The famous Danish physicist Niels Bohr once humorously observed, "Predictions are very difficult, especially about the future." And so, as the world considers yet another rosy oil supply forecast, this time from the Paris-based International Energy Agency (IEA), it is worth reviewing the agency's record.
Are AIM oil & gas companies inherently fragile? In their review of the performance of small-mid cap oil & gas companies – which you can find here – Richmond Energy Partners have highlighted that the fact that for most investors in AIM oil & gas companies, their investments have been under water since 2008. Why are the majority of such companies ‘fragile’? Firstly, they have faced headwinds that are outside their control – the downturn in the global economy, uncertainty about oil & gas prices, negative investor sentiment almost everywhere you turn.
The 1812 New Madrid earthquake caused the muddy waters of the Mississippi River to flow backwards. Today, an economic event of similarly epic seismic proportions is reversing the flow of liquid natural gas in the United States and Canada.
BUBBLE TROUBLE Indicators as wide-ranging as real-versus-official inflation indexes, T-bond fundamentals against daytrade technicals and all major stock markets hitting the roof have a faithful tracker in the paper oil asset boom. For many, the orgy of central bank "easing" is a prime mover of this megatrend, and the attitude of central bankers can be gleaned by the comment, reported by Reuters May 13, from the head of Italy's central bank, Ignazio Visco, who is also a policymaker of the European Central Bank.
DYING IN GREEN TAPE BusinessEurope president Jürgen Thumann speaking to EurActiv at the European Business Summit which opened 15 May, squarely blamed the European Commission for "the negative effects of green tape', also saying EU regulations create 'unnecessary burdensome legislative instruments in climate, energy and environment policies'. One of these is the so-called Third energy package, which is supposed to encourage Europe's gas importers, producers, pipeline transporters, distributors and users, because gas is cleaner-burning, lower emission and therefore preferable to coal for power generation.
DAWNING REALIZATION The perception of what the shale energy boom, starting in the US but rapidly going global, means for world energy - and especially for overpriced oil - has been slow but is now coming. This week's shale energy forecasts by the International Energy Agency, in its Medium-Term Oil Market Report of 14 May spells out what was clear as early as 2009-2010.
Shared Earth Models provide the foundations for the continuous capture of data and knowledge within exploration and production workflows. The delivery of 3D plate-scale geological models developed as part of the Neftex Earth Model unlocks limitless potential for integrating proprietary industry data into regional geological frameworks and the rapid analytical basin screening and assessment of play opportunities in the subsurface environment.
Many investors study supply and demand statistics to figure out where they think the oil price is going. But by far, the biggest factor that determines the oil price is the US dollar, says Donald Dony, who pens The Technical Speculator investment newsletter.
Maybe it's the gloomy Seattle weather that has made investment manager Jim Hansen and his son and partner, Kevin, at Ravenna Capital Management immune to oil and gas industry hype about the supposed U.S.
Did any of you watch the film about Richard Feynman's work on the Shuttle "Challenger" disaster of the 1980's, starring William Hurt? It was on TV recently; I knew before about his demonstration of the brittleness of the O-ring seals at low temperatures by dropping them into a jug of iced water (simulating the overnight conditions at the launch site) but I had forgotten the fact he had dug out of NASA the fact that when all the risks to shuttle launches and missions were considered, the 'chance of success' was thought to be somewhere just over 96%, in contrast to the 99.several 9's% that was NASA's official position.
For decades the Iranian oil industry has been the envy of oil producing nations around the globe. It is a key oil producing nation with a fascinating past and a very relevant role to play in the industry in the future.
Despite its well documented problems, Iraq remains a global oil heavyweight. The Middle Eastern nation was one of the OPEC (Organisation of the Petroleum Exporting Countries) founding nations and to this day continues to be the international group's second largest producer.
I have written in recent posts that oil limits are more complex than what many have imagined. They aren’t just a lack of a liquid fuel; they are inability to compete in a global economy that is based on use of cheaper fuel (coal) and a lower standard of living.
