Justin Williams, Author at NOIA

The future of oil and gas: Eight bold industry predictions

August 8, 2018 by Justin Williams

Offshore Technology | Talal Husseini | August 3, 2018

As oil prices tentatively recover from the 2014 crash and investments in alternative renewable energy sources gain momentum, oil and gas companies need to innovate to stay competitive and keep the fuel flowing. Offshore Technology asks industry experts for their insight into how technological advancements will shape the future of oil and gas.

LTE: Support offshore energy

August 8, 2018 by Justin Williams

News & Observer | Derrick Hollie | August 5, 2018

North Carolina has a chance to land a one-two punch of affordable and reliable energy and accessible new jobs – and its minority community needs its elected officials to stand up to support offshore energy development.

In North Carolina, 23 percent percent of African Americans and 27 percent of Latino residents live in poverty, and the offshore industry could be a lifeline to a better life for countless families.

A recent study predicts that within 20 years of leasing, North Carolina could see nearly 56,000 new jobs and $4 billion in annual contributions to the state’s economy as a result of energy development and exploration.

Likewise, too many low-income North Carolinians cannot afford to keep up with their energy bills. Take Jones County, the poorest households in this county – the ones below 50 percent of the federal poverty level – are spending close to 43 percent of their monthly income on energy costs.

There is no sufficient reason why North Carolina should not fight to ensure energy is affordable, reliable and accessible. North Carolina needs its elected leaders to step up and fight for this chance to better the lives of countless residents.

Derrick Hollie is president of Reaching America, an organization addressing complex social issues impacting communities and host of Reaching America on Demand podcast.

Oil Majors’ Focus On Deep Water Pays Off

August 1, 2018 by Justin Williams

E&P | Elaine Maslin | July 30, 2018

Some 74% of the estimated 3.9 billion barrels of oil equivalent (Bboe) discovered in first-half (1H) 2018 was in ultra-deep water, despite onshore drilling accounting for 57% of the exploration well count, according to analysts at Wood Mackenzie.

Deep and ultra-deepwater accounted for just 16% of the total exploration well count.

Oil majors are leading the charge in part driven by investors wanting to see growth. Exxon Mobil Corp. made the most discoveries in terms of volume in 1H 2018, trailed by Eni, Total, Hess Corp., Nexen, Equinor and Shell. These companies were followed by state-owned Petrobangla, Petronas and CNOOC.

“The oil major’s market share of high-impact exploration is as high as I can remember it,” said Andrew Latham, vice president, research, global exploration, for Wood Mackenzie. “There’s no doubt that the cost environment has made the market more favorable toward deep water, which is now very often more favorable than shale plays, with a sweet spot at US$40/bbl or less.

“That sweet spot is high-quality reservoirs able to deliver 20 million barrels [MMbbl] per development well to keep costs down. Some of the gas finds are above 1 Tcf per development well, so their break-evens are even lower,” Latham continued. “The operators are also looking for places where there is a route to market. It sounds obvious, but when oil was $100/bbl, this kind of discipline was not quite there; there was something of a scattergun approach.”

A targeted approach is paying off for some.

Deepwater Finds

The average discovered volume for an ultra-deepwater well in the first half was just shy of 140 million barrels of oil equivalent (MMboe), compared with less than 25 MMboe for onshore wells, according to data on Wood Mackenzie’s 2018 Wildcat Wells to Watch, compiled by Wood Mackenzie Research Analyst Alex Connelly.

A significant portion of those volumes came from the two largest discoveries in 1H, both of which sit in newly discovered plays. The largest is Eni’s ultra-deepwater Calypso discovery offshore Cyprus, containing between 6 trillion cubic feet (Tcf) and 8 Tcf (1.1 billion boe) of gas, in 1,047 m water depth.

The second largest is ExxonMobil’s Ranger at 500 MMboe. Ranger is one of three discoveries, alongside Longtail and Pacora, made this year by Exxon Mobil in the Stabroek Block, taking the total recoverable resource estimate for the block to 4 billion, according to partner Hess Corp. Ranger marks a new play in the block, proving the carbonate, Latham noted.

Other notable deepwater finds include Boudji and Ivela, offshore Gabon, discovered by Repsol and Petronas, respectively. They are the first discoveries in that part of deepwater offshore Gabon; however, despite being in seventh and 12^th place in the 1H biggest finds rankings, respectively, they may not be commercial, Latham said.

Read the full story here.

