International [Oil & Gas News] America Achieved Energy Independence As The World's Top Oil Producer (2018-2019)

[Rod1]

Meanwhile corrupted state-run oil companies are declining. Feels good man.

Thats the silver lining, petrostates have been against the ropes for quite a while.

 

[Pseudo Sane]

Russia's Putin says shale oil technologies are 'barbaric'
Sam Meredith | Wed, 20 Nov 2019​

https://www.cnbc.com/amp/2019/11/20/russias-putin-says-shale-oil-technologies-are-barbaric.html

'Barbaric' is a weird way to say 'outside of Russia's technical abilities'.

 

[Mendacious]

'Barbaric' is a weird way to say 'outside of Russia's technical abilities'.

Russia literally funds environmentalists in Poland and other places to oppose shale. Poland is one of the few European countries with significant shale deposits.

When I first found heard of this it was surprising (well not really) because when I think of Russian funded groups I think of nationalists and authoritarians

 

[Pseudo Sane]

Russia literally funds environmentalists in Poland and other places to oppose shale. Poland is one of the few European countries with significant shale deposits.

When I first found heard of this it was surprising (well not really) because when I think of Russian funded groups I think of nationalists and authoritarians

It's not surprising. Why wouldn't Russia fund any group which advances its interests by destabilizing their rivals? There is no reason not to fund everyone when the goal is conflict.

Shale is hard, though, and super capital intensive. To my understanding (I am definitely no expert) the only people with the infrastructure and technical know-how to make it viable on a large scale are American. None of the supermajors have wanted much to do with it, because it doesn't scale to their operations.

 

[Arkain2K]

Will OPEC Really Risk An Oil Price Crash?
By Liubov Georges | December 3, 2019​

The Organization of the Petroleum Exporting Countries and non-OPEC partners led by Russia, are now nearly two years into their production agreement and are expected to roll-over the accord through the end of June 2020 in order to stabilize crude markets and prices. Their goal has so far been elusive amid faltering demand growth and surging production from non-cartel members such as the U.S. and Brazil, which is expected to decrease OPEC’s market share in some of the world’s fastest-growing markets.

In their annual World Oil Market Outlook released in November, OPEC acknowledged that its global market share will drop to 31% in 2024 from 37% in 2018, as production declines by a staggering 2.2 million bpd within the next five years. Not surprisingly, many OPEC members aren’t keen to give up market share, and have been relentlessly producing above their pledged quotas, clouding the prospect of OPEC+ reaching consensus on an extension of the deal.

With less than a week left before the highly anticipated biannual meeting in Vienna on Dec. 5-6, key members of the OPEC+ alliance might need to reconsider their strategy on how to achieve balance in the market.

Oil prices have on average risen as a result of the OPEC’s production cuts, but this time it’s different. In the beginning of July, the group agreed to extend its pact through the first quarter of 2020, with a policy review meeting set in December. Since then, global crude benchmarks have barely responded.

The world economy may have avoided a recession, but trade war uncertainty, a protracted decline in global manufacturing and a slew of greenfield projects from up-and-coming producers all helped to undermine OPEC’s efforts to push prices higher. In short, “there are black swans all around us,” said Russian Energy Minister Alexander Novak.

Throughout the year, the ongoing trade war between the United States and China has taken its toll on global financial markets, and with it, the demand for crude oil. The trade dispute has hit export-driven economies such as Germany hard, with manufacturing activity slowing globally. Germany’s industrial output hit a decade low this year, as demand for its machinery in China started to plunge. Manufacturing is one of the most capital and energy-intensive parts of the economy, and the latest downturn suggests continued a slowdown in fuel demand and downward price pressure.

In response to the escalating trade tensions, the International Energy Agency, U.S. Energy Information Administration and OPEC lowered their forecasts for the world’s oil demand growth from 1.5 million bpd last year to between 1 and 1.2 million bpd in 2019, complicating the cartel’s tough balancing act. OPEC noted the typical 2 million bpd seasonal uptick in global oil demand during the summer did not happen this year for the first time on record.

In their Oil Market Report for November, the IEA said that global refinery crude throughputs are set to decline by 90,000 bpd this year, stating that this would be the first annual decline since 2009, and that this "partly explains the relative weakness of crude prices for most of 2019.”

Adding to the uncertainty, markets now expect a slew of new projects in 2020 from producers outside the alliance, namely Norway, Brazil and the United States.

Norway reported that crude production from the Johan Sverdrup field- the largest green-field project in the North Sea since 1990 - began ahead of schedule in October, bringing online as much as 660,000 bpd of oil at its peak. Brazil continues the development of its new pre-salt deposits, with oil production slated to grow by 24% to 3.2 million bpd by 2022, according to Wood Mackenzie data.

In its latest forecast, the IEA sees total non-OPEC supply expanding by a staggering 2.3 million bpd, nearly double the expected increase in demand of 1.2 million bpd.

Yet, it was U.S. shale that had the most disruptive impact on the energy markets this year. Despite forecasts of an impending slowdown, tight oil producers relentlessly defied critics and just last week reached a new record high of 12.8 million bpd.

The unexpected turn of events for both demand and supply have left OPEC+ with no good options. If OPEC+ fails to extend the production agreement, the price of oil will collapse, undermining the credibility of OPEC as an authority in the markets. In the most likely scenario of business as usual, OPEC’s three-month quotas extension has already been baked into prices and will likely fall flat or result in a modest selloff when announced.

