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2015-01-03 22:00:00

2015: U.S. OIL GROWTH

2015: U.S. OIL GROWTH

 

 

The recent decline in crude oil prices has created the potential for weaker crude oil production. 

The price of West Texas Intermediate (WTI) crude oil delivered to Cushing, Oklahoma declined more than 31% from June to November 26 and another 13% after the late November announcement of the Organization of the Petroleum Exporting Countries (OPEC) decision to maintain the current production level. At $60 per barrel, the current price of oil is likely approaching or already below the expected per-barrel costs of some of the most expensive U.S. tight oil projects.

Some of the most active production fields in the country are in North Dakota. Indicators tracked by the DPR and North Dakota's Department of Mineral Resources (DMR) cover much of the exploration and production process, from planning to production. These indicators include:

  • Permits. Before drilling begins, producers must sign lease contracts and apply for permits to drill exploration and development wells.
  • Rig movement. Drilling rigs must be secured and moved to permitted locations.
  • Spuds. Spudding is the term for the ground-breaking process of a new drilling project. In North Dakota, the spud count is a count of new wells drilled.

Based on the most recent data released by North Dakota's DMR, drilling and production activities in the state have not slowed, despite the significant decline in domestic crude oil prices since July 2014. Oil production in September 2014—the latest data available—rose 5% from the prior month.

The number of permits issued in October 2014 was 28% above the September level, but it dropped 30% in November. However, when normalized based on the number of business days during those months, October is only 17% above September's level, and November is only 10% lower than October.

 

Although the current economic situation is fundamentally different from the recession of 2008-09, changes in oil prices, production indicators, and production volumes during the recession may offer insight into what may happen next with U.S. shale oil production.

 

During the 2008-09 recession, monthly average WTI prices fell by 71% to $39.09 per barrel between June 2008 and February 2009. At the time, shale oil production in North Dakota was still in the testing phase and thus relatively expensive. Drilling and production continued to increase until November 2008, when WTI prices dropped below $57 per barrel. Below $57 per barrel, the number of projects that were interrupted increased significantly, with the number of permits declining 73% from December 2008 to July 2009, the number of rigs declining 62% from November 2008 to May 2009, and the number of spuds declining 55% from November 2008 to April 2009. However, the decline in production was not nearly as dramatic, falling only 13% from November 2008 to January 2009, after which time production began increasing.

Looking forward, EIA expects 2015 drilling activity to decline as a result of less-attractive economic returns in some areas of both emerging and mature oil production regions. Many companies will redirect investment away from marginal exploration and research drilling and into core areas of major tight oil plays. However, projected oil prices remain high enough to support development drilling activity in the Bakken, Eagle Ford, Niobrara, and Permian Basin, which contribute the majority of U.S. oil production growth.

EIA expects U.S. crude oil production to average 9.3 million barrels per day (bbl/d) in 2015, up 0.7 million bbl/d from 2014, but down from expected growth of 0.9 million bbl/d in last month's Short-Term Energy Outlook. However, all of the decrease in forecast production growth comes in the second half of 2015. EIA revised production growth downward by 140,000 bbl/d and 270,000 bbl/d in the third and fourth quarters, respectively, compared with the previous forecast. However, this forecast remains particularly sensitive to actual prices available at the wellhead and drilling economics that vary across regions and operators.

eia.gov

Tags: U.S., OIL, PRODUCTION, PRICES

Chronicle:

2015: U.S. OIL GROWTH
2018, August, 17, 11:30:00

U.S. INDUSTRIAL PRODUCTION UP 0.1%

U.S. FRB - Industrial production edged up 0.1 percent in July after rising at an average pace of 0.5 percent over the previous five months. Manufacturing production increased 0.3 percent, the output of utilities moved down 0.5 percent, and, after posting five consecutive months of growth, the index for mining declined 0.3 percent. At 108.0 percent of its 2012 average, total industrial production was 4.2 percent higher in July than it was a year earlier. Capacity utilization for the industrial sector was unchanged in July at 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2017) average.

2015: U.S. OIL GROWTH
2018, August, 17, 11:25:00

NORWAY'S PETROLEUM PRODUCTION: 1.911 MBD

NPD - Preliminary production figures for July 2018 show an average daily production of 1 911 000 barrels of oil, NGL and condensate, which is an increase of 64 000 barrels per day compared to June.

2015: U.S. OIL GROWTH
2018, August, 17, 11:20:00

GAZPROM NEFT NET PROFIT UP TO 49.6%

GAZPROM NEFT - For the first six months of 2018 Gazprom Neft achieved revenue** growth of 24.4% year-on-year, at one trillion, 137.7 billion rubles (RUB1,137,700,000,000). The Company achieved a 49.8% year-on-year increase in adjusted EBITDA, to RUB368.2 billion. This performance reflected positive market conditions for oil and oil products, production growth at the Company’s new projects, and effective management initiatives. Net profit attributable to Gazprom Neft PJSC shareholders grew 49.6% year on year, to RUB166.4 billion. Growth in the Company’s operating cash flow, as well as the completion of key infrastructure investments at new upstream projects, delivered positive free cash flow of RUB47.5 billion for 1H 2018.

2015: U.S. OIL GROWTH
2018, August, 15, 11:10:00

OIL PRICE: NEAR $72

REUTERS - Front-month Brent crude oil futures LCOc1 were at $72.34 per barrel at 0648 GMT, down by 12 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 23 cents, or 0.3 percent, at $66.81 per barrel.

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