Advanced BioFuels USA

by Clifford Krauss (New York Times) A surge of oil production is coming, whether the world needs it or not.  The flood of crude will arrive even as concerns about climate change are growing and worldwide oil demand is slowing. And it is not coming from the usual producers, but from Brazil, Canada, Norway and Guyana — countries that are either not known for oil or whose production has been lackluster in recent years.

This looming new supply may be a key reason Saudi Arabia’s giant oil producer, Aramco, pushed ahead on Sunday with plans for what could be the world’s largest initial stock offering ever.

Together, the four countries stand to add nearly a million barrels a day to the market in 2020 and nearly a million more in 2021, on top of the current world crude output of 80 million barrels a day. That boost in production, along with global efforts to lower emissions, will almost certainly push oil prices down.

…

Then came the rise of hydraulic fracturing and drilling through tight shale fields, which converted the United States from a needy importer into a powerful exporter. The increase in American production, along with a choppy global economy, shaved oil prices from well over $100 a barrel before the 2007-9 recession to about $56 on Friday for the American benchmark crude.

Those low prices have forced OPEC and Russia to lower production in recent years, and this year many financially struggling American oil companies have slashed their exploration and production investments to pay down their debts and protect their dividends.

…

Like the shale boom, the coming supply surge is a sudden change in dynamics. Guyana currently produces no oil at all. Norwegian and Brazilian production has long been in decline. And in Canada, concerns about climate change, resistance to new pipelines and high production costs have curtailed investments in oil-sands fields for five consecutive years.

…

But exploration decisions, made years ago, have a momentum that can be hard to stop.

…

In Brazil, after years of scandal and delays, new offshore production platforms are coming online. Production has climbed over the last year by 300,000 barrels a day, and the country is expected to add as much as 460,000 more barrels a day by the end of 2021. In the coming days, Brazil is scheduled to hold a major auction in which some of the largest oil companies will bid for drilling rights in offshore areas with as much as 15 billion barrels of reserves.

In Canada, the 1,000-mile Line 3 pipeline that will take oil from the Alberta fields to Wisconsin, is near completion and awaiting final permitting. Energy experts say that could increase Canadian production by a half million barrels a day, or about 10 percent.

And the most striking change will be in Guyana, a tiny South American country where Exxon Mobil has made a string of major discoveries over the last four years. Production will reach 120,000 barrels a day early next year, rising to at least 750,000 barrels by 2025, and more is expected after that.

Guyana potentially has the most complicated future of the four countries. Its ethnically divided politics are sometimes turbulent, and Venezuela claims a large portion of its territory. But with the oil fields miles offshore, drilling is largely protected. In addition, Venezuela is mired in a political and economic crisis and unlikely to challenge a Chinese state company which has an oil investment in Guyana, along with Exxon Mobil and Hess.

…

NOW ENTERING THE ERA OF MODERATION: (Politico’s Morning Energy)

Epitome of America’s Shale Gas Boom Now Warns It May Go Bust (Bloomberg)

CA Governor Halts Fracking Permits, NY Governor In Standoff Over Natural Gas (Our Daily Planet)

Texas oil explorers say predictions of growth contradict dire reality (Houston Chronicle/Bloomberg)

Oil Soars as U.S. Killing of Iran General Stirs Fear of Conflict (Bloomberg)

Peak Permian oil output is closer than you think, investor says (Houston Chronicle)

America’s Radioactive Secret (Rolling Stone)

The Most Exciting Oil Plays Of 2020 (OilPrice.com)

Shale pioneer John Hess says key U.S. fields starting to plateau (Reuters)

Coronavirus and Oil-Price Plunge Buries Shale and Occidental’s Big Bet (Wall Street Journal)

Saudi Arabia’s oil exports to the US skyrocketed in the last month – March 2020 (CNBC)

Oil & gas industry sheds more than 6,000 jobs in a single day (Houston Chronicle)

OIL ASKS: WHOSE SIDE IS TRUMP ON? (Politico’s Morning Energy)

Energy-concentrated US banks may face credit issues as prices fall (S&P Global Platts)

Excerpt from Houston Chronicle/Bloomberg: Texas wildcatters, after years eye-rolling at shale skeptics, are now saying global analysts are underestimating just how severe the industry’s slowdown is.

What’s ticking folks off these days is how the International Energy Agency in Paris and the Energy Information Administration in Washington still predict robust U.S. production growth next year, despite the dire reality on the ground. The IEA expects an increase of 900,000 barrels a day, while the EIA forecasts 1 million, which would mean practically replicating this year’s expansion.

Those projections don’t jibe with the vibe in Texas, home to about half of U.S. crude output. Capital-hungry producers are being starved of funding, stocks have plunged and there’s been zero appetite for public offerings, making the downturn potentially more enduring than previous price-related busts.

…

So far, an unclear picture has kept oil futures in New York mostly stuck between $50 and $60 a barrel for almost six months.

Gloomy views from Texas could have something to do with recent developments in the Lone Star state. Just as the industry was recovering from the last downturn, more than 1,000 layoffs have been announced this year as drillers and their hired hands seek to cut costs. Investment banks have also had to trim staff locally thanks to a lack of dealmaking.

…

Of course, independent explorers aren’t the only drivers of growth. Exxon Mobil Corp. and Chevron Corp. have been beefing up their presence in the Permian. Plus, chatty CEOs with skin in the game have a clear incentive to talk up an impending slowdown that would bolster oil prices.

…

On top of their newfound financial discipline, a number of producers have run into disappointing results from wells that were placed too close together.

…

Then there’s the rapid decline of shale-well production. In the top five shale basins, wells that came on in 2018 are declining at their fastest rates yet, according to David Ramsden-Wood, the former chief operating officer of Permian producer Franklin Mountain Energy.

“These factors have to be playing a bigger role than analysts think,” he said. “Productivity isn’t increasing.”  READ MORE

Excerpt from OilPrice.com: For the US shale industry, the future hangs in the balance. It’s now official: after a phenomenal decade-long run that has propelled the United States to the top of the oil producers’ league, America’s second shale boom is running out of gas.

According to the US Energy Information Administration, drilling in the Permian–easily the most prolific of the shale basins–declined 11% in the nine months to August. Output growth over the next year is expected to clock in at just 370,000 barrels a day–the slowest clip in four years. With oil prices remaining stubbornly low and no respite in sight, drillers in the shale patch are struggling and rig count has seen a steady decline.