Any article should explain immediately the authorship, and why readers might want to invest some of their precious time in reading the article as opposed to completing the crossword or going for a long walk. So, please let me introduce ourselves: we are Mars Omega LLP.
| Wednesday, May 01, 2013
Okay, I'm going to give you the shortest course ever in energy abundance: Energy abundance depends entirely on the RATE of energy flow. Let me say it again: Energy abundance depends entirely on the RATE of energy flow.
GOLD, OIL AND THE "SURPRISINGLY STRONG" DOLLAR All is set for a market top in oil. The heavyweight trio for deciding investor sentiment in oil and across the commodities space, to which we can add sovereign debt, interest rates and currency valuations, reads badly for oil above $85 per barrel - for Brent.
Oil producers in Alberta have embraced the holy rail, shipping out by train car an estimated 120,000 barrels of oil per day (bopd) to refiners on the east coast and the U.S.
| Thursday, April 25, 2013
We have all heard the story about oil supply supposedly rising and falling for geological reasons. But what if the story is a little different from this–oil production rises and falls for economic reasons? If this is the issue, it doesn’t really matter how much oil is in the ground.
Each morning when I release my cat from the basement where he sleeps, he rushes to the upstairs bathroom to drink water from a bowl placed there for him. He appears to have a 'religious' belief that the water in this bowl is far superior to that in the bowl sitting alongside his food in the basement.
Bubbles are a funny thing. Participants don’t see them.
The energy sector is such a typical American-Canadian contrast. It’s like the Americans love to shoot guns, and the Canadians love to dodge bullets.
The global impact of the US shale gas boom was in further evidence this week as Qatar Petroleum, along with its MOU partner, Centrica, made its first move into the North American E&P market in a $1 billion acquisition of Canadian assets from Suncor Energy. North America had been earmarked by Qatar as a guaranteed market to sell its copious Liquefied Natural Gas (LNG) export capacity in, but the US Shale boom has turned this idea on its head, as the middle-eastern NOC becomes the latest foreign power to move into the North American E&P arena.
LONG TERM METRICS The gold-oil ratio or how many barrels 1 Troy ounce of gold will buy has been tracked for decades, and has long term median values, about 15.4 barrels per Troy ounce.
The UK’s coalition government has recently had a change of heart and brought about renewed interest in the North Sea reserves. This comes in the form of the recently launched UK Oil and Gas Industrial Strategy which aims to encourage billions worth of investment and thousands of jobs.
The New Zealand Government recently announced proposed changes to the New Zealand Crown Minerals Act to establish tougher penalties for protestors damaging or interfering with oil and gas exploration activities in New Zealand's territorial sea and Exclusive Economic Zone (EEZ). These changes are controversial within New Zealand but should be welcomed by industry participants.
We in the United States, the Euro-zone, and Japan are already past peak oil demand. Oil demand has to do with how much oil we can afford.
East African gas discoveries have been enormous but the plan to export this gas as LNG faces considerable global competition for markets, most notably from North America. Over the last 2 or 3 years, there have been some very significant gas discoveries offshore East Africa, so significant that they have not escaped the attention of our ever insightful media.
Recently, I explained how high oil prices can bring on financial collapse for oil importers. In this post, I’ll discuss the flip side of the situation: how oil exporters reach financial collapse.
With all the talk about new oil discoveries around the world and new techniques for extracting oil in such places as North Dakota and Texas, it would be easy to miss the main action in the oil supply story: Aging giant fields produce more than half of global oil supply and are already declining as group. Research suggests that their annual production decline rates are likely to accelerate.
GOLD, OIL AND THE DOLLAR To this heavyweight trio for deciding investor sentiment in the commodities space, we can add sovereign debt, interest rates and currency valuations, in a cocktail mix that reads badly for oil above $85 - $90 per barrel - for Brent. Short term bounces and dips in commodity prices driven by the Eurozone merry-go-round might grind onward, perhaps, but the sundown on commodities of all kinds is shaping up on the horizon.
Resource limits are invisible, so most people don’t realize that we could possibility be approaching them. In fact, my analysis indicates resource limits are really financial limits, and in fact, we seem to be approaching those limits right now.
The boom in shale gas has taken up full pace due to the vast volumes available and cheap cost, even using unconventional fracking methods for excavation. Many have also asserted the properties of gas as the ‘cleanest’ fossil fuel as rationale for locking in widespread shale gas production.
