10 Things You Should Know About Oil and Gas Today
The Big Story
The presidential campaign run by Democrat Joe Biden continues to move far to the political left where oil and gas issues are concerned. In several Democrat primary debates last fall, Biden promised to heavily restrict hydraulic fracturing in the U.S., even promising to ban it outright in the December debate.
Last week, Biden named radical New York Congresswoman Alexandria Ocasio-Cortez as one of his chief “climate” advisors, along with climate alarmist Al Gore. Ocasio-Cortez, of course, is the chief sponsor of the so-called “Green New Deal,” a behemoth piece of legislation that would decimate the nation’s energy industry.
Yesterday, Biden further promised to cancel federal permits already issued to TC Energy, the owner of the Keystone XL pipeline system. That promise would revive the 8-year-long war conducted by the Obama/Biden administration against the pipeline on behalf of the climate alarm lobby.
If you were somehow thinking that this year’s election doesn’t really matter for oil and gas, think again.
On to Other Stories:
A great example of this lack of predictability is today’s trading on the June contract for West Texas Intermediate, the standard index price for domestic crude sales. Just a few weeks ago, speculation was rampant that the price for that contract could fall into negative territory today, which is the final day of trading before we move to the July contract. That was what happened on the last day of trading on the May contract, after all, as fears that global crude storage would be full by right about now pervaded the markets.
But here we are on May 19, and those fears have pretty much abated, with WTI trading above $32 per barrel, a level not seen since March. The reasons why are obvious: Global demand is recovering more rapidly than the experts were predicting at the first of this month, while supply is commensurately dropping more quickly than expected.
As if to emphasize that point, this Bloomberg piece details the fact that oil inventories in the U.S. actually fell last week for the first time since January. Excerpt:
“We were already in the midst of a transition away from high growth into slower growth,” Raoul LeBlanc, a Houston-based oil expert at IHS Markit said by phone. “We just got cut off at the knees.” The declines include 758,000 barrels a day of announced reductions in the U.S. by some of the country’s biggest producers including ConocoPhillips, Continental Resources Inc. and Chevron Corp., according to data compiled by BloombergNEF.
More than 500,000 barrels a day of production in the Bakken region of North Dakota and Montana has been shut in. Daily output from Alaska’s North Slope is down by about 100,000 barrels from early March. In April, U.S. Energy Secretary Dan Brouillette told world leaders that the U.S. will cut production by about 2 million barrels a day this year.
Rystad Energy said that U.S. said that U.S. production shut-ins will reach at least 2 million barrels a day in June, including natural gas liquids, with Permian-focused producers in West Texas and New Mexico driving 42% of the curtailments expected.
Reuters has a good piece detailing the fact that oil production from U.S. shale basins has fallen to a two-year low. No surprise there.
Interesting piece here at Rigzone about producers using innovations to cuts costs and increase efficiencies. Excerpt:
Hydraulic fracturing, using water, sand and chemicals was the revolutionary technological breakthrough that unlocked shale. Now, in development and an advance on seismic surveys tracking the fracking operation is real-time, electromagnetic monitoring of where the fracking fluid runs is being marketed to save on fracking materials. Start-up [iv], Deep Imaging’s chief executive David Moore explains, “Too often the fluid movements don’t match the initial modelling as the fluids travel farther than predicted or even escape into nearby wells, wasting millions of dollars in the process.” [v]
Smart microchip proppants
Kansas University’s Computational Earth Science and Smart Analytics Lab [vi], is working on “smart microchip proppants” [vii] for injection alongside traditional proppants to give well operators unprecedented precision in visualizing fracture networks in real-time. The Lab’s Director, Masoud Kalantari states, “This technology will support the U.S. operators to maximize the efficacy of recovery from unconventional resources while minimizing the environmental footprint by optimizing the well spacing and improving completion design.”
CBC discusses the fact that oil policy is now an election issue in Canada, too.
Troubles just keep multiplying for Occidental Petroleum, which paid $55 billion to acquire Anadarko Petroleum last year. Oxy’s proposed sale if the north African assets it inherited from Anadarko was canceled yesterday by the prospective buyer, Total, due to prevailing market conditions. At this point, Oxy’s management no doubt wishes it could go back and do the same with the Anadarko deal.
Texas Attorney General Ken Paxton is leading a group of 18 state attorneys general in challenging a recent federal district court ruling canceling a key environmental permit for the Keystone XL pipeline.
That’s all for today.