Latest News

    Shell Delays On LNG Canada Export Terminal (Saturday, 6 February 2016)

    6 Feb 2016, 11:00 pm

    British Columbia's ambitions to become North America's next major liquefied natural gas exporter took another hit on Feb. 4, as Royal Dutch Shell pushed back a final investment decision (FID) on its LNG Canada project to late 2016.

    The delay came as Europe's largest oil company reported its lowest annual income in over a decade and said it would take further steps to cut costs to cope with weak oil prices if needed.

    LNG Canada, located on British Columbia's rugged northern coastline, is one of the frontrunners in a now-slowing race to build Canada's first LNG export terminal. It has already been granted its key environmental permits.

    A Petronas-led project, also in the province's north, was given a conditional FID in June 2015, but an environmental review is still underway and could be further delayed by new rules requiring reviews to consider the emissions of upstream gas production.

    British Columbia's ruling Liberals, meanwhile, had been banking on having three LNG export terminals in operation by 2020, delivering new jobs in the near term and bolstering government coffers in coming years.

    Shell has in the last year scrapped numerous multibillion-dollar projects, including a controversial exploration project in the Alaskan Arctic Sea, the Bab sour gas field in Abu Dhabi and Carmon Creek oil sands project in Canada.

    "We are postponing the final investment decision on LNG Canada right through the end of this year," Chief Executive Ben van Buerden told investors on a conference call.

    The LNG Canada partners - Shell, along with PetroChina Co. Ltd., Korea Gas Corp. and Mitsubishi Corp. - had planned to take FID in the first half of 2016.

    Despite the delay, the team on the ground remained upbeat, noting that early work is moving ahead and the added time will be used to further derisk the C$25 billion ($18.22 billion) to C$40 billion ($29.15 billion) development.

    LNG prices are sinking as demand for the super-chilled gas slows and new supply from the United States, Australia and Russia is set to hit the market through 2021.

    Despite the near-term glut, Shell executives said they anticipate demand from China and other countries to increase through the next decade. ($1 = 1.3724 Canadian dollars)

    Source: www.oilandgasinvestor.com

    Please leave comments and feedback below

    hello

    'Monumental disaster': California Attorney General Sues Company Behind Massive Methane Leak (Saturday, 6 February 2016)

    6 Feb 2016, 10:00 pm

    California Attorney General Kamala Harris has filed a lawsuit against the gas company responsible for the methane gas leak near Los Angeles, calling it a “monumental environmental disaster.” Over 30 suits and probes related to the disaster are pending.

    On Tuesday, Harris joined both Los Angeles City Attorney Mike Feuer and Los Angeles County in a revised civil complaint filed against Southern California Gas Company (SoCal Gas), a subsidiary of the San Diego-based Sempra Energy. The California Air Resources Board, represented by Harris, also joined the lawsuit.

    A methane leak from an underground gas storage facility in Aliso Canyon was first detected on October 23 last year, but no official cause has been given for the event that has forced 6,600 homes in the Porter Ranch area of Los Angeles to be evacuated.

    “This gas leak has caused significant damage to the Porter Ranch community as well as our statewide efforts to reduce greenhouse gas emissions and slow the impacts of climate change. My office will continue to lead this cross-jurisdictional enforcement action to ensure justice and relief for Californians and our environment,” Harris said in a statement on Tuesday.

    On Monday, SoCal Gas released an “incident update,” citing its own success in drilling past 200 feet of caprock above the storage zone. The next step is more drilling, but will be within the storage reservoir, requiring care and accuracy to intercept the targeted well at “the appropriate angle and depth,” the statement read. The goal is to stop the leak by the end of February.

    The updated lawsuit contends that by causing the release of some 80,000 metric tons of methane so far, SoCal Gas broke health and safety codes, public nuisance laws, and violated hazardous materials reporting requirements. Furthermore, it alleges the company’s business practices were unethical. Civil penalties, injunctions, and restitution are all sought to hold the company accountable.

    So far, there are 11 governmental lawsuits or investigations on the local, state and federal level, and 20 private lawsuits waged by affected residents against SoCal Gas.

    California Governor Jerry Brown recognized the situation as a state of emergency on January 6.

    Source: www.rt.com

    Please leave comments and feedback below

    hello

    Why Aren't Oil Producers Turning Off the Taps? (Saturday, 6 February 2016)

    6 Feb 2016, 8:00 pm

    Around 3.4 million barrels per day (b/d) of oil production is cash negative at a Brent oil price of $35, Wood Mackenzie, a source of commercial intelligence for energy sector says in its latest report.