The diplomatic war of independence between Iraq and its northern region Kurdistan is escalating rapidly, with the flashpoint for armed conflict being the Kirkuk oilfield on the boundary between the two sides. While both sides have pulled back some of their troops poised for conflict recently, 2014 could be decisive as Iraqi Kurdistan plans to ramp up exports directly to Turkey, bypassing Baghdad.
Not a week seems to go by nowadays without an international ‘deal’ for the exploration for unconventional resources being announced in the ‘trade press’. So for example, Exxon and Rosneft are about to start exploring the Bazhenov shale in Russia, Ukraine and Shell have just announced a $10bn agreement for the exploitation of shale resources in that country(1), and China has just announced that it has awarded the exploration rights of 19 shale gas blocks, through an auction process which started in September last year, to 16 companies(2).
Last month Günther Oettinger, the European Commissioner for Energy, announced his eagerly-awaited plan for Oil and Gas European Health, Safety and Environmental regulation in the wake of the Macondo incident. The proposed directive that he unveiled confirms that, although there will be further points to follow from Europe, the role and remit of the existing UK Health and Safety Executive (HSE) system will continue.
Overview of Full Tensor Gravity Gradiometry Gravity gradiometry is the study and measurement of spatial variations in the acceleration due to gravity. The gravity gradient is the spatial rate of change of gravitational acceleration.
What exploration opportunities are there in North Africa and the Eastern Mediterranean, from Morocco via Algeria and Libya to Egypt and Lebanon? Below ground, these countries show different stages of exploration maturity. Offshore Morocco has been quite active in leasing terms recently and is perceived as a Frontier province.
Meetings with investors are nerve wracking for all involved. Figuratively speaking, anything can become a money pit.
THE HIGHGROUND VIEW Understanding why oil markets are "sticky for prices" needs a look at the basics. Oil markets are among the most liquid, most traded and most sought after - not only by investors, traders and hedgers, but also by economic and monetary policy makers of the world, due to the geopolitical sentiment that runs alongside oil.
On 9th January 2013, Finding Petroleum ran a special event with the support of the South African dti, from the High Commission of South Africa The event reviewed the scope for oil & gas exploration and production in Southern Africa, including Nambia, Mozambique, Tanzania and South Africa. The sensible starting point was to consider the large gas resources that have been reported for Mozambique and Tanzania.
| Monday, March 11, 2013
The way the oil industry is touting gains in U.S.
AN EVEN MORE RIDICULOUS QUESTION Some folks might ask an even more idiot question: "Why aren't oil prices continuing to rise?" but this second question is only asked by the brightest traders going for the big chance each trading day. For a long time this year so far, oil prices literally defied gravity, and went on rising, decorated with the nicest-possible leading edge analyses and commentaries.
One question investors should be asking about new dividend-focused E&P companies in the Canadian oil patch is: How will they pay their taxes? Deferring income tax payments is a major part of the business strategy for most junior E&Ps—one that investors don’t realize. Investors have become so used to junior producers (almost) never paying taxes, it’s hard to imagine how paying taxes could affect valuations (read: stock prices).
The importance of oil to a nation's strength and economic foundation cannot be underestimated. We have watched the rise of the United States over the last 100 years in economic power and security for its population and it has largely been due to it's oil reserves.
Natural gas bulls keep pointing to the declining gas rig count in the US as a reason for a near-term turnaround to the upside in prices. The gas rig count in the US has dropped by more than half in the last 18 months, but production continues at record levels—around 63-64 billion cubic feet per day (bcf/d).
The annual 2012 results of the major players in the global oil and gas industry are out and a distinct picture on how the year has progressed can now be formed. At the top of the food chain, the super majors - consisting of Exxon Mobil, Shell, Total, BP and Chevron - turned out a meagre performance with a 13% drop in earnings for the group as a whole.
Introduction: Most of the world's most valuable resources and therefore its dynamic growth markets are found in its highest-risk environments. Effective Risk Management is of paramount importance for organisations seeking to maximise their opportunities in these markets.
The oil industry in Libya is now over 55 years old. It has a complex history starting in the days of the kingdom (1951 – 1969) and developed further under the Gaddafi regime (1969 – 2011).
Investing in Condensate, Part I explained what this hot new commodity is; Part II outlined the bullish case for Canadian condensate demand, and in this third and final article on condensate, I review American efforts to move their glut of condensate north. Condensate is making uneconomic gas wells profitable for producers in the shale basins of northern BC and Alberta, and creating some great investment opportunities for informed investors.
In Part 1 of our story on Turkey, contributing editor Jen Alic reviewed the country’s intriguing onshore and offshore oil potential. Today in Part 2, we’ll look at where the Big Prize lies: the Dadas Shale—a huge unconventional shale play—and which Canadian-listed junior producers may be best positioned in this emerging play.
Despite recent attempts by the UK Government to shift the balance back in favour of the employer, the UK still boasts one of the most extensive systems of employment law, in terms of the protection it gives employees. An employer's obligations under the UK employment law regime are often more rigorous than those of foreign countries, certainly when compared to those beyond the European Union.
In a previous series of energy-related articles, I discussed how the resurgence of natural gas would give us solid alternative to oil for transportation energy needs. In addition, natural gas will also provide us with additional supplies of petrochemicals to offset the world’s insatiable demand for them and their end products, which includes just about everything you might currently purchase at Walmart.
Sometimes we explorers have a hard time, sometimes we have something to celebrate. So, over my career I have great memories of seeing the first logs from the Machar discovery in the North Sea, from Mars in the Gulf of Mexico, from Foinaven in the West of Shetlands, from Girassol in Angola, from Jubilee in Ghana, and so on.
| Tuesday, February 05, 2013
Impact Oil & Gas Ltd, through its subsidiary Impact Africa Ltd, maintains an interest in four prospective areas offshore South Africa, and has built up a substantial exploration acreage position consisting of 76,000 km2 of frontier exploration blocks. One Exploration Permit and three Technical Cooperation Permits are held: 1.
| Tuesday, February 05, 2013
In any one day I may have 20-30 conversations or meetings with C-Level executives of global energy and natural resources organisations. These conversations can take many forms yet, at some point, we will always move on to talk about a senior management team of some sort.
In this article Infield Systems reviews what is happening in the Southern and Eastern African oil & gas sector, analysing available data on current operations, especially offshore, known opportunities, and analyse the resulting markets. In particular, we describe operations offshore in Namibia, South Africa, Madagascar, Juan De Nova, the Comoros Islands, Mozambique, Tanzania, Kenya and the Seychelles.
| Tuesday, January 29, 2013
We begin by considering why we need to establish the hydrocarbon case for the Orange River Basin. To the north of the Walvis Ridge both post- and pre-salt plays are proven from the Kwanza and Congo Basins, both offshore Angola, and the Santos and Campos Basins, both offshore Brazil, and northwards.
| Tuesday, January 29, 2013
On the surface, Turkey has everything going for it in oil and gas. Onshore, it’s under-explored with one of the top international shale plays—the Dadas Shale—about to get tested for the first time with new technology.
With the UK government's issuing of 167 new oil and gas licences to companies looking to drill in the North Sea attracting 224 applications, the industry is set to experience a period of renewed activity in 2013. Tax allowances also appear to be playing a part in unlocking billions of pounds of investment in mature fields, creating an expectation of increased business for many suppliers to the oil and gas sector in 2013 and beyond.
West Africa makes up one third of the so-called 'golden triangle' of deepwater oil exploration and production (E&P) plays. While the US Gulf of Mexico and offshore Brazil have long been in the limelight, interest in West Africa has taken longer to come to fruition.
Integrity management and corrosion modelling tools provide a systemic approach to ensuring the safe and reliable operation of ageing assets for oil and gas operators looking to squeeze more from mature reservoirs and facilities. Many oil and gas operators today are extending the operational life of old facilities and equipment.
A study by Tata Communications highlights growing influence of developing economies on the oil and gas sector. The Connected World report explored the key barriers for investment in emerging markets and senior decision makers’ attitudes towards the opportunities offered by these economies.
Much digital ink has been spilled about the oil and gas boom in the US, the result of ever improving fracking technologies, and whether or not it will lead to energy independence, or even turn the US into an oil exporter. Now a “confidential” report by the German version of the CIA, the Bundesnachrichtendienst (BND), seeped to the surface.
A person might think from looking at news reports that our oil problems are gone, but oil prices are still high. Figure 1.
LIKE GLOBAL WARMING Recent news from scientists of the British Antarctic Survey and partner research institutions examining ice cores showing the climate record for tens of thousand of years is that ice sheet retreat due to global warming often suddenly stabilises, "for decades to centuries', despite the warming still going on. This is also what is happening in the oil patch: all the supply-demand fundamentals say that prices should decline - but they stay high or go on growing.
On 15 October 2012, Alex Salmond and David Cameron signed an agreement providing for a referendum on Scottish independence by the end of 2014, ending the doubt about whether the Scottish Parliament had the power to set up such a vote. This allowed the focus to turn from the process to the issues, which may affect the oil and gas sector more than most.
In this three part series, John McGoldrick, CEO of Dart Energy International, looks at the developing state of Chinese shale gas projects, and some of the implications these might have on the international industry. China recently announced the number of bidders in the second round of shale block tenders: 83 companies making 152 bids for 19 exploration blocks.
Global LNG flows will be dictated by pricing which has diverged globally since 2008 with Asia, Europe and the US all following different paths. Asia remains the a premium pricing market and therefore the market of choice for all those stranded gas resource holders including East Africa.
Africa has become a 'magnetic' attractor for explorers. Aside from the nowadays favoured provinces of West Africa, from Angola, Via Nigeria, to Ghana, what can we say about the rest of Africa? North Africa (and the Eastern Mediterranean) What exploration opportunities are there in North Africa, from Morocco via Algeria and Libya to Egypt, and beyond to the Eastern Mediterranean? Below ground, these countries show different stages of exploration maturity.
| Tuesday, January 15, 2013
Here's the short version of why forecasts of low long-term oil and natural gas prices are almost certainly wrong: It costs more than that to get the stuff out of the ground. Only two things could actually lead to low long-term prices: 1) Somebody could invent and deploy some genuinely brand new technology that makes it really cheap once again to get oil and gas out of the ground or 2) we could have a deep and grinding deflationary depression that brings demand for oil and natural gas down so much that prices collapse.
As we know, petroleum stockpiles are high but volatile: a January 4 report from Moody's Analytics said that US crude oil inventories fell by 11.1 million barrels for the week ending December 28, obliterating the consensus expectation of a 1.
I have written in the past that natural gas is our answer for a potential supply shortage in oil. Natural gas is cleaner than gasoline produced from oil, it is currently cheaper for the same energy output, and it is being produced in abundance in the United States which makes it a good current substitute for potentially stressed oil production.
Can the Bakken produce one million barrels a day of oil? If so, it would join an elite group of oil fields able to produce at that rate. Only six other fields, including Saudi Arabia’s famed Ghawar field, have ever topped 1 million barrels per day–they are Burgan (Kuwait), Cantarell (Mexico), Daqing (China) and Samotlor (Russia) and Kirkuk (Iraq).
Many people trot out their predictions for the coming year right about now. I'm generally allergic to predictions and think rather in terms of probabilities.
IRAN-IRAQ ALLIANCE INSIDE OPEC According to 'Financial Times' and the WSJ, reporting several times in 2012, Iran and Iraq are "strengthening their alliance inside Opec", raising concerns among Saudi-led moderate Arab Gulf producers that pricing discipline inside Opec will be disrupted. The backdrop to this concern is simple: with the EU sovereign debt crisis worsening, critical uncertainty on what exactly the US fiscal cliff means for the US economy, and growing fears for the global economy, deepening divisions within Opec can undermine the organisation's ability to do its claimed job of managing oil export supply and preventing violent price swings.
TALKING UP OIL - AND OIL PRICES Every single year since the year 2000, using IEA data, the role of oil in world energy has fallen. From more than 38% of world energy in 2000 to 33% in 2011.
A primary reason why coal consumption is rising is because of increased international trade, starting when the World Trade Organization was formed in 1995, and greatly ramping up when China was added in December 2001. Figure 1 shows world fossil fuel extraction for the three fossil fuels.
Activity in the huge Bakken field is going home. Home is Montana, where the Bakken was originally discovered.
