Haliburton: The Era Of Exponential Growth In U.S. Oil And Gas Is Over
The era of “exponential” growth in the U.S. oil and gas industry is over as most shale firms are returning cash to investors instead of going into debt to drill more, according to Halliburton, the world’s largest fracking services provider. “We’ll see growing investment, but quite frankly, nothing even close to what we saw from 2008 to 2014,” Halliburton’s CEO Jeff Miller said at a panel at the ADIPEC energy conference in Abu Dhabi on Tuesday, as carried by The National. “Companies were spending at a rate of 120 percent of their cash flow and that can’t go on indefinitely,” Miller said. Since the pandemic crash, however, the U.S. shale patch has focused on returning money to shareholders, paying down debt, and healing balance sheets. U.S. oil and gas production has rebounded but the growth rate is nowhere near the record growth from 2018 or 2019. This year, supply chain delays and cost inflation have combined with U.S. shale’s newfound spending discipline to hold back production growth. Pioneer Natural Resources CEO Scott Sheffield has said that U.S. oil production growth would likely disappoint both this year and next. Sheffield has forecast that U.S. oil production will add 500,000 bpd this year but in 2023 the production gains may be lower than this, due to constraints, Reuters reported in September. In its October Short-Term Energy Outlook, the EIA suggests that U.S. crude oil production will average 11.7 million bpd in 2022 and 12.4 million bpd in 2023, which would surpass the record high set in 2019. But the EIA has revised down its growth forecasts since the start of this year, while analysts say its current estimates are too optimistic. The U.S. oil and gas industry continues to be frustrated with the mixed messages from the Biden Administration, which continues to blame oil companies for high gasoline prices and demands that oil firms “lower the prices for consumers at the pump.” Commenting on President Biden’s latest remarks on gasoline prices and the threat that oil firms are “going to pay a higher tax on their excess profits and face other restrictions” if they don’t increase output, American Petroleum Institute (API) President and CEO Mike Sommers said this week, “Rather than taking credit for price declines and shifting blame for price increases, the Biden administration should get serious about addressing the supply and demand imbalance that has caused higher gas prices and created long-term energy challenges.” “Oil companies do not set prices—global commodities markets do,” API’s Sommers said.
Japan Will Retain Its Stake In Russia’s Sakhalin-1 Oil And Gas Project
Japan will remain a stakeholder in the Russian Sakhalin-1 oil and gas project after the government asked the Japanese companies that participated in the original consortium to retain their stakes in the new entity that will operate the project. Russia’s president signed a decree to change the ownership of Sakhalin-1 last month, with the state setting up a new entity to manage the project. Previous shareholders such as Japan’s SODECO consortium were offered the chance to retain their stakes. SODECO, or Sakhalin Oil and Gas Development Co, comprises Itochu, the conglomerate, Marubeni, and Japan Petroleum Exploration Co. The Japanese government has a 50-percent stake in the consortium. “The Sakhalin-1 is extremely important for Japan’s energy security as it is a valuable source outside of the Middle East,” said trade minister Yasutoshi Nishimura this week, as quoted by Reuters. Previously, the Sakhalin-1 project was operated by Exxon but Russia removed the super major from the operatorship position earlier this year, amid the company’s own total pullout from Russia. India’s ONGC is also reportedly considering taking a stake in the new entity operating Sakhalin-1. The Indian state oil major was a shareholder in the consortium running Sakhalin-1 before Exxon’s pullout and wanted to retain its interest in the project. The news that the Japanese companies will retain their interest in Sakhalin-1 is not a surprising development. The trade minister has repeatedly indicated that the offshore project is important for Japan, despite Western sanctions that have forced the country to shrink its import of Russian oil. “From the standpoint of diversifying Japan’s crude oil import, that’s a very important project,” trade minister Nishimura said last month. The chief executive of Itochu went further, saying in an interview with the Financial Times that Japan could not afford to follow its Western allies in cutting off all energy trade relations with Russia because, unlike them, Japan’s survival depended on energy imports.
India to intensify clean energy push as oil prices stay at $95 a barrel
India will “navigate” its way through the current oil price environment by further diversifying its energy sources, its Minister of Petroleum and Natural Gas Hardeep Singh Puri has said. An “unintended consequence” of $95 per barrel of oil is a hastening of the transition to cleaner energy, Mr Puri told The National on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference. As the world’s third-largest crude oil importer, India aims to produce 500 gigawatts of non-fossil fuel capacity by 2030 to meet half of its energy demand through renewables, he added. “We are the leading success story [in renewables] in the world. We brought the price of solar down from 25 cents to three cents … and will be the leading manufacturer of green hydrogen because we have low-cost power,” Mr Puri said. “We have got Indian companies supplying green ammonia to German companies. We have got Indian companies supplying to the new electricity turbines in Singapore.”
India set to register second highest LNG capacity additions
India is set to register the second highest LNG regasification capacity additions in Asia between 2022 – 2026, accounting for about 21% of the region’s total capacity additions by 2026, says GlobalDa yuh ta. GlobalData’s report, ‘LNG Industry (Liquefaction and Regasification) Capacity and Capital Expenditure (CapEx) Forecast by Region and Countries, All Active Plants, Planned and Announced Projects, 2022-2026’, reveals that India is likely to witness total LNG regasification capacity additions of 4174 billion ft3 by 2026. Out of this, 3589 billion ft3 of capacity is likely to come from the new build terminals, while the remaining is from the expansion of the existing regasification terminals. Himani Pant Pandey, Oil and Gas Analyst at GlobalData, comments: “In India, a significant part of the capacity additions will be through new build projects with the announced Jaigarh Port terminal being the largest among them with a capacity of 390 billion ft3. To be operated by H-Energy, the terminal is expected to become operational in 2025.” The second largest contributor among the new build projects in the country is the Kakinada GBS Floating terminal, which is likely to add a capacity of 351 billion ft3 by 2024. The Crown LNG India AS is the operator of the announced regasification terminal. With a capacity of 244 billion ft3, the Hazira Expansion regasification terminal will be the biggest contributor to India’s LNG regasification capacity additions among the expansion projects. It is expected to come online by 2025.
Festive demand drives up Indian state refiners gasoil sales in Oct
Indian state fuel retailers’ diesel sale in October surged from the previous month, preliminary sales data shows, indicate a pickup in industrial activity during the peak festive season. Fuel demand in India- a proxy for oil demand in Asia’s third-largest economy- typically rises during the month long festival season as diesel-guzzling trucks hit the roads to deliver goods. State-refiners’ average daily gasoil sales last month rose 6.2% from September and was 12% higher than a year ago, the data showed. Gasoil accounts for about two-fifth of India’s over all fuel demand. India’s factory activity expanded at a stronger pace in October as demand and output remained solid, encouraging firms to hire workers at the fastest pace in nearly three years, according to the Manufacturing Purchasing Managers’ Index, compiled by S&P Global. Also, a higher need for personal mobility during the month-long festival season drove up October average gasoline sales by 1.5% from September, the data showed.