On the other hand, OPEC may just surprise the markets, as it did so in the past and deepen the cuts – an idea that has been strutted by some OPEC officials this year. Deeper cuts would surely trigger a price rally into the end of the year but will be met with tough resistance from some of the cartel members that have seen their market share shrink over the last two years. As we enter the last month of the year, OPEC is set to choose from the lesser of many evils, with the outcome having a long-lasting effect on the demand-supply balance next year.

https://finance.yahoo.com/amphtml/news/opec-really-risk-oil-price-180000575.html

 

[Shinigami]

Thanks Obama...

in spite of Obama

now with Trump we are not dependent on terrorist nations for oiil

 

[Arkain2K]

in spite of Obama

If you want to participate in the adult discussion table, you first needs to learn how to read:

https://forums.sherdog.com/posts/141084973/

 

[Arkain2K]

U.S. shale producers begin restoring output as oil prices turn higher
Jennifer Hiller, Devika Krishna Kumar | June 2, 2020https://www.reuters.com/journalists/devika-krishna-kumar

U.S. shale oil producers are beginning to reverse production cuts as prices recover from historic lows, underscoring shale’s ability to quickly adjust to pricing and posing a challenge to OPEC as it considers extending production curbs.

U.S. producers slashed output in April and May as oil prices collapsed due to a supply glut and as restrictions on populations worldwide to slow the COVID-19 pandemic destroyed fuel demand.

Shale producers Parsley Energy Inc (PE.N) and EOG Resources Inc (EOG.N) on Tuesday disclosed plans to restore some or all of their output cuts. In North Dakota, state energy officials this week reduced by 7% an estimate of production shut-ins in the second-largest oil producing state.

Production coming back online is a fraction of what has been cut. Still, returning shale output may complicate deliberations among the Organization of the Petroleum Exporting Countries (OPEC) and allies when they meet on Thursday to consider extending an agreement to cut a record 9.7 million barrels per day (bpd) to offset the lost demand from the coronavirus outbreak.

Unlike OPEC and its allies, shale producers do not participate in government-mandated production cuts. They cut their output only when prices make pumping oil unprofitable.

For most shale producers, current prices are not enough to turn a profit on new wells, and U.S. oil companies are forecast to pare their output by as much as 2 million bpd this year.

Parsley plans to restore all of the 26,000 bpd it cut this spring and an EOG Resources executive told investors on Tuesday at an RBC Capital Markets conference it would reopen shuttered wells and add new ones in the second half of the year.

EOG, one of the largest U.S. shale producers which last year had more than 450,000 bpd of output, starting next month will open wells it had curtailed and “bring on wells that we’ve completed and not turned on yet,” said Kenneth Boedeker, EOG’s head of exploration and production.

https://www.reuters.com/article/us-...utput-as-oil-prices-turn-higher-idUSKBN2392UG

 

[Arkain2K]

OPEC+ Coalition Shaken as Iraq Pushed to Atone For Oil Cheating
By Grant Smith , Javier Blas , and Salma El Wardany | June 3, 2020

​

The grand alliance that’s helped revive global oil markets is being rattled by a long-running feud over members breaking their promises.

Just a day before a proposed gathering on Thursday, the OPEC+ coalition hurriedly backtracked from the meeting intended to green-light an extension of its deepest production cutbacks and prop up crude prices.

Saudi Arabia and Russia -- the leading producers in the group -- have lost patience with the errant behavior of the next-biggest member, Iraq, according to people familiar with the matter. While most of the main players are delivering their agreed share of output curbs, Baghdad is once again reneging on its commitments.

At stake is the unity of the 23-nation partnership, which has helped engineer a doubling in international oil prices following the battering meted out by the coronavirus crisis. If the Iraqis, and other delinquents such as Nigeria and Kazakhstan, don’t shape up then Riyadh and Moscow are warning they will start to phase out the supply curbs that are putting a floor under the market.

The kingdom and the Kremlin are pushing the stragglers hard -- not just demanding they implement the cuts already promised, but asking for deeper curbs in the coming months to compensate for their earlier failings.

“Riyadh and Moscow are not kidding about implementing some form of compliance-improvement mechanism,” said Bob McNally, founder of consultant Rapidan Energy Group and a former White House official. “Without it, they walk.

Impossible Choice
Such penance would be difficult for Iraq to accept. It made less than half of its assigned cutbacks last month, so compensating fully would require it to slash production by a further 24% to about 3.28 million barrels a day, according to Bloomberg calculations.

For a country still rebuilding its economy following decades of war, sanctions and Islamist insurgency, that’s a tall order. Resisting the temptation of selling crude during the current market rebound, which has brought prices back to about $40 a barrel, may prove impossible.

While Iraqi Finance Minister and Acting Oil Minister Ali Allawi did pledge to improve compliance with pledged cuts in an unusual Twitter post on Tuesday, he didn’t go any further.

The Organization of Petroleum Exporting Countries and its allies pledged in April to slash oil output by 9.7 million barrels a day, or roughly 10% of global oil supplies, to offset the unprecedented collapse in demand caused by coronavirus lockdowns.

A few weeks later, Saudi Arabia and its closest allies in the Persian Gulf pledged additional supply restraint of 1.2 million barrels a day in June.

Riyadh and Moscow are aligned on continuing cuts at the current level for an extra month beyond July 1, according to people familiar with the matter. But if they don’t receive assurances from Iraq and the other laggards at their next meeting -- currently scheduled for June 9-10 -- the group’s daily supply curbs will ease to 7.7 million barrels for the rest of the year.

Prince’s Priority
Enforcing better compliance among OPEC+ nations has been a motif since Saudi Energy Minister Prince Abdulaziz bin Salman was appointed.

In his first public outing after becoming energy minister, in Abu Dhabi last September, bin Salman was literally applauded for securing loud pledges of atonement from Iraq and Nigeria.

But his tenure has also been stormy, and the latest move has high stakes. In March, the prince’s attempt to force Russia to make deeper output reductions backfired spectacularly, splintering the entire alliance and igniting a destructive price war.

Two months ago, bin Salman’s achievement in successful restoring the OPEC+ coalition and forging an agreement for historic production cuts was delayed and ultimately overshadowed by a spat over Mexico’s contribution to the deal.

Consistent Laggard
Iraq’s recalcitrance is as old as the OPEC+ partnership itself, which was founded in 2016 to shore up oil prices against the onslaught of American shale.

