GOM Outlook Brighter as Noble Plans 2012 GOM Plans

- GOM Outlook Brighter as Noble Plans 2012 GOM Plans

Thursday, September 08, 2011
Rigzone Staff
by Karen Boman

Noble Energy sees a brighter outlook for the Gulf of Mexico from a year ago, Noble Energy Chairman and CEO Charles D. Davidson said at the Barclays Capital 2011 CEO Energy Conference earlier this week.

While the pace of Gulf of Mexico permitting is slower than that prior to the drilling moratorium following the Macondo oil spill, the pace is more predictable and comfortable as Noble moves forward with its 2012 drilling plans for the Gulf, Davidson said.

The company was the first to receive a deepwater permit after the moratorium's end for its Santiago prospect on Mississippi Canyon Block 519 in 6,500 feet of water; the company announced in May that it had encountered 60 feet of oil pay in a high-quality Miocene reservoir at Santiago. The company is now drilling an updip sidetrack at its Deep Blue discovery in approximately 4,700 feet of water – with drilling results expected in a few weeks -- and will next appraise the Gunflint discovery on Mississippi Canyon Block 948.

Noble had drilled a downdip discovery at Deep Blue, but work was halted due to the moratorium, Davidson said. The company originally encountered 32 feet of net pay in the well; the updip sidetrack is targeting 90 to 200 million BOE gross unrisked, with the chance of success increased from 30 percent to 50 percent. Noble is using Ensco semisubmersible Ensco 8501 for its drilling program in the Gulf.

The company anticipates production from its South Raton discovery to come online late this year and production from its Galapagos project to begin in early 2012, Davidson said. As part of the Galapagos project, Santiago and the Santa Cruz and Isabela discoveries on Mississippi Canyon blocks 563 and 562 will be tied back subsea to the Na Kika production platform. Noble's net production at Galapagos will be over 10,000 b/d of oil.

Noble estimates total gross resources discovered in the Galapagos project, including Santiago, to be 130 million barrels BOE, approximately 75 percent of which is oil, and sees multiple low-risk follow-on opportunities of 65 million BOE gross mean potential. Work is progressing on the topsides and subsea loop system for the project.

Noble's current U.S. Gulf portfolio includes 102 lease blocks covering approximately 400,000 net acres and around 40 prospects and 1.9 billion BOE net of net unrisked resources.

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Commodity Corner: Oil Falls Amid Softer Demand Outlook

- Commodity Corner: Oil Falls Amid Softer Demand Outlook

Friday, September 02, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for October delivery lost nearly three percent Friday after the U.S. Department of Labor announced that the U.S. economy added zero jobs last month.

The WTI settled at $86.45 a barrel, a $2.48 day-on-day decline, after the Labor Department reported that the loss of 17,000 government jobs in August offset the addition of the same number of private-sector jobs during the period. According to media outlet MSNBC, the government last reported zero job growth 66 years ago. The Labor Department also announced that the unemployment rate held steady at 9.1 percent.

The unimpressive employment figures support the view that the U.S. economy is experiencing a double-dip recession, lowering expectations for oil demand.

Brent futures also ended the day lower, losing 1.7 percent to settle at $112.33 a barrel. The benchmark traded within a range from $111.57 to $113.51. The WTI peaked at $88.99 and bottomed out at $85.42.

By noon Friday, one-third of Gulf of Mexico natural gas production had been shut-in as Tropical Storm Lee ambled toward the Louisiana coastline. That was not enough to counter the aforementioned dismal economic prospects, however; October natural gas lost more than four percent Friday to settle at $3.87 per thousand cubic feet.

Front-month natural gas fluctuated from $3.85 to $4.065 during floor trading. Reformulated gasoline for October delivery lost a nickel to end the day at $2.84 a gallon after trading within a range from $2.795 to $2.90.

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OPEC Shaves Oil Demand Outlook, Sees 'Dark Clouds' over Econ

- OPEC Shaves Oil Demand Outlook, Sees 'Dark Clouds' over Econ

Tuesday, August 09, 2011
Dow Jones Newswires
LONDON
by Benoit Faucon

OPEC Tuesday trimmed its global oil demand growth forecast for 2011 and warned it could cut the outlook further, signaling that mounting economic woes are biting into the world's crude consumption.

In its monthly report, the Organization of Petroleum Exporting Countries reduced the global demand growth forecast for this year by 150,000 barrels of oil a day--the deepest such cut this year--on a downgrade in its U.S. economic growth outlook and weakening Chinese prospects.

"Dark clouds over the economy are already impacting the market's direction," OPEC said. "The potential for consequent deterioration in market stability requires higher vigilance and close monitoring of developments over the coming months."

