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2015-05-13 21:05:00

OIL PRICES: BELOW $90

OIL PRICES: BELOW $90

Overseas competitors who were caught off-guard initially by rising US unconventional crude oil production have increased their own outputs now and can be expected to try and keep prices low to protect their global market shares, speakers at a May 12 Atlantic Council discussion said. That could make marginal US unconventional properties uneconomic, but won't threaten the new US position as a major producing nation, they agreed.

"We're entering a phase when all the excess capacity will be resized to the new US world market share," said Subash Chandra, managing director and senior equity analyst at Guggenheim Partners. "I don't expect prices to go above $70-75/bbl. If it hits $90, US producers will start working full-out again."

"I don't think there will be a bust," said Russell Gold, a Wall Street Journal senior energy reporter. "This is an immature industry that's learning to drill bigger wells. But several management teams bought suboptimal rock in an effort to keep up. Several companies will be headed for fire sales before the end of the year, but the new US role as a major producer won't change."

Terry Engelder, a geosciences professor at Penn State University, meanwhile, noted, "There's been a lot of emphasis on heavy early production from many of these wells, but they also have good production later on. A lot of these wells wind up being refraced and have residual production that's more than expected."

'Brute force until now'

US production surged because each new barrel had a place in global markets until November, when overseas producers decided to increase their own output to protect their prices and market shares, Chandra said.

"Up until now," Chandra said, "this industry has spent 130% of cash flow, fully funded by Wall Street. Now, it's moving to spend cash flow and learn more about plays it already has. It's all been brute force up to now. There's more emphasis on refining the science and learning more about the rock it already has."

Gold said US producers had to learn from their mistakes, including measuring air and water quality before drilling, "because better data lead to better understanding," he said. States need to divide regulatory and leasing responsibilities as the US Department of the Interior did offshore following the 2010 Macondo deepwater well blowout and oil spill, he added. Well construction matters more than some producers thought, he said.

Engelder said, "The industry didn't understand that baselines need to be established in every well. In Pennsylvania, 40% of the water wells are privately owned. Also, when producers from out-of-state drilled their first deep gas wells, they didn't realize shallower soil was saturated with its own gas, which started to find its way into water supplies."

Gold said growing transportation of crude by rail from the Bakken shale to East Coast refineries configured to process it raised new safety questions, which in turn led to new US Department of Transportation regulations. "Extraordinarily powerful interests—the freight railroads, and the oil industry—are involved," he said.

But Chandra said producers also are committing to build new pipelines to their markets. "Some Bakken crude is marginal and won't be produced now that prices are low. Pipelines could be sufficient to handle what's left," he said.

ogj.com

Tags: OIL, PRICES, US,

Chronicle:

OIL PRICES: BELOW $90
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.

OIL PRICES: BELOW $90
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.

OIL PRICES: BELOW $90
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.

OIL PRICES: BELOW $90
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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