Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018

[ceo_energemsier + 1,818]

US Shale Production on Track to Hit Almost 9 MM Bpd

 

 

Oil production from the seven heavy-hitting U.S. shale plays could reach 8.971 million barrels per day in November, (a month on month increase of 58,000 bpd), according to the Energy Information Administration’s latest Drilling Productivity Report.

Most of the production jump will be thanks to the Permian Basin, which is expected to see a production bump of 63,000 bpd next month. In October the Permian is on track to produce about 4.547 million bpd of crude, quite a bit more than the other six plays.

https://www.eia.gov/petroleum/drilling/#tabs-summary-2

 

[James Regan + 1,776]

https://oilprice.com/Energy/Crude-Oil/Oil-Rig-Count-Plunges-To-Lowest-Level-Since-2017.html

Me thinks its not so healthy as the 120 odd self posting would indicate, your trolling yourself......

[ceo_energemsier + 1,818]

19 minutes ago, James Regan said:

https://oilprice.com/Energy/Crude-Oil/Oil-Rig-Count-Plunges-To-Lowest-Level-Since-2017.html

Me thinks its not so healthy as the 120 odd self posting would indicate, your trolling yourself......

Apparently, the article you posted shows , rig count down production volumes up!!! so the headline of this thread holds: relating to increased US production.

[ceo_energemsier + 1,818]

The U.S. has seen its rig count decline for the second week consecutive week, after snapping an almost two-month streak of declines.

The nation dropped 17 oil rigs and four gas rigs for a net loss of 21 rigs, according to weekly data from Baker Hughes Co. Twenty of them were land rigs and one was an offshore rig.

This brings the U.S.’ total number of active rigs to 830, down 238 from the count of 1,068 one year ago.

Oklahoma led all states in losses with a drop of six rigs. The following states also idled rigs this week:

• Texas (-5)
• North Dakota (-2)
• Wyoming (-2)
• Louisiana (-1)
• New Mexico (-1)
• Pennsylvania (-1)
• Utah (-1)
• West Virginia (-1)

Colorado added one rig.

Among the major basins, the Permian dropped five rigs. The Permian’s number of active rigs now sits at 417, which accounts for more than half of the nation’s total.

The Cana Woodford, Marcellus and Williston dropped two rigs each and the Ardmore Woodford and Granite Wash dropped one rig apiece.

The Eagle Ford and the Mississippian gained three rigs and one rig, respectively.

[ceo_energemsier + 1,818]

Big Oil Investors Bracing for Bad News as Headwinds Gather

 

 

(Bloomberg) -- Slumping energy prices, sluggish global demand and shrinking chemical margins are weighing on the oil industry as its biggest names prepare to announce quarterly results to investors demanding ever-higher payouts.

The so-called supermajors -- Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., Total SA and BP Plc -- are expected to disclose a 42% plunge in third-quarter earnings, on average, when they post results this week. That drop-off is too steep to blame on the 18% decline in crude oil prices, which means executives will have some explaining to do.

Exxon, Shell, and BP already have already taken steps to manage shareholder expectations by releasing limited data points on things like refinery repairs, asset sales and hurricane impacts on offshore oil production. Nonetheless, investors will be watching for additional color on what to expect for the remainder of 2019.

To make sense of all the moving parts in Big Oil’s earnings reports that start Oct. 29 with BP, look for these five things:

1. Surprises

Most of the bad news already should be priced in. Exxon fell 2.6% on Oct. 2 after disclosing a half-billion dollar hit from lower oil prices, a deficit that wasn’t plugged by improved refining profits.

Meanwhile, Shell warned that oil and gas output inched lower, and its refineries and chemical plants operated at about 90% of full capacity. BP warned that its tax bill rose, production declined, and it incurred an impairment on some assets it sold, factors that dampened hopes of an imminent dividend increase.

2. Petrochemicals

Long touted as Big Oil’s next high-growth opportunity, petrochemicals are languishing. The U.S.-China trade war has weakened demand for plastics amid concerns that $40 billion in planned U.S. Gulf Coast chemical plants will create a glut.

“Current trends continue to suggest a prolonged downturn” in chemicals, RBC Capital Markets analyst Biraj Borkhataria said in an Oct. 17 note. Exxon, with its giant chemical division, is the most heavily affected by this trend among peers.

