BUSINESS

Gulf Publishing Company rebrands to Gulf Energy Information

Gulf Publishing Company, publisher of World Oil, has rebranded to Gulf Energy Information (Gulf) to better reflect the scope of its offerings across the upstream, midstream and downstream sectors of the international oil and gas industry. In addition to World Oil, the company’s market-leading brands include Hydrocarbon Processing, Petroleum Economist, Pipeline & Gas Journal, Gas Processing & LNG, Underground Construction and Pipeline News. Each brand serves its market through print publications and digital media outlets. Additionally, the company’s market intelligence offerings now include the Energy Web Atlas (EWA), a mapping and data service that provides both granular and regional insights into global LNG, gas processing, pipelines and renewables. The comprehensive corporate rebrand includes a new corporate logo, website (www.gulfenergyinformation.com) and mission statement (See page 7). “Gulf will continue to serve its global readers through outstanding content delivered through our traditional media, and increasingly through various digital platforms,” said John Royall, president and CEO of Gulf. “Gulf will continue to move the industry forward, delivering reliable information and intelligence—across many platforms—for decades to come. Coupled with strategic market insight, these offerings will help our readers and customers do their jobs better.”

Oil majors report robust first-quarter earnings

Oil majors—including Statoil ASA, Royal Dutch Shell, Total, ExxonMobil Corp., Chevron Corp. and BP Plc—presented first-quarter earnings during the last week of April, disclosing some of the best quarterly results seen in years. Statoil posted its highest net income since 2014, before the industry downturn took hold. Its adjusted net profit reportedly rose to $1.47 billion from the $1.11 billion it posted the year prior. Shell reported an adjusted net income of $5.32 billion last quarter, up from the $3.75 billion posted a year earlier. Similarly, Chevron posted a first-quarter net income of $3.6 billion, compared to the $2.7 billion reported in 2017. The earnings of both Shell and Chevron surpassed analysts’ expectations. BP reported its highest first-quarter earnings since 2014, as well. The company posted an adjusted net income of $2.59 billion, which was considerably higher than analysts’ estimates of $2.12 billion. Despite the impact of a massive earthquake in Papua New Guinea that cost the company about $80 million, ExxonMobil also posted an increase in first-quarter earnings. It reported earnings of $4.7 billion, up from the $4 billion posted during first-quarter 2017. Total also reported an increase in adjusted net income. The company posted a net income of $2.9 billion, up from the $2.6 billion posted in first-quarter 2017. Prolonged spending discipline and strong demand reportedly explain the majors’ increase in net income, cash flow and production rates. Additionally, Total reportedly pumped a record amount of oil and gas during the first quarter, reaching more than 2.7 MMboed. This is a 5% increase over last year.

PRODUCTION

Iran exports soar amid U.S. sanctions threat

Before U.S. President Trump’s decision to take America out of an international agreement that limits Iran’s nuclear activities, in exchange for a reprieve from oil sales restrictions, Iran had ramped up its crude exports to a record high in April. Since the alleviation of sanctions in January 2016, OPEC’s third-largest producer had nearly doubled its crude output. Accordingly, its crude exports reached 2.61 MMbpd last month, beating its previous record of 2.44 MMbpd, which was set in October 2016. According to Bloomberg data, overall observed shipments of crude and condensate rose to 2.83 MMbpd in April, from 2.48 MMbpd in March. However, this reportedly coincided with a 4-MMbbl drawdown from offshore storage tankers. Although President Trump called the U.S.-Iran accord “a horrible agreement for the United States,” he also said that doesn’t mean he would be opposed to negotiating a new agreement. Trump’s decision on May 8 to exit the nuclear deal means that Iran’s output could suffer as much as a 500,000-bopd decline by year-end. 

OPEC weighs deeper cuts, as it faces latent supply conundrum

OPEC and its allies have worked tirelessly to reduce an international oil glut through production cuts instigated in early 2017. Although the deal officially expires at the end of this year, OPEC has signaled that output restrictions could be extended into 2019. Russia reaffirmed that it is “fully committed” to the deal in early May, despite a two-month breach of its production target. However, the over-production will likely be counterbalanced by the stark output decline of OPEC members including Venezuela and Angola. The output curbs have nearly eliminated surplus oil inventories amid a three-year high in oil prices; however, trepidation is already being conveyed regarding future supply. Saudi Arabia reportedly is urging fellow producers to continue practicing output restraint to encourage investment in future supply. According to Rystad Energy, however, the industry is already on track to deliver the extra output needed to meet future demand. “Over the next 10 years, we see that supply will continue to keep up with demand growth,” Espen Erlingsen, a Rystad analyst told Bloomberg. “The surge in North American shale activity and startup of new fields are the main drivers for this growth.” At a recent OPEC meeting, Saudi Arabian Energy Minister Khalid Al-Falih reportedly said that there needs to be an additional 4-to-5 MMbpd in oil-production capacity each year to meet future global demand. Accordingly, OPEC now risks narrowing world markets too much, sending prices to levels that either impede oil demand or incite a new wave of supply from the U.S. Photo: OPEC.

