Saturday, June 18, 2016

Exxon CEO says Argentina shale investment may exceed $10 billion
BUENOS AIRES (Bloomberg) -- Exxon Mobil Corp. may invest more than $10 billion in Argentina’s Vaca Muerta shale formation in the next decades, Chairman and CEO Rex Tillerson said Thursday.
The oil giant has so far invested $200 million in the world’s second largest shale gas deposit, Tillerson said after meeting with Argentine President Mauricio Macri in Buenos Aires. Exxon has received approval to invest $250 million more for a pilot project in the coming months.
If the pilot project is successful, the company will start full development during a period of 20 to 30 years that could involve additional investment “that would be well in excess of $10 billion,” he said.
For Tillerson, Argentina’s vast Vaca Muerta shale region represents an opportunity to reverse production losses and add reserves after a $35 billion wrong-way bet on U.S. natural gas and a Russian exploration venture that was derailed by international sanctions. Exxon, the world’s largest oil explorer by market value, has designated Vaca Muerta as one of nine “key activity” areas in the Western Hemisphere and one of just four in South America, according to company data.
New Government
Macri has been courting international corporations from Total SA to Dow Chemical Co. to Coca-Cola Co. to invest in Argentina since taking office in December. Exxon, whose annual sales dwarf the economic output of all but about 45 of the world’s nations, is building a plant to strip impurities out of natural gas as well as a pipeline network to handle the output from its Vaca Muerta wells.
“I am very encouraged by the changes that have occurred here in Argentina, with the change in government,” Tillerson said, according to a statement from the Argentine government.
Exxon’s worldwide oil and gas output is lower than it was when Tillerson began his tenure as CEO a decade ago.
Last year, the company that traces its roots to the 1880s and John D. Rockefeller’s Standard Oil Trust failed to replace all the crude and gas it pumped with new discoveries for the first time in 22 years. In April, S&P Global Ratings stripped Exxon of the gold-plated credit rating it had held since the Great Depression.
Tillerson will reach Exxon’s mandatory retirement age of 65 in March. In a May 25 meeting with reporters after the company’s annual meeting in Dallas, he declined to say whether he would seek an extension of his tenure from the board.
Vaca Muerta, Spanish for Dead Cow, is one of the world’s top shale plays, covering an area the size of Belgium and considered key to restoring energy self-sufficiency in Argentina.

Saturday, June 4, 2016

Schlumberger acquires Omron Oilfield and Marine, Inc.

HOUSTON --Schlumberger has acquired Omron Oilfield and Marine, Inc., a U.S.-based OMRON Corporation group company, which is a global leader in automation technology and solutions.
“The addition of Omron Oilfield and Marine will enable us to strengthen our industrial automation control systems capabilities as part of our long-term strategy to develop an integrated well construction system,” said Ashok Belani, executive V.P., Technology, Schlumberger. “The control system plays a pivotal part in developing the software capabilities required to realize our vision to provide our customers with a step change in drilling performance.”
“This transaction enables us to leverage our U.S.-installed base with Schlumberger’s global reach to create new market opportunities internationally,” said Robert Bost, CEO, Omron Oilfield and Marine. “We will continue to build on our existing technology collaboration to expand control system capabilities in oilfield applications.”
Omron Oilfield and Marine is based in Houston, Texas and consists of 139 employees. The company designs, manufactures, sells, and provides aftermarket services for automated drive and control systems, power houses, and drillers’ cabins. The company also offers software-based drilling technologies on a rental or subscription basis. Omron Oilfield and Marine was founded in Houston as Industrial Drive Maintenance, Inc. (IDM) in 1973. It was acquired in 1999 by the OMRON Corporation, a Kyoto-based global leader in the field of automation, and is currently organized within the company’s Industrial Automation division.

Increased field decline on mature fields is becoming visible: Rystad

HOUSTON -- For the first time since the 1980s, the industry will experience two consecutive years of decreased global E&P investment, according to the latest analysis by Rystad Energy.
A lot of the investment cuts have been related to new projects and shale drilling, but the company has also observed lower activity on mature producing fields.
This decreased activity is starting to show on the production side, with the decline rates starting to increase.
Higher declines were observed for several of the major non-OPEC countries, such as Russia, U.S., Canada and Norway in 2014 and 2015.
For 2016, the decline is expected to continue increasing and in terms of barrels, this represents a 700,000 bpd increase in the yearly decline from the mature oil fields.
Foto PetroSociety.

Foto PetroSociety.Weatherford Canada drilling services facility gains API Q2 certification

HOUSTON, Texas -- Weatherford International plc announced that the Weatherford drilling services facility in Nisku, Alberta, Canada, received API specification Q2 certification. To gain certification, a facility must demonstrate a robust quality management system that assures personnel competency, risk assessment, contingency planning and other key elements.
The Nisku facility is the second Weatherford facility in Canada to achieve this certification. A Weatherford-Canada partnership facility in Paradise, Newfoundland, was certified last year.
“This certification validates the success of our service-quality and risk-mitigation programs, which are driven internally by our operational excellence and performance system (OEPS),” said John Raine, vice president of quality, health, safety, security and environment at Weatherford.
“API Q2 certification is a high bar of achievement,” said David Reed, region vice president, Canada, at Weatherford. “We were able to meet this challenge because of our strong culture of safety, quality and teamwork, as well as the implementation of OEPS.”

