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5 Posts authored by: aditibahuguna

From discreet talks about OPEC deals being structured to the hardly inconspicuous occasion of Trump assuming power; 2016 hasn't exactly passed without incident. As the year draws to a close, a review of the mostly unprecedented Industry events that filled a year almost gone by:-

 

  • The much talked about OPEC deal: The first output cut deal in fifteen years between OPEC and non OPEC producers finally fell through. And what's more? Oil gained 1.5% on Tuesday. 
  • The Permian Basin: After several companies kept announcing acquisitions throughout the year and drilling kept reassuring profitable returns, The Permian Basin has safely been established as the gift that keeps on giving. 

  • Dipping drilling costs: This is not a drill, pun unintended. As soon as January this year, had operators reporting a staggering 30% dip in costs.

  • Deepwater Exploration in sunny Mexico: On December 5, several Oil and Gas majors came together to invest in exploration in the Gulf of Mexico, thereby keeping deepwater exploration alive despite unfavorable market conditions. 

  • Rise in Expected Ultimate Recoveries: Process improvements and advancing technologies were also largely responsible for a dramatic uptick in EURs during 2016. Drilling times were shortened, new hydraulic fracturing technologies enabled producers to better identify sweet spots and access more of the formation rock during each frac job, and gathering and pipeline infrastructure continued to be built out in younger play areas, allowing more efficient takeaways for associated natural gas and liquids. 

  • Hydraulic Fracturing exonerated: Due to certain last minute hush-hush changes made by top EPA officials to a five year old study that linked fracking to deteriorating conditions of america's drinking water, the technology has now been given a clean chit. Scientists announced that the changes lack evidence. 

 

Source: Forbes

With the International Energy Agency predicting 2017 to be the fourth consecutive year of oil supply being greater than demand, OPEC rushes to structure an oil cuts deal for members before time runs out. The objective- bring production down to 33 MMbopd from last year's 36 million. 

 

The decision to cut production was made in a September meeting at Algiers, marking the end of OPEC's policy of no limitations on production. Prices rose in October shortly after the announcement, however, since last week, have fallen again, owing to growing doubt over the deal. 

 

Saudi Arabia has agreed to cut down production, with the demand that any losses incurred as a direct result of the deal will be shared equally by all members. However, OPEC Secretary General Mohammed Barkindo has stated that Libya and Nigeria will be exempted altogether from production cuts while Iran will be given special consideration. 

This essentially means that Iraq needs to cut production while Iran should maintain current rates, however, both the nations are so far uncooperative.  

 

With member states mulling over production cuts proposals, Russia- a keen observer in many OPEC meetings- will also be holding consultations with member countries at the Gas Exporting Countries Forum in Doha from the 17th to 18th of November. If consultations yield fruits, this may set precedent for other oil exporting non members to join the talks. 

The ramifications if the deal doesn't push through ? In the words of BP CEO Bob Dudley, "If the talks fail, prices will stay at the level they're at". 

 

Source: World Oil

With Republican candidate Donald Trump winning the US presidential elections despite of polls having been unfavorably inclined against him, S&P Global Platts brings forward information about his plans regarding the energy sector.

 

According to statements made by Trump during his campaign, his basic agenda is to ease industry regulations and increase the production of fossil fuels- claiming to be ready to put all federal resources to the dispersal of fossil fuel expansion plans.


Trump also intends on boosting infrastructure budget, increase the consumption of inexpensive oils as well as fossil fuels.
Another major factor on Trump's agenda is the scraping of several existing environmental policies, including the Clean Power Plan (kept alive by Barack Obama, in light of climate change) owing to his disagreement with the established notion that environmental degradation is a direct result of human involvement.


The Environmental Protection Agency is said to soon become extinct at the hands of Trump, or revamped with greater concern on clean air and water, according to his energy advisers. Certain steps to be taken in order to implement greenhouse gas performance standards in refineries are also likely to be rejected by Trump, according to S&P Global.

 

The perks of Trump's energy sector plans include greater offshore production, Clinton's plan having been of limiting offshore production to the Gulf of mexico. His efforts to limit alternate energy sources have the benefit of providing short term increased demand of fossil fuels. Furthermore, Donald Trump also intends to invest more than twice the amount suggested by Clinton for infrastructure in the energy sector, in order to benefit from current low rates. With his first day of assuming office just around the corner, whether or not these promises will be met is not yet to be deciphered, but only to be hoped for. 

