The U.S. shale producers behaved in an admirable manner over the past year. This was not something the industry wanted. It was forced to do it by the pandemic. It might be the right time to make a shift. The price shocks must now be applied to U.S. shale. Even so, it must have been painful to see the collapse of crude oil demand due to pandemics.
The large public shale producers also had unhappy shareholders. They managed to deal with them by cutting production and spending less while focusing more on cash flow generation. They did this largely with the help of OPEC+ which saw it cut 7.7 million bpd in its combined production and some non-OPEC producers who took on some of the load. Prices have recovered since then as has the demand.
For months, all eyes have been focused on U.S. Shale. We expect drillers to increase their drilling efforts in a big way. The industry has exceeded all expectations so far. This trend is unlikely to continue. According to the Financial Times, U.S. crude oil production will rise by 800,000. bpd in 2013. The report points out that the U.S. has oil prices hovering around $70 per barrel, which makes most shale fields profitable again. There is however one thing that will be different this time. An IHS Markit analyst stated that private, independent drillers will be leading the charge.
Baker Hughes reports that the number of US oil and gas drilling rigs increased by 9 this week. This is an increase of 260 over last year but still behind the 790 active rigs as of March 2020. This week, the U.S. oil count increased by 10 rigs to 421. The number of gas-rigs decreased by 1.
The number of miscellaneous rigs remained at zero. EIA estimates that oil production in the United States rose by 500,000 barrels per day to 10.6 million barrels on average over the week ended September 17. This was due to Gulf of Mexico oil producers returning some of the production to service following Hurricane Ida. Canada’s total rig count increased 8. Canada’s total active oil and gas rigs now number 162, an increase of 91 over the previous year.
This week saw an increase in the Permian Basin’s rig count by one, and the Eagle Ford saw an increase of 25 rigs. The total Permian rig count now stands at 135 more than last year. Meanwhile, Eagle Ford’s current rig count stands at 37. Primary Vision’s Frac Spread count, which tracks completion crews finishing off wells that have been drilled before, shows that completion crews increased by 8 to 252 in the week ending September 17.
For the year, the frac count has increased by almost 120. Oil prices trended up at 1:02 p.m. ET. WTI traded at $73.98, up 0.93% on the day and $2.60 for the week. Brent benchmark traded at $77.99, up 0.96% on the day and more than $3 per barrel on the week.
Russia is creating its own carbon tax, to avoid being subject to the EU’s carbon border tax. This tax is due to take effect in the middle of the 2020s. Russian officials expect to have a draft of the legislation ready within 12-18 months. Citi admits to blocking payments for PDVSA. At a US court hearing, Citigroup executives admitted that they had blocked Venezuela’s national oil company PDVSA from paying its debt to an equipment provider.
This bolstered the latter’s claim that banks had impeded its debt repayment efforts. US Natural Gas Firm up for sale. Gulfport Energy, a US-based natural gas upstream company (NYSE:GPOR), is reportedly looking at a sale. This comes just months after the company’s Chapter 11 bankruptcy filing was completed. Gulfport’s market value currently hovers at $1.6 billion. Energy Crunch prolongs the life of coal plants. Drax Group, a UK-based utility company (LON:DRX), announced that it would keep its coal-fired power plants running beyond the 2022 deadline.
This was due to high gas prices driving prices up to an all-time high. US arrests senior manager of Russia’s LNG champion. Mark Gyetvay (Deputy Head of Russia’s Leading LNG Producer NOVATEK (NVTK), who is a dual citizen with both Russian and American passports, was arrested in the United States for tax-related to $93 Million that was hidden in Swiss offshore accounts. ConocoPhillips sells secondary US acreage. ConocoPhillips, a US multinational, decided to sell its secondary US acreage, which is worth approximately $0.5 billion, following its $9.5 billion deal to purchase Shell’s Permian assets.
Gazprom, the Russian gas giant, denies any speculation or accusations that it isn’t supplying enough natural gas via its pipelines to Europe. A senior Gazprom Export official said this. Gazprom has delivered gas to Europe at historic levels in 2021 so far, according to Sergey Komlev (Head of the Contract Structuring and Pricing Directorate, Gazprom Export), in an article published in Gazprom’s corporate magazine. This article was carried by Russian news agency TASS. The manager stated that some of Gazprom’s biggest customers, Turkey and Italy, all boosted Russian gas imports in the first half 2021.
Komlev said that Gazprom’s exports from Europe rose by 23.2 per cent between January and July. The executive stated that these figures proved the absurdity of accusing Gazprom of a shortage of supply. Europe is facing soaring electricity and natural gas prices ahead of the winter heating season. This is due to tight gas supplies and very low inventories.
Reports say that more than 40 European Parliament members from all political parties have asked the European Commission for an investigation into Gazprom‘s market manipulation, which could have contributed to record-breaking natural gas prices in Europe.
Gazprom didn’t book any additional capacity via Ukraine during the summer, despite the strong rebound in European natural-gas demand and rising prices. Analysts believe that this was a shrewd move by the Russian giant to increase Europe’s gas prices and profit from very high prices.
Others believe that Gazprom’s reduction in gas supplies will force Europe to realize that its gas customers need the controversial Nord Stream 2 pipeline from Russia to Germany, bypassing Ukraine.
