Arctic Explorers Retreat From Hostile Waters With Oil Prices Low
From an article by Mikael Holter published 14 Jan 2015 by Bloomberg under the headline:
“Arctic Explorers Retreat From Hostile Waters With Oil Prices Low”
When Statoil ASA (STL)acquired the last of three licenses off Greenland’s west coast in January 2012, oil at more than $110 a barrel made exploring the iceberg-ridden waters an attractive proposition.
Less than two years later, the price of oil had been cut by almost half and Norway’s Statoil, the world’s most active offshore Arctic explorer in 2014, relinquished its interest in all three licenses in December without drilling a single well…
“At $50, it just doesn’t make sense,” James Henderson, a senior research fellow at the Oxford Institute for Energy Studies, said in a Jan. 12 phone interview. “Arctic exploration has almost certainly been significantly undermined for the rest of this decade.”
After spending $6 billion searching for oil off Alaska over the past eight years, Royal Dutch Shell Plc (RDSA) in October asked for an extension of licenses as setbacks including a stranded oil rig and lawsuits risk delaying drilling further. Cairn Energy Plc (CNE) spent $1 billion exploring Greenland’s west coast in 2010 and 2011 without making commercial discoveries, and OAO Gazprom (OGZD) has shelved its Shtokman gas field in the Barents Sea indefinitely on cost challenges.
When Statoil ASA (STL)acquired the last of three licenses off Greenland’s west coast in January 2012, oil at more than $110 a barrel made exploring the iceberg-ridden waters an attractive proposition.
Less than two years later, the price of oil had been cut by almost half and Norway’s Statoil, the world’s most active offshore Arctic explorer in 2014, relinquished its interest in all three licenses in December without drilling a single well…
“At $50, it just doesn’t make sense,” James Henderson, a senior research fellow at the Oxford Institute for Energy Studies, said in a Jan. 12 phone interview. “Arctic exploration has almost certainly been significantly undermined for the rest of this decade.”
After spending $6 billion searching for oil off Alaska over the past eight years, Royal Dutch Shell Plc (RDSA) in October asked for an extension of licenses as setbacks including a stranded oil rig and lawsuits risk delaying drilling further. Cairn Energy Plc (CNE) spent $1 billion exploring Greenland’s west coast in 2010 and 2011 without making commercial discoveries, and OAO Gazprom (OGZD) has shelved its Shtokman gas field in the Barents Sea indefinitely on cost challenges.
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Brace for $40-a-barrel oil
FROM AN ARTICLE BY GRANT SMITH PUBLISHED BY BLOOMBERG.COM ON 14 JAN 2015 UNDER THE HEADLINE:
Oil at $40, and Below, Gaining Traction on Wall Street
Extracts
Brace for $40-a-barrel oil.
The U.S. benchmark crude price, down more than $60 since June to below $45 yesterday, is on the way to this next threshold, said Societe Generale SA and Bank of America Corp. And Goldman Sachs Group Inc. says that West TexasIntermediate needs to remain near $40 during the first half to deter investment in new supplies that would add to the glut.
“The markets are continuing to price in huge oversupply in the first half of 2015,” Mike Wittner, head of research at Societe Generale SA in New York, said by phone on Jan. 12. “We’re going to go below $40.”
The rout may continue to $35 a barrel in the “near term” because both oil supply and demand will have a delayed reaction to falling prices, Francisco Blanch, head of commodities research at Bank of America in New York, said in a report on Jan. 6.
The U.S. is pumping oil at the fastest pace in more than three decades, helped by a drilling boom that’s unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota. U.S. output expanded to 9.14 million barrels a day in the week ended Dec. 12, the most since at least 1983, according to the U.S. Energy Information Administration.
Extracts
Brace for $40-a-barrel oil.
The U.S. benchmark crude price, down more than $60 since June to below $45 yesterday, is on the way to this next threshold, said Societe Generale SA and Bank of America Corp. And Goldman Sachs Group Inc. says that West TexasIntermediate needs to remain near $40 during the first half to deter investment in new supplies that would add to the glut.
“The markets are continuing to price in huge oversupply in the first half of 2015,” Mike Wittner, head of research at Societe Generale SA in New York, said by phone on Jan. 12. “We’re going to go below $40.”
The rout may continue to $35 a barrel in the “near term” because both oil supply and demand will have a delayed reaction to falling prices, Francisco Blanch, head of commodities research at Bank of America in New York, said in a report on Jan. 6.
The U.S. is pumping oil at the fastest pace in more than three decades, helped by a drilling boom that’s unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota. U.S. output expanded to 9.14 million barrels a day in the week ended Dec. 12, the most since at least 1983, according to the U.S. Energy Information Administration.