Baghdad argued that the exemption from cutbacks it had received since the conflicts of the 1990s should continue. The central government also has limited influence over about 500,000 barrels a day of production from the semi-autonomous Kurdish region.

At the critical meeting where OPEC+ was formed, Oil Minister Jabbar al-Luaibi had to leave the conference room and call his prime minister for approval to accept the new strictures.

Nonetheless, recent history suggests the burden might not be as onerous as it appears, and that Iraq’s resistance could be overcome.

Last December, Baghdad was pressed to accept additional supply reductions, even though it had barely managed to cut output earlier in the year. Iraq knew it wasn’t expected to implement the entire package, but rather consider the new target as a spur to improve its performance, analysts said at the time.

“It feels like Groundhog Day again as compliance issues complicate the effort to conclude a short roll-over agreement,” said Helima Croft, head of commodity strategy at RBC Capital Markets LLC. “Nonetheless, we still think these issues will be resolved and that a short extension will be announced.”

https://www.bloomberg.com/news/articles/2020-06-03/-opec

 

[Arkain2K]

OPEC+ Keen to Keep U.S. Shale in Check as Oil Prices Rally
By Reuters | June 3, 2020

​

LONDON — When OPEC, Russia and their allies agreed in April to slash oil production, little did they expect that their initiative to prop up collapsing prices would be helped by a swift drop in U.S. output.

Now that crude has rallied on the back of those cuts from below $20 a barrel to $40 or more, the group known as OPEC+ faces a fresh challenge: stopping U.S. shale production delivering another surprise by recovering equally quickly.

"The plan is to stick to prices of $40-$50 per barrel because as soon as they rise any further to say $70 per barrel it encourages too much oil production, including U.S. shale," said a Russian source familiar with OPEC+ talks on the issue.

OPEC+ sources told Reuters on Wednesday that Russia and Saudi Arabia had reached a compromise to extend into July the group's existing output cuts of 9.7 million barrels per day (bpd), the equivalent of 10% of global output.

Those deep cuts had been due to be implemented in just May and June, before curbs were to be slowly eased.

Concerns about a resurgence of U.S. shale, which is already showing signs of revival, was one reason Moscow and Russia only backed prolonging cuts into July rather than agreeing a longer extension, two sources briefed on OPEC+ talks said.

OPEC and its partners have in the past set out policy for several months at least, but JPMorgan's Christyan Malek said the month-by-month approach was a "lesser of the evils" as global demand picks up after crashing due to the coronavirus crisis.

"Saudi and Russia are in damage control mode. It is not only about measuring demand. It is also about tracking U.S. shale on a month-by-month basis in order not to allow shale to rebound back quickly," he said.

In recent years, even as OPEC+ cut output to support prices, U.S. production of crude and other liquids surged, soaring to 20 million bpd. But, with breakeven for shale oil producers around $50-$70 a barrel, this year's price collapse sent U.S. output down by as much as 2 million bpd in April by some estimates.

Global oil demand, which tumbled by as much as a third in April, has been recovering slowly with the easing lockdown measures. Demand is expected to exceed supply in June.

But global inventories are still bulging, after 1 billion barrels of oil was pumped into storage when producers struggled to find buyers.

"The market is very fluid and given the uncertainty around the trajectory of demand recovery versus the risks of a second wave of the virus, OPEC has to be nimble," said Amrita Sen, co-founder of Energy Aspects.

"By doing this month-by-month, they keep everyone on their toes, making it difficult for others to invest," she said.

Bob McNally, founder of Rapidan Energy Group, said Moscow and Riyadh were worried enough about the outlook to want to extend the production cuts.

"But no question that crude's unexpected rally along with faster-than-expected North American shut ins has reduced the level of concern," he said.

https://www.nytimes.com/reuters/2020/06/03/world/europe/03reuters-oil-opec-analysis.html

 

[ElKarlo]

Thanks for the updates. I'm curious, but I'm so worried about the US and western civilization that I can't read this right now

 

[Arkain2K]

OPEC, Russia meet to extend record oil cuts, push for compliance
June 5, 2020

OPEC and its allies led by Russia meet on Saturday over plans to extend record oil production cuts and to push countries such as Iraq and Nigeria to comply better with existing curbs.

Nigeria’s oil minister said he expected a deal on an extension, which has the backing of Saudi Arabia and Russia, to be concluded in the video conference talks despite “reservations of one or two member countries,” which he did not name.

The alliance known as OPEC+ previously agreed to cut supply by a record 9.7 million barrels per day (bpd) during May-June to prop up prices that collapsed due to the coronavirus crisis. Cuts were due to taper to 7.7 million bpd from July to December.

OPEC+ sources have said Riyadh and Moscow agreed to extend existing record cuts throughout July, while they said Riyadh wanted a further extension to August and possibly even December.

Global benchmark Brent crude LCOc1, which slumped below $20 a barrel in April, rose nearly 6% on Friday to end at a three-month high above $42. That is still more than a third less than the price of oil at the end of 2019.

Saturday’s video conferences starts with talks between members of the Organization of the Petroleum Exporting Countries at 1200 GMT, followed by a gathering of the OPEC+ group at 1400 GMT, OPEC said on Friday.

“A formal announcement of a roll-over of the April 12 decision is expected to be made, the reservations of one or two member countries notwithstanding,” Nigeria’s minister of state for petroleum resources, Timipre Sylva, said in a statement.

OPEC sources said an extension of cuts was contingent on compliance as countries that produced above their quota in May and June must compensate by cutting more in future months.

Iraq, which had one of the worst compliance rates in May, according to a Reuters survey, agreed to additional cuts, OPEC sources said. [OPEC/O]

It was not clear how exactly Iraq would cut output and agree with oil majors working in the country to curtail production. Nigeria said it would also aim to reach full compliance.

https://www.reuters.com/article/us-...rd-oil-cuts-push-for-compliance-idUSKBN23D007

 

[Arkain2K]

30% of shale oil companies could go belly up if crude stays this cheap
By Matt Egan, CNN Business | June 23, 2020​

The American shale oil industry is celebrating its 15th birthday on a perilous note.

