Thursday, February 4, 2021

WTI Breaks Through $56; One Well Coming Off Confidential List -- February 4, 2021

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Overnight:

Enough energy? Yes. Enough renewable energy? No, not by a long shot.

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Back to the Bakken

Active rigs:

$56.02
2/4/202102/04/202002/04/201902/04/201802/04/2017
Active Rigs1454635840

One well coming off the confidential list -- Thursday, February 4, 2021: 4 for the month, 37 for the quarter, 37 for the year. After this, no more wells coming off confidential list until next Monday.

  • 37200, A, Hess, TI-Bokn-158-94-1720H-1, Tioga, first production, 8/20; t--; cum 73K 12/20;

 RBN Energy: what a ban on federal lands could mean for the Permian. Archived.

It’s never easy in the commodity world, and despite oil prices comfortably above $50/bbl across the Permian, a new worry has come to the fore as we start the second month of 2021. No, it’s not a Reddit movement focused on the oil market, not even an OPEC+ action this time. The latest news that has wildcatters muttering through clenched teeth came from Washington D.C., where the Biden administration recently announced a pause on leasing federal lands for oil and gas development. While it’s far too early to discern what this decree — or future actions — will mean for the Permian, we get the sense that the headlines aren’t capturing the nuances of drilling activity in West Texas and southeastern New Mexico. In our view, at its worst, a long-term ban on drilling on federal lands would produce some clear winners and losers, while the near-term impact is potentially just a ripple in the ocean. Today, we examine what the latest drilling data from the Permian tell us about the possible outcomes of the new administration’s recent actions.

There is one thing we want to make clear before we get started today: this is not a blog about politics. That’s not what we do at RBN. However, we don’t stick our head in the sand either, when regulatory changes come along that may significantly impact the oil and gas sector. We get particularly interested when those changes might affect one of our core focus areas, namely the Permian Basin. So here are the facts as we know them regarding the recent orders. On January 27, President Biden signed an Executive Order (EO) that paused leasing of federal lands pending a review of oil and gas permitting and leasing practices. The EO followed a Secretarial Order (SO) issued by the Department of Interior (DOI) on January 20 that established a 60-day window during which some processes, including permitting, can no longer be delegated to lower-ranking officials for approval. As we see it, the SO is potentially more restrictive than the EO, though there is no outright ban on activity as leadership at DOI can still approve items previously delegated to their subordinates. In fact, it was reported last week that 70 permits had already hit a snag in the new process and will have to be resubmitted. That makes for a good headline, though the DOI reiterated last week that it was still approving permits. That said, it is really the potential impact here that gets some folks in the Permian worried.

What if the federal government makes these temporary orders more permanent? What would that mean for the Permian Basin? We give it our best shot at assessing the potential impact today, though many unknowns remain.

2 comments:

  1. Afternoon Bruce,
    Have you noticed the spread between WTI/Brent has/is narrowing? Does it matter? Could WTI overtake Brent on world stage?

    ReplyDelete
    Replies
    1. Historically (decades ago) WTI traded at a premium to Brent. And then it switched. I forget when / why. There have been periods in the past ten years while doing the blog that WTI did go above Brent, if I recall correctly, so I assume WTI could sell once again at a premium to Brent.

      The very question you asked was asked back in 2018:

      https://www.marketwatch.com/story/why-the-brent-wti-oil-price-spread-has-narrowed-2018-06-25.

      I used to follow the spread; not sure why. It never affected anything I did.

      Delete

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