 

 

Source: The Economic Times

Clean Energy Economy

Posted by aditibahuguna Oct 19, 2016

The government of Australia- a nation booming with energy both above the ground, and down under; has set up a Clean Energy Fund, with a one billion dollar start.The primary objective of this fund is to "earn income or a profitable return" on the loans and valuations made towards alternate energy sources, and sources with low emissions. 

The reason that drives this fund stems from the fact that Australia's alternate energy technologies are flourishing.

For instance, according to Australia's market operator, in a mere ten years, the entire nation's electricity requirements will be met primarily by the use of Solar Energy.

 

Another driving technology in the clean energy spectrum is Energy Storage- the capture of energy produced at a certain time, to be used at a later time. Tesla's electric cars are gaining recognition in the consumer market, and the era of more people with electric cars, than without, is near.

 

The Smart Energy Grid is another such clean energy source. The grid includes a variety of operational and energy measures including smart meters, smart appliances, renewable energy resources, and energy efficiency resources. Despite of the fact that Renewable energy is mainly self sufficient, experts are positive that the relevance of the grid will stand.

And yet, there are environment-related drivers.

 

With the signing of the Paris agreement, with the objective of practically no net emissions by the year 2050, governments are finally recognizing effective solutions in the Energy sector, Australia leading by example. With a newer, cleaner energy economy breaking through, what with nations making investments, and setting up funds, the near impossible goal, might just be met.

 

Source- The Guardian

Are militant groups responsible for the 50% reduction in Nigeria’s oil production or is Shell?

On September 29, 2016; Forbes listed out Royal Dutch Shell’s growth plan for the next five years, which now focuses on moving on to offshore production. Move forward six months to February 14, 2016, when the Niger Delta Avengers (NDA) destroyed Shell’s underwater Forcados 48-inch Export Pipline at the Forcados Export Terminal, forcing Royal Dutch Shell to shut production and announce Force Majeure. According to Nigeria Today, the production of more than 700,000 barrels per day of crude oil and 2000 megawatts of electricity was held up due to the incident. Following containment and recovery work, Shell had set May 29 as the deadline for repair proceedings to be completed in order to resume production. Shortly thereafter, another attack on the pipeline put a major stop on recovery. OPEC has since exempted Nigeria from the output cuts that are to officially be divided in November; however, the real recovery work lies in the retrieval of the 2.2 million barrels of oil per day that the militants take as their own.

The cause of this mayhem may only be truly understood by understanding the NDA, their demands and the cause that led to its creation. Their demands? ‘More power for the Niger Delta region to control their natural resources.’ The reason behind this demand?

The Niger delta houses 20 million people from 40 different ethnic groups and contains one of the highest concentrations of biodiversity in the world. From the years 1976 to 1996, an estimated 1.89 million barrels of petroleum has been spilled in the delta. Operations have led to more than 4,835 incidents. Reports suggest that half of all oil spills occur due to pipeline and tanker incidents- several of Shell’s pipelines from the region result in pollution and spillage as they are corroded. Since 1958, 9 to 13 million barrels of oil has been spilled in the delta. Effects of these incidents include degrading livelihood of Nigerian farmers, loss of mangrove forests, depletion of fish population, water hyacinth invasion, natural gas flaring etc. The NDA claims that the Niger Delta region lies robbed of development, and all essence of quality human life.

The unfairness lies in Shell’s continuous denial of its contribution to pollution, despite mass protests and their unwillingness to compensate for the damages they have caused for the better part of a century. According to Amnesty International, “The tragedy is that the oil spills continue to destroy the livelihoods of thousands of local people to this day. Shell will tell you that the vast majority are a result of theft, even though we have published evidence showing Shell misstates the cause of oil spills.” The said evidence is a report titled, 'Clean it up: Shell’s false claims about oil spill response in the Niger delta' published on their website on 3rd November 2015 implicating Shell in major cover ups, including absolute denial of their involvement in the Bomu Manifold and Boobanabe oil spills. 

The end result of this war between the Multinational Oil Corporation and the NDA is a lose-lose situation. Shell suffers heavy losses as production is crippled and Nigeria loses oil revenue and the government is forced to consider selling its hydrocarbon assets to fund their 2016 budget. The way forward is if Shell holds good on its promise to clean up the Delta, and the NDA realize blatant attacks on Shell pipelines will not provide a long term solution. As the Forcados export pipeline is to shortly resume exports after the February attacks, only time will tell whether conditions in Nigeria will change for the better or not.