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9 Posts authored by: rahulkapoor2412

Oil and gas discoveries around the world dropped last year to their lowest since the 1940s after companies sharply cut back in their search for new resources amid falling oil prices.The decline in discoveries means companies such as Exxon Mobil and Royal Dutch Shell will struggle to offset the natural depletion of existing fields, reinforcing forecasts of a supply shortage by the end of the decade. Total oil and gas resources found in 2016 reached just more than 6 billion barrels of oil equivalent (boe), said Sona Mlada, senior analyst at Oslo-based consultancy Rystad Energy.

The numbers do not include North American shale resources which have been a key driver in supply growth in recent years. Offshore liquid discoveries, where most major new fields have been found in recent decades, reached 2.3 billion boe last year, 90 percent below 2010 levels. As a result, companies were able on average to replace only 10 percent of their oil and liquid gas reserves last year, compared with a reserve replacement ratio of 30 percent in 2013. "The lack of discovered volumes in 2016 will not have an immediate impact on the global oil supply in the short-term, given the lead time it takes from the discovery to start-up of a field's production," Mlada said. "However, these 'missing' discovered volumes in the current years could have an impact on the global supply some 10 years down the line – depending on the investment decisions of the exploration companies." Several significant discoveries were announced in recent weeks including Exxon's find of 100-150 million boe offshore Guyana and Statoil's 80 million boe discovery off Norway.

Global exploration spending dropped in 2016 to $40 billion and could drop further this year, consultancy WoodMackenzie said last month. As a result, the number of exploration wells drilled dropped last year by 40 percent from levels seen in 2014 when oil prices began the sharp decline, according to Mlada. Around 60 percent of resources discoveries made last year were gas, she added.

SOURCE: Reuters

Some US oil policies are likely to shift significantly when Donald Trump assumes the presidency next year.

 

 

Relations with the Middle East and OPEC

 

Donald Trump has been critical of both Saudi Arabia and Iran during the campaign. He said that he was not a "big fan" of the Saudi government in a 2015 appearance on NBC’s "Meet the Press" and told the New York Times in March that he might stop buying oil from Saudi Arabia and other Arab countries unless they committed ground troops to combat Islamic State or reimbursed the U.S. for its efforts.

Trump is also opposed to the nuclear deal with Iran that unlocked the country’s oil exports. He said in a speech to the American Israel Public Affairs Committee in Washington in March that his “No. 1 priority is to dismantle the disastrous deal with Iran.” While tearing apart the accord is "technically possible," it is “extremely unlikely” that the other world powers that negotiated with Iran alongside the U.S. -- China, France, Russia, the U.K. and Germany -- “would follow our lead," U.S. Energy Secretary Ernest Moniz said in April.

Speaking at the Williston Basin Petroleum Conference in Bismarck, North Dakota in May, Trump also promised independence from the Organization of Petroleum Exporting Countries, although he didn’t elaborate on how that would be achieved.

 

Keystone Boost

 

At a press conference prior to the North Dakota event, he said he would approve TransCanada Corp.’s proposed Keystone XL oil pipeline, in return for the people of the United States being given "a piece, a significant piece of the profits."

Trump has also pledged to renegotiate or terminate the North American Free Trade Agreement, which limits the cases in which Canada can restrict energy exports to its southern neighbor. Ending that agreement could leave the U.S. more open to disruptions to supplies from Canada, although this seems unlikely given the country’s lack of alternative export options.

 

Support for U.S. Oil

 

At the same North Dakota press conference, the president elect said he would remove any restrictions on U.S. energy exports and that he would support hydraulic fracturing, although he didn’t elaborate on either.

Trump’s victory will support U.S. oil and gas production, with less regulation on exploration and a lifting of drilling restrictions in certain locations, Goldman Sachs Group Inc. analysts including Damien Courvalin and Jeffrey Currie said in a Nov. 9 report.

His support for the U.S. shale oil and gas industry has not been unequivocal, though. Trump had earlier caused concern among energy executives in Colorado when he said in July he supported letting local residents vote on fracking bans. In a statement after a meeting with oil executives in Denver last month, Trump’s campaign said he supports "safe hydraulic fracturing" and "energy production on federal lands in appropriate areas."