What Bloomberg Intelligence Says

Chemicals may not recover materially from recent margin contraction, and overhang from oversupply amid economic slowdown is concerning.

--Fernando Valle, analyst

Read the research here.

3. Growth

In a world awash in crude and confronted with climate change, growth is a major conundrum for Big Oil. Should these companies be expanding or winding down? Investors don’t seem to have a clear answer right now. Exxon’s stock has been punished after the company spent too much on future projects while Chevron is regularly challenged on whether it has enough in the tank for growth after 2023.

Meanwhile there’s uncertainty whether Shell can match historic returns with investments in renewables and power, though earlier this month Total CEO Patrick Pouyanne declared the company has already achieved double-digit returns by selling electricity.

Don’t expect major pronouncements on such existential issues, but executives may offer clues to their thinking during earnings conference calls when they’re quizzed about 2020 spending and progress toward asset-disposal targets. BP’s call may get more scrutiny than most after it said earlier this month that longtime CEO Bob Dudley is handing the reins to upstream director Bernard Looney in February.

4. Shale

Exxon and Chevron each plan to more than triple production in the U.S. Permian Basin to 1 million barrels a day by the early 2020s. As for the European giants’ attitude toward shale, BP’s $10.5 billion acquisition of BHP Group Ltd.’s assets last year was a statement of intent.

Analysts will be keeping a close eye on how those companies avoid the pitfalls of smaller rivals stung by overambitious drilling programs, and how their performance stacks up against lofty targets. Despite the production boom, investors have soured on shale because of poor performance by independent producers that burned through nearly $200 billion of cash in the past decade.

5. Dividends

The supermajors have long been among the stock market’s most generous dividend payers but in the new world of plentiful crude and anti-fossil fuel campaigns, increasing payouts and share buybacks are seen as key to retaining investors. Just as critical is whether the companies can afford them: the supermajors’ dividend yields this year surged to more than double the return on 10-year Treasury notes.

 

While none of the five companies’ dividend programs are in jeopardy, investors are keen to see how sustainable they are when balanced against costly drilling and construction projects, such as Exxon’s $30 billion-a-year spending program, and Shell’s investments in lower-profit renewable power.

 

https://finance.yahoo.com/news/big-oil-investors-bracing-bad-040002396.html

 

 

Investors brace for poor U.S. shale earnings amid weak oil and gas prices

 

 

(Reuters) - Investors are bracing for weaker results from U.S. shale players in coming days as lower oil and natural gas prices and cost-cutting measures have weighed on third-quarter operations.

Major shale producers ConocoPhillips <COP.N> and Concho Resources <CXO.N> this week kick off quarterly earnings reports for a group whipsawed this year by volatile pricing and investor demands for improved returns. Oil and gas producers have cut drilling and slashed jobs amid worries over pricing outlooks.

U.S. oil prices are down 17% and natural gas is down about 31% from a year ago, undercutting production increases. Costs of job cuts and retiring debt also will pressure profit at some companies, analysts said ahead of reports.

"I think we are moving from a growth to a value phase," said Brad Holly, chief executive at Whiting Petroleum Corp <WLL.N> at a Denver oil conference earlier this month.

Whiting, Devon Energy <DVN.N>, and PDC Energy <PDCE.O> each pared staff in recent months as prices swooned. Cutbacks have spread across the sector, with Halliburton <HAL.N>, Schlumberger <SLB.N>, and Patterson-UTI Energy <PTEN.O> idling equipment.

Investors will be watching for shale productivity updates. Last quarter, Concho Resources' <CXO.N> stock plunged 22% in a day after cutting its production outlook, blaming well designs that hurt output.

 

OUTPUT GAINS 'DECELERATING'

Concho is expected to report earnings of 69 cents per share for the quarter, down from $1.42 a year ago. Top U.S. independent Conoco is expected to post earnings per share of 75 cents, compared with $1.36 a year ago, according to IBES data from Refinitiv.

U.S. oil companies have flooded the market with crude this year, capping prices at about the mid-$50 a barrel range. Oil production averaged 11.8 million barrels per day (bpd) in July, the latest monthly figure, up 915,000 bpd from the same period last year, according to U.S. government figures.

