Exxon Mobil Corp. plans to reduce the cost of pumping oil in the Permian to about $15 a barrel, a level only seen in the giant oil fields of the Middle East.
The scale of Exxon’s drilling means that it can spread its costs over such a big operation that the basin will become competitive with almost anywhere in the world, Staale Gjervik, president of XTO Energy, the supermajor’s shale division, said in an interview.
Development, operating and land acquisition costs will be “in and around $15 a barrel,” he said on the sidelines of the CERAWeek Conference by IHS Markit in Houston. West Texas Intermediate futures traded at almost $59 on Thursday. “The way we are approaching it is very unique compared to most, if not really everybody out there, as far as the scale," he said.
Exxon plans to deploy 55 rigs in the Permian this year, by far the most of any driller, as it aims to increase output in the region fivefold to about 1 million barrels a day by 2024.
Its strategy also includes building its own takeaway infrastructure from separation tanks to pipelines, and it’s even joining a giant conduit project to make sure its oil doesn’t get stuck in bottlenecks that have depressed prices in West Texas.
Some analysts raised their eyebrows over Exxon’s ambitious plan for the Permian, but Gjervik -- a Norwegian who joined Exxon in 1998 and has worked in Angola, Nigeria and the North Sea -- argues that it’s exactly that kind of massive scale that will help the company generate $5 billion of cash flow from the region by 2023.More at the link.
For newbies: XTO is a pretty big operator in the Bakken.
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Big Oil Dodged A Bullet
Norway, link here.
Norway took a partial step in divesting oil and gas stocks in its massive $1 trillion wealth fund, approving the sale of smaller exploration companies while sparing the biggest producers such as Royal Dutch Shell Plc and Exxon Mobil Corp.
After more than a year of deliberation, the government approved excluding 134 companies classified as exploration and production companies by FTSE Russell, including Anadarko Petroleum Corp., Chesapeake Energy Corp., Cnooc Ltd. and Tullow Oil Plc. The proposal would see the fund sell about $7.5 billion in stocks.
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The Rally
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.
The tea leaves this morning suggest the recent "oil rally" will continue through this summer, although it may not be particularly remarkable.
OPEC, from twitter this morning:
OPEC, from twitter this morning:
- cancelled its "extraordinary" meeting penciled in for April
- next meeting will be the regularly scheduled meeting in June
- Saudi Arabia won't change course on cutting production until it sees significant inventory drop
- inventory continuing to increase despite efforts
Back to the Bakken
Wells coming off confidential list over the weekend, today --Monday, March, 18, 2019: 79 wells for the month; 299 wells for the quarter
- 35240, SI/NC, WPX, Spotted Horn 26-35HUL, Squaw Creek, no production data,
- 34625, 2,059, CLR, Anderson 7X-4H, Willow Creek, t10/18; cum 148K 1/19;
- 33857, 1,031, Oasis, Berry 5493 42-7 8T, Robinson Lake, t10/18; cum 95K 1/19;
- 33856, 1,220, Oasis, Berry 5493 42-7 9B, Robinson Lake, t10/18; cum 116K 1/19;
- 23942, SI/NC, XTO, FBIR Yellowwolf 21X-10E, Heart Butte, no production data,
- 35011, conf, WPX, Spotted Horn 27-34HD,
- 34643, 1,651, CLR, Anderson 10X-4HSL1, Crazy Man Creek, t10/18; cum 96K 1/19;
- 34253, SI/NC, BR, Raider 4A MBH, Twin Valley, no production data,
- 33889, 778, Oasis, Berquist 5298 13-27 9B, Banks, t10/18; cu 114K 1/19;
- 32814, 2,110, CLR, Brandvik 8-25H1, Corral Creek, t1/19; cum 106K 1/19;
- 23938, SI/NC, XTO, FBIR Yellowwolf 21X-10A, Heart Butte, no production data,
- 34252, 227, BR, Raider 3C UTFH, Twin Valley, t2/19; cum --;
- 32408, SI/NC, Slawson, Slasher Federal 1 SLH, Big Bend, no production data;
- 32786, 596, BTA Oil Producers, 20901 Elkhorn 433 1H, Elkhorn Ranch, t11/18; cum 31K 1/19;
- 32934, 276, BR, Renegade 44-10MBH, Sand Creek, t12/18; cum --;
- 32933, 165, BR, Chuckwagon 41-15MBH, Sand Creek, t12/18; cum --;
- 31803, 1,633, CLR, Jensen 7-8H, Chimney Butte, t1/19; cum 66K 1/19;
| $58.56 | 3/18/2019 | 03/18/2018 | 03/18/2017 | 03/18/2016 | 03/18/2015 |
|---|---|---|---|---|---|
| Active Rigs | 65 | 58 | 47 | 32 | 107 |
RBN Energy: IMO 2020 and the heavy-sour crdue shortage.
Last year, the impending implementation of International Maritime Organization’s rule mandating the use of lower-sulfur marine fuels starting January 1, 2020, widened the price spread between rule-compliant 0.5%-sulfur bunker and the 3.5%-sulfur marine fuel that has been a shipping industry mainstay. Traders’ thinking was that demand for high-sulfur bunker would evaporate in the run-up to IMO 2020, as the new rule is known.
But since early January, the spread between low- and high-sulfur fuel at the Gulf Coast has narrowed from nearly $11/bbl to less than $2/bbl. The culprit is a shortage of heavy-sour crude caused by a number of factors. Today, we begin a two-part series on low-sulfur vs. high-sulfur fuel and crude values as IMO 2020 approaches.
Given IMO 2020’s broad implications — not only for the shipping industry but for crude oil producers and refineries — it’s natural that the rule would be a frequent topic in RBN blogs.
The IMO — a specialized agency of the United Nations — for a number of years has been ratcheting down allowable sulfur-oxide emissions from the engines that power the 50,000-plus tankers, dry bulkers, container ships and other commercial vessels plying international waters.
IMO 2020, the agency’s latest rule, calls for the current 3.5% cap on sulfur content in bunker fuel in most of the world to be reduced to a much stiffer 0.5% nine-plus months from now. [There is an even tougher 0.1%-sulfur limit already in place in the IMO’s Emission Control Areas (ECAs), which include Europe’s Baltic and North seas and areas within 200 nautical miles of the U.S. and Canadian coasts.]
We also looked at the six primary factors seen as bringing the marine fuel market into something approaching a balance as IMO 2020 kicks in: (1) some degree of non-compliance with the rule, (2) on-ship “scrubbers” to capture sulfur-oxide emissions, (3) blending of existing low-sulfur fuel oil with distillate to make rule-compliant marine fuel, (4) refinery upgrades (to produce more low-sulfur products), (5) shifts in crude slates and crude oil flows, and (6) increased global refining throughputs.
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