RealtormC: Shale CEO: U.S. To Be The World’s Top Oil Producer By Fall
By Irina Slav – Jun 21, 2018, 9:30 AM CDT
The United States is on track to become the world’s top oil producer as early as this fall, unseating the current no.1 Russia, according to Scott Sheffield, the chairman of one of the largest U.S. producers, Pioneer Natural Resources.
U.S. oil production will exceed 11 million bpd within the next three to four months, Sheffield told CNNMoney on Wednesday in Vienna, where OPEC is hosting an international conference attended by some U.S. shale producers, a couple of days before OPEC and its Russia-led allies meet to discuss how much oil production to bring back to the market to offset supply disruptions.
U.S. oil production could “very quickly” reach 13 million bpd, and hit 15 million bpd within seven or eight years, Sheffield said.
The manager told CNNMoney that he sees the sweet spot for oil prices at between $60 and $80 a barrel. Oil prices above $80 per barrel would really hurt consumers, especially U.S. drivers, Pioneer’s executive said.
U.S. oil production has already been topping that of OPEC’s largest producer and de facto leader, Saudi Arabia, for several months now. Last month, U.S. oil production averaged 10.7 million bpd, EIA estimates show, while Saudi Arabia’s oil production was just shy of 10 million bpd in May—at 9.987 million bpd, according to OPEC’s secondary sources in its Monthly Oil Market Report.
Oil production in Russia—currently the world’s no.1—is around 11 million bpd and could tick higher if OPEC and its Russia-led friends approve a boost in production.
In its latest Short-Term Energy Outlook (STEO) released last week, EIA projects that U.S. crude oil production will average 10.8 million bpd this year, up from 9.4 million bpd in 2017, and will average 11.8 million bpd in 2019.
Weekly U.S. production has been setting records every week over the past three-four months, with the latest available data to the week of June 8 showing a weekly production of 10.9 million bpd.
Gulf Of Mexico Production Expected To Hit Record High
By Tsvetana Paraskova – Jun 24, 2018, 6:00 PM CDT
While the U.S. shale production in the Permian has been grabbing most of the market and media attention over the past two years, the Gulf of Mexico has been quietly staging a comeback.
Big Oil firms, the main operators in the Gulf of Mexico, have been cutting costs and simplifying designs to make offshore projects viable in the lower-for-longer oil price world.
Chevron, Shell, and BP continue with their deepwater developments offshore Louisiana and Texas and have brought down breakeven costs to $40 a barrel or less—comparable with the breakevens at some shale formations onshore. Now operators are vying for new exploration acreage close to existing production platforms that would bring development and production costs down even further.
While the market and media have focused on the record Permian production, the Gulf of Mexico’s production is also expected to hit a record high this year.
But there’s one huge difference between onshore and offshore in terms of resource development—for shale wells, production peaks in several months, while vast deepwater resources can pump oil for decades.
Big Oil continues to bet on resources and projects that will last for decades, but companies have drastically changed their approach to development. Gone are the days in which the race was to have ‘the biggest, the most complex and most expensive’ bespoke project the industry has seen. It may have worked at oil prices at $100, but at half that price of oil, the focus is on leaner projects and more collaborative work to bring costs down.
Related: Shale CEO: U.S. To Be The World’s Top Oil Producer By Fall
Top executives at the largest operators in the Gulf of Mexico admit that project costs before 2014 were unsustainable.
“We knew there was incredible waste, but 2014 was the trigger,” Harry Brekelmans, Shell Projects and Technology Director, tells Bloomberg.
“We knew there was no way we could put forward a project in the same way again.”
In April this year, Shell announced the final investment decision for Vito, a deepwater development in the Gulf of Mexico with a forward-looking, breakeven price estimated at less than $35 a barrel. After the oil prices started crashing, Shell began in 2015 to redesign the Vito project, reducing cost estimates by more than 70 percent from the original concept, the oil major said in late April.
Shell “collaborated internally and externally to optimize the supply chain, to drill standardized wells and to build tried-and-tested designs more efficiently,” Brekelmans said at the Offshore Technology Conference in Houston a week later.
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Last month, Shell started early production at the Kaikias deepwater subsea development in the Gulf of Mexico a year ahead of schedule and at a forward-looking, break-even price of less than $30 per barrel of oil. Shell’s Brekelmans said earlier this year that the supermajor was targeting its deepwater projects to break even at $40 or preferably below that threshold.
Another oil major, BP, has cut project costs for its Mad Dog 2 project in the Gulf by 60 percent to US$9 billion, working with co-owners and contractors to simplify and standardize the platform’s design.
Chevron says that offshore crude oil extraction, including deepwater, is closing in on shale in terms of cost thanks to new production technologies.
“In the past, a lot of the cost of development has been new technology,” Jeff Shellebarger, president of Chevron’s North American division, told Bloomberg. “With the types of reservoirs we’re drilling today, most of that learning curve is behind us. Now we can keep those costs pretty competitive.”
According to Wood Mackenzie, oil and gas production in deepwater Gulf of Mexico is expected to reach an all-time record high this year at 1.935 million boepd, of which 80 percent is oil—beating the previous record from 2009 by nearly 10 percent and representing 13-percent growth year over year.
U.S. crude oil production in the Federal Gulf of Mexico increased slightly in 2017 to reach 1.65 million bpd, the highest annual level on record, the EIA said in April, adding that production is expected to continue growing this year and next, accounting for 16 percent of total U.S. crude oil production. According to the EIA, a total of 10 deepwater Gulf of Mexico field starts are expected in 2018 and 2019.
Related: U.S. Overtakes Saudi Arabia In Recoverable Oil Reserves
Exploration investment, however, is still flat, and operators are in a ‘wait and see’ mode, Wood Mackenzie said in March in a comment on the latest ‘lackluster’ U.S. lease sale in the Gulf. Bidding was focused on the Mississippi Canyon—an area with established infrastructure and lowest cost developments.
“Operators are keen to keep the utilization up on the infrastructure and every new barrel produced through these facilities, further realizes value from the original investment,” William Turner, senior research analyst at Wood Mackenzie, said.
“Meanwhile some patient but dedicated operators are on the brink of cracking the code on ultra-high-pressure developments. Once the industry sees some proven developments in fields like Anchor, others will follow suit and we will begin to see the return of significant volumes being discovered and developed in the region.”
KickyKai: People are often unreasonable, illogical and self-centered;
Forgive them anyway.
If you are kind, people may accuse you of selfish, ulterior motives;
Be kind anyway.
If you are successful, you will win some false friends and some true enemies,
If you are honest and frank, people may cheat you;
Be honest and frank anyway.
What you spend years building, someone could destroy overnight;
If you find serenity and happiness, they may be jealous;
Be happy anyway.
The good you do today, people will often forget tomorrow;
Do good anyway.
Give the world the best you have, and it may never be enough;
Give the world the best you’ve got anyway.
You see, in the final analysis, it is between you and your God;
It was never between you and them anyway.