“America is sitting on a treasure trove of untapped energy —- some $50 trillion dollars in shale energy, oil reserves and natural gas on federal lands, in addition to hundreds of years of coal energy reserves,” Trump said during a keynote speech at the Shale Insight conference in Pittsburgh, a summit of natural gas producers. “I am going to lift the restrictions on American energy and allow this wealth to pour into our communities."

 

Wider Policies

 

Trump said he would open federal lands for oil and gas production, and free up offshore areas to energy development.

The biggest impact on crude markets may not come from Trump’s oil policies at all given the importance of decisions that influence wider economic development, trade, and international relations.

He pledged during Wednesday’s victory speech to double economic growth during his tenure. That would imply annual expansion of 3 percent, a level last exceeded in 2005.

Against that, he’s questioned climate-change science and vowed to withdraw from the Paris agreement to limit global warming, measures that would potentially redefine the nature of global energy consumption if coal returns as a growth fuel for power generation.

Lastly, observers including UBS AG and Nordea are now considering whether the U.S. will become more protectionist. Before the vote, Trump said China was a "grand master" at currency manipulation and was stealing American jobs. He threatened punitive tariffs of up to 45 percent on the country’s imports.

 

Source: Bloomberg

BP agreed to buy stakes in West African licenses held by Kosmos Energy for $916 million as the British producer builds its natural-gas business following an acquisition in Egypt last month.

BP will become operator and acquire a 62% working interest in licenses at four deepwater blocks off Mauritania, as well as an effective 32.49% interest in permits at two blocks off Senegal, the companies said Monday. Kosmos will keep 28% and 32.51% of the Mauritanian and Senegalese licenses, respectively, and will remain exploration operator.

“The deal gives BP a leadership position in an emerging world-class, low-cost gas basin with advantaged access to global gas markets,” the London-based company said.

Chief Executive Officer Bob Dudley said the project “brings together all the elements” needed to create a new liquefied natural gas hub in Africa. The Mauritania-Senegal basin will become an “important profit center” according to BP’s upstream CEO, Bernard Looney. The company last month purchased 10% of Eni SpA’s Zohr field in Egypt for $375 million, giving it access to one of the world’s largest natural gas discoveries in recent times.

Larger rival Royal Dutch Shell strengthened its position in natural gas and LNG with the $54-billion acquisition of BG Group in February.

Financial Capability

While energy exploration has slowed in Africa with the slump in oil prices, Kosmos and Cairn Energy have made discoveries off Senegal. That includes Kosmos’s mid-2015 discovery of the Greater Tortue complex, which is estimated to hold 25 Tcf of gas, according to Will Hares, an analyst at Bloomberg Intelligence.

“Kosmos is an explorer, and brings in an experienced operator with deep LNG experience and effectively funds their work program for the next several years,” Hares said.

Kosmos and BP also entered into an exploration partnership covering potential new ventures in Mauritania, Senegal and Gambia, according to the statement.

BP “brings financial capability, deepwater development and LNG expertise,” said Kosmos CEO Andrew Inglis, who was formerly BP’s upstream chief.

 

Source: World Oil

ConocoPhillips is planning to instigate a $5-billion to $8-billion divestiture program, which will primarily focus on North American natural gas, as the company seeks to bolster its operations.

The sale was one among a number of measures adopted, which include a 4% cut to next year's capital budget and a $3-billion share repurchase program, aimed at boosting the company’s “value proposition.”

“During the past two years, we have significantly transformed ConocoPhillips to succeed in a lower, more volatile price environment. We’ve lowered the capital intensity and break-even price of the company, lowered the cost of supply of our investment portfolio, and created strategic flexibility for future price cycles,” Ryan Lance, the company’s chairman and CEO, said Thursday. “We believe our plan offers a differentiated strategy within the E&P sector that is focused on free cash flow generation and improving returns to shareholders."

“The acceleration actions we’ve announced today will allow us to achieve our value proposition priorities at Brent prices of about $50/bbl,” added Lance. “These priorities include a debt target of $20 billion, a 20% to 30% payout of operating cash flows to shareholders, and modest production growth to drive margin and cash flow expansion. In setting out these priorities, our goal is to have strong resilience to low commodity prices with the ability to capture upside during periods of higher prices.”