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Shell puts the brakes on
By John Donovan
In response to the collapse in the price of oil, Shell and Qatar Petroleum have abandoned a $6.4 billion joint venture to build a petrochemical complex in the Ras Laffan Industrial City.
Extract from a Reuters Report:,
Prices quoted by companies to build the huge complex showed the project was “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry”, the statement said.
By John Donovan
In response to the collapse in the price of oil, Shell and Qatar Petroleum have abandoned a $6.4 billion joint venture to build a petrochemical complex in the Ras Laffan Industrial City.
Extract from a Reuters Report:,
Prices quoted by companies to build the huge complex showed the project was “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry”, the statement said.
RELATED FINANCIAL TIMES ARTICLE 14 JAN 2015:
Shell scraps $6.5bn Qatar project due to oil price rout
Extract
The decision not to proceed — a significant move following thehalving of oil prices since last summer — was taken “after a careful and thorough evaluation of commercial quotations” from engineering, procurement and construction bidders, Shell said.
Under pressure to improve returns following the first profit warning in its history last year, Shell had already embarked on an intense round of cost-cutting before the slide in international crude prices to below $50 a barrel, from more than $110 last summer.
Extract
The decision not to proceed — a significant move following thehalving of oil prices since last summer — was taken “after a careful and thorough evaluation of commercial quotations” from engineering, procurement and construction bidders, Shell said.
Under pressure to improve returns following the first profit warning in its history last year, Shell had already embarked on an intense round of cost-cutting before the slide in international crude prices to below $50 a barrel, from more than $110 last summer.
RELATED TELEGRAPH ARTICLE 14 JAN 2015
Shell ditches $6.5bn Qatar project as oil price slump deepens
Extract
Royal Dutch Shell and its partner Qatar Petroleum have ditched a $6.5bn (£4.3bn) project in the latest sign of the broadening impact of falling oil and gas prices on the hydrocarbons industry.
Shares in Shell were down 2.5pc at £30.18 in London following the announcement.
With oil prices firmly below $50 per barrel billions of dollars of projects both upstream, or in refining and petrochemicals are under threat.
Shell is due to report fourth quarter earnings at the end of the month when analysts expect more details on how the UK’s biggest oil company plans to adapt to the new price environment.
Extract
Royal Dutch Shell and its partner Qatar Petroleum have ditched a $6.5bn (£4.3bn) project in the latest sign of the broadening impact of falling oil and gas prices on the hydrocarbons industry.
Shares in Shell were down 2.5pc at £30.18 in London following the announcement.
With oil prices firmly below $50 per barrel billions of dollars of projects both upstream, or in refining and petrochemicals are under threat.
Shell is due to report fourth quarter earnings at the end of the month when analysts expect more details on how the UK’s biggest oil company plans to adapt to the new price environment.
RELATED REUTERS ARTICLE 14 JAN 2015
Oil under pressure as World Bank cuts growth forecast
Extracts
Reuters) – Oil prices pared early losses on Wednesday but remained under pressure after the World Bank cut its economic growth forecast, doing little to end a rout that saw prices touch their lowest in nearly six years in the previous session.
“OPEC is not going to come to the rescue of the market,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
Extracts
Reuters) – Oil prices pared early losses on Wednesday but remained under pressure after the World Bank cut its economic growth forecast, doing little to end a rout that saw prices touch their lowest in nearly six years in the previous session.
“OPEC is not going to come to the rescue of the market,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
RELATED BLOOMBERG ARTICLE 14 JAN 2015
Oil Collapse of 1986 Shows Rebound Could Be Years Away
Extracts
The last time excess supply caused a plunge in oil, it took almost five years for prices to recover.
The CHART OF THE DAY shows how West Texas Intermediate, the U.S. oil benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to $9.75 in April 1986 when Saudi Arabia, tiring of cutting output to support prices, flooded the market. Prices didn’t claw back the losses until 1990. Oil has dropped 57 percent since June and OPEC members say they’re willing to let prices sink further.
Surging prices in the 1970s led to the development of the North Sea and Alaska oil fields. OPEC members also increased capacity, leaving the Saudis to trim output when demand softened.
Extracts
The last time excess supply caused a plunge in oil, it took almost five years for prices to recover.
The CHART OF THE DAY shows how West Texas Intermediate, the U.S. oil benchmark, tumbled 69 percent from $31.82 a barrel in November 1985 to $9.75 in April 1986 when Saudi Arabia, tiring of cutting output to support prices, flooded the market. Prices didn’t claw back the losses until 1990. Oil has dropped 57 percent since June and OPEC members say they’re willing to let prices sink further.
Surging prices in the 1970s led to the development of the North Sea and Alaska oil fields. OPEC members also increased capacity, leaving the Saudis to trim output when demand softened.
