new base 547 special 24 february 2015

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

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NewBase 24 February 2015 - Issue No. 547 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

ExxonMobil Research Qatar’s technology goes global The Peninsula + NewBase

The Minister of Energy and Industry, H E Dr Mohammed bin Saleh Al Sada (third left), President and General Manager of

ExxonMobil Qatar, Alistair Routledge (second left); and President of Upstream Research Company, ExxonMobil Corporation,

Sara Ortwein (fourth left); with other officials during the fifth anniversary of the ExxonMobil Research Qatar in Doha yesterday.

An innovative technology, developed in Qatar, is going global. The ExxonMobil Research Qatar’s (EMRQ) affiliate ExxonMobil Upstream Research Company yesterday announced it awarded a global commercial licence for an improved version of remote gas detection system to an international company Providence Photonic.

The technology was developed at EMRQ and Providence Photonic was the co-developer. Sara Ortwein, President, ExxonMobil Upstream Research Company, said the newly developed dual imager system IntelliRed provides a more sensitive and accurate early warning alert of hydrocarbon leaks with minimal false alarms.




A single imager system was commercialised in late 2013. Both systems are designed to improve process safety and environmental performance at oil refineries, chemical plants, liquefied natural gas (LNG) facilities and other gas processing facilities and can be used world-wide. The IntelliRed system was developed by scientists from EMRQ and Photonics over a four-year period, culminating in field tests of the system that began last year at production facilities in Qatar and the United States.

“The dual imager IntelliRed system is the latest example of ExxonMobil’s continuous focus on process safety and environmental protection”, said Ortwein. “Our collaboration with the imaging experts at Providence Photonics has produced a second generation remote gas detection system that leads the industry and with its robust design in capable of operating in oil and gas processing facilities around the world.”

Ortwein, who is in Doha to join the fifth anniversary celebrations of EMRQ, said ExxonMobil’s Doha research centre is currently focusing on four sectors, which are of common interest to Qatar and ExxonMobil. The sectors include environmental management, water reuse, LNG safety and costal carbonates.

On EMRQ’s coastal research, she said Qatar’s coastal sedimentary layers, formed during an estimated over 10,000 years, are similar to the sedimentary layers of the carbonate reservoir rocks found in the subsurface. This provide great benefits to geologists and engineers working to produce Qatar’s natural gas resources as they are able to gain a better understanding of the rock formations and the surface geology along the Qatari coast line.

In 2014, EMRQ’s achievements included a partnership with QU and Texas A&M at Galveston, with support from the Ministry of Environment, to further environmental research and marine mammal initiatives in order to address the issue of preservation of dugongs-large, long-living herbivorous marine mammals found in Qatar coastal waters.

On EMRQ’s future plans, Ortwein said the Doha Centre will continue to invest in research to better understand environmental risks from industrial activities, and the technologies needed to enhance environmental management capabilities.

Qatarisation is a key element of ExxonMobil Qatar’s strategic business plans. Approximately 30 percent of EMRQ’s employees, including key staff members, are Qatari nationals, she added.

‘Remote Gas Detection’ system, which is designed to improve process safety and environmental performance at liquefied natural gas production and transportation facilities and other gas processing facilities.

The system employs a specially-developed computer algorithm to autonomously analyse infrared camera images and detect escaping hydrocarbon gases. The system provides an early warning alert of hydrocarbon leaks .




Morocco: Gulfsands reports gas discovery at DOB-1 in the Rharb Centre Permit in Northern. Source: Gulfsands Petroleum

Drilling operations on the Douar Ouled Balkhair 1 gas exploration well ('DOB-1') located within the Rharb Centre Permit in Northern Morocco have now concluded with the DOB-1 well being confirmed as a gas discovery. During testing of this discovery, gas flowed to surface during the well's clean up flow period at rates in excess of 10 million standard cubic feet per day ('mmscfpd'). DOB-1 has now been suspended as a future gas production well.

The DOB-1 well is the third well to be drilled on the Rharb Centre permit based on the Company's interpretation of 3D seismic survey data acquired by Gulfsands on the permit area in the second half of 2013. The first two wells to be drilled on this permit were also successful in finding gas and flowing it to surface, at wells LTU-1 and DRC-1.