 

The company’s 2017 operating plan includes capital expenditures guidance of $5 billion, a decrease of 4% compared with 2016 guidance of $5.2 billion and more than 50% lower than 2015 capital expenditures and investments of $10.1 billion. Spending in 2017 will focus primarily on flexible unconventional development programs in the Lower 48, conventional projects in Europe, Asia Pacific and Alaska, and base asset maintenance. Approximately $0.6 billion is included for exploration, which is primarily focused on unconventionals, appraisal of the Barossa discovery, and the closeout of deepwater Gulf of Mexico and Nova Scotia drilling obligations.

 

Full-year 2017 production is expected to be 1.540 MMboed to 1.570 MMboed, which results in flat to 2% growth compared with expected full-year 2016 production of approximately 1.540 MMboed when adjusted for 2016 expected dispositions. Growth is expected to come primarily from ramp up at APLNG in Australia, Surmont 2 in Canada and Kebabangan in Malaysia, as well as increased activity in the Lower 48 unconventionals, partly offset by normal field decline. The company’s production outlook excludes Libya.

 

The company continues to achieve cost reductions across the business. Guidance for 2017 production and operating expenses is approximately $5.2 billion, which results in adjusted operating cost guidance of $6 billion, a 9% improvement compared with 2016 adjusted operating cost guidance.

 

“We believe our company offers one of the most unique value propositions in the E&P sector,” said Lance. “We’ve reset virtually every aspect of the business—our capital program, our cost structure and our portfolio—during the recent industry downturn. Now, we’re in a differential position to generate free cash flow as prices recover and we implement our clear priorities for allocating available cash. In a future of volatile prices, we can demonstrate that our disciplined, returns-focused approach will deliver strong performance for all our stakeholders.”

 

 

Source: World Oil

NEW DELHI: Iran has given an ultimatum to ONGC Videsh Ltd over development of the coveted Farzad-B gas field in the Persian Gulf even as the Oil Ministry said it hopes to conclude a deal by February next year. 

Iran is reportedly unhappy with the $10 billion plan submitted by OVL, the overseas arm of state-owned Oil and Natural GasCorp (ONGC), for development of the 12.5 trillion cubic feet reserves in Farzad-B field and an accompanying plant to liquefy the gas for transportation in ships. 

 

"Several rounds of negotiations so far have been held with the Indian state company on the development of Farzad-B. But ONGC's financial proposal for the project is not acceptable," Iranian newspaper Financial Tribune quoted the nation's Oil Minister Bijan Namdar Zanganeh as having told Mehr News Agency.

 

While Indians want a reasonable rate of return on the investment, Iran is only offering a fixed fee for its efforts. The Indians feel the fixed fee is not remunerative enough and want a higher percentage, something that Iranians are resisting.

 

The field in the Farsi block was discovered by an Indian consortium led by OVL in 2008. It has an in-place gas reserves of 21.7 Tcf, of which 12.5 Tcf are recoverable. 

But India initially felt deterred from investing because of the fear of sanctions being imposed by the US. But with the lifting of sanctions this year, they are back discussing a master development plan involving investing $5 billion in field development and an equal amount in a LNG plant. 

Underscoring that Iran has set a deadline for the Indian firm to submit a reasonable development plan, the Minister was quoted as saying: "We won't wait any longer for the Indians and if they fail to propose a sound financial proposal in the meeting planned for this month in Tehran, we will change our mind."

 

The Indian Oil Ministry issued a statement saying that it continued high level engagement with Iran when Joint Secretary Sunjay Sudhir and OVL Director (Business Development) Sudhir Sharma visited Tehran on Tuesday to "discuss bilateral cooperation in the field of oil and gas including ongoing negotiations on Farzad-B gas fields". 

It said: "During the discussions, the two sides took stock of the progress since the April ministerial meetings and expressed satisfaction at the ongoing negotiations. Discussions progressed on the Heads of Agreement which will eventually lead to a definitive agreement." 