Gangbusters growth from shale has transformed the energy landscape, making the United States the world's leading producer of crude.

Yet the shale industry failed to turn those surging barrels into consistent profits. The pandemic has turned the world upside down.

And now muted crude prices, massive piles of debt and capital flight away from fossil fuels threaten to set off a tidal wave of bankruptcies and fire sales to larger players.

About 30% of US shale operators are technically insolvent at $35-a-barrel oil prices, according to a study released Monday by Deloitte. That means the discounted future value of these frackers is lower than their total debt.

By that same metric, about half of the US shale industry is technically insolvent at $20 per barrel. Crude breached that extremely low threshold in April, when US oil briefly crashed below zero to negative $40 a barrel. Oil has since rebounded to around $40 a barrel.

"Beneath this phenomenal growth, the reality is that the shale boom peaked without making money for the industry," the report said.

Outside of the companies that are technically insolvent, 20% of US shale oil operators are financially "stressed" at $35 oil, Deloitte found.

https://amp.cnn.com/cnn/2020/06/23/investing/oil-prices-bankruptcy-debt-shale/index.html
---

U.S. Shale Needs To Rethink Its Strategy To Survive
By Haley Zaremba - Jul 02, 2020​

U.S. shale is hurting. While the entire global energy industry has been hit hard by the novel coronavirus pandemic and its disastrous effect on oil prices and oil demand, West Texas shale takes the cake for the biggest economic collapse. While the international Brent crude benchmark did take a beating, the West Texas Intermediate crude benchmark stunned the world when it plunged below zero on April 20, closing out the day at nearly $40 in the hole. The results have been devastating. The Permian Basin has been swept by a tidal wave of bankruptcies, shut-in wells, and legions of fired and furloughed employees, converting untold numbers of Texan oil towns from boomtown to ghost town. Just this Sunday, Permian basin pioneer and industry titan Chesapeake Energy declared bankruptcy. It’s difficult not to read the shuttering of this shale golden child as a bad omen for the industry as a whole. Not that we didn’t see it coming.

“The collapse of Chesapeake Energy, one of the pioneers of the US shale industry, took few people by surprise,” the Guardian reported this week. “The embattled fracker slumped into bankruptcy weeks after the darkest month in oil market history, in a financial mess of missed interest payments, looming bond deadlines and crippling debts.”

Chesapeake Energy is not the first U.S. shale casualty of the COVID-19 pandemic, and it almost certainly won’t be the last. CNN reports that as much as 30 percent of all U.S. shale companies could go bankrupt if the price of crude doesn’t improve. “Broadly speaking, it all sounds like a near-term abyss for the sector, writes Rig Zone in a report this week. “What’s more data analysis by Deloitte suggests frackers have burned through $300 billion since 2010, and yet 30 percent of operators both large and small can barely break-even at $35 per barrel.”

But it’s also almost certainly too soon to start writing a wholesale obituary for United States shale (not that plenty of headlines haven’t already taken that leap). And while it’s true that there is no quick fix for the United States shale industry’s myriad woes, a slow recovery is possible, and even likely. As Rig Zone reports, while the short-term outlook is grim, “at the same time, an agile group of shale players with viable acreages saw the approaching near-term abyss. These firms scaled back their respective operations down in such a way that it left room for a slow but sure footed bounce-back within the same tumultuous cycle.”

As Oilprice reported back in May, “U.S. shale needs to slow down to survive.” The kind of long-term strategy and measured decision-making described by Rig Zone is crucial to keeping shale alive. Panicked decisions to reopen shut-in wells all at once will destroy the industry’s chances of bouncing back. “With WTI futures now firmly above $30 and having even flirted with $40, it is these very companies who are leading a slow recovery,” the report continues. “Their ranks include Parsley Energy, a company which demanded a coordinated oil production cut in Texas, and having failed to get one voluntarily cut 20 percent of its 126,000 bpd output.”

The road to recovery in the Permian will be slow, but steady, and it certainly will not reward impatience. But for those companies who are able to hang on--and, crucially, are able to work together to build a coordinated recovery--there is still hope for the future. The permian of the future, however, will never reach the heights of the shale revolution, and will be a much more consolidated field than before.

https://oilprice.com/Energy/Crude-Oil/US-Shale-Needs-To-Rethink-Its-Strategy-To-Survive.amp.html

 

[Arkain2K]

President Joe Biden on Wednesday signed a raft of executive actions to combat climate change, including pausing new oil and gas leases on federal land and cutting fossil fuel subsidies, as he pursues green policies he billed as a boon to the economy.

The orders map out the direction for the Democratic president's climate change and environmental agenda and mark a reversal from policies under his Republican predecessor Donald Trump, who sought to maximize U.S. oil, gas and coal output by removing regulations and easing environmental reviews.

Biden said building a modern and resilient climate-related infrastructure and a clean energy future for the United States would create millions of good-paying union jobs. Another order establishes climate considerations as an essential element of U.S. foreign policy and national security.

"It's not time for small measures. We need to be bold," Biden said.




---

​

U.S. Federal Judge Orders Resumption of Drilling on Public Lands in Setback for Biden
By Nichola Groom | June 15, 2021

​

A federal judge in Louisiana on Tuesday blocked the Biden administration's pause on oil and gas leasing on public lands and waters, dealing a setback to a key White House effort to address climate change.

The order granted a preliminary injunction to Louisiana and 12 other states that sued Democratic President Joe Biden and the Interior Department over the freeze on new drilling auctions. Louisiana is a major hub for offshore oil and gas production.

Biden paused the government's leasing auctions in January pending a review that is expected to be completed in the coming weeks. The move was part of a sweeping plan to rein in fossil-fuel extraction and combat the effects of climate change.

The Interior Department said it would comply with the ruling, but did not say when auctions might resume.

The nation's top oil and gas trade group, the American Petroleum Institute, issued a statement urging the administration "to move expeditiously to follow the court's order and lift the federal leasing pause."