"We will continue to see growth, but it will be decelerated, and meaningfully decelerated from where it has been for the last three years," said Bobby Tudor, chairman of Tudor, Pickering, Holt & Co, in an interview this month on the sidelines of a conference. He based the forecast on U.S. oil at about $50 a barrel.

U.S. oil output is projected to rise by 900,000 bpd next year to 13.2 million bpd, down from a gain of 1.3 million bpd day this year, according to a U.S. Energy Information Administration forecast.

With prices in the mid-50s, top shale-service provider Halliburton last week warned U.S. customer activity would continue to decline this year, and outlined plans for a new round of cost cuts.

 

RESTRAINT CAME 'TOO LATE'

Halliburton and other hydraulic fracturing providers have taken 100 U.S. fracking fleets that complete oil and gas wells off the market, "with a portion of that to never return," consultancy Primary Vision wrote last week.

"We expect 2020 (spending) plans to be focused around maintenance capital," or spending that supports existing output, said Bernadette Johnson, vice president of market intelligence at consultancy Enverus.

Among major shale producers, EOG Resources <EOG.N> is forecast to report per share earnings of $1.13, down from $1.75 a year earlier. Pioneer Natural Resources Co <PXD.N> could post earnings of $1.98 per share, down 9 cents, according to Refinitiv IBES.

Continental Resources <CLR.N> is projected to earn 47 cents per share, down from 90 cents a year earlier. Its shares have fallen to about $29.16 from roughly $54.15 a year ago.

"People are ignoring shale names now and they're sort of disgusted with them almost," said Rohan Murphy, an analyst with Allianz Global Investors in London, adding that their push for capital discipline came "almost a bit too late."

 

Graphic: U.S. oil producers' shares fall even as output continues to rise, https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-RESULTS/0H001QXF1933/index.html

 

[ceo_energemsier + 1,818]

(Bloomberg) -- Sasol Ltd. fired its co-CEOs Bongani Nqwababa and Stephen Cornell after an investigation found serious mismanagement in the development of a $13 billion chemicals plant in the U.S., tarnishing the reputation of the whole company.

It’s an ignominious end for the executives, who promoted the Lake Charles facility in Louisiana as a way to transform the fortunes of the almost 70-year-old company, best known for liquid fuels from coal in South Africa. Development of the massive plant went badly wrong, with costs surging about 50% from initial plans.

Sasol’s internal probe showed that the Lake Charles project management team acted inappropriately, lacked experience and was overly focused on maintaining cost and schedule estimates instead of providing accurate information.

“There was a culture of fear that was prevailing” at the project, which was fostered by previous management, Sasol Chairman Mandla Gantsho said on a call with reporters. That prevented people from coming forward, he said.

Sasol was drawn to America’s Gulf coast by the shale boom -- a historic surge in production of oil and gas that has reshaped global energy markets. As the Asian manufacturing boom increased demand for chemicals to make materials like plastics, the hydrocarbon feedstocks used to make those chemicals were becoming ever more abundant in the U.S., offering an opportunity for profit.

The Lake Charles Chemical Project, dubbed LCCP, will produce the building blocks of products including packaging, bottles, and footwear, plus solvents, explosives and fertilizers. Once completed, it will boost the portion of chemicals in Sasol’s sales mix to 70%.

It’s one of two massive plants originally planned in the U.S. The second project, to convert natural gas into liquid fuels, was abandoned during the oil-price crash.

Sasol didn’t find misconduct or incompetence by either of the outgoing chief executive officers, who will be replaced on Nov. 1 by Fleetwood Grobler, previously executive vice president for chemicals. Nonetheless, the board decided a leadership reset was needed to restore trust in the company.

“Shortcomings in the execution of the LCCP have negatively impacted our overall reputation, led to a serious erosion of confidence in the leadership of the company and weakened the company financially,” Sasol said. The setbacks “have tarnished the entire company.”

Sasol’s shares rose 12% to 299.51 rand at 2:33 p.m. in Johannesburg on Monday, the most in about 11 years. South Africa’s biggest company by sales has tumbled this year and twice delayed reporting full-year results ahead of an investigation into what went wrong at the plant. The company reported adjusted earnings that missed analyst estimates.

A senior executive previously in charge of the project is facing disciplinary action and three executives involved in Lake Charles have left the company.

