February 2012 ///
As producers shift their focus to liquids, politics has emerged as the biggest unknown in North America.
Barclays sees exploration as a spending priority, with focus on liquids-rich resources and deepwater activity.
It will be another strong, profitable year for producers around the globe, especially those focusing on crude oil. Assuming that prices hold near $100/bbl or higher, this type of economic structure will support greater liquids and shale exploration in a number of international areas, just like it has done in North America. The relatively high price also supports large projects offshore.
U.S. crude oil producers should be able to cruise through 2012, if oil prices continue to hover in the $100/bbl price range. Natural gas prices in North America are at a 10-year low and threatening to reach $2/MMbtu, due to an oversupply caused by a combination of an unusually warm winter and surge in shale gas production.
Within a limited budget, Pemex has the difficult task of boosting output to meet growing demand, both at home and for exports.
Oil prices are likely to remain high with relatively small differences in prices between regions. Natural gas prices, however, are likely to remain low–to-moderate in North America with large differences between regions of the world due to high transportation costs.
Strong and consistent oil prices kept U.S. crude production climbing in 2011, though only modestly, in the Lower 48 states, offsetting a continued decline in Alaska. Overall, U.S. production climbed an estimated 3.7%, while Alaska, once the Gargantua of production and reserves, fell another 5.3% from 2010’s revised rate of just under 600,000 bopd.
The U.S. Presidential election in November will have critical implications for the country’s energy policies. Here’s a review of the energy policies advocated by President Barack Obama, the Democratic party candidate running for re-election, and the four candidates currently campaigning in primary elections to win the Republican party nomination.
Henry Hub spot gas prices fell about 9% in 2011, to just short of $4/Mcf, reaching the second lowest annual average price since 2002. This drop has continued and accelerated the shift toward liquids-rich drilling, with the number of rigs targeting gas dropping 12.3% since 2010.
The total number of producing oil wells in the U.S. increased at a steady pace in 2011, reflecting stepped-up drilling programs spurred by $100/bbl prices. World Oil’s estimate of producing wells, based on surveys of state agencies and company sources, indicates a rise of over 16,000 wells to 535,951.
End-of-year oil reserves grew by a double-digit percentage, and gas reserves rose comparably during 2010, posting the strongest, combined annual growth in the five-year period analyzed by Ernst & Young in its 2010 US E&P benchmark study.
Although E&P work has slowed overall, deepwater projects remain the heartbeat of Southeast Asia. A number of new fields will go onstream in the next several years, and additional projects are under evaluation. Deepwater development in this region can be relatively expensive and technically challenging.
A majority of the deepwater rigs that have been ordered in the last few years are traditional drillships and semisubmersibles. However, not all rigs are built alike, as is the case with two drillship models being built for Noble Corp., as well as a unique type of semi being constructed for Norwegian operator Statoil via rig contractor Songa Offshore.
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