The Center for Biological Diversity environmental group said in a statement the order "turns a blind eye to runaway climate pollution that's devastating our planet."

The judge's decision, which applies to onshore and offshore leasing nationwide, will remain in effect pending the final resolution of the case or orders from higher courts, according to a court document.

In the ruling, Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana said the states had met the requirements to establish that they would suffer injury from the pause on new oil and gas leases.

"Millions and possibly billions of dollars are at stake," Doughty wrote.

He also said the states had a "substantial likelihood of success" with their lawsuit.

In a statement, an Interior Department spokesperson said the agency's upcoming report "will include initial findings on the state of the federal conventional energy programs, as well as outline next steps and recommendations for the Department and Congress to improve stewardship of public lands and waters, create jobs, and build a just and equitable energy future."

The attorneys general of both Louisiana and West Virginia praised the decision. Louisiana Attorney General Jeff Landry called it "a victory not only for the rule of law but also for the thousands of workers who produce affordable energy for Americans."

The states joining Louisiana’s lawsuit were Alabama, Alaska, Arkansas, Georgia, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia. All have Republican attorneys general. Louisiana Governor John Bel Edwards is a Democrat.

One other state, Wyoming, has filed its own lawsuit challenging the leasing pause.

https://www.reuters.com/business/en...en-pausing-oil-gas-lease-auctions-2021-06-15/

 

[Arkain2K]

Fucking hell. So much for that short-lived Energy Independence. Back to begging the OPEC cartel to increase output again, after shackling our own production.

Well, at least we are saving the environment, supposedly by burning $4 Saudi gas instead of $2 American fuel.

​

Biden Caught Flatfooted By Skyrocketing Oil Prices
By Dan Eberhart, Contributor | Oct 4, 2021


​

The case for oil prices continuing their bull run and making a push toward $100 a barrel is strong. The bigger question is what the Biden administration plans to do about it?

More analysts see $100 oil as a distinct possibility before the end of the year due to a series of supply setbacks this fall. These include outages related to Hurricane Ida in the U.S. and the absence of additional Iranian barrels that the market was expecting by now.

While U.S. production is moving closer to pre-Ida output levels, the outlook for additional supply from Iran continues to dim.

Nuclear talks between Washington and Tehran are stalled and may stay that way as long as the new hardline Iranian President Ebrahim Raisi remains in power. That means U.S. sanctions on Iran’s oil sector will continue to keep about 1 million barrels a day of additional Iranian exports on the sidelines.

The expanded OPEC+ cartel, meanwhile, is feasting on high oil prices and has shown little inclination that it plans to add more supply beyond the 400,000 barrels a day per month increment it agreed to previously.

Adding to the bullish cocktail for crude is sky-high prices for natural gas and LNG in Europe and Asia. This will compel some power plants in these regions to switch from gas to crude oil for power generation during the peak winter demand season.

The potential uplift in oil demand from this fuel switching could be as high as 1 million barrels a day, according to consultancy Rystad Energy. For power plants with fuel-switching capability, there will be little appetite to buy LNG for the equivalent of $150 a barrel when oil products are cheaper.

Meanwhile on the demand side, the world is approaching pre-pandemic rates of oil consumption faster than many thought. The Delta variant, the top threat to demand, is getting beaten back in top consuming regions. There are no new lockdowns in Europe, there’s a robust recovery in China road activity, and the United States is lifting its ban on foreign travelers from November 2021.

All of this will increase oil demand — and prices — in the coming quarters unless there is a commensurate supply response.

OPEC+ holds about 6 million barrels a day of spare production capacity — excluding Iran — but if it chooses not to add more barrels, prices have nowhere to go but up.

Economic analysts Goldman Sachs GS, one of the most influential financial players in oil markets, expects international benchmark Brent prices to hit $90 a barrel by the end of the year. That’s an increase from their previous forecast of $80, which Brent was already closing in on as of Monday, Oct. 4.

It should be emphasized that Brent has already risen to around $80 even though global oil demand remains roughly 4 million barrels a day less than its pre-pandemic levels. It’s not hard to see where this is heading if we leave it up to OPEC+ to satisfy rising demand. Prices will go to the moon.

Between 2011 and 2014, consumers tolerated an average price of $107 a barrel. This dropped to $57 a barrel in the subsequent five years through 2019 largely because of the boom in America’s shale oil patch, which added vast amounts of non-OPEC supply that tempered prices.

However, the Biden administration and Wall Street concerns about the low-carbon energy transition have put shackles on shale.

U.S. oil production remains nearly 2 million barrels a day below its peak of 13.1 million barrels a day. The Energy Information Administration expects U.S. output to remain near 11.3 million through the end of 2021 before increasing to an average of 11.7 million barrels a day in 2022.

That’s a significant additional oil, but shale producers could do much more.

The Biden administration could improve the investment climate around shale by ceasing its attacks on the oil industry.

Investors’ ESG (environmental, social and governance) concerns were hampering the industry before Biden arrived but have been turbocharged by his administration’s policies aimed at keeping new oil and gas production in the ground.

These include cancellation of the Keystone XL Pipeline, an attempt to halt oil and gas leasing on federal lands, and plans to increase taxes and royalties on producers — as well as hitting them with big fees on methane emissions. Many of these punitive measures can be found in Democrats’ proposed $3.5 trillion budget reconciliation bill.

The Biden administration has failed to square its long-term climate ambitions, which call for a 50 percent reduction in greenhouse gas emissions by 2030, with the short-term needs of the American economy.

Oil demand will continue to grow through at least 2030, even if the world implements aggressive climate policies. The energy transition will take place over decades, not a few years. Washington can’t lose sight of this fact.

The U.S. oil industry will be needed to meet this demand unless we want to turn over total control over the global oil market to OPEC, as we did in the 1970s. Biden has already resorted to pleading with OPEC producers to add supply even though he has hands on the controls of the world’s largest oil and gas producing nation.