Gantsho described the findings of the investigation that included “overly optimistic assumptions” used by the project management team. While more work remains to restore trust in the company, “today we are ending a period of uncertainty,” he said.

The chemical plant, approved in 2014 at an estimated cost of $8.1 billion, exceeded its “worst-case scenario” for price over the last few years as problems continued to deepen.

A cost revision in 2016 reflected “poorer-than-anticipated subsurface conditions,” requiring more ground works, weather delays, and higher construction and labor costs, Sasol said at the time. The following year it shut the site for over a week due to Hurricane Harvey.

The Lake Charles facility is now nearing completion and Sasol said it’s confident the plant will soon start delivering financial and strategic benefits.

While the successful completion of LCCP remains a challenge for the company, it will “significantly strengthen” its position in the global chemicals market, Grobler said in a presentation at Sasol headquarters. The plant is expected to bring in a core profit of as much as $200 million in the 2020 financial year, ramping up to $1 billion from 2022.

Other actions following the Lake Charles review:

• Co-CEOs and members of the group executive committee were awarded zero short-term incentive value for the 2019 financial year.
• Reassigned oversight and accountability for the project to a new executive vice president as of April and added project management resources.
• Revising the company’s procedures regarding the escalation of ethics complaints and internal investigation findings.

[ceo_energemsier + 1,818]

(Bloomberg) -- Oil bulls are rebuilding their positions, but it will probably take some major news to shake the market out of its current mood and trigger a sustained rally.

Money managers boosted their net-long position on West Texas Intermediate crude for the first time since mid-September in the week ended Oct. 22, data released Friday show. Those bets are still at half the level they reached last month, though, while short-selling wagers have tripled in that period.

That signals there’s still a lot of skepticism in the market, despite crude’s 5.4% gain last week. But it also shows there’s growing support for a meaningful rally once short-sellers start unwinding their positions. It’s just that they don’t seem to have a reason to do that yet.

“We had some events recently that were unusual, including the unprecedented attacks on Saudi Arabia,” said Stewart Glickman, an analyst at CFRA Research Inc. “The market saw a quick uptick but then shrugged it off a bit pretty quickly.”

Last week was marked by news of a decline in U.S. crude stockpiles, a brief shutdown of a critical pipeline and signs of progress on U.S.-China trade talks. The market has seen similar pieces of bullish news over the past few months that weren’t enough to dispel uncertainty over demand in the face of growing supplies.

“Every other day, it seems like we get a new statement from the [Trump] administration related to the trade talks,” said Gene McGillian, manager of market research at Tradition Energy. “We’ve gone down this road too many times.”

Money managers’ WTI net-long position, or the difference between bullish and bearish bets, rose 8.5% to 93,856 futures and options, according to U.S. Commodity Futures Trading Commission data. That compares with more than 200,000 about a month ago.

Long-only bets rose 9.3%, while short positions climbed 10%. Short-selling is near a peak reached in January, before massive short covering through the end of April helped support crude’s rally during the first four months of the year.

Other Positions

Net-bullish wagers on Brent crude rose 2.7% The U.S. gasoline net-long position increased 6.8% The net-long position on U.S. diesel surged 175%

[ceo_energemsier + 1,818]

[ceo_energemsier + 1,818]

Deloitte study addresses shale's performance puzzle

 

 

New findings from Deloitte’s “Deciphering the performance puzzle in shales: Moving the shale revolution forward” research series suggests that if Eagle Ford and Permian Basin shale operators were to fully optimize their well designs, they could generate capital efficiency gains of 19 percent and 23 percent, respectively. This could represent a $24 billion capex saving opportunity for U.S. shale operators to strengthen their balance sheets and boost returns. 

“When it comes to efficiency gains, the industry seems presently divided on the outlook for shale wells. Some say gains have peaked, but Deloitte’s deepest foray into well-level data analytics revealed actionable insights which can help improve industry performance at a time when both investor sentiment and commodity prices are low,” said John England, partner, oil, gas and chemicals, Deloitte & Touche LLP. “The

 

 

findings clearly show that a one-size-fits-all approach to well design and completions is wasteful, and that it’s time for the industry to choose the right well design, not the biggest, to maximize efficiencies and profitability.” 

