable drilling. Trump wants the government to step in to prop up failing companies.

Quote
But the idea was met with howls of criticism immediately after the Post broke the story. The proposal was panned by Democrats, who Trump will need to pass anything.

Quote
But, perhaps more surprisingly, the proposed shale bailout was also met with skepticism from traditional allies of the oil and gas industry. The head of the American Petroleum Institute, the oil industry’s most powerful lobby group, shot down the idea. “We believe we shouldn’t be reacting to one day of a market downturn,” API CEO Mike Sommers said, according to the Washington Examiner.

Quote
On Wednesday, Secretary of Treasury Steve Mnuchin said that aid to struggling industries, including airlines, cruises and the oil industry should not be described as a “bailout.”

“I want to be clear: This is not bailouts. We are not looking for bailouts,” he said. “But there may be specific industries that are highly impacted by travel and have issues with lending.”

There was skepticism elsewhere. “It sounds like a bailout to me,” Paul Winfree of the Heritage Foundation, a conservative think tank, told the Post. “We are going to have to see specifics, but when you are dealing with special treatment given to one industry or sector of the economy, that is, almost by definition, a bailout.”

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3636 on: March 16, 2020, 01:38:51 PM »
Oil drops more than 8%, breaking below $30
Quote
Oil prices slid more than 8% on Monday as the acceleration in coronavirus cases worldwide, which is bringing travel and business to a standstill, further dents global demand for crude.

U.S. West Texas Intermediate crude dropped 8%,or $2.54, to trade at $29.19 per barrel. International benchmark Brent crude fell 10.4%, or $3.53, to trade at $30.37 per barrel.

"The demand drop unfolding is like nothing anyone has ever witnessed," Simmons Energy analyst Pearce Hammond said in a note to clients Sunday.

Oil is coming off what Hammond called a "horrific week" for the energy market. Both contracts posted their worst week since the financial crisis after dropping more than 23%, although prices did get a temporary boost Friday evening following President Trump's call to fill the U.S. strategic petroleum reserve.

Oil continues to be hit on both the demand and supply side. The coronavirus outbreak has led to softer demand for crude as people cut back on travel, for example, while a breakdown in OPEC talks means there could soon be a supply glut as Saudi Arabia gets set to ramp up production to a record 13 million barrels per day. ...
https://www.cnbc.com/2020/03/16/oil-drops-more-than-6percent-breaking-below-30.html
People who say it cannot be done should not interrupt those who are doing it.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3637 on: March 17, 2020, 06:31:21 PM »
Latest forecasts of oil demand are a huge decrease from current levels.  The impacts on the US shale producers will be devastating.

https://oilprice.com/Energy/Oil-Prices/Oil-Demand-To-Plunge-By-10-Million-Barrels-Per-Day.html

Quote
Oil Demand To Plunge By 10 Million Barrels Per Day
By Nick Cunningham - Mar 16, 2020

As major economies go into lockdown, oil demand continues to fall off a cliff. On Monday, WTI fell into the $20s.

“The additional quarantine measures imposed in France, Spain and elsewhere over the weekend has spurred a ‘world championship’ in demand loss forecasting this morning,” Bjoernar Tonhaugen, Rystad Energy’s head of Oil Markets, said in a statement.

Quote
Loose credit will do very little to stoke demand when tens of millions of people go into lockdown. Airlines are on track to cut flights by 75 percent for April and May. Pierre Andurand, who runs oil hedge fund Andurand Capital Management, said that oil demand could fall by 10 million barrels per day (mb/d) for a period of time, a contraction with no historical precedent. Oil trading giant Trafigura agreed on the 10-mb/d demand destruction estimate, and said demand could yet drop further.

Several analysts say that oil prices will likely continue to fall. “The potential loss of demand in March-April may dwarf anything the World has ever seen, just when OPEC+ producers open the floodgates of new supply to the market,” Bjoernar Tonhaugen of Rystad Energy said. “The price of oil may in the coming months need to drop down to short-run marginal cost of production in order to incentivize forced shut-downs of production globally.”

Rystad’s data suggests that only 16 shale companies have average new well costs at less than $35 per barrel, as Reuters points out. And that does not take into account debt servicing, dividends, and the array of other corporate costs – it only accounts for preparing and drilling a new well. Needless to say, if U.S. shale was struggling at $50, drilling at sub-$30 makes sense for no one.