Biden and Democrats would be well advised to think twice before going down such a precarious path with the midterm elections just over a year away.

https://www.forbes.com/sites/danebe...ht-flatfooted-by-skyrocketing-oil-prices/amp/

 

[Officer Rick]

Knew this thread wouldn't generate much in response as it doesn't follow the woefully false narrative that America is in the midst of some kind of terminal decline. It's becoming entirely self-sufficient and it's only a matter of time before upholding the position as guarantor of global free trade and security (at great expense) are outright dumped altogether to a posture more closely resembling pre-1945. It's willfully going to break its own 'empire'.

This aged well

 

[Arkain2K]

Oil prices hit a 7-year high as industry feud with Biden administration continues
By Bethany Blankley | Oct 6, 2021​

Oil prices hit a 7-year high this week as American oil and gas companies continue to fight the Biden administration over policies restricting production.

As the economy began to reopen this year and the demand for fuel increased, President Joe Biden, through executive order, halted and restricted oil and gas leases on federal lands, stopped construction of the Keystone Pipeline, and redirected U.S. policy to import more oil from Organization of the Petroleum Exporting Countries and Russia (OPEC+) instead of bolstering American oil and gas exploration and production.

The U.S. led the world in oil and gas production for seven consecutive years prior to this year. It produced more oil and petroleum liquids than any other country, with Texas leading the way, according to U.S. Energy Information Administration (EIA) data.

Texas remains the top crude oil and natural gas producing state in the U.S. In 2020, Texas accounted for 43% of the nation's crude oil production and 26% of its marketed natural gas production, EIA reports.

In Texas and across the country, however, gas prices have soared. In Houston, the state’s largest city with close access to refineries, gas prices were historically low last year, hovering at $1.50 a gallon at the pump. Now gas in some areas of the state is $3 a gallon or more. In other states like California, gas prices have already surpassed $5 a gallon.

As of Oct. 6, the average national retail price was $3.22 a gallon for regular gasoline, according to AAA, roughly one dollar more than it was last year. The highest average was $4.42 in California.

On Oct. 4, OPEC+ said it planned to increase oil production by up to 400,000 barrels a day in November, causing a market reaction.

West Texas Intermediate, the U.S. benchmark, rose 2.3%, reaching a seven-year high. Its international counterpart, Brent, rose 2.5%, its highest level in three years. Oil is expected to reach over $100 a barrel by the end of the year, driving prices up even further.

In August, while the administration saw gas prices and inflation rising, and asked OPEC+ to increase oil output, it imposed harsher restrictions on American companies and failed to comply with a court order reversing an executive order.

In an Aug. 11 statement, National Security Adviser Jake Sullivan said, “While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022. At a critical moment in the global recovery, this is simply not enough.”

At the same time, the Western Energy Alliance and the Petroleum Association of Wyoming were fighting Biden’s ban on oil and natural gas leasing after the Department of the Interior failed to comply with a Louisiana court ruling overturning the ban. As gas prices were going up and many Americans in the oil and gas sector were still out of work, “the Interior Department still had not issued a plan on how it would conduct its reported comprehensive review of the federal oil and natural gas program” as directed by a January executive order, the Alliance argued.

“[F]or six months the leasing ban [was] completely futile, as no progress [was] made on the supposed reason for the ban in the first place,” the Alliance said.

On Oct. 4, White House press secretary Jen Psaki said at a press briefing, “We’re going to continue to use every tool at our disposal to ensure we can keep gas prices down for the American public.” But those in the oil and gas sector argue the surest way to do this is to allow American companies to produce more oil and gas and for the Biden administration to follow the law.

Instead, the federal government has buckled down on not allowing onshore lease sales to be held for the entire year of 2021.

Plaintiffs in Louisiana and Wyoming have asked the judges in their respective cases to force the Department of the Interior to comply with federal law and “meet its obligations under the Mineral Leasing Act. This administration is not above the law. It must comply with laws passed by Congress and orders by the federal judiciary, whether it agrees with them or not.”

Pete Obermueller, president of the Petroleum Association of Wyoming, said, “the Biden Administration must do more than say it will follow the law, it must follow the law in practice.”

https://www.thecentersquare.com/nat...cle_75397262-26b8-11ec-8110-2f727b34f38a.html

 

[Arkain2K]

Oil is back up to $80/barrel, it's time to resume pumping for the wells that aren't on federal land (those have been canned by Biden). Only this time only the smaller private companies are fueling the growth since the big public oil companies aren't in a rush to overproduce and drive prices down again.

Shale Oil Is Booming Again in the Permian
By David Wethe, Kevin Crowley and Sergio Chapa | October 11, 2021

(Bloomberg) -- Oil prices above $80 a barrel are once again spurring a revival of shale drilling in America’s biggest oil field, where production is expected to return to pre-pandemic highs within weeks.

Only this time, the surge is being driven by private operators, rather than the publicly traded companies that fueled the previous booms. And they see little reason to slow things down.

Increased access to financing and strong oil demand has created an opening for closely held producers, most of whom are backed by private equity or family money, to ramp up output in West Texas and southeast New Mexico. With the other major U.S. shale basins either holding steady or declining, according to BloombergNEF, the surging growth in the Permian isn’t likely to risk upsetting OPEC or tanking crude prices as it did in previous shale booms—at least not yet.

“It’s a win for the privates without being a loss for the oil markets,” said Raoul LeBlanc, an analyst at IHS Markit Ltd. “The big takeaway is that private growth won’t ruin the party.”

It’s a tenuous balance, and one that could shift quickly if oil prices continue to march higher. U.S. production growth was so strong over the past decade—and took so much market share from OPEC and its allies—that the cartel was willing to engage in all-out supply wars in both 2014 and 2020. The temperature has since come down as global demand for oil surges, especially amid a need to supply fuel-hungry Europe and Asia, removing some competitive pressure between suppliers.

