[TheDude]

OfficialWire: More Than 3.5 Mb/d Of Crude Oil Production Capacity That Was Supposed To Come Online Between 2009-13 Has Been Postponed

$this->bbcode_second_pass_quote('', 'T')he Report on ‘Global Financial Credit Crunch: Will it lead to a Global Oil and Gas Supply Crunch’ analyzes the oil and gas markets focusing on the effects of the reduction in capital expenditure by oil and gas companies and the delayed and cancelled upstream and downstream projects on the future of the oil and gas industry. The report provides an in-depth analysis of the effects of the credit crisis on the capital expenditure of companies and the current and future projects in the upstream and the downstream sectors. The report highlights the key issues leading to a future supply crunch and the role of government policy in the energy markets. Finally, the report tries to map out the consequences of the low investments on the future production capacity and compares them with the future demand growth estimates. The report analyses current and future demand and supply projections to propose three scenarios for the future possible evolution of the world oil industry and examines the possibility of a supply crunch in the near future.

[copious.abundance]

Rig count now up 7 of the past 8 weeks.
LINK

[copious.abundance]

US rig count up by 17 in the last week. I think that's up 9 of the past 10 weeks, if I'm not mistaken.

>>> LINK <<<

Even the natural gas rig count has been going back up. Why - I haven't a clue. Anyone doing more gas drilling these days outta have their heads examined!

[copious.abundance]

US rig count up 14 this past week. I believe that's up 10 of the past 11 weeks now.

>>> LINK <<<

[copious.abundance]

In addition to rig counts starting to climb once again, we also have some projects which were put on hold earlier in the year being put back on the front burner. In addition to the revived oil sands project I posted a couple months or so ago, here's another example. I can find others, if y'all are interested.

Certain people *cough cough* in this thread seemed to act as if the pullback was permanent and would have long-term consequences, but with some of these drilling plans and projects only having been put on hold for mere months, in the long term their postponement will hardly be noticed.

>>> LINK <<<
$this->bbcode_second_pass_quote('', '[')...]

HOUSTON, Sept. 1 – MegaWest Energy Corp., Calgary, signed agreements to recapitalize the company and restart its Marmaton River and Grassy Creek enhanced oil recovery projects in Missouri.

An investor group led by Iroquois Capital Opportunity Fund LP will buy $2.2 million in MegaWest preferred stock, and Mega Partners 1 LLC (MP1) paid $2 million for a 10% working interest partner in two existing Missouri heavy oil projects. MP1 will hold as much as a 20% working interest in future development on 15,313 acres in Missouri and Kansas.

MegaWest will receive services from Iromad LLC, a production enhancement and project management consultancy. Proceeds from the initial funding will be used to restart the two existing projects.

[copious.abundance]

She's back over 1,000!

>>> 1009 <<<

[AirlinePilot]

I never said anything of the sort about permanence. I said that price had an effect and it was and still is completely evident that many projects were put on hold or cancelled.

Now that price has rebounded a bit you are seeing the obvious results of that. The results still remain to play out. It is not and will not be evident until the price and demand signals recover enough to estimate the longer term effects of last years price crash in crude. I still stand by my premise that the impact will remain and any large scale production increases will lag real demand significantly.

On a macro scale the industry is still far below what one could consider normal times when you consider capital outlay and project schedules. Your pointing to minor increases in drilling rigs, production projects etc and claiming we are somehow out of the woods. We still have a very large issue with credit and lending. The velocity of normal money/lending is still crippled and will continue to be as long as large banks and financial institutions are allowed fantasy asset valuations by the regulatory structure.

What you are seeing is a simple small scale uptick in activity due to the price of crude moving off it's bottom. That's the proper and accurate context OF.

[copious.abundance]

$this->bbcode_second_pass_quote('AirlinePilot', ' ')What you are seeing is a simple small scale uptick in activity due to the price of crude moving off it's bottom. That's the proper and accurate context OF.

[AirlinePilot]

Recession impacts still being felt

Europe's largest oil company by market value said it planned to restructure its exploration division and divide it into two units, one focused on the Americas and another focused on the rest of the world. Since, then new Chief Executive Peter Voser has announced hundreds of job cuts across the company as it struggles with plunging revenues after oil prices collapsed from a record above $147/barrel in July 2008. On Thursday, ratings agency Standard and Poors lowered its long-term rating on Shell to "AA" from "AA+", citing concerns about its cash flows.

http://www.reuters.com/article/rbssEner ... 4?rpc=401&



In Context....

