Page 8 - NorthAmOil Week 21

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A representative of the National Hydrocarbons Agency (ANH) has said that the government may take the unprecedented step of intervening in the tariff regime, which is under the control of Ecopetrol’s Cenit subsidiary.
If you’d like to read more about the key events shaping the Latin American oil and gas sector then please click here for NewsBase’s LatAmOil Monitor.
Middle Eastern moves
Developments in Saudi Arabia and Iraq are at the forefront in this week’s MEOG.
The recent volatility of the oil market has encouraged these two countries to come together for major diplomatic and energy ini- tiatives. Saudi Arabia’s decision to appoint an ambassador to Baghdad and its leadership in a further bout of OPEC production cuts represent milestones in the evolving energy crisis.
The appointment of Mustafa al-Kadhimi as Iraq’s new prime minister has been covered in recent editions of MEOG. The new government’s latest move to tackle sections of the Iran-sup- ported PMU (Popular Mobilization Unit) could be a bellwether for a change in dynamics between Iraq and Iran; time will tell.
In the present uncertain economic envi- ronment, Saudi Arabia has taken various steps to reduce its potential exposure. For example, Saudi Aramco’s shipping division Bahri has put on hold plans to charter up to 12 tankers to carry LNG from Sempra Energy’s proposed export project in Texas, the final investment decision (FID) for which has been delayed to 2021.
Meanwhile, Kuwait and Saudi Arabia have agreed to suspend oil output from the joint off- shore Al-Khafji field until the end of June.
If you’d like to read more about the key events shaping the Middle East’s oil and gas sector then please click here for NewsBase’s MEOG Monitor.
North American shale shifts
The gas-rich Marcellus shale is reported to have
edged out the Permian Basin as the top US des- tination for hydraulic fracturing crews. Accord- ing to data from investment advisory firm Tudor, Pickering, Holt & Co., the Marcellus accounts for 31% of the active hydraulic fracturing crews in the field, while the Permian accounts for 30% and the Eagle Ford and Haynesville shales account for 14% each. (See: Marcellus edges out Permian to become top destination for frack crews, page 14)
The rise of the Marcellus formation came as US rig counts continued their downward trajec- tory, dropping by a further 21 in the week up to May 22. Oil-focused rigs were the only ones to decline in number, dropping from 258 to 237, while gas rigs stayed at 79 and two rigs labelled “miscellaneous” also remained unchanged. This was the third consecutive week of new record lows for the rig count.
According to US Secretary of Energy Dan Brouillette, over 2.2mn barrels per day (bpd) of US oil production has now been shut in.
It was not all bad news for the US oil industry, however, as a second consecutive weekly drop in oil inventories helped to keep West Texas Intermediate (WTI) prices in the $30-35 per barrel range. The recovery in prices has been welcomed, but there are signs that the industry is still nowhere near being able to sustain itself and that more bankruptcies are looming.
Outside the shale patch there is cautious opti- mism about demand beginning to recover. On May 21, the operator of the Trans-Alaska Pipe- line System (TAPS) announced plans to end its temporary curtailment of oil production on the state’s North Slope, citing the start of a recovery in global demand. The curtailment began in April, peaking at 75,000 bpd.
On a more pessimistic note, ConocoPhillips, Alaska’s largest oil producer, confirmed sepa- rately that it was sticking with plans to cut about half its production in the state in June. This will bring output down by about 100,000 bpd. (See: ConocoPhillips reaffirms Alaska production cut even as TAPS ramps flows back up, page 16)™
A second consecutive weekly drop in oil inventories has helped to keep WTI prices in the $30-35 per barrel range
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w w w . N E W S B A S E . c o m Week 21 28•May•2020