(Bloomberg) Ultra Petroleum Corp. was a shale success story. A former penny stock that made the big leagues, it was worth almost $15 billion at its 2012 peak.
Then came the bust. Almost half of Ultra’s reserves were erased from its books this year. The company filed for bankruptcy on April 29 owing $3.9 billion.
On the Canadian oil sands: “It is not a growth sector, and one of the issues particularly for the oil sands is, if you’re sitting in London or New York or Hong Kong or Tokyo and you’re running institutional money, are you really going to think about being a shareholder in something that’s going to cost billions, take 10 to 15 to 20 years to realize a return and be in the high-cost production when price is under pressure and global growth is slow? I don’t think so…. In general, we’re the [world’s] high-cost producer…. And in a US$50 [oil market] … we’re just not competitive.”
John Stephenson, CEO of Stephenson & Co.
Oil prices remained firm last week amidst continuing reports concerning actual or impending supply disruptions. US futures dipped below $50 a barrel on Friday, to close at $49.83, but analysts are expecting further gains as the impact of more disruptions are felt. Higher oil prices have encouraged a small revival of drilling activity with the US rig count up slightly for the second week in a row.
(oilprice.com) The disruptions in global oil supplies are at their highest level since 2011. That comes from an updated assessment from the EIA, which shows total disruptions in oil production at more than 3.6 million barrels per day in May (mb/d), the highest monthly total since the EIA began tracking the data in January 2011. The outages hit major oil supplies across the world. At its worst, Canada saw more than 1 million barrels per day knocked offline because of the wildfires near Fort McMurray. That production is starting to come back online, however, and was always thought to be a temporary disruption.
(The Economic Times) India has surpassed Japan to become the world’s third-largest oil consumer, with its oil demand galloping 8.1 per cent in 2015, according to BP Statistical Review of World Energy released today.
With demand of 4.1 million barrels per day, India is the third-largest consumer behind US (19.39 million bpd) and China (11.96 million bpd). India accounted for 4.5 per cent of world oil consumption in 2015.
(Hellenic Shipping News) Iraq is pumping more oil than ever before, even as ISIS-fueled chaos grips parts of the Middle Eastern country.
Iraq, which relies on oil to fund nearly its entire government, increased daily oil production to an all-time high of 4.5 million barrels in May, according to estimates from research firm JBC Energy.
(The Telegraph) McKinsey has slashed their forecasts for the world’s energy use even as global economic growth climbs Global oil demand could peak by the end of the next decade even as global economic growth climbs.
The latest downward revision to forecasts, from consulting firm McKinsey, could leave major new investments uneconomic if demand for energy fails to meet expectations.
“The widely recited rhetoric that Canada must continue its de facto energy strategy of liquidating its remaining non-renewable resources as fast as possible to maintain the economy has no credibility.”
David Hughes, researcher and geologist, in a recent report “Can Canada Expand Oil and Gas Production, Build Pipelines and Keep Its Climate Change Commitments?”
Oil prices hovered just below the $50 level last week with Brent closing just above $50 on Thursday before settling at $49.46 on Friday. As has been the case lately, there were numerous factors pressuring oil prices one way or another. The week opened with much enthusiasm that OPEC would agree to a production freeze, but this went away when the OPEC meeting failed to take any action. The major factor pushing prices higher last week was the unplanned production outages in Alberta, Nigeria, and Venezuela. Although the fires are now well past the Alberta tar sands, it will be several weeks before the 1 million b/d of production that had to be shut down during the firestorms can return fully to production. In the meantime, the Alberta outage and the one in Nigeria have likely removed much or all of the production surplus that has overhung the markets and for now, there may be a rough balance of supply and demand.
(Forbes) When Wood Mackenzie reported in the Fall that $1.5 trillion in potential global oil projects were uneconomic oil cost $51 a barrel, about what it costs now. The industry is making big cuts in CAPEX and upstream investments, and more than $200 billion in oil and gas investments evaporated in 2015. There’s still about 1.3 million b/d of surplus oil on the global market, and just the other day “OPEC Fails to Reach Agreement on Oil Production Ceiling.”
