don’t panic oil price outlook improves
Last Updated : GMT 07:25:12
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 07:25:12
Arab Today, arab today

as US shale faces headwinds in 2018

Don’t panic! Oil price outlook improves

Arab Today, arab today

Arab Today, arab today Don’t panic! Oil price outlook improves

Told that 2018 is unlikely to see a massive ramp-up in US shale production.
London - Arab Today

Arab News has been told that 2018 is unlikely to see a massive ramp-up in US shale production that could potentially wreck attempts by Russia, Saudi Arabia and other producers to stabilize oil prices and shrink surplus inventories.
Speaking from Denver, Colorado, senior Wood Mackenzie energy analyst Ryan Duman said there were “headwinds” for the US shale industry which would hold back production next year, reducing the danger that the oil price would head south again.
Duman said: “US shale operators who don’t have rigs or crews under contract are going to have to pay dearly because the oil services industry is overstretched right now.”
That’s because it pared back considerably during the slump — building it up again is going to take time, he said.
There were plenty of wells, but the big question was how quickly can they come on line.
“One of the things we are looking for in 2018 is the rate of completions, whether they start to catch up to the rate of drilling. And then, how fast can the oil get to market.”
He added: “What we need to see is a massive rehiring to make up for the labor that was let go during the bad times, and operators need more equipment, such as pressure pumping and other assets, in order to push forward with hydraulic fracturing — in other words, the completion stage — which comes after the rigs have dug the wells.”
There were also infrastructure challenges in terms of transporting shale oil to refiners, some of which don’t process that type of crude.
Asked if he thought the US could overtake Saudi Arabia to become the world’s second-largest producer after Russia, Duman thought this was years away, “although I am not saying it won’t happen.”
The way he saw it, the obstacles for US shale currently were the following: Not having ample takeaway capacity — that is, pipelines and other equipment, essential to get crude to market; and a dearth of workers, both skilled and unskilled who were laid off three years ago.
Duman said: “We have seen rigs added back quickly this year, but operators can’t get the crude to customers fast enough — which has implications for costs.”
The outlook for 2019 was a different matter, as long as the oil price stayed between $60 and $65 — because at those prices the shale operators were in the money, he said.
“I think 2018 could be about hiring and rebuilding the sector that has been neglected in recent years. After that, a very strong production year in 2019.
One important factor was that technological improvements and efficiencies would gradually make the shale industry more profitable.
Operators today are able to drill and complete wells much faster than before thanks to developments in predictive analytics or big data — all of which propel optimization.
In the Permian Basin (the region of Texas and New Mexico at the center of the shale revolution), Goldman Sachs estimates that wells have become 50 percent more productive over the past two years.
And shale companies have locked in higher oil prices when they occur by turning to hedging contracts. More and more oil companies are using hedges to give them certainty.
“But the other part of it is the sheer learning curve … shale is still in its infancy if you think about how young the industry is compared with Big Oil,” said Duman.
But will huge quantities of US shale be cascading into the market next year?
Duman doesn’t think so — “We have growth rates almost equivalent for 2017 and 2018 at about 850,000-900,000 bpd.”
His overall analysis was echoed by BP CEO Bob Dudley who told the Financial Times that traditional producers such as Saudi Arabia would continue to exert more influence over crude prices.
Dudley said he was less worried these days about the extent to which US shale resources could hold down prices as more was learned about their geology.
He told the FT: “There are cracks appearing in the model of the Permian being one single, perfect oilfield.”
He warned of emerging technical challenges, and called into question the ability of shale companies to rival conventional producers over the long term.
Dudley was outspoken on another matter. While acknowledging that oil faced long-term competition from electric vehicles, he claimed the technology had been “hyped” and that environmental problems surrounding the mining and disposal of materials used in lithium-ion batteries that power electric vehicles had been underestimated.
On the issue of shale, however, the International Energy Agency (IEA) sees things differently to Wood Mackenzie, and — as we’ll see — OPEC as well.
In a report this month, IEA said the recovery in oil prices this year to about $63 per barrel had spurred growth in US tight oil output (which includes crude, condensates and natural gas liquids, which the IEA said would cause global supplies to exceed demand in the first half of 2018.
It added US oil output until 2025 will be the strongest seen by any country in the history of crude markets, making it the “undisputed” leader among global producers. “Technological advances that have enabled production from US shale oilfields to thrive will lead to growth of 8 million barrels a day between 2010 and 2025, surpassing expansion rates enjoyed by any other nation,” said IEA executive director, Fatih Birol.
In an interview with Bloomberg, Birol said the US would become the undisputed global oil and gas leader for decades to come and is expected to account for 80 percent of the increase in global supply over the same period.
US tight oil production will rise to 13 million bpd by 2025, out of total US output of 16.9 million bpd.
“The growth in production is unprecedented, exceeding all historical records, even Saudi Arabia after production from the mega Ghawar field or Soviet gas production from the super Siberian fields,” Birol said.
Moreover, if oil did settle at $60, we should expect a ramp up in US production which would stop inventories coming down, according to Birol. OPEC’s views are different still. At a recent forum in London, secretary general Mohammed Barkindo said the global oil market was tightening at an “accelerating pace,” and he cited a sharp reduction in worldwide inventories as evidence that last year’s agreement by producers to cut supply was having an effect.
He added: “OPEC stocks in September were about 160 million barrels above the five-year average, down from 340 million in January. There has been a massive drainage of oil tanks across all regions, a balanced oil market was fully in sight,” said Barkindo.
OPEC and other producers want to get stocks down to the five year average in order to remove the glut built up when the price was above $100.
Perhaps, the only thing one can say with any degree of certainty about the oil industry is that there is widespread disagreement about almost everything.
 