Global oil demand will still rise by 1.2 million barrels a day, and the downgrade represents only a fraction of the 88.14 million barrels a day OPEC expects to be consumed this year worldwide.

OPEC warned that were higher oil prices to persist or the most industrialized economies to suffer further setbacks, it might trim the forecast by another 200,000 barrels a day. OPEC produces more than one in three barrels consumed worldwide each day.

Coming hard on the heels of a drop in oil prices by over 10% since early August, the downgrade could give ammunition to an Iran-led group that has fought higher oil output. A June OPEC meeting in Vienna ended in acrimony after a Saudi Arabia-led group failed to persuade OPEC that an anticipated surge in oil demand this year merited an output increase.

OPEC Tuesday cut its U.S. economic growth forecast to 1.8% in 2011 from 2.5% previously. U.S. oil consumption data for May showed the largest decline observed since January 2010 and demand contraction in industrialized countries was expected to continue.

OPEC also said demand in China--the engine of oil consumption growth in recent years-has been losing steam. The country's factory sector grew in June at its slowest pace in 28 months, OPEC said.

OPEC estimated demand for its own crude remained unchanged for 2011 and is still up 200,000 barrels compared to last year, as the global demand downgrade is offset by lower-than-expected non-OPEC supply. The OPEC oil demand outlook, however, was cut by 100,000 barrels a day for next year.

But the group's data also still points to a supply gap of 811,000 barrels a day in the second half of this year, according to a Dow Jones calculation of the difference between current oil output and OPEC's demand forecast for the coming period.

But the crystal ball will roll into the consumers' camp with the U.S. Energy Information Administration expected to release its own report later Tuesday, followed by the International Energy Agency Wednesday.

Copyright (c) 2011 Dow Jones & Company, Inc.

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S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

- S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

Wednesday, July 06, 2011
Dow Jones Newswires
by Melodie Warner

Standard & Poor's Ratings Services revised its credit outlook on BP to stable from negative, saying it sees less downside risk to the oil company's credit quality and little evidence of further erosion to its business standing.

The ratings company also affirmed BP's long-term corporate credit rating of A, which is five steps below the coveted AAA.

"The stable outlook reflects our view that BP is well positioned to meet potentially substantial additional fines and other payments related to the Gulf of Mexico disaster," the firm said. For its analysis, S&P assumes that all Gulf of Mexico-related payments will total less than $55 billion and will be spread over several years.

The ratings firm noted BP's first-quarter average realized oil price was 19.2% higher than the fourth quarter, and rose 31% from a year earlier. BP's refining margins also expanded in 2011, while its underlying downstream operating profit increased to $2.1 billion in the first quarter, from a quarterly average of $1.2 billion in 2010, despite a 6% decline in refining throughput, S&P said.

But, a sustained decline in oil prices below $70 a barrel alongside underlying operating cash flow of less than $25 billion could put downward pressure on the ratings, S&P said. Any upside rating potential is limited until there is more clarity on the penalties BP could face in the U.S. for the Gulf of Mexico oil spill.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Long-Term Outlook for Gas Remains Bullish

- Long-Term Outlook for Gas Remains Bullish

Friday, June 24, 2011
Rigzone Staff
by Karen Boman

Despite the shift by producers towards oil-focused drilling away from natural gas, the long-term outlook for U.S. natural gas demand remains bullish as U.S. nuclear power and coal plants are retired and gas-fired electricity use rises over the next few years, said Pearce Hammond, director of institutional research at Simmons & Co. International, at Platts' sixth annual Oil & Gas Shale Developer conference in Houston this week.

The anticipated retirement of nuclear power plants could potentially add 1 Bcf/d of gas demand by 2020, and the expected retirement through 2020 of 50-60 gigawatts of U.S. coal generation assets could add 4 Bcf/d of additional U.S. gas demand. LNG exports from the U.S. could add an additional 2 Bcf/d of U.S. gas demand, Hammond said.
Increased future use of natural gas vehicles in the U.S. could also create additional 1 Bcf/d of demand for U.S. gas, and gradual growth in industrial demand could add another 2 Bcf/d.

While the U.S. has lost ground to Asia in terms of industrial base, the U.S. has the demographic advantage versus China, whose population is aging and growth limited by the nation's one child policy. Manufacturing costs also have begun rising in China, along with wage rates, and the availability of cheap energy resources at home has prompted some companies to bring manufacturing operations back to the U.S.

U.S. gas demand for 2011 is estimated at 67 Bcf/d, up from 66 Bcf/d in 2010, but less than U.S. supply estimate of 68.4 Bcf/d. Still, the supply overhang estimate is less than previous estimates, thanks in part to cold weather earlier this year which boosted gas demand for heat generation, Hammond said.