    Since the dramatic drop in prices from late 2014, there have been few halts in production – with around 100,000 b/d shut-in globally to date, the intelligence group said.

    According to Wood Mackenzie, the areas with the largest volumes shut-in so far have been Canada onshore and oil sands, conventional US onshore projects and aging UK North Sea fields. However, Wood Mackenzie cautions that the number of shut-ins is unlikely to increase at the rate some might expect, as many producers hold out in the hope of a price rebound.

    Stewart Williams, Vice President of upstream research at Wood Mackenzie explains: “Our latest 2016 production data indicates that with Brent crude oil prices at $35 per barrel ($/bbl), 3.4 million b/d of oil production is cash negative, which equates to 3.5% of global supply (96.1 million b/d).”

    Wood Mackenzie’s latest study collates oil production data from over 10,000 fields and calculates the cash operating costs – identifying the price at which the fields turn cash negative, and the volume of oil production associated with this price level.

    Williams continues: “Since the drop in oil prices from late 2014, there have been relatively few production shut-ins with less than 0.1% of global production halted so far – around 100,000 b/d globally.”

    So why aren’t producers turning off the taps?

    Robert Plummer, Vice President of investment research at Wood Mackenzie explains: “Being cash negative simply means that production costs are higher than the price that the producer receives and does not necessarily mean that production will be halted altogether. Curtailed budgets have slowed investment which will reduce future volumes, but there is little evidence of production shut-ins for economic reasons.

    “Given the cost of restarting production, many producers will continue to take the loss in the hope of a rebound in prices. In terms of our current oil price forecast, we have recently revised our annual average to $41 per barrel for Brent in 2016. The operator’s first response is usually to store production in the hope that the oil can be sold when the price recovers. For others the decision to halt production is more complex and we expect that volumes are more likely to be impacted where mechanical or maintenance issues arise and operators can’t rationalise further investment at current prices,” Plummer adds.

    The areas hardest hit are Canada onshore and oil sands, conventional US Onshore projects and some aging UK North Sea fields. Wood Mackenzie attributes the hit on Canadian production from oil sands and conventional onshore to high costs and distance from market place. There have also been production shut-in from US ‘stripper’ wells (onshore, ultra-low output wells) and in the North Sea, where some operators have prematurely ceased production of aged fields.

    Plummer elaborates: “At a Brent oil price of $35, Canada has 2.2 million b/d of production which has a negative cash operating cost – predominantly from oil sands and small producing conventional wells in Alberta and British Colombia. Venezuela is second with 230,000 b/d from its heavy oil fields, followed by the UK with 220,000 b/d.”

    Williams adds in closing: “In the past year we have seen a significant lowering of production costs in the US, which has resulted in only 190,000 b/d being cash negative at a Brent price of $35. In fact, the biggest reductions have been from tight oil, the majority of which only becomes cash negative at Brent prices well-below $30/bbl.”

    Source: www.offshoreenergytoday.com

    Please leave comments and feedback below

    hello

    Fitch Sees Dayrates Down for Offshore Drillers (Saturday, 6 February 2016)

    6 Feb 2016, 7:00 pm

    Offshore drillers, companies providing drilling rigs for the oil and gas industry’s marine exploration efforts, continue to face murky market conditions, and according to Fitch ratings agency, the situation is nowhere nearly close to improvement.

    According to Fitch, a 70% drop in oil price, and the offshore rig oversupply cycle have led to a continued market dayrate weakness.

    The ratings agency has thus revised its base case market dayrates for high-specification ultra-deepwater rigs to $275,000/day.

    “This is a downward revision from our previous base case estimate of $300,000/day due to the increasingly competitive contracting environment,” Fitch said in a statement on Thursday.

    Furthermore, Fitch expects other rig classes to see similarly steep price discounts. Fitch also said that market dayrates could reach cash breakeven levels – about $200,000/day for high-specification ultra-deepwater rigs – but continues to expect operators will be cautious, particularly larger, established drillers, about bidding at or below cash breakeven levels.

    While the low rig price might seem attractive for oil companies, Fitch is of the opinion that careful consideration will be given to an operator’s size, staying power, geological familiarity, and historical operating performance.