Quote
Goldman said total capex from the U.S. shale industry could fall by 30 percent and that U.S. oil production could fall by 1 million barrels per day between the 2Q2020 and 3Q2021.

That could be underestimating the impact. IHS Markit said the supply hit to U.S. shale could be more like 2 to 4 mb/d over the next 18 months.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3638 on: March 17, 2020, 10:56:27 PM »
Some arithmetic.

Sales revenue = Price (US$) x Quantity (bpd)

2019
Average Revenue per day 2019 = $ 64 x 100 million = $6.4 billion per day = $2.336 Trillion a year

Worst case?
Average Revenue per day 2020 = $ 25 x 90 million = $2.25 billion per day = $0.821 Trillion a year

Average case?
Average Revenue per day 2020 = $ 43 x 90 million = $3.87 billion per day = $1.413 Trillion a year.

If demand is suppressed for the rest of the year the oil companies could see their cash income declining by anything between 0.9 and 1.5 trillion bucks

Even if a V-shaped rebound happens in the second half of the year several hundred billion bucks of cash will be lost to the oil companies - and they will never get it back. That's gotta hurt
____________________________________________
Data

In 2019, demand grew 1.46%, from 100.00 mb/d to 101.46 mb/d. The EIA forecast demand will average 100.3 mb/d in the first quarter of 2020. It will increase to ...

EIA forecasts Brent crude oil prices will average $43/b in 2020, down from an average of $64/b in 2019. For 2020, EIA expects prices will average $37/b during the second quarter and then rise to $42/b during the second half of the year. EIA forecasts that average Brent prices will rise to an average of $55/b in 2021, as declining global oil inventories put upward pressure on prices.

Current WTI price = < $ 30

& From Ken's post above...
https://oilprice.com/Energy/Oil-Prices/Oil-Demand-To-Plunge-By-10-Million-Barrels-Per-Day.html
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

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Re: Oil and Gas Issues
« Reply #3639 on: March 17, 2020, 11:09:24 PM »
<$10 bl
Maybe?

gerontocrat

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Re: Oil and Gas Issues
« Reply #3640 on: March 17, 2020, 11:51:01 PM »
<$10 bl
Maybe?
Norway, once upon a price slump, basically shut down its rigs (maintenance only). But they've got sufficient loot to withstand a lot of pain.

Countries such as Nigeria, population 190+ million might collapse from the twin threats of its dependence on oil for 80% of its export revenues and the coronavirus epidemic (& since its oil industry grew its agriculture has been in relative decline)
____________________________________________________
Tracing the Roots of Nigeria’s Agricultural Decline
May 5, 2016

During its first decade of independence, Nigeria was one of the world’s most promising agricultural producers. Regionally focused policies based on the economic principle of commodity comparative advantage ensured that the agricultural sector served as the nation’s main source of food and livelihoods. Nigeria was not only agriculturally self-sufficient and food secure, but it thrived in global markets as the world’s largest producer of groundnuts and palm oil and as a significant producer of cotton and cocoa. Agriculture was the nation’s main source of employment and income. In 1965, the agricultural sector employed over 70 percent of the labor force. Export cash crops were responsible for 62.2 percent of the young nation’s foreign exchange and 66.4 percent of its GDP.
_________________________________________________
FAO...
 It is estimated that Nigeria has lost USD 10 billion in annual export opportunity from groundnut, palm oil, cocoa and cotton alone due to continuous decline in the production of those commodities. Food (crop) production increases have not kept pace with population growth, resulting in rising food imports and declining levels of national food self-sufficiency (FMARD, 2008).
« Last Edit: March 18, 2020, 12:05:09 AM by gerontocrat »
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

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Re: Oil and Gas Issues
« Reply #3641 on: March 17, 2020, 11:53:34 PM »
Under the Heading more bad news:


Russia makes move on Antarcticas 513 billion barrels of oil

 >:( :'(
https://oilprice.com/Energy/Crude-Oil/Russia-Makes-Move-On-Antarcticas-513-Billion-Barrels-Of-Oil.html

Sigmetnow

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Re: Oil and Gas Issues
« Reply #3642 on: March 18, 2020, 05:15:42 PM »
U.S. oil falls to a nearly 18-year low as rout continues on coronavirus fears, price war
Quote
Oil futures extended their plunge Wednesday as countries continued to lock down to slow the spread of COVID-19, while Saudi Arabia and Russia remain on track to flood the world with crude in a global price war.

“Oil is by far one of the biggest casualties from the novel coronavirus outbreak,” said Lukman Otunuga, senior research analyst at FXTM. “WTI crude and Brent have both depreciated a staggering 60% since the start of 2020 and could extend losses as the pandemic darkens the outlook for fuel demand.”

“To rub salt into the burning wound, the raging price war between Saudi Arabia and Russia is fuelling oversupply concerns,” he told MarketWatch, adding that WTI oil may test $20 “if nothing changes.”

West Texas Intermediate crude for April delivery on the New York Mercantile Exchange fell $3.56, or 13%, to $23.39 a barrel, with the front-month contract trading around the lowest since 2002, according to Dow Jones Market Data. May Brent crude dropped $2.21, or 7.7%, at $26.52, with prices trading at their lowest since 2003. ...
https://www.marketwatch.com/story/us-oil-falls-to-17-year-low-as-rout-continues-on-coronavirus-fears-price-war-2020-03-18
People who say it cannot be done should not interrupt those who are doing it.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3643 on: March 18, 2020, 05:35:59 PM »
West Texas Intermediate crude for April delivery on the New York Mercantile Exchange fell $3.56, or 13%, to $23.39 a barrel, with the front-month contract trading around the lowest since 2002, according to Dow Jones Market Data. May Brent crude dropped $2.21, or 7.7%, at $26.52, with prices trading at their lowest since 2003. ...
https://www.marketwatch.com/story/us-oil-falls-to-17-year-low-as-rout-continues-on-coronavirus-fears-price-war-2020-03-18
[/quote]

As at 12:21 pm EDT WTI is at $ 22.14, now at an 18 year low
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3644 on: March 18, 2020, 06:16:30 PM »
As the gas glut grows and the recession deepens, big LNG projects are being cancelled.

https://oilprice.com/Energy/Natural-Gas/Giant-LNG-Projects-Face-Coronavirus-Death-Or-Delay.html

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Giant LNG Projects Face Coronavirus Death Or Delay
By Irina Slav - Mar 17, 2020

Plummeting oil prices have been the focus of attention ever since Saudi Arabia and Russia fired the first shots in what analysts see as a potentially devastating oil price war. Oil producers, however, are not the only ones suffering the consequences of this war, aggravated by the slump in demand from the coronavirus pandemic.

There were 10 liquefied natural gas projects in the United States slated for approval last year but due to an already sizable glut and the U.S.-China trade war, many final investment decisions were pushed into 2020.

Some of these projects might even be canceled if the situation doesn’t improve soon.

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Market conditions are indeed extreme. Buyers from Europe are turning away LNG cargoes in an oversaturated market where prices have fallen historic lows. Asian buyers are also turning away or deferring deliveries, and China’s largest gas importer PetroChina earlier this month declared force majeure on all gas imports. What’s worse, with the outbreak continuing to spread outside China, the prospect of a quick improvement seems slim.

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Things are not looking up for the rest of the projects due for approval this year. Magnolia LNG, Port Arthur LNG, and Brownsville LNG are all grappling with the same problems weighing on the whole industry. If oil and gas prices remain subdued for the rest of the year, which is now increasingly likely, some of these projects will simply become unviable. And the oil price war will also play a major part.

"If coronavirus brought the near-term prospects of new LNG business to a particularly slow crawl, we believe the OPEC+ blow up will bring it to a full stop, at least until the dust settles," Michael Webber, managing partner of Webber Research & Advisory said in a recent note to clients. "For companies in the process of restructuring, like Tellurian, it certainly won't help the market's appetite for refinanced, commercially-challenged LNG paper. It's hard to imagine its lenders not feeling the collapse of commodity prices in several places throughout their loan books."

The article has details on three large LNG projects that were due to be funded last year but were delayed into 2020 instead.  It's worth following the link to the article to see the specific details about these projects.