Key findings from the analysis include:

-Rock quality is important but is not necessarily the main performance differentiator. According to Deloitte’s analysis of all drilled wells in the Eagle Ford and Permian, the ranking of acreage (e.g., “Tier 1, Tier 2, Tier 3”) does not influence well performance to the extent previously assumed. More than 40 percent of wells drilled outside the core of the western Delaware area reported initial 180-day normalized productivity of more than 1,000 barrels of oil equivalent per day (boed). In the Eagle Ford, a comparable number of high-performing wells exist across acreage tiers.

-Bigger is also not always better. The statistical analysis further notes wells drilled over the last two to three years, with complex and intense completion designs (i.e., longer laterals, more proppants, etc.) actually led to diminished productivity, explaining some of the concerns from investors and financial markets. During this period, more than 3,000 wells that were completed with massive volumes of proppant (in excess of 1,800 pounds per foot) yielded productivity below 750 boed per 10,000 feet of perforated interval. Despite an increase in completion intensity of more than 40 percent, approximately 50 percent of U.S. horizontal wells had the normalized 180-day productivity of below 750 boed in the past four years. 

-Optimizing well designs can boost capital efficiency. Deloitte found approximately 67 percent of wells in the Permian have been under- or over-engineered. A more balanced formation-and-engineering equation could improve the capital efficiency of Permian operators by approximately 23 percent. Similarly, approximately 60 percent of Eagle Ford wells have been under- or over-engineered. An optimal completion design strategy could increase capital efficiency of Eagle Ford operators by 19 percent.

-$24 billion could be at stake via optimization. Improving well-designs has the potential for U.S. shale drillers to reduce capital requirements by $24 billion. If achieved, E&Ps could achieve economic targets in a broader range of price scenarios, and thereby revive investor interest, per the analysis.

-Myriad solutions to consider. To succeed, shale companies can utilize more sophisticated data analytics and balance experimentation and standardization. Technology is king, and knowing the reservoir is critical. Therefore, E&Ps should consider investing in advanced technologies such as microseismic monitoring, fluid tracking and tracer analytics, among others, to understand how and why the reservoir is behaving in a certain fashion and then augment the development approach. 

Sustaining shale efficiency gains and building resiliency

Optimizing well designs is an important priority, but the industry shouldn’t stop there, Deloitte notes. To make truly sustainable improvements and build resiliency against future price cycles, operators should work with all stakeholders in the oil and gas ecosystem. For example, E&Ps should co-share the productivity benefits with oilfield service companies, and design new win-win contractual arrangements with infrastructure providers. 

Importantly, E&Ps should also win back investors’ trust through more consistent transparency and reporting details of performance. Companies should standardize how they report well results and look to third parties to help. Large institutional investors, energy agencies, and shale industry associations along with data aggregators could play a big role in standardizing performance benchmarks for the shale industry and its investors.   

“Even though we’re over 10 years into the shale era, the industry is actually in the early stages of understanding. As with any new resource, the early phase of growth is also the initial phase of evolution and experimentation,” said Scott Sanderson, principal, Deloitte LLP’s oil and gas strategy and operations practice. “Now we are more aware of the challenges facing the viability of shales, and ‘brute force’ is not necessarily the answer. E&Ps should use analytic insights like this to course-correct both operational tasks and commercial arrangements to bring sustainable benefits to shareholders and the extended oil and gas ecosystem.”

 

https://www2.deloitte.com/us/en/insights/industry/oil-and-gas/us-shale-revolution-playbook.html?id=us:2el:3pr:4di6417:5awa:6di:102319:&pkid=1006754

 

 

[ceo_energemsier + 1,818]

Investors brace for poor U.S. shale earnings amid weak oil and gas prices

 

 

https://www.reuters.com/article/us-oil-results/investors-brace-for-poor-u-s-shale-earnings-amid-weak-oil-and-gas-prices-idUSKBN1X70QG

[ceo_energemsier + 1,818]

Production from shale wells declines quickly, but operators can cushion the fall. Sustaining base production is often the best use of capital, a quick way to generate cash, and a key pillar for producers seeking to transform their operations.

 

Sustaining the base: A new focus in shale’s quest for cash

 

 

https://www.mckinsey.com/industries/oil-and-gas/our-insights/sustaining-the-base-a-new-focus-in-shales-quest-for-cash

[James Regan + 1,776]

The cracks are getting bigger.....