The DOB-1 well was drilled to a Total Depth ('TD') of 1140 metres Measured Depth ('MD') and encountered the primary reservoir target interval on prognosis at a depth of approx. 808 metres MD. Significantly elevated gas readings obtained while drilling, as well as interpretation of geological samples and wire line logs, indicated the presence of a gas bearing sandstone reservoir section of excellent quality. Detailed petrophysical evaluation of wireline logs over the primary target yielded an interpretation indicating a 4.2 metres gross sand thickness, with a net sand thickness of 3.7 metres and evaluated average gas saturation of 70% and average porosity of 34%.




The DOB-1 well was cemented and perforated over the primary reservoir interval, completed and then subjected to a flow testing and pressure survey period for evaluation of well flow performance and connected gas volumes.

During initial clean up flow operations over this reservoir, the well produced natural gas at an estimated rate in excess of 10 million standard cubic feet per day ('mmscfpd') on a 48/64th inch choke setting. During subsequent multi-rate flow testing, a stable flow of 6.2 mmscfpd was established for a period of 4 hours on a 32/64th inch choke setting, with a final wellhead flowing pressure of 1084 psi. No formation water was detected in the gas production stream during testing operations.

The secondary reservoir target interval for the well was encountered at a depth of approximately 1075 metres MD. Significantly elevated gas readings were encountered over the interval 1075-1127 metres MD. However, after the completion of wire line logging operations, mechanical problems with well bore integrity above this interval prevented further access to or production testing of this deeper potential reservoir.

The Company is currently reviewing all available data in order to determine the optimal path for further exploration of this reservoir section, which may include a re-deepening of this well at a later date post production of the shallower gas zone, potentially employing in this future operation a modified and strengthened well design.

Drilling and well testing operations for DOB-1 were completed on plan and on budget. Upon completion of operations the Company plans to suspend drilling operations whilst a detailed technical assessment is conducted over the DOB-1 and DRC-1 gas discoveries that will include the identification of potential locations for further drilling in the near vicinity of these discoveries.

Mahdi Sajjad, the Company's CEO commented:

'We are delighted with the results of the drilling and flow testing operations at well DOB-1. This is the third consecutive successful exploration drilling result that the Company has achieved in Morocco utilising the 3D seismic data acquired and processed in 2013-2014. We are continuing with our efforts to commence production from these discoveries and are receiving much appreciated assistance from ONHYM to ensure this is achieved .

• Gulfsands holds a number of highly prospective oil and gas licences and gas exploitation concessions covering a substantial area of Northern Morocco.

• Gulfsands is operator of all its licence interests and co-venturer on Fes with partners Caithness Petroleum.

• Commencing in 2013 and continuing into 2014, Gulfsands conducted two extensive 3D (now completed) and 2D seismic programs on the Rharb and Fes licence areas respectively.

• During 2014 Gulfsands will undertake further drilling on the Rharb Sud and Rharb Central exploitation concessions with a view to establishment of commercial gas production during 2014.

• July 2014 the LTU-1 Natural Gas Discovery was made in the Rharb Centre Permit in Northern Morocco.

• The Rharb Centre and Rharb Sud permits represent an opportunity for near term gas production from existing discoveries and anticipated further discoveries in a shallow depth gas play.

• The Fes permit area is considered to have significant oil exploration upside.




Norway: Statoil starts up Oseberg Delta 2

On February 21, Statoil and its partners started up production from Oseberg Delta 2 in the North Sea. According to Statoil, the field’s recoverable reserves are estimated at 77 million barrels oil equivalent.

The field, which is tied back to the Oseberg Field Centre, has been developed using two subsea templates with capacity for a total of eight wells. The initial phase of the plan initially involves three oil producers and two gas injectors.

“Delta 2 is an important element in extending the lifetime of Oseberg. It provides a good example of how we can make lesser discoveries profitable by using existing infrastructure while it is still available,” says Arild Dybvig, vice president for fast-track development projects in Development & Production Norway.

The start-up of the first well is in line with the development plan and takes place 38 months after the discovery became part of the fast-track portfolio. The total investment is slightly less than NOK 7 billion ($925.3 million), well below the estimated investment cost when the project was sanctioned.