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3645 on: March 18, 2020, 06:43:03 PM »
A 95,000 bpd oilfield in Iraq has shut down due to the Covid-19 countermeasures.

https://oilprice.com/Latest-Energy-News/World-News/Large-Iraqi-Oilfield-Goes-Offline-As-Operator-Evacuates-Staff.html

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Large Iraqi Oilfield Goes Offline As Operator Evacuates Staff
By Tsvetana Paraskova - Mar 17, 2020

Operator Petronas has evacuated its employees from an oilfield in Iraq in an effort to protect them from the spreading coronavirus, which has forced Iraq to suspend production at the 95,000-bpd oilfield, Iraqi oilfield officials told Reuters on Tuesday.

gerontocrat

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Re: Oil and Gas Issues
« Reply #3646 on: March 19, 2020, 12:39:18 PM »
<$10 bl
Maybe?
Canada Western Select Heavy Oil 18 March $ 9 a barrel.
Keep pumping to bankruptcy?

Meanwhile a bounce back today of WTI crude by nearly $2.50 to the dizzy heights of just under $23.

https://business.financialpost.com/executive/posthaste-oil-could-hit-sub-us20-levels-as-saudi-co-unleash-a-tsunami-of-barrels-to-teach-the-market-a-lesson
Posthaste: Canadian oil falls below US$10, as Saudi & Co. unleash a tsunami of barrels to 'teach the market a lesson'
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There is also no end in sight to the supply being pumped into the market by Saudi Arabia & Co. Rystad Energy says a ‘tsunami’ of 3 million extra oil barrels per day are set to come by April, even as consumption declines due to a global shutdown due to coronavirus concerns.

Two million bpd is what OPEC+ countries are realistically able to add next month based on their storage, spare capacity and ramp up capabilities. Another million bpd could come if a cease-fire is agreed upon in Libya and the country reaches pre-shut-in levels, the Oslo-based energy intelligence firm said.
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

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Re: Oil and Gas Issues
« Reply #3647 on: March 19, 2020, 10:56:05 PM »

I couldn't believe this one but apparently it might be possible for oil prices to go negative. https://www.bloomberg.com/news/articles/2020-03-19/the-idea-of-negative-oil-prices-is-more-realistic-than-you-think

gerontocrat

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Re: Oil and Gas Issues
« Reply #3648 on: March 19, 2020, 10:56:23 PM »
While Brent and WTI crude increased very sharply today (19 March), just about every other source of oil went down in price.

The star loser was Canadian Western Select Heavy Oil fell another 55% to $ 4.73.
One year ago was $ 45, and even then probably unprofitable.

How much money will Western Governments & Central Banks throw at the oil industry ?
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
"Damn, I wanted to see what happened next" (Epitaph)

Ken Feldman

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Re: Oil and Gas Issues
« Reply #3649 on: March 20, 2020, 05:51:20 PM »
Most US oil companies (Exxon and Chevron are the exceptions) are preparing for bankruptcy.  The linked article refers to "debt restructuring" but in almost all cases that means bankruptcy.

https://oilprice.com/Energy/Energy-General/Saudi-Shock-And-Awe-Is-Crushing-Shale-Drillers.html

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Saudi ‘Shock And Awe’ Is Crushing Shale Drillers
By Nick Cunningham - Mar 19, 2020

WTI dropped into the low $20s on Wednesday, and the near-term outlook is grim.

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To be sure, Saudi Arabia is surely sticking the knife in, flooding the market at a time of economic meltdown. But an extra 2-3 million barrels per day (mb/d) of supply pales in comparison to the more than 10 mb/d of demand destruction. JBC said that oil price movements are “coming increasingly from” day-to-day news on the pandemic, rather than from OPEC.

The fastest way out for the oil industry, then, is for governments to slow the spread of the pandemic. The economic crisis can only be resolved when the health crisis is resolved.

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Other shale companies are more resigned to their fate. The list of drilling companies in various stages of exploring debt restructuring now includes Whiting Petroleum, Antero Resources, California Resources, Chesapeake Energy and Gulfport Energy, to name a few. “At the moment most companies are on life support with the exception of Exxon [Mobil] and Chevron,” an oil and gas banker told the FT.

Occidental Petroleum’s huge dividend cut did not spare the company from seeing its credit rating cut into junk territory by Moody’s.