Foto PetroSociety.
OPEC ministers say oil market moving in right direction

VIENNA, Austria (Bloomberg) -- OPEC ministers gathering in Vienna for the group’s biannual meeting said the oil market is moving in the right direction as a supply glut dissipates.
While Saudi Arabia—the architect of the Organization of Petroleum Exporting Countries’ current policy—remained silent, ministers from the United Arab Emirates and Nigeria signaled that the strategy of letting low prices eradicate surplus production is working. Some of the world’s biggest oil traders said accelerating demand is also helping to rebalance the market.
“From the beginning of the year until now, the market has been correcting itself upward,” U.A.E. Oil Minister Suhail Al Mazrouei told reporters in Vienna on Tuesday. “The market will fix itself to a price that is fair to the consumers and to the producers.”
Those comments, echoed by his Nigerian counterpart, suggest renewed optimism among producers after oil prices rose more than 85% in New York since touching a 12-year low in February. There were still signs of division in the group, with Venezuelan Energy Minister Eulogio Del Pino saying Wednesday the price recovery had more to do with unexpected supply disruptions than a successful OPEC strategy.
Market Strategy
Forecasters including the International Energy Agency and Goldman Sachs Group Inc. say the crude glut is finally dwindling as the Saudi approach of squeezing high-cost suppliers—opposed by most OPEC members when it was unveiled in late 2014—finally pays off. The group is unlikely to change direction this week, according to analysts surveyed by Bloomberg.
"I think the market trends are better now” and the sense of urgency that spurred producers to mull an agreement to freeze production in April has dissipated, Emmanuel Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, told reporters in Vienna. While prices are moving “in the right direction, I think it needs more acceleration of the pace,” he said.
While Venezuela’s Del Pino lamented the failure of the freeze agreement, which Saudi Arabia blocked because Iran wouldn’t participate, he said unplanned disruptions in Canada, Nigeria and Kuwait had effectively capped crude production.
“If you take into account what happened in the last three or four months,” there has been a “de facto” freeze, Del Pino told reporters in Vienna Wednesday. More than 3 MMbbl of daily production are out of the market, he said.
Traders’ View
After two and a half years of oversupply, oil traders also see signs supply and demand are getting close to being in balance.
"The rebalancing is happening a bit faster than anticipated because of the disruptions," Marco Dunand, the head of Geneva-based trading house Mercuria Energy Group Ltd., said in an interview. "Demand is also stronger than expected” in countries from India and the U.S., he said.
The IEA forecasts oil demand will increase this year by 1.2 MMbpd, while Dunand said growth is likely to top 1.5 MMbpd, perhaps rising as high as 1.8 MMbpd.
Brent and West Texas Intermediate crudes, respectively the international and U.S. oil benchmarks, rose last week above $50/bbl for the first time in six months. Wall Street banks have lifted their oil price forecasts, with Goldman Sachs now saying oil prices could hover between $50 and $60 in the second half of the year.
“We have around 360 MMbbl of surplus inventories in industrialized countries that need to be diminished before prices head markedly above $50/bbl,” said David Fyfe, head of research at oil trading house Gunvor Group Ltd in Geneva.

Foto PetroSociety.
Statoil drills minor discovery, dry appraisal well in North Sea

STAVANGER, Norway -- Statoil Petroleum, operator of production license 035, is in the process of concluding the drilling of wildcat well 30/11-12 S and appraisal well 30/11-12 A. The wells were drilled 2 km south of the 30/11-9 A (Askja Øst) discovery, and about 35 km southwest of the Oseberg Sør facility in the North Sea.
The objective of well 30/11-12 S was to prove petroleum in three sandstone layers in Middle Jurassic reservoir rocks (Tarbert formation). The objective of well 30/11-12 A was to delineate in the event a discovery was made in well 30/11-12 S. The 30/11-12 S well encountered a 37-m oil column in the upper part of the Tarbert formation, of which about 30 m had good to moderate reservoir properties. Well 30/11-12 A, which was drilled further down on the structure, encountered similar reservoir rocks, but is dry.
Preliminary estimates place the size of the discovery at between 0.7 and 2.5 million standard cubic metres of recoverable oil equivalents. The discovery will be included in the evaluation of a new field development, along with other earlier discoveries in the area. Data has been collected and samples have been taken in both wells.
Both wells were drilled to vertical and TDs of 3,669 m and 3,671 m, respectively, and 3,609 m and 4,144 m below the sea surface. Well 30/11-12 S was terminated in the Ness formation and 30/11-12 A bottomed in the Tarbert formation. The wells are the 12th and 13th exploration wells in production license 035, which was awarded in 1969.
Water depth is 110 m. The wells have been permanently plugged and abandoned. Both wells were drilled by the Songa Delta drilling facility, which will continue its drilling campaign with the drilling of another wildcat well (30/11-13 S) in the same production license, where Statoil is the operator.

Wednesday, June 1, 2016

Foto PetroSociety.
Iran plans oilfield tenders in June for international companies

TEHRAN, Iran (Bloomberg) -- Iran plans to invite international companies to bid for oilfield development rights in June, a government official said, as the Persian Gulf country seeks to revive its energy industry after years of crippling sanctions.
The Oil Ministry will solicit bids in a tender round starting June 21 and running for a month, state-run Islamic Republic News Agency reported Tuesday, citing Mehdi Hosseini, chairman of the ministry’s oil contracts revision committee. National Iranian Oil Co. is working on a model investment contract for any development agreements, he said.
Iran is rebuilding its oil and natural gas industries and restoring sales of crude after international sanctions were lifted in January. The country, which will meet other OPEC members this week in Vienna, is targeting an increase in production and exports to pre-sanctions levels. It refused to join other producers in a push to freeze output at a meeting in Doha in April.
Seventy Fields
Foreign companies have been awaiting details of the investment contracts and bidding rules since Iran in November identified about 70 oil and gas fields that it would offer. International conferences planned as early as 2014 never took place due to sanctions. Would-be investors may now hesitate to commit to Iran out of concern that the U.S. may toughen its policy toward the country after choosing a new president in November, according to Edward Bell, a commodities analyst at Emirates NBD PJSC in Dubai.
“There’s plenty of opportunity in Iran,” Bell said Tuesday by phone. “It’s been two years now that we’ve been waiting for these contracts. But regardless of how ready or not Iran is to accept investment, nobody is going to be dying to move into Iran until after the U.S. election.”
Iran needs about $185 billion in investment to upgrade its oil, gas and petrochemicals industries by 2020, the Oil Ministry’s news service Shana reported, citing Amir-Hossein Zamaninia, deputy oil minister in charge of commerce and international affairs.
Iran’s crude production rose to 3.38 MMbpd in May, from 3.35 MMbpd in April, JBC Energy GmbH said Tuesday in an emailed report. The nation pumped 3.6 MMbopd at the end of 2011, before the U.S. and European Union intensified their sanctions, according to data compiled by Bloomberg. Iran is currently the third-biggest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia and Iraq.

Foto PetroSociety.
Oil pessimists exit market as supplies seen closer to balance

NEW YORK (Bloomberg) -- The oil market doomsayers are beginning to capitulate.
Speculators reduced bets on falling prices to the lowest level in 11 months as oil briefly breached $50/bbl on signs supplies are coming into balance.
Crude climbed 7.4% this month in New York amid lower U.S. production and unplanned disruptions in Canada and Nigeria. Prices are up almost 90% since February. Money managers’ short position in U.S. benchmark crude reached the least since June, according to data from the Commodity Futures Trading Commission.
"If you’ve been short since February this has been a very painful ride," said Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston. "There are always a few die-hards but otherwise you’d want to get out. This is indicative of the improving fundamentals."
West Texas Intermediate rose 0.6% on the New York Mercantile Exchange during the CFTC report week. Futures rose 0.3% to $49.50/bbl at 11:43 a.m. on Monday.
Oil has surged amid a spate of disruptions. Nigerian crude output has dropped to the lowest level in 27 years as militants increased attacks on pipelines in the Niger River delta. Fires that began early May in Fort McMurray shut about 1.2 MMbpd of production in Canada’s oil-sands region.
Market Balance
Analysts from the International Energy Agency to Goldman Sachs Group Inc. say the crude glut is dissipating as supply and demand move back into balance. Goldman increased its 2016 forecast for WTI to $44.60/bbl, from $38.40 in a report dated May 15.
"The confidence of the shorts has been shattered," said Phil Flynn, senior market analyst at Price Futures Group in Chicago. "A lot of bears continued to bet that prices would fall well into the rally. When relatively bearish banks like Goldman Sachs changed to a more bullish outlook, bears noticed."
U.S. crude output fell to 8.77 MMbpd in the week ended May 20, the least since September 2014, an Energy Information Administration report showed. The number of active oil rigs in the U.S. slipped by 2 to 316 last week, the lowest number since October 2009, according to data from Baker Hughes Inc.
Rig Count
"The rigs number underlines the bullish case," Flynn said. "They are still cutting the rig count and it’s going to take months before any price increase can result in increased oil production."
The short position in WTI fell by 3,047 futures and options combined to 60,932, CFTC data show. Longs slipped 2.6%, while net-long positions dropped 2.1%.
The Organization of Petroleum Exporting Countries is unlikely to reach any agreement to limit output when it meets June 2 in Vienna, as the group sticks with Saudi Arabia’s strategy of squeezing out rivals, according all but one of 27 analysts surveyed by Bloomberg.
"There wasn’t much of a move either way; the drop in both shorts and longs was small," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. "The market didn’t do much after hitting $50. They seem to be betting that the OPEC meeting will end with a whimper not a bang."