“We’ve delivered yet another high quality, fast-track development according to plan and well within budget,” says Torger Rød, senior vice president for subsea projects in Technology, Projects & Drilling.

Oseberg Delta 2 marks a further development on the Delta terrace where oil from two wells on an existing template has been produced since 2008. “The new development includes gas injection that will give us a substantially greater recovery rate.”

“There are also some good opportunities for the further development of the area and an exploration well has already been planned in the southern part of the Delta terrace,” says Terje Gunnar Hauge, vice president for operations on Oseberg East.

The plan for development and operation was submitted to the Ministry of Petroleum and Energy on May 30, 2013.




Norway: Statoil to drill test well in PL602

Statoil has decided to drill a well to test the Roald Rygg Prospect in PL602, on the Norwegian Continental Shelf (NCS).

In addition to drilling decision, Statoil also decided to acquire Rocksource’s 10 per cent participating interest in the licence. The transaction is subject to government approval.

PL 602 is located in the Vøring Basin, immediately close to the Luva, Snefrid and Haklang discoveries which will be developed as the Aasta Hansteen Field expected to come on stream in 2017. In addition to the Roald Rygg prospect the PL602 license contains several other prospects and leads that provide exiting follow up potential.

The current partnership in PL 602 consists of Statoil Petroleum AS (Operator, currently 30%), Petoro (20%), Centrica Resources (10%), Atlantic Petroleum Norge AS (currently 10%), Rocksource Exploration Norway AS (currently 10%) and Wintershall Norge (10%).

Atlantic Petroleum CEO, Ben Arabo, comments: “We are excited to participate in the well following our farm down agreement with the operator Statoil which will bring our ownership down from 10% to 7.5%, subject to government approval. This well has the potential to deliver significant gas resources in an area where gas infrastructure is being developed.” The well is planned to be drilled in 2015.




Kenya: Taipan Resources' Badada-1 well disappoints Source: Tower Resources

JV partner Tower Resources, the AIM-listed Africa-focussed oil and gas exploration company, has provided an update with respect to the Taipan Resources- operated Badada-1 well, Block-2B, onshore Kenya. Tower has received formal notification from Lion Petroleum, the wholly-owned Kenya-based subsidiary of Taipan Resources, and Operator of Block-2B (Tower 15%, Premier Oil 55% and Taipan 30% working interests) that the Badada-1well has been drilled to a total depth of 3,500 metres MDBRT (Measured Depth Below the Rotary Table) and following completion of logging operations will be plugged and abandoned as a dry hole.

The well has taken a total of 46 days to date, compared to the Operator's expectations of 70 days in total and is expected to have been drilled under the gross budget of $25.8 million.

The well encountered a thick and previously untested Neogene age succession in the Anza Basin, of similar age to that encountered in the Lokichar and Albertine Basins, confirming the pre-drill geological model for this part of the basin. Excellent quality reservoirs of Neogene and possibly older Tertiary age have been drilled. Although the well has failed to find commercial hydrocarbons, minor gas shows and traces of heavier gas molecules indicate the presence of a thermogenic source rock.

The Operator has proposed seeking additional time from the Government of Kenya in order to complete its evaluation of the remaining prospectively of what is a very large 5,458 sq km Block, prior to a decision on entering the next phase of exploration.

Graeme Thomson, CEO commented 'This was the first well to drill the thicker undisturbed Tertiary section in the Anza Basin, close to the basin-bounding faults and potentially analogous to Tullow Oil's Ngamia discovery in the South Lokichar Basin. Drilling results suggest that the section here is sandier than had been expected and the development of sealing claystones is less than had been hoped. This was always the principal risk for the play. We shall be evaluating the results of the well to assess the remaining prospectivity in this very large area.'




US: As oil plunge puts thousands of US jobs at risk GulfNews + NewBase

Years of high crude prices have transformed the sleepy US Midwest state of North Dakota into of the US’s fastest growing, with thousands of workers attracted by its promise of low unemployment and high prosperity.

The government has invested billions back into the state, not to mention the private investment behind the countless new hotels and restaurants popping up to house and feed many of the out-of-state of workers.

But with US crude losing more than half its value from about $100 (Dh367) a barrel in June last year to below $50 last month, several oil industry firms have warned of layoffs.