    Rationalization & Recovery

    Fitch expects floaters rationalization process will generally be more orderly than the jack-up market and that it will rebalance more quickly.

    “Fitch believes that the more competitive jack-up market environment provides fewer economic incentives for operators to rationalize over the near-term,” the company said.

    Offshore rig demand could lag a recovery to supportive oil price levels – currently estimated at $65 – $70/barrel for deepwater – by at least six months to a yearto encourage operators to set aside more cash to offshore projects, Fitch said.

    Fitch has pushed back its recovery inflection point estimate into the second half of 2018 from late 2017/early 2018 with a risk for further inflection point revisions. A recovery to more robust operating and financial metrics is not likely to happen until after that point, Fitch said.

    Source: www.offshoreenergytoday.com

    Please leave comments and feedback below

    hello

    Oil Majors Converging On A New Hotspot? (Saturday, 6 February 2016)

    6 Feb 2016, 6:00 pm

    Even with oil at $30, the petroleum industry continues to see a few bright spots. Particularly when it comes to offshore activity — such as Shell this week announcing the first natural gas production from its ground-breaking Corrib field off the northwest coast of Ireland.

    And this week also saw another unexpected event in the offshore sector — halfway around the world in South America.

    That came in Uruguay. Where major European producer Statoil announced a surprise farm-in on one of the world’s up-and-coming exploration areas.

    Statoil said Monday that it will acquire a 15 percent interest in block 14, majority-owned by Total in the offshore of Uruguay, just south of Brazil

    Statoil is acquiring a 15 percent interest in block 14, offshore Uruguay (source: Offshore Magazine)

    This is an interesting deal, given that most major E&Ps are cutting back spending on new projects right now. Showing that Statoil must see something it finds very attractive here — especially given this is a major stepout from the company’s core operating area of the North Sea.

    That something could be results from 3D seismic surveys recently completed by Total over block 14. Which are perhaps showing some sizeable leads on drilling targets here.

    The other partner currently involved in the block is ExxonMobil — showing that a range of majors are converging in this part of the world.

    The prize here could be something similar to recent offshore mega-discoveries in Brazil, given that the Uruguay blocks are located just south of those basins. With Uruguay perhaps being a more attractive way into such plays at the moment, after scandals and corruption have swept over the Brazilian petroleum sector the last few months.

    The first drilling at block 14 is expected within a few months, meaning we won’t have to wait long to see what the potential might be here. Watch for results from this emerging district.

    Source: oilprice.com

    Please leave comments and feedback below

    hello

    Offshore Union Calls for Emergency Measures to Save North Sea Future (Saturday, 6 February 2016)

    6 Feb 2016, 5:00 pm

    Unite, Britain’s biggest offshore oil trade union, has warned the UK government that the losses announced this week by oil industry supermajors could, without serious interventions, bring an end to meaningful production in the North Sea within years.

    Shell heaped more misery on the industry yesterday morning, announcing a drop in annual profits of 80% to £2.6 billion and confirming cuts to 10,000 jobs worldwide, while BP had previously reported losses of £4.5 billion and Exxon Mobile posted a 58% drop in fourth-quarter earnings.

    Earlier this week, findings from the industry certification body DNV GL showed the impact of the downturn on employment has been more acute across the North Sea than any other region, giving further rise to trade union fears of insufficient skill levels offshore with cuts being made too deep and too fast.

    Over 70,000 oil-related jobs across the UK have now been lost since the oil price slump in January 2015 with grim forecasts that as many as 200,000 could be shed before the crisis eases.

    “The impact on jobs and skills for the UK oil and gas sector due to these staggering profit losses could be disastrous unless the government steps in with significant interventions,” Unite Scottish Secretary Pat Rafferty said. “Emergency tax measures should be implemented as soon as possible by the Chancellor so we can sustain jobs and skills as best as we possibly can, giving North Sea oil and gas production a fighting chance for the future. Left unchecked these losses will cascade onto offshore contractors and UK supply chains with inevitable consequences, potentially taking us beyond the point of no return.”

    “We need genuine co-operation between government, industry and trade unions to alleviate the increasing pressure on the sector while protecting employment rights,” said Unite National Officer for Oil Tony Devlin. “That’s why Unite is calling for the UK and Scottish governments to pull together an industry summit as soon as possible.”

