Weekly US Crude Oil Inventory Number Plunges -- API -- June 26, 2018; T+28

API: US crude oil inventory plunges. Forecast for a 2.5 million bbl draw; in fact, the actual draw was 9.228 million bbls. If the EIA number confirms a similar draw tomorrow -- one word, wow. Hold on to your wallet when stopping to fill up with gasoline.

WTI: surges. Up almost 4%. Closes at $70.77.

LLS: closes at $75.66.

Canadian dollar: holds at US 75 cents.

Stunned? Surprised? I don't know but here it is: remember -- this is the US District Court for the District of California -- a BusinessWire story -- the court has issued a ruling dismissing the climate change lawsuits filed against Chevron Corporation by the cities of San Francisco and Oakland. A lot of legalese, but basically a frivolous suit thrown out. 

Permian pipeline project announced: will cross an international border. Oh-oh. From oilprice.com: Kinder Morgan, flush with new cash from Canada -- having sold the Trans Mountain Pipeline project to Mr Trudeau-- announces a new Permian pipeline project. By the way, if I'm not mistaken, a Kinder Morgan subsidiary may have sold the project to Canada, but the company will still get first shot at the contract to build it. What a hoot. If built, Canada will eventually sell it back to Kinder Morgan, no doubt. Now, back to the linked article:

• Kinder Morgan will team up with Apache Corp and a Blackstone subsidiary
  
• a US$2-billion, 2-billion-cf gas pipeline project from the Waha area to the Gulf Coast and to Mexico
• will be interesting to see if the new Mexican president will "buy into this" project with all the animosity between the two countries
• scheduled to begin operations in 2020
• the article suggests that the Permian play is an oil-dominated play (I tend to disagree; makes me wonder about the writer's credentials)
• this is KMI's second such project in the Permian
• two months ago KMI started construction of the Gulf Coast Express Project
• US$1.75 billion; 1.98 billion cubic feet of natural gas from the Permian to Agua Dulce in Tex
• should be operational in late 2019
• already fully subscribed for the long term

*********************************

Screen Shot Of The Day

*********************************** 

Peak Oil? What Peak Oil?

First it was the Permian. Then the Gulf of Mexico. Now it's Norway that is setting new production and discovery records.

From oilprice.com: Norway's oil discoveries on track for best year since 2010. A nice reminder that Statoil is now Equinor. From the linked article:

[C]ompanies [exploring on the Norwegian Continental Shelf] are on track to find nearly 1 billion barrels of oil equivalents this year.

These calculations show that the resources found per well could reach their highest since 2010—the year in which the giant Johan Sverdrup oil field was discovered in the North Sea with resources estimated at between 2.1 billion and 3.1 billion barrels of oil equivalents.

Johan Sverdrup—with production start planned for late 2019—will be one of the most important industrial projects in Norway in the next 50 years and will be the main contributor to Norway’s rising oil production until 2023.

Peak oil? What peak oil?

*************************************

Peak Natural Gas? Nope, Not Yet

 We should see the official EIA data tomorrow. From SeekingAlpha today:

North Dakota's policy / guidance regarding flaring at this site. It may show up on your desktop as a pdf.

**************************************

Peak Water

Keeping to its announced schedule, the US Army Corps of Engineers is releasing 60,000 cubic feet per second from the Garrison Dam in an effort to low flood waters in the Bakken. Today's report:

Another Article On Statoil's Slump -- December 5, 2014

Reuters via Rigzone is reporting:

Norwegian energy firm Statoil extended the suspension of three drilling rigs on Friday as it battles to cut costs in the face of shrinking margins, squeezed by a 35 percent drop in crude oil prices since June.

Statoil, which had suspended more than a third of its exploration fleet this year, is upping its efforts to preserve cash having already been selling assets to pay for investments and dividends even when oil was over $100 per barrel.

The group signed contracts for many of its rigs at the top of the market for near record prices, but is suspending the rigs just as market rates tumble, making it impossible to sublet the vessels.

To some extent, in another time and place, this might be a story somewhat unique to Statoil. But certainly the current slump in prices is exacerbating things for Statoil.

Tuesday, December 2, 2014; Weatherford Sells Chemical/Drilling Fluids Business to Lubrizol; Meanwhile, Might Orange Peels Be The Magic Potion?

Active rigs:

	12/2/2014	12/02/2013	12/02/2012	12/02/2011	12/02/2010
Active Rigs	189	192	182	199	161

RBN Energy: update on ethane. Ethane is worth more as natural gas; won't last forever.

Warren's Lubrizol buys chemicals, drilling fluids form Lubrizol. Link here, Reuters via Rigzone:

Oilfield services provider Weatherford International Plc said Berkshire Hathaway Inc's Lubrizol Corp would pay $750 million in cash for two businesses that provide chemicals and drilling fluids for oil and gas production.

Weatherford said the sale of its engineered chemistry and integrity drilling fluids businesses also included a potential increase of $75 million tied to the performance of the units after the closure of the deal, expected by the end of this month.

From Yahoo!In-Play:

Chevron announces first oil from Jack/St. Malo project in the Gulf of Mexico: Co announced that crude oil and natural gas production has begun at the Jack/St. Malo project in the Lower Tertiary trend, deepwater U.S. Gulf of Mexico. Jack/St. Malo is a key part of CVX's's strong queue of upstream projects and was delivered on time and on budget.