Whilst the energy revolution rolls on in the USA, both Europe and the UK are mired in confusion over shale gas and shale oil in particular and ‘Unconventionals’ in general. Below ground, we have the technology.
[I]f you're still operating under the assumption that the earth's petroleum--or at least the cheap stuff--is about to run out, you're not going to thrive in the new oil era. Technology is making it possible to find, produce, and refine oil so efficiently that its supply, at least for practical purposes, is basically unlimited.
Most of us have heard that Thomas Malthus made a forecast in 1798 that the world would run short of food, and that great famine would result. But most of us don’t understand why he was wrong.
Unconventional natural gas is often described as game-changing and transformative, a revolution heralding a golden age of cheap, plentiful energy for a resource-constrained world. But only if it makes it out of the ground.
Same, same and very little different. After Hugo Chavez's recent re-election victory in Venezuela the global oil industry knows only too well what to expect from his next six years in power.
President Cristina Fernandez de Kirchner's administration simply cannot help itself. And if Buenos Aires continues to meddle in the oil industry in the manner to which it has become accustom over recent months then nobody else will be willing to help it either.
When people read about a long-term forecast of world oil supply--say, out to 2030--they often believe that the forecasters are merely incorporating our knowledge of existing fields and figuring out how much oil can be extracted from them over the forecast period. Nothing could be further from the truth.
Barbados Barbados looks to explore new areas for oil and develop other forms of energy to cut back on costly oil imports. Oil has a destabilizing effect on national economies with high oil imports and low overall oil production.
This year has been mixed for some sectors of the equity arena, even though at the headline level the likes of the S&P 500 are actually substantially higher YTD. The first few months were great for the bulls but then everything turned negative as economic fears in China, Europe and even the U.
The UK government has published the shortlist of companies to win its £1bn carbon capture and storage funding - and no enhanced oil recovery projects were included. One theory is that EOR projects might have been kept out of the shortlist due to an unwillingness by the Liberal Democrats to embrace the technology, since it is seen as increasing carbon emissions.
The United States’ fiscal cliff is very much related to several changes we have been going through recently, and will likely continue to experience: High oil prices (more than triple their level ten years ago). High oil prices cause people to cut back on discretionary spending, leading to layoffs in discretionary industries and debt defaults.
World leaders seem to have their minds made up regarding what will fix world CO2 emissions problems. Their list includes taxes on gasoline consumption, more general carbon taxes, cap and trade programs, increased efficiency in automobiles, greater focus on renewables, and more natural gas usage.
There have been numerous references in the world's press recently about the increasing globalisation of the LNG market. The growth of supply has increased the Asian demand for greater pricing and contract length flexibility.
More Oil Than OPEC There's no question, says Rusco, that the oil is there, all 3 trillion barrels of it..
Daniel Yergin, a well known and recognized expert in the oil industry often states that most of the problems involved in producing more oil today are 'above ground and not below ground'. To a great extent he is right, but I am sure that he would also agree that there is a lot of oil trapped in global oil fields and today's oil recovery technology has not been successful in recovering a significant portion of remaining original-oil-in-place.
Was the most recent American election outcome determined by the presidential debates, changing demographics, voter views on issues, Hurricane Sandy (and the president's reaction to it) or voter turnout? Probably all of these contributed to the result. Energy was actually one of the issues discussed during the campaign, particularly domestic production of oil and natural gas.
There is an increased expectation that - somehow - Enhanced Oil Recovery (EOR) projects will justify and therefore, lead to, investments in Carbon Capture and Storage. This is what is happening onshore in the USA where there are a range of established EOR technologies, and some 50 million tonnes per annum of CO2 is injected leading to ~350-400,000 barrels per day and, despite EOR needing lots of CO2 - typically one-third of a tonne of new CO2 per barrel, estimates of potential reserves in excess of 200 billion barrels.
There is an old adage that runs "The best place to find oil is in an oil field!" As global exploration gets more difficult, there is a major prize to be gained by increasing flow rates and improving recovery factors in existing fields. In any petroleum province which is very mature in exploration terms, such as the North Sea, it would be better for companies to stop 'wildcat' exploring and focus on enhancing production in and around existing oil & gas fields.