American gas supplies see biggest expansion since 2015

Mounting natural gas production has inflated U.S. stockpiles even further. In early May, Bloomberg reported that national gas supplies climbed by 90 Bcf, the most seen in three years. After a particularly cold month in April, U.S. gas supplies are approximately 28% below the usual amount for this time of year. On April 27, gas inventories stood at 1.343 Tcf. Analysts and traders reportedly are keeping a watchful eye on any U.S. storage fluctuations, as they may help anticipate whether supply will overtake demand and send prices on a downward spiral. Stephen Schork, president of consulting company Schork Group, told Bloomberg that “the make-or-break point in the market is going to occur within the next two reports.” 

DISCOVERIES/DEVELOPMENTS

Shell takes FID for Vito development in deepwater GOM 

Shell Offshore Inc. (operator, 63.11%), a Shell subsidiary, announced a final investment decision (FID) for the Vito development, about 150 mi southeast of New Orleans, in the U.S. Gulf of Mexico (GOM). According to the company, the decision—which has a forward-looking, break-even price estimated at less than $35/bbl—will advance the construction and fabrication of a new, abridged host design and subsea infrastructure. In 2015, the company started a redesign of Vito, which reportedly reduced cost estimates by more than 70% from the original project plan. The cost savings are said to be a direct result of a more simplified design, as well as more collaboration with vendors on concepts including well design and completions, subsea, contracting and topsides design. Vito, which is Shell’s 11th deepwater host in the GOM, is scheduled to start producing in 2021. With estimated recoverable resources of 300 MMboe, the development is expected to reach peak production of about 100,000 boed. Statoil is the company’s project partner, with a 36.89% stake. Image: Shell.

Eni strikes oil in Egypt’s Faghur basin

Eni’s SWM A-2X exploration well struck oil in the Southwest Meleiha license. The well—situated approximately 64 mi north of Siwa, in the Egyptian Western Desert—is the company’s first well drilled to explore the geological structures of the Faghur basin. Drilled to a TD of nearly 16,700 ft, the well encountered 59 ft of light oil in the Paleozoic sandstones of the Carboniferous-age Dessouky formation. The well delivered 2,300 bpd of light oil and 0.4 MMscfd of associated gas. According to Eni, which holds a 100% stake in the license, development and appraisal of the discovery may bring about drilling of other exploratory prospects in the region, and open up a new productive area in Egypt.

Statoil begins offshore mobilization for hook-up, completion of Johan Sverdrup

Statoil has reported the start of the offshore mobilization of the giant Johan Sverdrup field, in the North Sea. According to the company, approximately 150 people, plus crew from ProSafe, set sail on the floating accommodation vessel Safe Zephyrus early this month. These crew members will work to finalize the riser platform, the field’s first topside to be installed. Soon thereafter, preparations for hook-up will begin for the drilling platform. The next topside is scheduled to arrive in early June. Following installation of the first two platforms, the accommodation jackup vessel Haven reportedly will join Safe Zephyrus to increase bed capacity to nearly 900 during the hook-up and finalization phases. This will enable three shifts of up to 2,400 workers from Statoil and its suppliers to be based at the field. Johan Sverdrup is anticipated to start production late next year. Photo: Anette Westgård, Woldcam/Statoil.

SDX Energy finds more natural gas in Morroco

SDX Energy reported a gas discovery after drilling the LNB-1 exploration well on Morocco’s Lalla Mimouna permit. The well was drilled to a TD of approximately 6,105 ft, encountering 984 ft of gas-bearing horizons. According to the mudlog obtained through a significantly over-pressured section, gas readings were elevated more than 20%, with some sections above 50%. SDX says that the gas shows are symptomatic of a thermogenic hydrocarbon source rock, which has not yet been seen in other parts of the basin. Accordingly, the shows indicate that a new petroleum system has been unearthed. An unrisked, mid-case volume of about 33.4 ft of net conventional natural gas and 55,000 bbl of condensate has been estimated, based on the mudlog shows, reservoir quality information from the formation cuttings, analogue fields, and the size of the mapped feature. According to the company, the well is now being completed as a conventional gas producer in the Upper Dlalha, while the deeper Lafkerena section is suspended until the appropriate equipment can be mobilized to test the over-pressured section. SDX President and CEO Paul Welch said, “ We are very excited about the results of this exploration well. It was a higher-risk exploration prospect than previous drilling in Sebou, as it was a sequence that had not been previously penetrated in a similar structure location. We had anticipated a higher-pressure section, based upon offset drilling in the area, but the actual pressures encountered, the thickness of the section, and the type and amount of shows, significantly exceeded our expectations.”