Bloomberg has a more in-depth story. 

Undeterred by the worst slump in oil prices this decade, Chevron (CVX) Corp. began pumping from a half-billion barrel deposit beneath the Gulf of Mexico more than 10 years after its discovery.

Crude and natural gas is flowing from the Jack and St. Malo fields through a platform built to service both developments simultaneously, Chevron said in a statement today. The $7.5 billion project -- Chevron’s costliest active Western Hemisphere investment -- is expected to produce for at least 30 years, according to the San Ramon, California-based company.

St. Malo was discovered 11 years ago in an area 280 miles (450 kilometers) south of New Orleans by Unocal Corp., which Chevron acquired in 2005. Jack was found by Chevron in 2004 about 25 miles from St. Malo. Both formations are part of a subsea mountain range called Walker Ridge. Daily production is expected to reach 94,000 barrels of crude and 21 million cubic feet of gas.

************************************

Internecine War of Words

A little more clarity. The Telegraph is reporting:

The kingdom may also be forcing the price lower to damage the Iranian economy amid a bitter political dispute between to the two regional powerhouses over the future of Syria. Prince Turki said that both Russia and Iran should stop supporting the regime of Bashar al-Assad in Syria and if they both got out of the country the government in Damascus would fall in a few months.

************************************

Off-Shore Drilling/Ultra-Deep Drilling vs Saudi

Statoil defers decision on $6 billion recovery project. Link here, Retuers via Rigzone:

Norway's Statoil said it has postponed a decision to invest $5.74 billion in a mature field, saying that it needed more time to refine the project as its profitability was under threat.

Statoil said it would decide in October next year instead of March whether to go ahead with a new platform at the Snorre field in the Norwegian Sea as it hoped to cut costs and get more precise cost estimates.

The project, which could squeeze another 240 million barrels of oil out of the field, has been in doubt due to high costs, and uncertainty has risen since oil prices tumbled to a five-year low. Statoil said a final decision on whether to build a new Snorre platform and extend the field's lifetime to 2040 would be taken in the fourth quarter of 2016 and production would start in the fourth quarter of 2021.

Analysts estimate that the Snorre platform's break even cost, including the investment and actual production spending, would be over $80 per barrel, well above the current $69 per barrel oil price.

************************************

Will California Ship Orange Peels To Utah? 

Reuters via Rigzone is reporting:

While North America has been gripped by controversy over the Keystone XL pipeline that would ship crude to the United States from the Canadian oil sands, a small Canadian company has been quietly digging in the oil sands of Utah with a secret weapon it thinks may end the environmental argument: citrus.

U.S. Oil Sands Inc says its method will cut the cost and reduce the energy needed to separate oil from sand, lowering the environmental impact. Opponents are far from convinced.

The Calgary-based firm is developing its PR Spring project on a 32,000-acre lease about 280 kilometers (174 miles) southeast of Salt Lake City. It plans to start producing 2,000 barrels per day next year with the potential to reach 10,000 barrels per day.

Its patented technology uses a solvent whose main ingredient is derived from orange and lemon peels.

The solvent, it says, can separate tar-like oil deposits, known as bitumen, from sand more efficiently than methods currently used in the Canadian oil sands in northern Alberta.

I know one can use peanut butter to get chewing gum off clothes, so why not orange peels to separate thick oil from sand?

**************************

November Car Sales -- US -- Incredible

Audi: up 22%
GM: up 6%, above estimates; best November sales in 7 years
Ford: down 2%
Fiat Chrysler: up 20%

It's Gonna Get Ugly; Statoil -- Rigzone -- December 1, 2014

I don't believe I posted this link to an article on Norway / oil for a couple of reasons. One reason: it didn't seem to mirror what I had been reading about Statoil recently, and the article seemed to have been written before the current slump in the price of oil.

I thought maybe I had been missing something, or misreading something about Statoil over the past year, but obviously not. Reuters via Rigzone is reporting, in a fairly long article:

After the failure of its risky exploration strategy this year, Norwegian oil firm Statoil is cutting costs as fast and deep as it can to preserve cash for dividends – and may be jeopardising future production in doing so, industry insiders say.

Statoil took a big gamble by committing major resources to what it hoped would be new discoveries in Angola, the Norwegian Arctic and the U.S. Gulf of Mexico.

They all failed, leaving two Tanzanian gas fields its only major finds in 2014. With no new prospects to drill, and a 35 percent drop in the price of oil since June, the company is now paying hundreds of millions of dollars to cancel or suspend a third of its exploration fleet in order to find the cash it needs to pay its dividend, which so far this year equalled nearly all of its 30.9 billion crown ($4.46 bln) net profit.

"They have gambled and...bet on the wrong horses," says Hilde-Marit Rysst, the head of labour union SAFE, which has thousands of employees with Statoil and its contractors. "They have spent too much and made too many commitments."

Statoil's problems are several but the root of them can be simply put: it spent too much money on long drilling contracts in exploration areas before ensuring there would be enough work. Additionally, it took out those contracts at the top of the market, paying record day rates to secure capacity. 

Much more at the linked article.

For more on Statoil (wiki).