Houston, 15 May (Argus) — US shale crude output is expected to rise by 122,000 b/d to 5.4mn b/d next month, according to new data from the US Energy Information Administration (EIA).The largest increases will be in the Permian basin in Texas and New Mexico, and the Eagle Ford in south Texas, the EIA said in its latest Drilling Productivity Report.Permian basin production should increase by 71,000 b/d from May to June to about 2.49mn b/d.Output in the top-producing Permian has been more resilient than in other regions during the downturn in commodity prices because of lower extraction costs. Midstream companies are investing heavily to add takeaway capacity out of the region because of the expected rise in output.Eagle Ford oil production is expected to rise by 36,000 b/d to about 1.28mn b/d in June.
Source: News – Argus Media
Investors who took a hit last year when dozens of U.S. shale producers filed for bankruptcy are already making big new bets on the industry’s resurgence.In the first quarter, private equity funds raised $19.8 billion for energy ventures – nearly three times the total in the same period last year, according to financial data provider Preqin.The quickening pace of investments from private equity, along with hedge funds and investment banks, comes even as the recovery in oil prices from an 8-year low has stalled at just over $50 per barrel amid a stubborn global supply glut.The shale sector has become increasingly attractive to investors not because of rising oil prices, but rather because producers have achieved startling cost reductions – slashing up to half the cost of pumping a barrel in the past two years. Investors also believe the glut will dissipate as demand for oil steadily rises.That gives financiers confidence that they can squeeze increasing returns from shale fields – without price gains – as technology continues to cut costs. So they are backing shale-oil veterans and assembling companies that can quickly start pumping.”Shale funders look at the economics today and see a lot of projects that work in the $40 to $55 range” per barrel of oil, said Howard Newman, head of private equity fund Pine Brook Road Partners, which last month committed to invest $300 million in startup Admiral Permian Resources LLC to drill in West Texas.Data on investments by hedge funds and other nonpublic investment firms is scant, but the rush of new private equity money indicates broader enthusiasm in shale plays.”Demand for oil has been more robust than anyone imagined three years ago,” said Mark Papa, chief executive of Centennial Resource Development Inc (CDEV.O).Papa referred to the beginning of an international oil price crash in 2014, which took many firms in the shale sector to the brink of bankruptcy.
Source: Undaunted by oil bust, financiers pour billions into U.S. shale | Reuters
Increasing crude oil production in the Permian basin of western Texas and eastern New Mexico is filling available pipeline capacity, putting modest downward pressure on West Texas Intermediate (WTI) crude oil priced at Midland, Texas compared with WTI at Cushing, Oklahoma. However, the Midland versus Cushing discount, which recently widened to more than $1 per barrel (b), is unlikely to be either as large or as persistent in 2017 as it was following the rapid increase in Permian production over 2010-14. Pipeline capacity expansions and other market changes now underway appear poised to facilitate the efficient disposition of higher volumes of Permian crude oil.Compared with other oil producing regions, the Permian has a large number of productive geological formations stacked in the same area, including the Wolfcamp, Bonespring, Spraberry, and Yeso-Glorieta formations. The Permian’s other favorable characteristics are in-region refining capacity, close proximity to large refining centers on the Gulf Coast, and existing pipeline infrastructure.Crude oil production in the Permian grew by 593,000 barrels per day (b/d) between January 2010 and January 2014, more than could be accommodated by in-region refinery capacity and pipeline capacity. This situation resulted in large price discounts at the crude gathering and transportation hub in Midland, Texas compared with Cushing, Oklahoma, indicating that the marginal barrel of crude oil was moving out of the region via a mode of transport more expensive than by pipeline. In 2014, WTI-Midland averaged a $6.94/b discount to WTI-Cushing, compared with a $1.68/b average discount the prior year. However, as new and expanded pipeline capacity was added in 2014 and 2015, WTI-Midland’s discount to WTI-Cushing narrowed, falling to an average of only $0.07/b in 2016 (Figure 1).
Source: This Week In Petroleum Summary Printer-Friendly Version
Posted in oil, Permian
Tagged oil, Permian
Two new crude pipeline projects from West Texas’ prolific Permian Basin to the Corpus Christi coastline have analysts crowing about refinery and export expansion in that city. The Houston-based pipeline company Buckeye Partners has proposed a 400,000 barrel-per-day line from Wink and Midland to existing facilities in Corpus.And a three-company consortium — TexStar Midstream Logistics, based in San Antonio, Castleton Commodities International, out of Connecticut, and Dallas-based Ironwood Midstream Energy — have proposed a new 590,000 barrel-per-day pipeline from Orla, Pecos, Crane, and Midland to Corpus, with a stop in Gardendale in the Eagle Ford oil field. Both projects aim to open for business in 2019.
Source: Pipelines planned from Permian to Gulf; Boom to come to Corpus Christi | Fuel Fix
A San Antonio-based company has entered into a joint venture to build a 730-mile pipeline that will link the oil fields of the Permian Basin to refineries and marine terminals at Port Corpus Christi.
