Repsol Makes Significant Gas Discovery in Indonesia (Thursday, 21 February 2019)

SKK Migas has confirmed a gas discovery at the Repsol-operated Sakakemang PSC, onshore Central Sumatra, Indonesia, according to Wood Mackenzie's research director Andrew Harwood.

Repsol's Kali Berau Dalam-2 well re-entered after well control problems in late 2018, having targeted the Pre-Tertiary fractured basement play. Prior to drilling, the prospect was estimated to hold in the region of 1.5 Tcfg, or over 250 MMboe.

Further appraisal will be required to determine the extent of the discovery and firm up resource estimates, with another well scheduled on the block for later this year. Wood Mackenzie estimates anything larger than 300 Bcf would be considered commercial, given proximity to gas infrastructure.

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"The discovery is just 25 km from the Grissik gas plant, which gathers and processes production primarily from ConocoPhilips-operated Corridor PSC, before sending it to buyers in Sumatra, West Java and Singapore.

"Besides operator Repsol, which holds a 45% stake in the discovery, the news is encouraging for the other PSC partners, including PETRONAS, which farmed into the block for 45% in January 2019, and MOECO which holds 10%. ConocoPhillips and PERTAMINA will also be interested in the result, as they look for resource that could extend the life of the Corridor PSC, scheduled to expire in 2023. The Corridor PSC is a key supplier of gas to Singapore and West Java, but is expected to see declining output from 2024 – a new source of supply would also be positive news for gas buyers in these markets.

"Indonesia's oil and gas regulator, SKK Migas, has recently upped its efforts to encourage exploration in the country as it faces dwindling output and a lack of new investment activity. The regulator has targeted the discovery of at least one new giant field (500 MMboe) by 2023.

The Kali Berau Dalam discovery could be the good news Indonesia needs to kick-start its exploration sector. If pre-drill estimates are realized, it would be the largest discovery in Indonesia since ExxonMobil's Cepu discovery in 2001."

Source: www.worldoil.com

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Halcón Resources Announces Leadership Changes

Floyd Wilson Steps Down from Management Team and Board James Christmas Appointed as Non-Executive Chairman of the Board of Directors $10 Million Estimated Reduction in Annual Overhead Costs as Part of Renewed Focus on Maximizing Shareholder Value Through Operational Improvement Denver, CO, Feb. 21, 2019 (GLOBE NEWSWIRE) — Halcón Resources Corporation (NYSE: HK) (“Halcón” or [Read more]

Source: BOE Report

Parsley Energy Announces Fourth Quarter 2018 Financial And Operating Results

AUSTIN, Texas, Feb. 21, 2019 /PRNewswire/ — Parsley Energy, Inc. (NYSE: PE) (“Parsley,” “Parsley Energy,” or the “Company”) today announced financial and operating results for the quarter ended December 31, 2018. The Company has posted a presentation to its website that supplements the information in this release. Fourth Quarter 2018 Highlights Net oil production increased 5% quarter-over-quarter [Read more]

Source: BOE Report

Goodrich Petroleum Announces Year-End Reserves And Haynesville Well Results

HOUSTON, Feb. 21, 2019 /PRNewswire/ — Goodrich Petroleum Corporation (NYSE American: GDP) (the “Company”) today announced year-end proved reserves, which grew 12% at an organic finding and development cost of $0.92 per mcfe.  The Company also reported results from two recently completed Haynesville wells. RESERVES The Company announced that proved oil and natural gas reserves as of [Read more]

Source: BOE Report

Kicking Mexico’s Addiction To U.S. Natural Gas

Mexico is looking for ways to reduce its overwhelming dependency on U.S. natural gas imports, which currently satisfy over 50 percent of its demand. This is the highest foreign gas dependency rate in the world, according to a senior adviser to Mexico’s president Andres Manuel Lopez Obrador. S&P Global Platts quotes Abel Hibert as saying that Mexico needed to diversify its sources of natural gas but also its entire energy supply as the overdependency on U.S. gas constitutes the “greatest strategic risk” for the country.…