    Source: www.worldoil.com

    Please leave comments and feedback below

    hello

    'Fracking Could be Carried Out Safely', Weaver Vale MP (Saturday, 6 February 2016)

    6 Feb 2016, 2:00 pm

    FRACKING could be carried out safely if the best engineering practices and robust inspection are used, Weaver Vale MP Graham Evans says.

    Mr Evans was speaking to fellow MPs at Westminster during a debate on onshore oil and gas.

    Mr Evans is chairman of the chemical industry all-party group and co-chairman of the energy-intensive industries all-party group.

    INEOS is to operate a licence to allow it to explore for oil or gas possibly trapped in commercially viable quantities below ground.

    The company has been awarded ‘acreage’ in Yorkshire, the East Midlands and Cheshire, the latter including Knutsford, Northwich and Winsford.

    Mr Evans said: “The potential benefits of additional high-skill, high-wage engineering and manufacturing jobs and the increased security of our energy supply are too important to neglect.

    “Hydraulic fracturing is an established technology, and has been used in the oil and gas industries for many decades.

    “The UK has more than 60 years’ experience of regulating the onshore and offshore oil and gas industry and is a world leader in the field.

    “If the best engineering practices are used alongside a robust inspection system, fracking can be carried out safely in our constituencies.

    “Engineering and chemical industries are a vital part of the northern powerhouse, especially if we want to ensure a high-wage, low-tax, low-welfare economy in the north west of England.”

    UK energy supplies were becoming uncompetitive and less secure, he said, supplies of North Sea gas for use as raw materials and fuel were reducing, and there was increased reliance on less secure supplies of imported gas.

    “Our onshore oil and gas reserves offer an unrivalled opportunity to secure our energy supply for the future,” he said.

    “It is estimated fracking has offered the US and Canada about 100 years of gas security, and has presented an opportunity to generate electricity with half the carbon dioxide emissions of coal.

    “The safety and security of people, their homes and businesses is paramount to any discussion.

    “I cannot and will not support anything that may pose a risk to the health, safety and wellbeing of local residents, the natural environment, homes or businesses.

    “Perhaps that is an area in which the Government need to do more to convince the great British public.”

    He said public bodies were relatively poor at getting points across, and there were many scare stories about fracking, based on what was said by powerful lobby groups.

    Source: www.northwichguardian.co.uk

    Please leave comments and feedback below

    hello

    Centrica CEO: George Osborne Should Cut Taxes of Oil Producers to Avoid North Sea Closures (Saturday, 6 February 2016)

    6 Feb 2016, 12:00 pm

    North Sea oil fields face closure if Chancellor George Osborne does not cut taxation of oil producers, the chief executive of Centrica has said. Iain Conn, the boss of the Windsor-based utility company, urged the chancellor to offer relief to troubled oil companies following the loss of 65,000 jobs in the UK because of the oil price collapse.

    The Times revealed on 1 February that the oil veteran has written a letter to Osborne in an effort to get help for the oil industry. "I have only seen a fall in oil prices like this once before," Conn told the newspaper. "The North Sea is really hurting. The government needs to be agile here. It needs to encourage companies to keep their fields going and keep their people."

    The majority of the 65,000 jobs cut in the UK oil industry in 2015 fell in the North Sea operations. In October 2015, the chief executives of independent oil companies EnQuest and Premier Oil both predicted that a further 10,000 jobs could be cut in the North Sea oil sector, the FT reported.

    Oil benchmark Brent Crude has fallen more than a third in value since February 2014. In January 2015, oil even traded below $30 a barrel – a fall of almost 75% in just two years.

    On top of that, the North Sea productions are relatively high cost, causing the companies operating there to look for alternatives to cut costs.

    "The government has to be really thoughtful about taxation in the North Sea," Conn argued. "They can always put it up again — indeed, they have quite a good record of doing that. But right now there is a case to be made that corporation tax in the North Sea should just be corporation tax and that petroleum revenue tax should probably disappear for a while."

    Conn, an oil veteran who has worked at BP for 29 years, also argued that the oil companies operating in the North Sea are not making a profit at the moment. "So the government wouldn't lose a lot because most people aren't making any money," he said. "This is a very unusual time for the North Sea."

    Centrica, the company that owns British Gas, cut 6,000 jobs in July following two rounds of slight price cuts. The utility giant managed to hike its profits but axed positions in an effort to increase margins.

    Source: www.ibtimes.co.uk

    Please leave comments and feedback below

    hello

News Feeds

Oil and Gas Jobs Health and Safety Community