U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 September last year, and now stand at 885 rigs below the same week last year.
During the week ended July 17, 2009, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating. Tighter access to credit and a 75 percent slide in natural gas prices to below $3 per mmBtu over the last year or so have forced many producers to scale back gas drilling operations.

http://www.reuters.com/article/rbssEner ... 4?rpc=401&

[AirlinePilot]

Tough sell in VZ

The risk is not geological. Everyone knows where the oil is. The upgrading and refining facilities required to turn tar to oil cost billions of dollars, but the technology is tried and tested. Environmentalists, so vocal about Canada’s tar sands (see article), have so far been silent over Venezuela’s bitumen.

It does not help that PDVSA wants a 60% share and operational control in each block while not putting up any money. On top of that the government will take a 33% royalty and a windfall tax. Even so, state-owned oil firms from China, Russia and India have expressed interest in the blocks, along with Brazil’s Petrobras and multinationals such as BP, Chevron, Royal Dutch Shell and Total. Two things have prompted them to hesitate, says Michelle Billig of Pira Energy, a consultancy. The first is the world recession and the fall in the oil price—factors that lay behind disappointing bidding rounds in Algeria and Iraq earlier this year.


http://www.economist.com/world/americas ... 5&fsrc=rss

[AirlinePilot]

Oil project delays hit sub sea sector

Contractors and shipowners face struggle as drop in activity set to persist for 18 months

Martyn Wingrove - Thursday 27 August 2009

THE sub sea construction sector continues to be challenging for contractors and shipowners as oil companies delay projects and call for cost reductions.
European contractor Acergy has found the market tough in northwest Europe as the number of oil field developments has slowed. It is also finding it tough to win new sub sea installation orders in Africa and the ME...

http://www.lloydslist.com/ll/news/oil-p ... tm?src=rss

[AirlinePilot]

$this->bbcode_second_pass_quote('OilFinder2', 'S')he's back over 1,000!

$this->bbcode_second_pass_quote('AirlinePilot', '&')quot;US drilling activity continued to climb, with 10 more rotary rigs active this week for a total 1,009 units—just slightly more than half the 2,013 units drilling in the same period a year ago, Baker Hughes Inc. reported. "

[copious.abundance]

No problem getting investors for Canada's oil sands!
>>> LINK <<<
$this->bbcode_second_pass_quote('', '[')b]China's $1.9B Alberta oilsands deal
PetroChina partners with Athabasca Oil Sands
By Dina O'Meara, With Files From Canwest News Service
September 1, 2009

CALGARY - In a blockbuster deal, privately owned Athabasca Oil Sands Corp. said PetroChina International Investment Co. Ltd. will buy a majority stake in its operations for $1.9 billion, marking the largest venture by China in the Canadian oilsands to date.

Athabasca Oil Sands said the state-owned firm, one of the world's most valuable oil and gas companies, will acquire a 60 per cent working interest in the MacKay River and Dover oilsands projects.

[...]

[copious.abundance]

And guess where some of those new rigs are going?
>>> LINK <<<
$this->bbcode_second_pass_quote('', 'S')eptember 05 2009
N.D. oil industry optimistic about the year ahead

MEDORA, N.D. (AP) — A record 381 oil wells were drilled in North Dakota in the past year and more are expected this year, the state mineral resources director told oil representatives Thursday.

Lynn Helms gave his report to about 250 people at the North Dakota Petro-leum Council’s annual meeting.

He said 335 of the wells drilled in the past year were in the Bakken and Three Forks shale formations in western North Dakota. Geologists have been trying to figure out whether the two formations are separate or one.

"The jury’s still out," Helms said.

Helms expects about 500 wells to be permitted this year, though he said oil prices remain so volatile he now compares them to a bungy cord rather than a roller coaster.

The number of applications for drilling permits dropped off in February, when oil prices were lower, to about two per week, Helms said. But as oil prices have increased, the number of applications has grown to at least two per day, he said.

[...]

[copious.abundance]

$this->bbcode_second_pass_quote('AirlinePilot', '[')b]In Context....