That dynamic is exactly the signal private drillers have been waiting for. Trigo Oil & Gas LLC, three-person upstart company, just drilled its first two wells in Reeves County, Texas, near the New Mexico border, with a third on the way. After spending most of the pandemic trying unsuccessfully to finance the wells, Trigo scored deals in August with two Oklahoma City-based investors, right before a lease was about to expire, said its 37-year-old chief executive officer, Travis Wheat.

Private oil companies like Wheat’s will make up more than half of U.S. production growth next year, Rystad Energy said. And the surge has already started. According to onshore U.S. rig data from Lium LLC, little-known Mewbourne Oil Co., founded by Louisiana-born army officer Curtis Mewbourne in 1965, is now running 17 drill rigs in the U.S., more than Exxon Mobil Corp. and Chevron Corp. combined. Endeavor Energy Resources LP, owned by octogenarian billionaire Autry Stephens, and CrownQuest Operating LLC, led by Republican donor Tim Dunn, are together operating the same number of rigs as Permian heavyweight ConocoPhillips.

With private fleets running hot, production from the Permian Basin will likely reach its pre-pandemic record high of 4.9 million barrels a day as soon as this month and will continue climbing steadily in 2022, Rystad Energy forecasts. The Permian is a particularly attractive place to ramp up production because of its low breakeven costs and high rates of productivity.

So what are all the public companies in the Permian doing? They have ratcheted back growth rates significantly.

Chastened by a decade of poor returns, public companies such as Pioneer Natural Resources Co. and Diamondback Energy Inc. are paying back debt and passing profits back to shareholders via dividends and stock buybacks rather than reinvesting the bulk of their cash in new wells. Integrated majors Exxon and Chevron are also preaching prudence. Public shale companies can “walk and chew gum” with prices around $80 a barrel, IHS’s LeBlanc said, meaning they can keep growing production just modestly and still return significant amounts of cash to investors.

The restrained strategy for the public companies is working for them: Five of the 10 best-performing stocks in the S&P 500 this year are shale.

That newfound austerity means public oil companies in the U.S. now look like less of a risky investment, allowing them to attract the lowest bond yields they’ve ever seen. But because they’re using their cheap credit to retire debt instead of fuel new exploration, it will take until 2023 before the country’s total production will reach pre-Covid levels at current prices, three of the four major forecasters surveyed by Bloomberg said. Only Enverus forecasts the U.S. to be at its pre-pandemic high by December next year.

To be sure, shale oil production is notoriously difficult to predict: If prices march quickly upwards as has happened lately in natural gas, producers can respond with more wells within months. Rising costs to drill and complete in the shale patch due to supply-chain snarls and widespread inflation could also shift the equation. And if more public drillers buy out their private rivals, as was the case with Pioneer buying DoublePoint Energy LLC for $6.4 billion earlier this year, the new public owners might put a cap on activity. Egged on by investors eager to see more consolidation, there have been 159 deals in the U.S. oil and gas sector so far this year, according to data compiled by Bloomberg, more than in all of 2020.

But for now, private producers are finding open road with little pushback from OPEC or the majors to slow them down.

That’s music to Wheat’s ears. The former high school quarterback, who cut his teeth in the Barnett Shale after graduating college and named his company after the Spanish word for wheat, landed Trigo’s financing right at the nick of time. After cratering during the pandemic, West Texas Intermediate crude futures are up about 60% this year, making those brand-new wells highly profitable. West Texas Intermediate crude rose as much as 3.6% Monday to trade above $82 per barrel for the first time since October 2014.

“Capital was so hard to come across,” Wheat said. “We kept driving, kept moving forward, got fortunate and made a little bit of fate.”

Incentivized by higher oil prices, Saudi Arabia and the coalition of oil-producing countries are expected to get along with shale’s higher output, for now.

“The big assumption for next year is that as the shale growth continues, OPEC does want to keep the prices above $65,” Al Salazar, vice president of intelligence at Enverus, said in an interview. “We think OPEC+ will have to cut barrels in order to maintain prices in the high $60s sometime in the first half of next year.”

https://finance.yahoo.com/news/shale-oil-booming-again-permian-080003947.html

 

[Arkain2K]

U.S. Oil Prices Continue to Surge, Breaking Seven-Year Record
By Caroline Downey | October 11, 2021

As demand for energy continues to skyrocket due to the post-COVID recovery, U.S. oil prices have hit $80-a-barrel for the first time in nearly seven years.

On Monday, crude oil closed at $80.52 a barrel. The last time oil finished above $80 was October 31, 2014. While seasonal fluctuations in gas prices are typical, with hikes expected during the summer when leisure travel and transportation are at a high, they usually temper by the fall.

The national average price for gasoline has increased by 7 cents in the last week alone, landing at a steep $3.27 a gallon on Monday, according to AAA.

The price spike seems to contradict the administration’s claims that recent inflationary pressures are transitory.

As energy demand persists, supply has lagged significantly behind, prompting President Biden to demand that OPEC and its allies increase oil production. As one of his first acts in office, Biden curtailed domestic drilling by shutting down the Keystone oil pipeline and imposing a moratorium on new oil and gas drilling leases.

The cartel of 13 oil-producing nations mainly in the Middle East and Africa has the power to expand output and help anchor the price surges but has so far only committed to adding slightly more oil to the market.

The administration’s commitment to cut greenhouse gas emissions in half by 2023, in accordance with the Paris Climate Accords, could exacerbate supply issues.

The seven year record high for U.S. oil prices also comes amid a looming energy crisis, marked by surges in natural gas prices and coal costs in addition to oil.

In Europe, natural gas is now worth the equivalent of $230 per barrel, a 130 percent increase from early September and eight times higher than the same period last year, according to data published by the Independent Commodity Intelligence Services.

The story is similar in East Asia, where the cost of natural gas is up 85 percent from the beginning of September, settling at approximately $204 per barrel in oil terms.

https://news.yahoo.com/u-oil-prices-continue-surge-193337716.html

 

[Arkain2K]

Gas prices are at 7-year highs, and Biden can't do much about it
Analysis by Matt Egan, CNN Business | October 08, 2021

​

Americans are feeling pain at the pump -- and there's little the White House can do to shield them from it.

