Latin America swaps oil flag for welcome mat

Big Oil is roaring back into Latin America, sweeping past the detritus of resource nationalism to scoop up acreage once reserved for national oil companies. Ho hum shifts the pendulum, but with a twist: most of the focus is now offshore.

Witness Mexico’s historic auction this week. ExxonMobil, Chevron, BP, Statoil, and Total, plus a smattering of independents, were awarded deepwater acreage in the Gulf of Mexico, some tantalizingly close to prolific developments on the US side of the maritime border. That includes Trion, the Perdido fold belt field that state-owned Pemex will develop with its new farm-in partner BHP Billiton. This wasn’t just a private-sector affair. China’s state-owned CNOOC picked up two blocks, the only bidder to go it alone.

Shell was conspicuously absent from the Mexican winner’s circle, even though it presented an offer for one of the blocks. The European major already has a full plate of offshore assets in Brazil, where it is the largest private-sector producer after state-controlled Petrobras, thanks to its BG acquisition early this year. Expect the gap to narrow as Petrobras’ legacy Campos basin fields decline and foreign firms prepare to operate sub-salt projects, a role that had been, until recently, the exclusive domain of Petrobras. A series of upstream tenders are scheduled for 2017. Oil companies like Shell, Statoil, and Chevron are keeping a close eye on Brazil’s evolving regulations and still-tumultuous politics.  Continue reading

Billion dollar question

ogci

“You spent more on this event than you do on renewables,” claimed a protester’s banner outside the Shard, the UK’s tallest building, last Friday.

The message was aimed at participants in the Oil and Gas Climate Initiative (OGCI) – some of the world’s largest oil and gas companies including Saudi Aramco, Shell, BP, Total, Italy’s Eni, Norway’s Statoil and Spain’s Repsol. Seven chief executives assembled in the Shard to pledge a total investment of $1bn over 10 years “to develop and accelerate the commercial deployment of innovative low emissions technologies”.

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Another pipeline ensnared

What’s the biggest news in US energy infrastructure these days? Ask a 2nd grader.

As I sat with my 7-year-old in the elementary school cafeteria one morning this week, one of her friends ran up with some shocking news: ‘bad guys’ are trying to build a pipeline that will leak chemicals into a river that Native Americans own! And with that, the Dakota Access pipeline construction project joins a growing list of mainstream energy boogeymen.

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The new normal?

Nymex WTI crude futures have only settled above $50/bl for four days this year. That’s been enough to spur a few US independents to announce mergers, increase capital outlay and step up drilling activities.

Crude futures have nearly doubled from the lows below $30/bl seen in the first quarter. Decisions by a handful of producers like Marathon Oil and Pioneer Natural Resources to loosen the purse strings points to the resilience of the US unconventional industry and shows how far the sector has come in terms of lowering costs and improving efficiency.  Continue reading

All eyes on Permian

As US crude prices breach $50/bl, all eyes are on the Permian basin, the Texas/New Mexico oil field that is most likely to lead a step up in drilling activity. The Permian is the playground for some of the most resilient US shale operators, such as Pioneer Resources and Occidental Petroleum.

Rig counts have fallen in the Permian basin during the price downturn, but it has stood out as one of the most resilient basins. The rig count in the Permian dropped by 39pc from 233 a year ago, compared to a  72pc drop in Texas’ Eagle Ford shale (to 29 rigs) and a 71pc drop in the Williston basin in North and South Dakota, (to 22 rigs).   Continue reading