U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 September last year, and now stand at 885 rigs below the same week last year.
During the week ended July 17, 2009, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating. Tighter access to credit and a 75 percent slide in natural gas prices to below $3 per mmBtu over the last year or so have forced many producers to scale back gas drilling operations.

http://www.reuters.com/article/rbssEner ... 4?rpc=401&

[AirlinePilot]

It's only hilarious to you because you are not looking far enough down the road. NG rigs are not like oil rigs. I'm really tired of spelling it out for you OF so I just wont. At least others who come in to read this stuff might just take away something you are failing to see.

The entire NG and Oil industry is in DEEP TROUBLE if these prices remain where they are. The economy is in DEEP TROUBLE if the industry cannot recover from this fact. You have failed in your classic cornucopian outlook to understand the implications of what is going on. You can run around screaming all day long about the daily moves in numbers but that does not change the macro picture which will drive what happens in the future.

The industry cannot move fast enough, nor does it have the capital to do so. It's happening right in front of your eyes, but all you can do is count rigs.

Pretty funny actually.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('AirlinePilot', '
') The entire NG and Oil industry is in DEEP TROUBLE if these prices remain where they are. The economy is in DEEP TROUBLE if the industry cannot recover from this fact. You have failed in your classic cornucopian outlook to understand the implications of what is going on. You can run around screaming all day long about the daily moves in numbers but that does not change the macro picture which will drive what happens in the future.

The industry cannot move fast enough, nor does it have the capital to do so. It's happening right in front of your eyes, but all you can do is count rigs.

Pretty funny actually.

[AirlinePilot]

Outcast,

First off Im not a doomer in the classical sense. I see large problems ahead, but not Mad max.

The loss of revenues due to the cratering of price last year is a behind the seens issue presently. In case you have been missing it, there is a dearth of real news lately. Its mostly fluff and pumping to attempt to keep things propped up with the economy. Whether or not you believe the global economy will grow or not isnt the point.

What i have been factually pointing out is that the larger immediate problem we will have is that with prices at or below the current levels, the industry cannot sustain the pace we saw prior to last fall. Extraction costs, E&P costs, Infrastructure spending etc are currently suffering in a large way due to

A. The global recession
B. The continued slowdown in the velocity of money (I.E. credit/lending)
C. Demand signals (percieved or otherwise)

I dont believe that "strong demand signals/global economic growth" are needed for another drastic price spike. I think even the perception of ANY growth, especially here in the US is all the signal we will require to ignite that fuse.

When and if any demand rears its ugly head again the industry will not be able to ramp up any of the above mentioned operations in a timely fashion. Add to this the obvious and measurable issues of natural decline, Export Land , and crude price volatility and the recipe is for more and even greater volatility. There really is no way around it. This will result in higher prices and the economic impact which will ensue. At some point the industry will falter and it may be doing so now due to the fact that its not a charitable institution. Robust and higher prices are needed and required for the health of the industry if we are to meet any growth in demand down the road. I believe that a "waiting game" is being played out. Resources exist to allow this to go on for some time but not longer term . Without I believe at least 100-120$/bbl oil things will just continue to go downhill for the industry in general

Your point about growth or lack of it is also an interesting one. I see that global oil decline will at some point trump the economic problems. This may not happen for a bit, but with the Industry being impacted significantly it bears watching and attempting to measure. I see this whole thing as an almost perfect storm. Decline of somewhere in the neighborhood of 4-6-8% YOY will have an impact on the global economy quickly. If the global downturn exceeds these rates, than things will be a lot worse than I am currently thinking. It's kind of a feedback loop at this point unless we do something meaningful with regard to conservation and alternatives very soon. I presently do not see that occurring and plan and invest accordingly.

$this->bbcode_second_pass_quote('AirlinePilot', '[')b]Tough sell in VZ

The risk is not geological. Everyone knows where the oil is. The upgrading and refining facilities required to turn tar to oil cost billions of dollars, but the technology is tried and tested. Environmentalists, so vocal about Canada’s tar sands (see article), have so far been silent over Venezuela’s bitumen.

It does not help that PDVSA wants a 60% share and operational control in each block while not putting up any money. On top of that the government will take a 33% royalty and a windfall tax. Even so, state-owned oil firms from China, Russia and India have expressed interest in the blocks, along with Brazil’s Petrobras and multinationals such as BP, Chevron, Royal Dutch Shell and Total. Two things have prompted them to hesitate, says Michelle Billig of Pira Energy, a consultancy. The first is the world recession and the fall in the oil price—factors that lay behind disappointing bidding rounds in Algeria and Iraq earlier this year.


http://www.economist.com/world/americas ... 5&fsrc=rss