Source: San Antonio-based TexStar Midstream Logistics to build EPIC Pipeline linking Permian Basin to Corpus Christi – San Antonio Business Journal
Posted in CERAWeek, Corpus Christi, Permian, Pipeline, Port of Corpus Christi
Tagged CERAWeek, Corpus Christi, IHS CERAWeek, Permian, Pipeline, Port of Corpus Christi, TexStar Midstream
The US Geological Survey said Tuesday that it found what could be the largest deposit of untapped oil ever discovered in America.An estimated average of 20 billion barrels of oil and 1.6 billion barrels of natural gas liquids are available for the taking in the Wolfcamp shale, which is in the Midland Basin portion of Texas’ Permian Basin.Based on a West Texas Intermediate crude oil price of $45 per barrel, those deposits are worth about $900 billion.US oil exploration companies have flocked to the superrich Permian Basin in recent years and used shale-drilling technology to create an oil boom that simultaneously helped trigger a price crash two years ago. The count of active oil rigs fell with prices, but has risen over the past few months, mostly in the Permian. Bloomberg noted that the Wolfcamp, where this deposit was found, has been one of the primary targets of shale drillers.”The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” Walter Guidroz, program coordinator for the USGS Energy Resources Program, said in a statement.
Source: USGS estimates 20 billion oil barrels in Texas’ Wolfcamp shale – Business Insider
Posted in Permian
EOG Resources cut losses in the third quarter, like many other E&P companies. The oil exploration firm also said that it was doubling the amount of oil and gas it thought it could recover from the Permian Basin.
EOG reported a third quarter net loss of $190 million, or 35 cents per share, $3.9 billion better than its performance over the same period last year. In the third quarter of 2015, EOG posted a net loss of $4.1 billion, or $7.47 per share. Revenues dipped by 2 percent to $2.2 billion over the third quarter last year. Expenses were decreased by more than $6 billion, to $2.3 billion. The decrease in income last quarter came from the continuing fall in crude oil and natural gas prices despite “significant well productivity improvements and lease and well cost reductions.”
Source: EOG cuts losses to $190 million, doubles Permian oil estimates | Fuel Fix
Posted in E&P, Permian
Tagged E&P, EOG, Permian
Merit Energy Partners has completed a $938 million equity raise this month, according to regulatory filings from the Dallas oil and gas investor.The latest Form D filed by the firm on Oct. 7 showed $789.5 million in capital raised.
Source: Merit Energy wraps up nearly $1 billion capital raise – Dallas Business Journal
Posted in E&P, Permian
Tagged E&P, Permian
Oil companies continue buying acreage in West Texas’s prolific Permian Basin.This time, it was Denver’s SM Energy, announcing Tuesday it was picking up 35,700 acres in Howard and Martin counties, north and east of Midland, from private-equity backed and Houston-based QStar for $1.6 billion in cash and stock. The deal included 2,400 barrels per day of existing oil and gas production and works out to at least $42,000 per undeveloped acre, analysts said, stacking the purchase up among top prices this year.It’s the second big announcement in a week. Last Thursday, Dallas-based RSP Permian bought Silver Hill Energy Partners, also headquartered in Dallas, and its 41,000 acres for $2.4 billion, or as much as $47,000 per undeveloped acre, according to some analysts.The investment banking firm Piper Jaffray called the purchase another among “transformational acquisitions” this year.The two announcements again show how U.S. oil companies, regardless of the slump in oil prices, are fighting to get into the oil-rich Permian Basin, even as they pull rigs from other fields. They also show how much companies are willing to pay.“The Permian is so hot right now,” said Ben Shattuck, an analyst with the energy research firm Wood Mackenzie. “These are high-water numbers.”The Permian Basin’s two sections, the Midland and the Delaware, are the most competitive markets in the country in tight oil right now, he said.
Source: Oil companies keep paying for Permian land; ‘High-water numbers,’ analyst says | Fuel Fix
Posted in Permian
The biggest player in the Permian Basin, America’s most coveted oil field, thinks rig counts in region are poised for explosive growth.In an interview with Bloomberg, Pioneer Natural Resources Co. Chief Executive Scott Sheffield predicted that 100 oil rigs will be added in the area considered to be U.S. shale drillers’ version of prime real estate over the next year. Bloomberg Intelligence Analysts Vincent Piazza and Daniel Krauser note that Pioneer has the highest gross production of any driller in the Spraberry and Wolfcamp formations in the Texan oil field.The shale revolution sparked a frenzied rise in U.S. crude production that eventually drove oil prices to their lowest level in more than a decade earlier this year. While prices have since recovered, they’ve failed to sustainably hold above $50 per barrel — and any advances may continue to be capped if drillers boost activity in the productive Permian Basin.
Source: The Top Permian Oil Producer Says Rig Counts in the Region Are Going to Soar