[Rob Plant + 2,756]

On 10/20/2019 at 11:17 PM, James Regan said:

Purple Hearts, Secret Affair etc, good days....

I don't hold any Oil stocks, I'm not stupid, definitely not stupid enough to buy any LTO stock, They call it Madness, one step beyond.......

What about The Specials?

[James Regan + 1,776]

12 minutes ago, Rob Plant said:

What about The Specials?

Good man, there always room for more, one of the better bands, madness were a bit too commercial but the Specials , brilliant. Good spinoffs, FunBoy Three etc.

[James Regan + 1,776]

https://youtu.be/lgCZN1rU5co @Rob Plant

[James Regan + 1,776]

https://youtu.be/DCpmJHFMNRI

[James Regan + 1,776]

@Rob Plant heres a classic, brilliant GREAT GUITAR RIFF

https://youtu.be/qErykBldZCs

Edited October 30, 2019 by James Regan

[Rob Plant + 2,756]

28 minutes ago, James Regan said:

@Rob Plant heres a classic, brilliant GREAT GUITAR RIFF

https://youtu.be/qErykBldZCs

superb mate!

[ceo_energemsier + 1,818]

Conoco Ramps Up Cash to Be Antithesis of Shale Sector

 

https://finance.yahoo.com/news/conocophillips-profit-beats-estimates-shale-111512098.html

 

[ceo_energemsier + 1,818]

Natural-Gas Prices Jump as Producers Promise Restraint

Prices for the heating fuel are on the rise with forecasts of a cold front

 

https://www.wsj.com/articles/natural-gas-producers-promise-restraint-11572366892

[ceo_energemsier + 1,818]

U.S. net natural gas exports in first-half 2019 doubles year-ago levels for second year

 

 

https://www.eia.gov/todayinenergy/detail.php?id=41713

[ceo_energemsier + 1,818]

Big oil has gotten bigger. A lot bigger.

That’s what Simon Flowers, chairman and chief analyst at Wood Mackenzie, stated in his latest version of The Edge, a regular column published on the company’s website.

“The majors have increased commercial reserves by 62 billion barrels of oil equivalent (proven and probable) through the downturn, equivalent to another BP and Chevron combined,” Flowers said in the column.

“Our forecast for 2030 production for the seven companies is over six million boepd, or 40 percent higher today than it was in our 2014 view,” he added.

In the column, Flowers asked Tom Ellacott, Wood Mackenzie’s senior vice president, if the majors are chasing volume rather than value.

“No, far from it,” was Ellacott’s response.

“Cash generation is paramount – cost-cutting and productivity gains have driven cash flow breakevens down from $63 per barrel in 2015 to an average of just $40 per barrel today,” Ellacott stated in the column. 

“We’ve also seen a profound strategic shift with companies building resilience into portfolios … We’d say the majors aren’t just bigger but are also in far better shape” Ellacott added.

Flowers also asked Ellacott if bigger means “less focused”.

“No, the opposite,” Ellacott stated in the column. “We’re starting to see increasing portfolio concentration,” he added.

Ellacott highlighted that the majors are focusing on asset types or geographies “where they have competitive strengths and competencies”.

“The U.S. majors, for example, have significantly strengthened tight oil exposure. European Majors have used DROs, M&A and exploration to beef up advantaged positions in conventional plays,” Ellacott stated.

The seven big oil companies comprise Equinor, Chevron, ExxonMobil, Eni, Shell, BP and Total, according to Wood Mackenzie.

Flowers first joined Wood Mackenzie in 1983. He has more than 20 years of experience across a breadth of commodities and sectors including oil and gas, utilities and mining, Wood Mackenzie’s website states.

Ellacott has worked at Wood Mackenzie for more than 20 years. He recently led the analysis of over 40 companies in the corporate service, including all the majors, leading independents and the main Asian national oil companies. 

[ceo_energemsier + 1,818]

Commonwealth LNG touts modular approach, second-mover advantage

 

 

Privately held Commonwealth LNG sees its late entrance in a crowded field of US LNG developers as an advantage, with officials saying they can apply lessons learned from the first wave of LNG export projects toward a low-cost approach that will put it ahead of its rivals.

But the LNG facility that the company's export venture in Louisiana most resembles is not among the projects concentrated on the US Gulf Coast -- it's the Yamal LNG plant in Siberia.

