What You Should Know About Oil and Gas Today
The Big Story
Oil ministers from the OPEC+ nations are meeting in Vienna, Austria today to review compliance with their ongoing agreement to limit crude oil production and exports. That agreement has succeeded in causing the price for oil to rise back to levels above $40 per barrel following several months of extremely low prices caused by the price war between Russia and Saudi Arabia and the impacts of the COVID-19 pandemic.
The current agreement mandated cuts in exports of 9.7 million barrels of oil per day during May through July. That was scaled down to 7.7 million bopd beginning August 1, and running through the remainder of 2020. The group is unlikely to change those targets during today’s meeting, in which they will take a close look at compliance by Iraq, Nigeria and Kazakhstan, which are known to have exceeded their quotas during the May-July time frame.
Despite those failures to follow quotas, Reuters reports that sources within OPEC claim that overall group compliance was as high as 97% during July. That’s a clear indication of how focused these countries are on causing the crude prices to move back above the $50 per barrel level by the end of this year, as global demand continues to recover.
Meanwhile, in other news…
Politifact does another false “fact check” on the Biden campaign, claiming Wisconsin voters who support fracking – and the state’s major sand industry – have nothing to fear from a Biden presidency. This is abjectly false: Both Biden and Kamala Harris have repeatedly expressed their support for an outright ban on hydraulic fracturing if they are elected in November. Both have made these promises on live national TV, and you can be sure those video clips will be used by the Trump campaign in Wisconsin and everywhere else this fall. In case you haven’t figured it out yet, Politifact is just another media support group for the Democratic Party.
It’s the 1980s all over again. The Wall Street Journal has a major piece this morning titled “Oil Industry Frets About Recruiting Its Next Generation of Workers.” The subtitle reads “A growing distaste for the oil business among potential young employees, combined with the economic crisis of the pandemic, could make it harder to tackle competition from renewable energy and electric vehicles.” Those of us old enough to have lived through the bust of the 1980s and its after-effects on industry employment know we likely saw those exact same headlines and subtitles during those times. Absent the part about COVID-19, of course.
The folks at Rystad Energy have a new report out claiming that pretty much all of the U.S. wells that were shut-in during April-June will be back online by the end of September. “Nearly all operators said they did not face any issues in bringing volumes back on line as per schedule, as they had already worked on issues such as maintaining reservoir pressure and well integrity even before they began moderating output or shutting in wells,” said Veronika Akulinitseva, vice president, North American Shale and Upstream for Rystad. Cool.
Here’s some news we haven’t seen nearly enough of this year: Graham-based Barron Petroleum, a family-owned company, reported a major new discovery in the Permian Basin on Tuesday: 13,000-acre field in Val Verde County holding an estimated 74.2 million barrels of oil equivalent. “This is a major discovery because these new field designations are all going to be made from this one 13,000-acre lease,” said Albert McDaniel, a Fort Worth-based petroleum engineer involved in the project. “These are going to be high-volume, high-rate wells from a major new field that will be developed over the next five to 10 years.”
And with that bit of good news, that is all for today.