Source: Oilprice.com

Venezuela Struggles To Find Buyers For Its Oil After U.S. Sanctions

Following the U.S. sanctions, Venezuela’s oil inventories have swelled to a five-year high, The Wall Street Journal reported on Thursday, citing satellite data—a sign that Venezuelan oil buyers are fleeing and the country sitting on top of the world’s largest crude resources is struggling to sell its oil. At the end of January, the U.S. imposed sanctions on PDVSA to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela. The path to sanctions…

Source: Oilprice.com

Venezuela Struggles To Find Buyers For Its Oil After U.S. Sanctions

Following the U.S. sanctions, Venezuela’s oil inventories have swelled to a five-year high, The Wall Street Journal reported on Thursday, citing satellite data—a sign that Venezuelan oil buyers are fleeing and the country sitting on top of the world’s largest crude resources is struggling to sell its oil. At the end of January, the U.S. imposed sanctions on PDVSA to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela. The path to sanctions…

Source: Oilprice.com

Cracks Begin To Form In Saudi-Russian Alliance

Could cracks be forming in the bromance between Saudi Arabia and Russia over oil production quotas? According to one analyst, the answer could be - yes. The background for one of the biggest structural changes in global markets in recent history dates back only a few years when OPEC defacto leader Saudi Arabia mismanaged its decades-old role as global oil markets swing producer and actually ramped up production in late 2014 in response to a then saturated oil market. The Saudi thinking at the time was straight forward. Since US shale oil producers…

Source: Oilprice.com

Gas Guru Who Corrected CIA says U.S., Russia Pick Wrong Fight (Thursday, 21 February 2019)

The scientist who built the most prominent Cold War energy advisory said the U.S. and Russia should set aside their fight over natural gas markets and focus on slashing fossil fuel pollution more quickly.

Nebojsa Nakicenovic helped set the stage for the global gas boom five decades ago as part of an elite scientific team that fixed Central Intelligence Agency estimates “that were all wrong.” He combined the CIA’s views with secret Soviet data to provide the first full picture of the Earth’s plentiful methane reserves. But the window to tap those deposits is already almost closed, he said.

“It was 50 years of retrograde,” Nakicenovic said in an interview. “Rather than achieving the transformation, we were working on the counter transformation in many ways. Now we have no time to waste. We need to be at zero emissions by mid century.”

The remarks are meant to refocus debate about how to shape Europe’s energy networks, an issue on the agenda when Austrian Chancellor Sebastian Kurz meets President Donald Trump in Washington on Wednesday. The scientist, who was hired by a joint White House and Kremlin initiative to advise on the issue, brings a historical perspective to the discussion about whether Europe should draw its energy through pipelines from Russia or in tankers of liquefied natural gas from the U.S.

Trump and Kurz will wade into the thorny debate over how the European Union gets its gas, and the issue is expected to come up during a bilateral meeting. Austria’s state-owned energy company has preferred financing pipelines that tie European industry together with Russian reserves. Trump wants allies to buy more U.S. liquefied natural gas and shun trade that could strengthen Russia’s military hand, especially the Nord Stream 2 pipeline.

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To Nakicenovic, who spoke Saturday at the American Association for the Advancement of Science in Washington, that debate misses the point. While answering the question will shape the fortunes of Russian companies led by PJSC Gazprom and American LNG exporters such Cheniere Energy Inc., the more important priority is to rein in the greenhouse gases damaging the planet, he said.

“Infrastructure is important insomuch as it provides the resilience to the system,” said Nakicenovic, who was born in Belgrade in 1949 and has been awarded Austria’s highest scientific honor. “More fragmentation through my country first policies” risks damaging it.

Nakicenovic has a credibility among policymakers built up as a director at the International Institute for Applied Systems Analysis, which won backing from Washington and Moscow in 1967 as a forum where science could weigh in on energy debates.

The institute was the outcome of a meeting between President Lyndon Johnson and Soviet Premier Alexei Kosygin, when the two leaders reached accord in Glassboro, New Jersey, to let their scientists find ways to ward off crisis. Since then, more than a half dozen Nobel Prize winners, have rubbed shoulders with Nakicenovic at IIASA, including this year’s laureate William Nordhaus.

At the moment, Europe is embroiled in a complex debate about how much weight to give energy security issues over the environment. Germany, Britain and Italy are phasing out power plants that use coal in favor of renewables, building up natural gas as a fuel that can fill the gaps. With Europe’s domestic gas production in decline, that’s meant relying more on imports from Russia, Qatar, Algeria and even the U.S.

American security concerns over pipelines linking Europe to Russia have come and gone “almost like a cycle,” the scientist said.

When U.S. diplomats warned this month that pipelines are “bankrolling Russian military aggression,” forecasters who labor in IIASA’s baroque palace just south of Vienna heard the echo of U.S. intelligence agencies 40 years ago, that “locked-in gas markets help the Soviet military buildup.”

Decades ago, Nakicenovic was among those recommending the world shift away from coal and build up low-emissions energy sources such as nuclear, solar and gas. While his initial forecasts from the 1980s were wrong about coal’s quick decline, the gas industry has grown rapidly in recent years with enlarged pipelines and more tankers and terminals for LNG.

It's scientists with intelligence-agency links like Nakicenovic who were called on to draw a picture of the gas industry because the business has always been so opaque. Even today, much of what flows through pipelines is sold on long-term contracts with terms that aren’t publicly available, making it difficult to understand what shapes flows of the fuel.

If gas becomes part of the climate solution, then leaders need to plan now for massive new flows to quickly replace the dirtiest fossil fuels and boost industry. That’s the view of executives at companies like Austria’s OMV AG, who project Europe faces a gas shortfall by 2030 that could swell to more than 100 billion cubic meters a year by 2035.

Under that scenario, there would be room for both American LNG and Russian pipeline produce to supply growing European markets.

Newly-built solar and wind could soon generate cheaper electricity than existing fossil fuel plants, according to forecasts from BloombergNEF. Under that scenario, gas could be marginalized, and new facilities being built across the continent would be relegated to producing only when consumption peaks or on windless and cloudy days.

In another scenario, pipeline politics could distract from the shift to renewables. New flows of gas coming from the LNG and the 746-mi (1,200-km) Nord Stream 2 pipeline could flood Europe with new supplies, provoking a “counter transformation” where gas undercuts all its competitors, said Nakicenovic.

“It has been clear that decarbonization with gas as a bridge was possible,” he said. “But it was also clear that it couldn’t be done with the energy sector as an island. It required a grand transformation.”

Source: www.worldoil.com

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An Underestimated Niche In Oil & Gas

Several hundred offshore oil and gas wells could cease production by 2021 in the face of today’s bearish oil market. As a consequence, so-called decommissioning obligations in the global oil and gas industry rose to $11.7 billion last year and are projected to hold steady at an average of about $12 billion per year from 2019 through 2021, according to Rystad Energy.  “2018 was an all-time high, and the next years are set to break this record,” said Rystad Energy partner Audun Martinsen. “To put this into context, the…

Source: Oilprice.com

Prices Gave Up Some Gains With Crude Inventory Build, But Still Supported By OPEC-led Supply Cuts

US crude oil stocks posted an increase of 3.7 MMBbl from last week. Gasoline and distillate inventories both decreased 1.5 MMBbl. Yesterday afternoon, API reported a crude oil build of 1.26 MMBbl while reporting gasoline and distillate draws of 1.55 MMBbl and 0.76 MMBbl, respectively. Analysts were expecting a larger crude oil build of 3.1 MMBbl. The most important number to keep an eye on, total petroleum inventories, posted a decrease of 2.5 MMBbl. For a summary of the crude oil and petroleum product stock movements, see the table below.

US crude oil production increased 100 MBbl/d last week, per the EIA. Crude oil imports were up 1.3 MMBbl/d last week, to an average of 7.5 MMBbl/d. Refinery inputs averaged 15.7 MMBbl/d (57 MBbl/d less than last week), leading to a utilization rate of 85.9%. Prices are still hovering near 2019 highs but are pressured by the crude oil build, slowdown in global economic and demand growth and uncertainty around US – China trade dispute. The ongoing OPEC-led supply cuts and declining Venezuelan and Iranian production are supporting prices. Prompt-month WTI was trading down $0.40/Bbl, at $56.77/Bbl, at the time of writing.

Prices have been on an upward trend and traded in the $54/Bbl to $56/Bbl range last week. WTI prices finished the day on Wednesday at their highest levels in three months as global supply surplus started decreasing due to OPEC-led cuts and Saudi Arabia’s willingness to balance the market. Bullish news on temporary supply outages and a weaker dollar also supported prices.

The pressure on prices due to high supply levels and weaker global economic and demand growth has been fading away for the last couple of weeks. Supply cuts by OPEC and non-OPEC countries have been successful so far, with Saudi Arabia reducing its output significantly in order to balance the market and bring support to prices. Declining Venezuelan production and US sanctions on Iranian crude also supported OPEC’s case to reduce global supply levels. In addition to OPEC-led supply cuts, prices have also been getting support from Saudi Energy Minister Khalid al-Falih’s comments on how committed the kingdom is to bringing a balance to the market. Khalid al-Falih has been very vocal stating, that Saudi Arabia can reduce their production further and beyond the pledged levels in March. On Wednesday, al-Falih said he hoped the oil market would be balanced by April and that there would be no gap in supplies due to US sanctions on Iran and Venezuela. News around Nigeria possibly joining the supply cuts also helped the uptick in prices. A spokesman for Nigerian President Muhammadu Buhari said that the country is willing to reduce oil output to secure higher prices. The partial shut-down of the Safaniyah oil field and the Yanbu refinery for maintenance by Saudi Arabia and the production halt in Libya’s largest oil field El Sharara are also supporting prices in the near term.

The continuously increasing US production and the skepticism around the US – China trade wars are the two main catalysts pressuring and limiting further price gains. US production can increase further in 2019 when pipeline takeaway capacity issues are alleviated in the Permian Basin. The US – China trade dispute – although it has thawed in the last couple of weeks – is still a wildcard and a huge threat to global economic and demand growth, if a deal cannot be reached.

The latest increase in prices is mainly due to the OPEC-led supply cuts and a tighter crude market. Now the market will be closely watching the tariff negotiations between China and the US and the potential impacts on the global economy. These negotiations will resume as the countries are trying to work out an agreement before the self-imposed March 1 deadline. Success in these efforts will lead to a more bullish environment for prices and likely foster enough support to test the WTI highs from mid-November at $57.96/Bbl. Failure to secure the agreement will pressure prices, initially down to $50/Bbl, where the market consolidated in early January.

Petroleum Stocks Chart

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Nigeria Could Soon Start Cutting Oil Production

Nigeria could start reducing its crude oil production in line with the OPEC-wide output cut agreed last December, President Muhammadu Buhari said as quoted by Nigeria media, speaking to a special envoy of the Saudi king Salman. The country was not this time exempted from the cuts: OPEC assigned it a production cut quota of 2.5 percent of the 1.7 million bpd the West African country was producing when the cut agreement was struck. This amounts to about 40,000 bpd, Energy Minister Emmanuel Ibe Kachikwu said at the time. However, instead of reducing…

Source: Oilprice.com

Nigeria Could Soon Start Cutting Oil Production

Nigeria could start reducing its crude oil production in line with the OPEC-wide output cut agreed last December, President Muhammadu Buhari said as quoted by Nigeria media, speaking to a special envoy of the Saudi king Salman. The country was not this time exempted from the cuts: OPEC assigned it a production cut quota of 2.5 percent of the 1.7 million bpd the West African country was producing when the cut agreement was struck. This amounts to about 40,000 bpd, Energy Minister Emmanuel Ibe Kachikwu said at the time. However, instead of reducing…

Source: Oilprice.com

Iran To Start Navy Drills In The World’s Key Oil Chokepoint

As the U.S. sanctions on Iran’s oil industry have already started to mount pressure on Tehran and have halved Iranian oil exports, the Islamic Republic announced that its Navy would hold an annual drill in the Strait of Hormuz—the world’s most important oil chokepoint. Iran will begin on Friday a three-day drill in the Strait of Hormuz, with maneuvers extending as far as the Sea of Oman and the Indian Ocean, The Associated Press quoted Iranian Admiral Hossein Khanzadi as saying on Iran’s state TV on Thursday. Warships, submarines,…

Source: Oilprice.com