OVL is preparing a Master Development Plan for the gas field while also working on a gas pricing formula keeping in view of the global gas price scenario.

 

"The two sides agreed to make their best endeavours to conclude the definitive agreement by February 2017," the statement said.

 

SOURCE: Economic Times

Royal Dutch Shell plc, through its affiliate Shell Canada Energy, agreed to sell a total of approximately 206,000 acres of non-core oil and gas assets in Western Canada to Tourmaline Oil Corp. for a total consideration of roughly $1.037 billion.

The consideration is comprised of $758 million in cash and Tourmaline shares valued at $279 million. Subject to regulatory approvals the transaction is expected to close in the fourth quarter of 2016.

The acreage includes 61,000 net acres in the Gundy area of Northeast British Columbia, Canada, and 145,000 net acres in the Deep Basin area of West Central Alberta, Canada. The assets are a combination of developed and undeveloped lands, along with related infrastructure, producing 24,850 barrels of oil equivalent per day of dry gas and liquids.

“Shell retains a significant shale position in Canada and we are actively working to mature our attractive core asset base in the Montney and Duvernay,” said Andy Brown, Upstream Director, Shell.

“At the same time we are strengthening our shale business and creating shareholder value by selling assets that do not fit our near-term development plans,” he added.

Shell has a large shale portfolio focused on North America and Argentina, and is currently maturing this portfolio as a growth option for beyond 2020 with material value and substantial long-term potential.

 Source: Rigzone

Even after some signs of enhancement, women do not save enough funds for their retirement, finds a 2016 report from a financial education company, Financial Finesse. As per the report, which explores gender gaps in financial wellness, the gender gap is shrinking – presently at 8.9 percentage points, which gives a 37 percent improvement since 2012.

 

Still, just 22 percent of women between the age of 45-54 are on track for their retirement; 28 percent of the women aged between 55 to 64 ; and 33 percent of the women aged 65 and older. The report states that though the average American worker’s expectation of working is until at least age 66, the average age of actual retirement is closer to 61.

 

Does this mean it’s too late for those women 65 and older?

 

Not mandatory, says Kelley Long, a certified financial planner and Financial Finesse’s lead researcher on the gender issues. She said that some women are more motivated after the age of 60 to put cash away.

 

“While the last few years of work may not give them an opportunity for growth, they are able to put money away by cutting back on life costs,” Long days. “What I’ve been seeing is women at that point in their lives are saving everything past their living expenses. This is partly because, in their later years, they realize they can live on significantly less money."

 

Long also added that different people ready retirement differently, depending on their present stage in life.

 

“When you get closer to retirement age, it becomes clearer exactly what it looks like to you,” she said. “When you’re younger, retirement is almost an educated guessing game because you don’t know what your lifestyle will be in the future.”

 

The report evaluated that the median 25-year-old working full-time for about 40 years, and retiring at an age of 65, needs to save an amount between $1.5 and $1.7 million to meet the estimated average yearly expenses for people with the age of 65 and above.

 

“Those big numbers can be scary, but younger people should understand it doesn’t take a lot of concrete savings to get that amount because of compound interest and the years you have to save,” said Long. “It’s easy to get intimidated by the big number, but it’s also easy to save once you take it by the smaller number.”

 

Younger women, millennials in particular, seem to be struggling with saving enough for retirement.

 

About 18 percent of women between the ages of 30-44 are on track for retirement while only 16 percent of women aged younger than 30 are.

Long offered some advice. First, enroll in a company 401K savings plan if it’s offered.

“Try to start out contributing whatever your employer matches. If you’re not financially able to do that right off, add a percent every year if you get a raise,” she said.

 

Long also cautioned against investing too conservatively.

“If you’ve got more than 15 or 20 years [of working] to go, invest pretty aggressively,” she said. “Don’t pay attention when the stock market is weaker. In the long run, those investments will help you.”

 

Courtesy: Rigzone

Harrisburg, Pennsylvania, 7th October (Reuters) - Pennsylvania adopts new regulations regarding the exploration and extraction of natural gas via fracking, effective Saturday, 8th October in Pennsylvania, the first remodelling since the industry took off in the state more than 10 years ago.

