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Shell seen reclaiming dominance in Texas shale country

World Oil : By KELLY GILBLOM on 6/18/2018 LONDON (Bloomberg) — Shale oil hasn’t always been Royal Dutch Shell Plc’s best friend, but they’re working on the relationship. Shell is said to have bid, with partner Blackstone Group LP, on a portfolio of U.S. shale assets BHP Billiton Ltd. wants to sell for about $10 billion. If it wins, the Anglo-Dutch oil major could exceed its goal of doubling its American onshore output, according to JPMorgan Chase & Co. That would boost the unit’s free cash flow — currently on track to grow by $2 billion by 2025 — and turn around a shale portfolio that is currently “mid-lower ranked,” analysts from the bank including Christyan Malek said in a report. At the heart of Shell’s shale problem has been the lack of a coherent strategy, according to the report. It has irregularly acquired various bits of U.S. acreage, including a large stake in the low-cost and highly desirable Permian.   In the Permian’s Delaware basin Shell was pumping fewer than 100,000 bpd per 1,000 ft (300 m) of well length in the first 30 days of production — about 20% lower than the industry average at the time. In contrast, shale specialist EOG Resources Inc.’s wells in the same area were about 50% more productive. Shell declined to comment. The company, with partner Anadarko Petroleum Corp., has started improving productivity by drilling longer wells and implementing a technology program called iShale, which has reduced costs by 60% since 2015. BHP’s Permian portfolio, which overlaps Shell’s current acreage, could solidify those gains and allow it to take advantage of existing infrastructure, said Malek....

The Permian Basin in Texas and New Mexico will soon become the third-biggest oil producing region in the world: IHS Markit

Output from the Permian basin is poised to double between 2017 and 2023, according to IHS Markit. At 5.4 million barrels per day, Permian production would surpass output from all other producer nation’s except Saudi Arabia and Russia. IHS Markit believes the jump in output will require more than $300 billion in investment. CNBC.com | Tom DiChristopher | @tdichristopher Today, the Permian basin in Texas and New Mexico is the nation’s biggest shale oil producing region. But in just a few years, drillers could be pumping enough Permian crude to outmatch every nation in the world except Russia and Saudi Arabia. Output from the region is forecast to more than double between 2017 and 2023, jumping to 5.4 million barrels a day, according to a new estimate from IHS Markit. That would help the United States graduate from an emerging player in export markets to an established power. IHS Markit thinks the United States could be shipping 4 million bpd to foreign customers, up from 1.1 million bpd last year. The Permian is one of the nation’s shale regions, where drillers use advanced methods to unlock oil and natural gas from rock formations. They pummel the shale rock with water, sand and chemicals — a process known as hydraulic fracturing — and recover oil and gas through horizontal wells. U.S. shale oil and gas regions, source: Energy Information Administration - Read...

Devon Energy Corp Doesn’t Disappoint

The Motley Fool: Matthew DiLallo: May 2, 2018 at 10:31AM The oil giant bounces back from a rough end to 2017 thanks to the help of an absolute gusher in the Permian. While Devon Energy (NYSE:DVN) limped into 2018 after running into some production problems at the end of 2017 and bad weather to start this year, it was able to put those issues in the rearview mirror by the end of the first quarter. That’s evident by looking over its results for the period where the oil giant beat its production guidance, putting it on track to exceed its full-year forecast. The company did that by drilling some of the best wells ever completed in the legendary Permian Basin. While Devon Energy’s total output was just above the mid-point of its guidance range, oil production came in toward the top end of the forecast at 251,000 barrels per day thanks to strong drilling results. Fueling that performance was an absolute gusher in the Permian Basin where two wells in the Delaware side combined to achieve a stunning initial 24-hour production rate of 24,000 BOE/D. They were the highest-rate wells ever brought online in the region’s nearly 100-year history. Those were just two of several high-rate wells that Devon brought online in the Delaware and STACK shale plays in the quarter. Another highlight was the company’s Showboat project, which came online 40 days ahead of schedule thanks to efficiency gains. The company achieved a 30% improvement in drill time and doubled the number of completion stages per day versus prior activity in the area. Those operating improvements enabled Devon to save $1.5 million per well. Continue reading…...

What Trump’s Iran decision means for oil and gas prices

MSN.com : CNN : Matt Egan President Donald Trump chose a dicey time to crack down on Iran, the world’s fifth-biggest oil producer. Global oil supplies were already getting tight before Trump vowed on Tuesday to exit the Iran nuclear deal and impose “powerful” sanctions on the OPEC nation. Energy industry insiders say Trump’s tough stance on Iran will probably keep oil and gasoline prices higher than they would otherwise be. Iran ramped up its oil production by 1 million barrels per day after sanctions were lifted in early 2016. At least some of that oil will now be pulled from the market — at a time when oil prices are already rising because of production cuts by OPEC and Russia as well as instability in Venezuela. Dan Eberhart, CEO of oilfield services company Canary LLC, drew a direct connection: “Withdrawing from the Iran nuclear deal will support higher oil prices.” Trump telegraphed the move, and oil prices shot up in recent weeks as traders anticipated it. Crude topped $70 a barrel this week for the first time in nearly four years. Hours before Trump’s announcement, federal government forecasters raised their estimate for 2018 oil prices by 10.5% to an average of $65.58 a barrel. Crude oil prices swung wildly on Tuesday, eventually climbing back above $70 a barrel later in the day. Continue...

Why The Permian Is Set For A Shakeout

Forbes.com : Business : Wood Mackenzie , Contributor  : APR 30, 2018 @ 04:38 AM Motives for both the tight oil ‘haves’ and ‘have nots’ The best accessible upstream growth opportunity in fifty years? US tight oil. Correction: the Permian Basin. Second correction: the Wolfcamp formation spread across the Delaware and Midland sub-basins. It’s this play that drives most of the growth in tight oil, from 5 million b/d today to the 10 million b/d we forecast in the middle of next decade. No surprise then, that those already big in the play want more of it. But does Concho Resources’ acquisition of RSP Permian for US$9.5 billion – the biggest deal yet – signal the start of Permian consolidation? I caught up with Ben Shattuck, Research Director, US Lower 48. Q. Ben, is Concho doubling up on what it does best? That’s the obvious answer. Merging two Permian tight oil specialists brings scale (the largest rig program in the Basin) and synergies that Concho estimates at US$2 billion. That’s a very ambitious target in our view to be extracted from rationalising central costs, high grading drilling inventory and leveraging technical expertise, such as longer laterals from larger pads.  Continue...

BNEF Brief: Permian Basin’s Impact on Global Oil Supply

Nasdaq : AOL Network - April. 26, 2018 Apr.26 — Selling more than two million barrels a day of U.S. crude overseas may soon be the new normal. The U.S. sent out record amounts of crude to foreign destinations last week, with domestic output hitting an all-time high, thanks to growth in the Permian Basin. Bert Gilbert, Bloomberg New Energy Finance oil analyst, joins Bloomberg’s Alix Steel for this week’s “BNEF Brief” on “Bloomberg Commodities Edge.” Read...