The highest oil and gasoline prices since 2014 are casting a shadow over the economic recovery from the Covid recession. Energy sticker shock threatens to intensify the nation's biggest inflation scare in more than a dozen years.

$3 gas also poses serious political problems for US President Joe Biden, even though the blame from Republicans is largely misplaced. Voters don't like high gas prices and, fair or not, they have a history of blaming whoever is in the White House.

There is "a growing concern in the White House about a perilous run up in prices that could derail the global recovery," Helima Croft, head of commodity strategy at RBC Capital Markets, wrote in a note to clients this week.

The Biden administration has said "all tools in the toolbox" are under consideration to combat high energy prices.

Unfortunately, industry sources say that toolbox is quite limited right now. And some options that may be under consideration could actually make the situation worse.

Energy diplomacy

Plan A was to get OPEC and its allies, known collectively as OPEC+, to unleash the spigots. That has not been successful, at least so far.

OPEC+ announced Monday it would only gradually add supply to the market, declining to heed calls from the White House to dramatically ramp up production.

The OPEC+ news sent US crude surging above $79 a barrel for the first time since November 14.

Prices at the pump also continue to climb. The national average price of regular gas rose to $3.24 a gallon on Thursday, up from $2.18 a year ago, according to AAA.

Mixed signals on tapping the emergency oil stockpile

Energy Secretary Jennifer Granholm suggested this week that the Biden administration is considering a Plan B, and possibly Plan C.

Granholm was asked at the FT's Energy Transition Strategies Summit if it would make sense to once again release barrels from the Strategic Petroleum Reserve, the nation's emergency stockpile of crude.

"It's a tool that is under consideration," Granholm said, adding, "certainly the president will consider that."

US oil prices briefly tumbled below $75 a barrel following those comments about the SPR, which the Biden administration tapped last month in the wake of Hurricane Ida.

However, the Energy Department later walked Granholm's remarks back, saying "there is no immediate plan" to tap the SPR. Following that clarification, crude rallied back near $79 a barrel.

'Bringing a squirt gun to a fight'

In any case, industry sources are skeptical that tapping the SPR unilaterally would make a meaningful dent in high energy prices.

"It would be a big mistake, like bringing a squirt gun to a fight," said Bob McNally, president of consulting firm Rapidan Energy Group. "You need a cannon. The SPR is too small."

Indeed, Goldman Sachs said releasing up to 60 million barrels of oil from the SPR would only be of "modest help," cutting the Wall Street bank's year-end forecast for $90 Brent crude by just $3.

"The timing of such an SPR release is surprising," Goldman Sachs strategists wrote in a note to clients on Wednesday. "Although oil prices have increased this year, they are not historically elevated."

Goldman Sachs noted that since 2000 past sales have been announced at an average price of $93 a barrel for Brent, adjusting for inflation.

Another problem: If releasing barrels from the SPR worked to drive down oil prices, it could discourage US shale oil companies from ramping up oil production. (US oil production remains below pre-Covid levels -- even as prices have more than fully recovered).

A further delay in US shale production would hurt natural gas production, "pushing US natural gas prices sharply higher," Goldman Sachs strategists noted. US natural gas prices have nearly tripled over the past year, raising the risk of higher home heating and electricity costs in the coming months.

"We believe such actions could perversely prove inflationary," Goldman Sachs strategists wrote of the SPR release.

'Truly disastrous'

Moving on to Plan C.

Speaking at the FT event, Granholm did not rule out the more extreme step of banning oil exports.

"That's a tool that we have not used but it is a tool as well," Granholm said. "We have an intergovernmental process that is going on. As [White House Press Secretary] Jen Psaki said, all tools are on the table. But some are more readily available than others."

However, the Energy Department walked that back too, saying there is no immediate plan to ban oil exports.

Some oil watchers are skeptical.

"I'm not sure Jennifer Granholm went entirely rogue. She's telegraphing the concern in the administration about oil and gasoline prices -- and a broader energy crisis globally," Croft, the RBC analyst, told CNN in an interview.

McNally, previously an energy adviser to former President George W. Bush, sees a 5% to 10% chance that Biden would start the lengthy process of banning oil exports -- a decision he strongly advised against.

"That would be truly disastrous and counterproductive," McNally said.

The problem is that oil is a globally traded commodity -- and US gas prices are set by Brent, the world benchmark. If the world suddenly lost access to US oil, Brent crude prices would likely move higher due to weaker supply. And US refiners require access to foreign oil to churn out gasoline, jet fuel and diesel. They can't rely on US shale alone.

That means an export ban could backfire on US drivers.

"Ironically, it would be particularly bullish for gasoline and refined products," Goldman Sachs strategists wrote.

Inflation jitters meet climate concerns

A sustained spike in energy prices would only exacerbate inflationary pressures.

Consumer prices climbed this summer at the fastest annual pace since 2008. The risk is that high prices at the pump will boost inflation expectations among consumers and CEOs -- a situation that can become self-fulfilling.

"We should watch this closely. Individuals build inflation expectations around their most recent experiences, such as at the gas station or stores," Roger Ferguson, the former vice chairman of the Federal Reserve, told CNN.

All of this brings the White House back to Plan A: Persuading OPEC+ to more aggressively return production that was sidelined during the height of Covid.

Of course, energy diplomacy with OPEC might interfere with another priority this fall: climate diplomacy.

Biden is huddling with world leaders in Glasgow later this month at COP26, a summit aimed at forging support for weaning the global economy off fossil fuels.

Behind the scenes, Biden officials will likely be forced to push OPEC to produce more fossil fuels. It's just another reminder of how tricky the energy transition will be -- and how addicted the world remains to oil.

https://amp.cnn.com/cnn/2021/10/08/business/gas-prices-oil-biden-opec/index.html