 

With the implementation of the new rules, the state's department of environmental protection is allowed to require additional measures in case of fracking being conducted near public resources, and makes it necessary for the drillers to restore water supply that gets degraded through fracking operations.

 

Environmental groups hailed the new rules. An oil and gas industry group blasted the regulations, with a spokesman saying he expected legal challenges.

The rules have been under development since 2011, and they suffered oppression from the oil and gas industry and it's allies in the state legislature, where the regulations were rejected earlier this year.

 

Democratic Governor Tom Wolf, came to an understanding that gives conventional oil and gas wells varied rules than the 'unconventional' wells developed through fracking operations.

 

Hydraulic Fracturing i.e. fracking, incorporates injection of water, chemicals and sand at high pressure into the rock to withdraw natural gas and other products. Oppression has mounted due to the fact that the run-off from fracking operations has been blamed for contaminating water supplies in parts of the States.

 

In March, residents near Dimock in the northeast corner of the state won $4.2 million in damages from Cabot Oil & Gas for the contamination of well water. The verdict is being appealed.

Thomas Au of the Sierra Club in Harrisburg said one of the biggest changes in the new regulations involves industry reporting of spills and contamination. "It's much more thorough," he said.

 

Daniel Weaver, President, Pennsylvania Independent Oil & Gas Association boosted the new regulations in a statement, saying that they are a result of a "flawed, pre-determined and antagonistic development process."

 

Industries cannot challenge state regulations in court until they go into effect. Au said he expects there will be litigation over some of the new rules.

 

Source: Rigzone
(Reporting By David DeKok in Harrisburg)

Caelus Energy Alaska LLC has made a light oil discovery of 6 billion barrels in place off Alaska’s North Slope.

Based on the outcomes of two wells drilled by Caelus earlier this year on its Smith Bay state leases, and 126 square miles of existing 3-D seismic data, this estimate was calculated, Caelus said in a press release on October 4.
Caelus-Tulimaniq No.1 and step-out Caelus-Tulimaniq No.2 well encountered Gross hydrocarbon columns of more than 1,000 feet in both the with respective net pay of 183 and 223 feet. As a result of the seasonal time constraints, the company could not run the flow tests in the well, but Caelus said that extensive sidewall coring and subsequent lab analyses confirm the existence of reservoir-quality sandstones holding light oil ranging between 40 to 45 degree API gravity.

Company also predicts that the Smith Bay fan complex might possess more than 10 billion barrels of oil in place when adjoining acreage is included. The Smith Bay evolution could prospectively provide 200,000 barrels per day of highly mobile and light oil which should raise the Trans-Alaska Pipeline System (TAPS) throughput volumes and minimize the average viscosity of oil through the pipeline, extending the long-term viability.

According to the favourable fluids the reservoir accommodates, Caelus anticipates to attain about 30 to 40 percent recovery. It also reported that the supplementary drilling and seismic should improve oil-in-place estimates via delineation of undrilled fan lobs and channel complexes imaged on the original 3D seismic.

CEO Jim Musselman quoted “the discovery has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three to four decades.” He also expressed that the discovery is a solid proof that Alaska’s state tax credit programs are functional, adding that he was unsure that the company would have explored Alaska without these programs.

Tudor Pickering and Holt analysts were persuaded to observe the huge discovery of conventional oil in shallow waters of Alaska, but such a discovery prevails to be an exception to the rule, analysts stated in an October 5 note during their research. They will focus the market on Repsol’s exploration program at the Pikka unit on the North Slope this winter to supplement to its 1.4 billion barrels discovered hitherto, which is onshore and much closer to existing North Slope producing infrastructure, analysts added.

Analysts believe that “pertinent that this discovery was made by an E&P and not an IOC, and the CEO of Caelus has a strong exploration track record as one of the founders of Kosmos [Energy].”

Caelus is a private, Dallas-based exploration and production (E&P) firm founded in 2011 by Jim Musselman. The company is operator of the Oooguruk Unit on Alaska’s North Slope. Caelus is currently planning an appraisal program that will include drilling and the acquisition of new 3-D seismic data. The company is also studying and planning the facilities buildout which will process and transport oil to TAPS.

Courtesy: Rigzone