Given high oil prices, the Eagle Ford oil shale play in South Texas and the Permian Basin in West Texas and eastern New Mexico remain hot spots for drilling activity. However, activity in the Marcellus shale gas play continues to hold up despite the capital flow shift from gas into liquids.

Unconventional natural gas, particularly shale gas, will make an important contribution to future U.S. energy supply and carbon dioxide emission-reduction efforts, according to The Future of Natural Gas, the fourth in a series of MIT multidisciplinary reports examining various energy sources and their role in meeting future demand.

Demand for natural gas, which burns cleanly and efficiently with very few non-carbon emissions, will likely grow in the U.S. and worldwide for use in power generation, industrial, commercial and residential sectors due to its abundant availability, utility and low cost compared to other energy resources. Gas can play a major role in reducing greenhouse gas reduction, and "play a critical role as a bridge to a low-carbon future," according to the MIT report, which was released earlier this month.

The ample domestic supply of gas has stimulated interest in its use in transportation, driven by the oil-gas price spread and opportunity to lessen oil dependence in favor of domestically supplied fuel, including natural gas-derived liquid fuels with modest changes in vehicle and/or infrastructure requirements and reduce carbon dioxide emissions in direct of gas.

Compressed natural gas (CNG) offers a significant opportunity in U.S. heavy-duty vehicles used for short-range operation, such as buses and garbage trucks, where payback times are around three years or less and infrastructure issues do not impede development. However, for lighter passenger vehicles, even at 2010 oil-gas price differentials, high incremental costs of CNG vehicles lead to long pay back times for the average driver.

Payback periods could be reduced significantly if the cost of conversion from gas to CNG could be reduced to levels experienced in other parts of the world such as Europe.

The current supply outlook for gas will contribute to greater competitiveness of U.S. manufacturing, while the use of more efficient technologies could offset demand increases and provide cost-effective compliance with emerging environmental requirements.

The growing global interest in developing shale gas resources presents the U.S. energy industry with an opportunity to only build up a supply chain of exports for rigs and equipment, and an opportunity to support international allies, Melanie Kenderdine, executive director of the MIT Energy Initiative, told conference attendees. Providing aid in developing shale gas resources in southern South America can help counterbalance against the Chavez regime in Venezuela or help stabilize economies and governments in Africa and the Middle East.

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Commodity Corner: Crude Tumbles on S&P Debt Outlook

Commodity Corner: Crude Tumbles on S&P Debt Outlook

Monday, April 18, 2011

Rigzone Staff

by Saaniya Bangee

Front-month crude futures plummeted Monday after Standard & Poor (S&P) changed its outlook for U.S. debt from stable to negative. The shift in outlook has increased concerns of the U.S. economy's stability and cuts in government spending.

Oil prices fell by $2.54 Monday, settling at $107.12 a barrel on the New York Mercantile Exchange (NYMEX). Prices fluctuated between $106.54 and $109.44. The S&P move came on the possibility that policymakers may not reach an agreement on how to address long-term fiscal pressures.

Over the weekend, China's central bank announced it would increase bank reserve requirements. In its fourth attempt this year, China hopes to control inflation and curb energy demand. Following the U.S., China is the world's second largest energy consumer.

Additionally, Saudi Arabia's Oil Minister Ali al-Naimi said Sunday that the kingdom has reduced oil production by 800,000 barrels due to lack of demand. Crude output was 8.3 million barrels a day last month, compared to February's 9.1 million barrels a day. Naimi anticipates an increase in April production.

On Monday, the greenback rose against the euro and other currencies further pressuring prices. The euro fell on concerns that Greece will have to restructure its debt. A stronger dollar makes oil more expensive, less attractive to foreign buyers.

May natural gas prices fell for a second day Monday, settling nearly seven cents lower at $4.14 per thousand cubic feet. Analysts do not foresee any near-term pressure increasing prices due to near-average storage and below-average prices. The intraday range for natural gas was $4.087 to $4.27 per thousand cubic feet.

Likewise, gasoline futures fell 1.1 percent, peaking at $3.29 before bottoming out at $3.23. Gasoline priced ended Monday's trading session at $3.25 a gallon.

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative

S&P's Ratings Services Affirmed Credit Ratings For US, Revised Its Outlook To Negative



Apr 18, 2011

Standard & Poor's Ratings Services affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the U.S., according to a Bloomberg report.

It also revised its outlook on the long-term rating to negative from stable.

The revised outlook reflects the U.S.'s "very large budget deficits and rising government indebtedness" relative to its triple-A peers.