As PAO Novatek did in developing Yamal in Russia, Commonwealth LNG plans for offsite construction of its facility's six natural gas liquefaction trains and other major components, the company's controller, Nick Eusepi, said in an interview. The benefit of this modular approach would be a lower cost and faster turnaround time on construction, he said.

"We are basically mirroring the Yamal project," Eusepi said. "The market is tough; the customers and off-takers have fatigue from all the projects, and they are somewhat on the sideline just waiting things out. We think our low-cost, flexible approach does put us ahead of the line, though."

 

 

 

It was only in August that Commonwealth LNG submitted its formal application for a federal permit to build the 8.4 million metric ton/year LNG export terminal and an affiliated feedgas pipeline interconnect in Cameron Parish, Louisiana. The project is competing against some others that already have permits and deals lined up with potential off-takers.

But Commonwealth LNG said the amount of time to build its project -- around three years as opposed to the usual four -- puts it on track to come online in early 2024, when a potential global LNG supply crunch is anticipated.

Commonwealth LNG recently received a notice of environmental review from the Federal Energy Regulatory Commission that suggested the agency could be ready to make a decision on whether to approve the project by the end of 2020. The company is now targeting a final investment decision in early 2021 (CP19-502).

"We are coming in later, but we are not finishing much later than everyone else," Eusepi said. "We still fall right in the middle of that second wave demand cycle. A little late to the game, but not really late to the game."

The construction approach would use modular LNG facilities developed by TechnipFMC, a designer and builder of LNG projects that worked on Yamal LNG. TechnipFMC signed an engineering service contract with Commonwealth LNG in 2018. Commonwealth LNG has not finalized an engineering, procurement and construction contract. Commonwealth LNG is a subsidiary of an investment vehicle owned by businessman Paul Varello, a veteran of the engineering and construction sector.

In a significant difference from other US LNG projects, Commonwealth LNG's plans call for even the LNG storage tanks to be built away from the project site.

This will allow the developer to build the tanks and do site preparation at the same time, which would be an important innovation in handling a key timeline constraint for LNG projects, said energy analyst Katie Bays, co-founder of research and consulting firm Sandhill Strategy. This could lend predictability in cost and schedule to the project's competitiveness in the race for a final investment decision.

"There is a path for them being able to do that," Bays said. "The big issues are not their model or regulation -- it's financing and the commercial environment. It's roughly the same hurdle for them as it is for every other company that is nothing more than an idea ... Capital is just anemic. And that is a huge risk for basically every project that doesn't have a balance sheet and a huge advantage for all of the projects that do."

Adding to the uncertainty for the LNG sector is the trade war between the US and China, which is expected to be the world's biggest importer of LNG within a decade.

As it stands, Commonwealth LNG could take a final investment decision on the $4.8 billion project if it contracts about 7 million mt/y of the offtake, Eusepi said. The company in June announced the signing of a nonbinding agreement with a subsidiary of global commodity trader Gunvor Group that could lead to a 15-year sale-and-purchase agreement for 1.5 million mt/y of LNG. The deal is Commonwealth LNG's only public commercial commitment.

Bays said the shorter duration of the contracts Commonwealth LNG is marketing, compared with the typical 20-year deals, is another factor that distinguishes the project in the field of independent LNG developers.

The low cost of the project enables Commonwealth LNG to offer these shorter-term deals, Eusepi said.

Other terms of the Gunvor deal, including the price structure or links to gas indexes, were not disclosed. But as the company pursues additional deals, it is not committed to any single pricing structure or index, Eusepi said.

"We've got a little bit signed up so far, but by no means all that we need to to get the project to go," Eusepi said. "But we are confident that we are going to get there, and hopefully, by the end of the year, we have got some more announcements coming out."

[ceo_energemsier + 1,818]

Frackers Scrap Idled Equipment Amid Shale Drilling Pullback

 

https://finance.yahoo.com/news/frackers-scrap-idled-equipment-amid-100000694.html

 

[ceo_energemsier + 1,818]

The North American downstream project outlook has been healthy for some time and this trend looks set to continue in the near term. Current active North American downstream project capex is estimated at $35 billion and looking ahead could grow a further $27.7 billion between 2021 to 2022 according to Industrial Info.