Page 14 - NorthAmOil Week 41

NorthAmOil PERFORMANCE NorthAmOil

US oil and gas operations recover from

latest hurricane-related outages

GULF OF MEXICO OIL and gas production was coming back online Safety and Environmental Enforcement (BSEE),
in the US Gulf of Mexico this week following staff from more than 280 production platforms
the latest weather-related disruptions, this time and drilling rigs were evacuated ahead of Delta’s
caused by Hurricane Delta. arrival in the region, causing 91.7% of Gulf oil
The storm also disrupted onshore operations production and 62.4% of gas production to go
at refineries and other facilities when it made offline.
landfall in Louisiana on October 9 as a Category As of October 14, staff from around 57 pro-
2 hurricane. It comes after certain downstream duction platforms, or 8.9% of the manned plat-
facilities were shut down by Hurricane Laura in forms in the Gulf, remained evacuated, while
late August, in some cases sustaining damage 30.7% of oil and 18.0% of gas output remained
that delayed restart efforts. shut in.
Reuters reported sources familiar with the The 2020 Atlantic hurricane season is already
situation as saying that Total’s 225,500 barrel per the second most active in recent history and only
day refinery lost power as a result of Delta, while three more named storms are needed to match
Valero Energy’s 335,000 bpd facility lost a cool- the record set in 2005. For Gulf oil producers,
ing tower and Motiva Enterprises shut a small this comes during a year of unprecedented vola-
unit at its 607,000 bpd refinery. tility caused by a short-lived Saudi Arabia-Rus-
Offshore, meanwhile, Hurricane Delta was sia price war and significantly exacerbated by the
the latest in a series of storms to cause evacu- coronavirus (COVID-19) pandemic. And while
ations of manned platforms in the Gulf after there have been hopes that disruptions to out-
Hurricanes Laura and Sally and other storms. put in the Gulf would help to prop up oil prices,
Indeed, Delta passed through the heart of deep- this does not appear to be playing out, with West
water oil and gas operations, causing more off- Texas Intermediate (WTI) still hovering around
shore disruption. According to the US Bureau of $40 per barrel.™

Diamondback’s third-quarter

update shows output bottoming

PERMIAN BASIN DIAMONDBACK Energy released an opera- 2020,” Diamondback’s CEO, Travis Stice, stated.
tional update on its third-quarter performance “We exited the quarter with no balance on our
this week. The results show that the company’s revolving credit facility, implying true free cash
production fell slightly to 287,300 barrels of oil flow [FCF] generation in the third quarter.”
equivalent per day compared with 294,100 boepd Stice added that while recovery on an indus-
in the second quarter of the year. Within this, oil try-wide level was important, he did not think
output dropped from 176,300 barrels per day in the concept of production growth should be
the second quarter to 170,000 bpd in the third. discussed “until commodity prices recover and
Diamondback said the third quarter marked global inventories return to normalised levels”.
production bottoming out, but added that it He warned of the impact shale producers can
was expected to rise again slightly in the fourth have on the global oil market, adding that this
quarter thanks to the company’s efforts to stem market is currently oversupplied.
declines and stabilise its production base. It also “As such, if North American producers
noted that it had ramped up activity again in the decide to grow again, even at mid-single-digit
third quarter after carrying out “minimal” com- rates, we will magnify the issues our industry
pletion activity in the second quarter amid the is fighting today and face repercussions from
collapse in oil prices. other global producers,” Stice said. “Should the
The producer anticipates achieving its investment community reward companies tout-
fourth-quarter output target of 170,000-175,000 ing growth, other producers are going to follow
bpd. suit, and this downturn will carry on longer. To
“This production level is the proposed base- that end, we will consider appropriately growing
line for our future activity plans, and we antic- production again should the global oil market
ipate we can hold this production flat in 2021 call on growth through a price signal, but that
while spending 25-35% less capital than in day is not today.”™

P14 www. NEWSBASE .com Week 41 15•October•2020