Uncertainty over global oil prices continues, with Shell’s Chief Energy Advisor predicting a delayed rebound. Despite continued price uncertainty the US natural gas market shows signs of growth, while China moves ahead as the leading oil operator in the North Sea.
Ending gas flaring is more important than carbon trading
A Social Action report entitled ‘Up in Smoke: Gas Flaring, Communities and Carbon Trading in Nigeria,’ has called for oil companies to take responsibility to end gas flaring in Nigeria, rather than participating in carbon trading schemes. The report called for oil fields that continue to flare to be shut down to encourage development of gas capture technology.
The report stated: “Considering that gas flaring is illegal in Nigeria, it amounts to bad faith to consider flare reduction projects in Nigeria as Clean Development Mechanism projects. Gas flaring reduction projects in Nigeria should not qualify for any global carbon credit scheme.”
“Oil companies in Nigeria can end gas flaring profitably without recourse to an international carbon market. This can be done through a clear commitment by the Nigerian government to abiding by its own laws and commitments to improving local access to electricity which can be enhanced by utilising associated gas.”
Shell boss predicts slow oil price recovery
Oversupply has supressed oil prices during the last two years, but according to Shell’s Chief Energy Adviser, Wim Thomas, prices may not rebound until the third quarter of 2017.
Thomas’ uncertainty stems from the potential return to market of 1.5 million barrels per day of Libyan and Nigerian oil, with continued uncertainty over Iranian and Iraqi oil production levels.
Thomas told Reuters at the ONS Oil Conference in Stavanger, Norway: “All these things when they come back on the market can again postpone the true balancing.” The most optimistic outcome is for supply to rebalance, but before this can happen the market will need to absorb significant volumes of stored crude oil. The Shell Chief Advisor described three key factors with the potential to disrupt the current situation: demand from China and India; the resilience of United States (US) shale production and a possible OPEC agreement to freeze oil production.
Gulf of Mexico production disrupted as sites evacuated
Offshore oil and gas operators in the Gulf of Mexico began the evacuation of platforms and rigs in preparation for a Tropical Depression 9 (TD 9). The intrusion of the hostile weather front was shown using data from offshore operator reports.
On-site personnel were evacuated from six production platforms and one rig. As a precaution five dynamically positioned (DP) rigs have also moved from the storm’s path. There are currently 781 manned platforms, 16 non-DP rigs and 25 DP rigs in the region, and the Bureau of Safety and Environmental Enforcement (BSEE) estimates that approximately 11.48 percent of the current oil production and 5.51 percent of the natural gas production in the Gulf of Mexico has been shut down due to the impending weather.
The National Hurricane Centre reported that TD 9 had winds of up to 35 mph and was located over the extreme south-eastern Gulf of Mexico.
Supplies and prices increase for US natural gas
The United States (US) Energy Information Administration (EIA) reported that supplies of natural gas rose 11 billion cubic feet towards the end of August. While this was below the average rise of 18 billion cubic feet predicted by analysts, total stocks now stand at 3.350 trillion cubic feet, an increase of 275 billion cubic feet year-on-year. Current levels stand at 350 billion cubic feet above the five-year average and have bumped natural gas future prices up 0.5% from $2.809 to $2.866.
By the end of 2015, shale oil extraction accounted for more than half of US oil production and the continued evolution of fracking is expected to transform the US into a net energy exporter sometime in the next decade.
China moves ahead in the North Sea
China is now the biggest oil operator in the North Sea through its state-owned company China National Offshore Corporation (CNOOC).
CNOOC runs two of the biggest oilfields in the region with one of its subsidiaries, Nexen, responsible for extracting 200,000 barrels every day. This extraction equates to more than 10 per cent of the total for the region. The Chinese state-owned company is followed by BP, Maersk, Suncor Energy, Apache, BG, Shell and Taqa.