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Short Takes for the Week of 10-14-16

News about New Fields/ Developments

Russian Energy giant Gazprom reported it has discovered new gas deposits during exploration at the Kirinskoye field in the Sea of Okhotsk near Russia's Sakhalin island. Shell may also get a piece of the find, but the outcome is uncertain because of the sanctions leveled against Russia. Gazprom also plans to launch a third LNG production train in 2021, possibly to newly drilled fields. Sakhalin-2, Russia's sole LNG plant is run by Gazprom, Royal Dutch Shell, Japan's Mitsui and Mitsubishi, operates two production lines with a combined capacity of 10M metric tons/year of LNG, and the third train should add another 5M tons. ()

Shell (says it plans to raise production capacity at its giant Ormen Lange field offshore Norway to 70M cm/day from 50M cm/day by installing two new compressors. The Ormen Lange gas field, which feeds the Langeled pipeline under the North Sea, covers 20% of Britain's demand for natural gas.

Shell signed a Memorandum of Understanding with the Iranian oil ministry to cooperate in the development of the petroleum industry in Iran. The more interesting part is the stated growth objective for Iranian production: Iran plans to expand its petrochemical output from the current 60M tons to 160M tons by 2025.

Caelus Energy Alaska LLC reported it made a light oil discovery of 6 billion barrels in place off Alaska’s North Slope. The company also estimates the Smith Bay fan complex may contain more than 10 billion barrels of oil in place when adjoining acreage is included. The Smith Bay development could potentially provide 200,000 barrels per day of light, highly mobile oil which would boost Trans-Alaska Pipeline System (TAPS) throughput volumes and reduce the average viscosity of oil in the pipeline, extending its long-term viability, the company said in the release. Based on the favorable fluids contained in the reservoir, Caelus expects to achieve recovery in the range of 30 to 40 percent.

 

Random News of Interest: Service Sector

Schlumberger says it won a project in Venezuela to drill 80 wells in an extra-heavy oil field in the Orinoco Belt, although specific terms are still being negotiated. The field will contain 480 wells, and is expected to be one of the world’s largest drilling projects.

Schlumberger and Malaysia's state-run oil company Petronas signed an agreement to license a "significant part" of a deepwater seismic survey in the Campeche basin of the southern Gulf of Mexico. More than 80K square kilometers of newly imaged subsurface data, which have been acquired in the last 12 months, are available for companies participating in exploration in Mexico, which has opened licensing rounds to non-government companies for the first time.
 

Random News of Interest Oil:

ExxonMobil agreed to pay a $12M settlement related to environmental damages caused by a 2011 pipeline break that spilled 63K gallons of crude oil into Montana's Yellowstone River. Exxon has spent $135M on cleanup and repair work. Penalties against the company for federal Clean Water Act violations have not yet been assessed.

Crestwood Equity Partners announced that it will build, own and operate a $180M natural gas gathering system in the Permian Basin. Crestwood reached a long term gathering agreement with Shell. The system will produce ~250M cf/day of gas, with a targeted initial in-service date on or before July 1.

Nigeria’s government can take the local units of Chevron and Total to trial for allegedly illegally exporting crude oil, a judge ruled.

Nigeria is taking several international oil companies - including Royal Dutch, Eni and Petrobras to court for allegedly failing to declare more than 57M barrels of crude exports during 2011-14. The oil was allegedly worth about $13B.

Colonial Pipeline will halt flows on its gasoline-bearing Line 1 at least once more this year to replace leaking segments amid the company's worst ever shutdown earlier this year. This pipeline carries half the gasoline supply to the east coast - 70%in many southeastern states according to U.S. energy secretary Ernest Moniz.

Chesapeake Energy says it has plenty of cash to pay bondholders through the end of 2018.

CHK says it has closed its $1.25B private placement of unsecured convertible notes that it can convert to shares in 2019 under certain circumstances, and now has $1B in cash on hand in addition to an undrawn revolving credit line. I would note that several board members resigned recently.

ExxonMobil says it is considering its next steps after the High Court in Chad ordered the company to pay $819M in royalties.

XOM says it disagrees with the court’s ruling yesterday in favor of the government after the finance ministry complained the company had not met its tax obligations.

Royal Dutch Shell (said that it would scrap plans to build an oil train terminal in Washington state that would have taken more than 400K barrels per week of Bakken and other inland crudes. Shell cited continued market pressure caused by low crude prices. Where I find this interesting is the breakeven in the Bakken has become considerably lower over the past two years. Yet, Shell still seems to be concerned that the market will not correct enough to justify the CAPEX.

General Electric says it intends to purchase Denmark-based LM Wind Power for $1.65B, in a deal that would in-source wind turbine blade design and manufacturing for its renewable energy business. This shows GE’s business model for diversifying its energy applications.

 

By: Ty Chapman

Five Star Metals, Inc.

Raising the Bar for Customer Service and Quality

Twitter: @FSM_TY

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Ty’s Take for the Week of 10-14-16
OPEC and Russia Sending Signals, U.S. Poised to St...