Energy Secretary Rick Perry: ‘True energy independence is finally within our grasp’

August 1, 2018 by Justin Williams

CNBC | Secretary Rick Perry | July 29, 2018

By all accounts, the United States is in the midst of truly spectacular progress in the vital realm of energy. Spurred by technological breakthroughs unleashed by innovation, deregulation and pro-growth policies, we are now producing energy more abundantly and affordably, using it more cleanly and efficiently, and obtaining it from a wider range of sources than anyone ever thought possible.

Gone are the days of America's crippling dependence on foreign energy sources. True energy independence is finally within our grasp and we are exporting more of our energy to our allies.

Nowhere is this stunning turnaround more dramatic than with natural gas.

Thanks to significant innovations in hydraulic fracturing and horizontal drilling, the United States is the number-one natural gas producer in the world.

A few short years ago, U.S. natural gas producers were spending billions to construct facilities to import liquefied natural gas (LNG). Today, they are converting investments to export operations and last year, for the first time since Dwight Eisenhower was president, America became a net natural gas exporter.

We currently have two LNG export facilities operating in the United States – Sabine Pass on the Gulf Coast in Louisiana and Cove Point on the Chesapeake Bay in Maryland – and another four export terminals under construction. Sabine Pass and Cove Point ship American LNG to 30 nations on five continents.

During a recent visit to Cove Point, I witnessed the historic completion of its LNG export expansion project — a great milestone in America's natural gas journey — and watched as a tanker was loaded and readied for shipment to overseas customers.

Cove Point's contracted LNG customers are companies based in Japan, a prosperous nation of 127 million people, and India, the world's largest democracy with a growing economy and population of more than 1.3 billion. These contracts carry destination flexibility, and have allowed LNG from Cove Point to reach global destinations that include the United Kingdom, Argentina, Jordan, Japan, Pakistan, Kuwait, the Dominican Republic, and Panama, with more opportunities on the horizon.

In fact, DOE just finalized a new rule that will expedite the permitting of certain small-scale exports of natural gas to reduce the regulatory burden on American businesses, while providing significant benefits to our trading partners in the Caribbean, Central and South America.

Read the full op-ed here.

Rick Perry is the U.S. Secretary of Energy.

As Oil Industry Recovers From a Glut, a Supply Crunch Might Be Looming

August 1, 2018 by Justin Williams

Wall Street Journal | Sarah Kent and Georgi Kantchev | July 28, 2018

Dearth of investments in oil projects mean a spike in prices above $100 could be on the horizon

Crude across the globe is being used up faster than it is being replaced, raising the prospect of even higher oil prices in the coming years.

The world isn’t running out of oil. Rather, energy companies and petro-states, burned by 2014’s price collapse, are spending less on new projects, even though oil prices have more than doubled since 2016. That has sparked concerns among some industry watchers of a price spike that could hurt businesses and consumers.

The oil industry needs to add 33 billion barrels of crude every year to satisfy anticipated demand growth, particularly as developing countries like China and India are consuming more oil. This year, new investments are set to account for an increase of just 20 billion barrels, according to data from Rystad Energy.

The industry’s average decline rate—the pace at which output falls in a particular field or region without new investment—was 6.3% in 2016 and 5.7% last year, the Norway-based consultancy said. In the four years before the crash, that decline rate was 3.9%.

Any shortfall in supply could push prices higher, similar to when oil hit nearly $150 a barrel in 2008, some industry participants say.

“The years of underinvestment are setting the scene for a supply crunch,” said Virendra Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production deficit could come as soon as the end of next year, potentially pushing oil above $100 a barrel.

Strong demand for crude could falter if the global economy slows. On the supply side, some large new projects have been commissioned, potentially signaling appetite for more investment, and companies are driving down project costs, allowing them to do more for less. Likewise, soaring production from U.S. shale fields has offset underinvestment and declines elsewhere. But the shale industry’s growth is expected to peak in the early to mid-2020s, according to industry experts.

Once, market participants worried that supply would peak. Now, they talk of vast oil reserves underground.

The Gulf of Mexico, for instance, holds roughly 4 billion barrels of proven reserves, according to 2016 data from the U.S. Energy Information Administration. But new projects generally require billions of dollars of investment and years of development. BP PLC’s $9 billion Mad Dog 2 development in the Gulf of Mexico isn’t expected to start production until 2021, despite getting the green light in 2016. Such deep-water projects take an average of 3½ years and roughly $5 billion to go from approval to production, according to consultancy Wood Mackenzie.

The industry has a record of boom-bust spending that can lead to big price swings.

Read the full story here.

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Dearth of investments in oil projects mean a spike in prices above $100 could be on the horizon