Source: AFP

 

 

arabstoday
arabstoday

GMT 02:03 2018 Saturday ,20 January

UK retail sales slide in December

GMT 05:20 2018 Tuesday ,16 January

UK construction firm Carillion collapses

GMT 09:52 2018 Monday ,15 January

EU more dependent on Russian gas

GMT 05:30 2018 Friday ,12 January

Brexit could cost nearly 500,000 UK jobs

GMT 09:16 2018 Monday ,01 January

Chinese ban on ivory sales goes
Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

don’t panic oil price outlook improves don’t panic oil price outlook improves

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

don’t panic oil price outlook improves don’t panic oil price outlook improves

 



Arab Today, arab today Modern colorful bedroom renovation

GMT 11:23 2017 Thursday ,21 December

Modern colorful bedroom renovation
Arab Today, arab today For the Variety of Interior Design Styles

GMT 11:14 2017 Tuesday ,19 December

For the Variety of Interior Design Styles

GMT 10:09 2017 Sunday ,15 October

Malabar Gold launches 3 stores

GMT 11:09 2017 Wednesday ,19 April

Souhair Ramzy reveals her role in 'Lovers’ Palace'

GMT 13:06 2017 Monday ,30 January

Nazanin Zinouri is banned from entering America

GMT 01:31 2017 Wednesday ,05 April

After dating show boom, TV helps you get a divorce

GMT 12:46 2016 Monday ,21 November

First Italian Cuisine Week comes to Jeddah

GMT 09:31 2017 Saturday ,01 April

Actress Nadeen Al Rassi praises "Two Sisters"

GMT 14:40 2017 Thursday ,07 September

ECB to decide on next stimulus moves 'in autumn'

GMT 08:46 2017 Wednesday ,11 October

How to prepare for your next holiday

GMT 03:31 2014 Monday ,15 December

Qatari emir receives Prince al-Waleed bin Talal

GMT 17:11 2017 Monday ,30 January

Trump's first military operation fails in Yemen

GMT 13:04 2017 Saturday ,29 April

Greenpeace disrupts Credit Suisse meet

GMT 13:28 2018 Thursday ,11 October

Al-Bashir trust on Measures to Solve Economic Crisis

GMT 10:18 2016 Thursday ,15 September

Guardiola urges Manchester City fans

GMT 04:07 2017 Friday ,22 December

Ammouta refuses offer to lead Zamalek

GMT 20:09 2017 Friday ,03 February

Putin’s quest for a Monroe Doctrine

GMT 02:16 2017 Monday ,30 October

Dec22/Jan20

GMT 21:59 2016 Wednesday ,13 April

Somali President Visits Sudan

GMT 13:14 2017 Friday ,10 November

Engy Al Moqadem happy for reaction to her role
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday