Friday, September 13th, 2019
Happy Friday and welcome to Energized, your weekly look into the geopolitics, news, and happenings of energy markets.
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Now, onto this week’s issue.
Curated weekly oil and gas newsletter
Oil Prices and Markets
+ Fast Facts – Houston Chronicle “Fuel Fix” as of Sunday, September 8th, 2019
Light, sweet crude (dollars per barrel): $56.52
Last Week: $55.10
Natural Gas (dollars per million British thermal units): $2.496
Last Week: $2.285
Rig count (United States): 898
Last Week: 904
+ Total rig count falls below 900 for first time since 2017 – Houston Chronicle
The United States rig count continued its trend lower, falling below 900 for the first time since 2017. “Oklahoma, which has seen its rig count plummet by 45 percent in just 12 months, lost five rigs for the week, while Texas declined by three rigs, including two from the Permian Basin. North Dakota, with its Bakken shale, was the only state to add to its drilling rig tally.”
A good explanation from Barrons on the crude price differential between West Texas intermediate (WTI) and Brent and how this difference affects the economics of US production.
+ Who are the biggest U.S. methane emitters? – CBS News
A follow up to our environmental discussion from last week.
+Rice scientists develop clean tech to transform carbon dioxide into fuels – Houston Chronicle
An interesting follow up to our July Energized Spotlight Issue on Carbon Capture and Storage
“Chemical and biomolecular engineer Haotian Wang and his team of researchers at Rice University developed a cleaner and more efficient process to turn carbon dioxide into a feedstock for chemicals and fuel for electricity generation without using oil, natural gas or coal.”
+ Equinor completes $1B Gulf of Mexico deal – Rigzone
Equinor completed a $965 million deal with Shell Offshore Inc to acquire an additional 22.45% interest in the U.S. Gulf of Mexico (GOM) Caesar Tonga oil field. Equinor now has 46% in total. Anadarko Petroleum Corporation has 33.75% and Chevron has 20.25%.
The field now produces a total of more than 130,000 barrels of oil equivalent per day
+ Digital Twins: Enhancing subsea asset integrity – Oilfield Technology June 2019
How subsea asset integrity managers are using digital twins to reduce operational risks and costs from planning to decommissioning.
We’ve discussed digital twins, in-depth, throughout this newsletter. The article defines digital twins as “a virtual representation of an entire physical asset or a critical element of it.”
Digital twins help reduce costs and risks during planning, construction, operation, life extension, or decommissioning.
+ Bigger is better – Oilfield Technology July 2019
Before going into the article, it’s important to understand what coiled tubing is and why it’s the fastest-growing segment of the well-services industry. Check out this 2-minute video.
“While the number of wells completed in 2018 is just 69% of those completed in 2014 according to the US Energy Information Administration (EIA), the growth in lateral lengths has mostly offset this factor.”
This article breaks down why longer laterals across all the major US basins has led to a transformation in the coiled tubing and hydraulic workover market.
Coiled tubing is used to drill out the plugs left behind after hydraulic fracturing.
Longer coiled tubing strings can be used to reach the toes of these wells.
“With the increase in lateral length, the demand grew for new units to increase the capacity of coiled tubing to ensure reaching total depth (TD) of the well. Additionally, as the lateral lengths increased, the outer diameter of the coiled tubing needed to increase as well. The reduced space in the annulus between the coiled tubing and the completion confines the coiled tubing better as it buckles, allowing better transmission of force downhole and thus extending the depth the coiled tubing can reach before becoming frictionally locked. In order to support these developments, new coiled tubing units have been created that are able to carry heavier weight and larger capacity.”
+ Hitting the Breaks – Episode 126 of the Drilldown: In-depth answer to oilfield questions
- Well count in the Bakken has been going up but production is decreasing
- In 2018, US crude oil production grew 1.8 million bpd year over year (YOY)
- In June 2019, US crude oil production was growing at just 1.2 million bpd YOY. Granted, that growth faces tough comparables against 2018 figures but still, the production growth rate is declining nationwide
- The Spears brothers go on to predict that the growth rate will continue to decline to less than 1 million bpd YOY by the end of August, and maybe even down to 500,000 by August 2020.
- Again, these numbers are classic comparables, as in up 500,000 bpd from where we are today, but still, a gradual trend is forming towards a decrease in the production growth rate.
- So why is it slowing? As we have discussed in this newsletter, we are drilling and fracing fewer wells. As Richard Spears mentions, the wells are also not as good per foot. They could be overall the same, but they have longer laterals so there’s more rock exposure. Additionally, as we covered with Concho Resources recent quarterly report disaster, they found that drilling wells in close proximity to each other negatively affected the production of those wells.
Oil prices are likely to go up over time. There seems to be overconfidence on the supply side due to the sheer might of the shale revolution but inventory numbers, frac job numbers, etc. all point to challenges on the supply side, challenges that have led to unexpected higher costs.
Natural Gas/ LNG
+ Under Control – LNG Industry July 2019
“According to the GIIGNL, the total liquefaction capacity reached 406 million tpy at 2018 year-end. 42 countries were LNG importers with a global active regasification capacity of 868 million tpy. LNG tankers number 563 vessels globally, including 33 floating storage and regasification units (FRSUs) with a total cargo capacity of 83.1 million m3”.
The rest of the article goes onto explain how terminal headers can help to safely drive and control the pumps that transfer LNG from their tanks to various applications.
+ Luck of the Draw – Oilfield Technology June 2019
South American crude analysis by country
Mexico, for example, “imports over 800,000 bpd of gasoline and other refined fuels just to meet its domestic needs.”
“Pemex also announced plans to drill 506 new wells in 20 recently-discovered fields in 2019, more than triple the number drilled in 2018. The targets include 16 offshore projects and four onshore; new production platforms and other infrastructure are also slated. The plan is to add 300,000 bpd in new production by 2022.”
Have a great weekend!
EKT Interactive Managing Editor
Head Writer | Eau Claire Writing
Eau Claire Writing is a Houston-based freelance writing company that specializes in gas compression, turbomachinery, onshore and offshore drilling, and well service content for the oil and gas industry.