Charlie, who works in the oil industry pumping wells in Divide County, which lies on the fringes of the states oil boom, is thinking about changing jobs.

The number of oil rigs operating in the state dropped by around 20 per cent from mid-December to the end of January, according to state data. Though US crude rebounded in February to above $50 a barrel, which means some of these rigs, could come back online.

But Charlie, who did not want his surname published because he did not want to jeopardise his employment, said the oil companies “are going to trim some fat” as long as prices stay low.

Charlie is considering switching back to driving trucks. Truck drivers are a commodity in high demand. The local high school and primary school, struggling to compete with the high wages offered by the oil industry, has been unable to run the necessary school buses each morning with employees switching to the oil industry.




“There are winners and losers … everybody is nervous,” said Gerry, who was sitting in a roadside truck stop with Charlie. The two discussed the slowdown and what it will mean for them. Charlie asks Gerry for advice, “I don’t think there’s an over-abundance of oil trucks. They aren’t part of the boom are they?”

Gerry, who also requests his surname not be published, acts as a broker for a trucking company operating in North Dakota’s oil boom. Gerry, who after years of driving trucks, now spends his time ensuring the trucks are always on the road but low prices are changing all that.

“It’s going to get thin,” he tells Charlie.

“You can feel the slowdown,” he later adds.

But trucks continue to tear up and down the state’s west where the oil-rich Bakken formations, where most of North Dakota’s shale oil is located, stretches across 31,079 square km. The roads that were never designed to handle such heavy loads have been left rutted by years of the oil boom. There is hope that weak oil prices will slow down the industry just enough for the state to catch up.

“This breathing space seems to us like an opportunity to get the infrastructure on the ground in a more efficient way,” said Democrat State Senator Connie Triplett.

The North Dakota Petroleum Council, a group that represents the interest of more than 500 companies working in the state’s oil industry, is concerned the industry will not be able to replace the laid-off workers. North Dakota has had one of the lowest unemployment rates in a country that has been pulling itself out of recession for years. The oil boom meant thousands from across the US flooded the state to seek employment.

The unemployment rate in North Dakota was 2.7 per cent in 2014, according to preliminary state data, less than half the 6.6 per cent national average.

“This is a world-class resource. We know it’s here. We’re going to produce it long term,” said Ron Ness, president of the North Dakota Petroleum Council, speaking on the state’s abundance of oil that saw 1.2 million barrels a day produced last year.

“[But] the shale oil plays are very labour intensive. We need a lot of people so having the ability to ramp up again will depend on our ability to attract and retain people,” he added.

North Dakota was the fastest growth state in the US between 2010 and 2013 when its population grew by 7.6 per cent compared to the 2.4 per cent nationwide average, according to federal data. Modern day gold rush

The state had seen its population decline for decades as residents moved away from its sleepy country towns and cities for bigger, cosmopolitan cities. But on the back of a modern day gold rush, thousands flocked to the state to cash in on its booming oil industry. The 50,802 people that moved to North Dakota over the period nearly matched those that left over the 60 years before 2010.

Others in Divide County that do not work in the oil industry but have benefited from its boom do not share the same concerns as Charlie and Gerry.

“Oil production is always up and down,” said Kay Garbel, co-owner of the sole furniture store that bears her name in Crosby, a town in Divide County.

Roughly 80km south from Divide County in Williston, the heart of the state’s oil boom, people are still flocking to the city hopeful of still cashing in on the oil boom even as prices weaken.

Mo Noor, a University of Connecticut graduate, left his job at Bank of America last October when prices were hovering around $85 a barrel, down from Brent crudes June high of $115, to drive taxis in Williston.




Noor, who has paid $12,000 off his university debt since moving to Williston, said he makes more money today driving taxis than the white-collar job he left in New York. Noor is not alone. He said he moved with a friend and fellow University of Connecticut graduate who has a degree in mechanical engineering.

Earlier, on a bus from Bismarck, the North Dakota capital, a man who gives his name as Idrissa has travelled 2,819km from Atlanta, Georgia in search of a job.

“Maybe I’ll get a job on an oil rig, maybe I’ll get a job at a restaurant,” he said without giving his surname.

North Dakota’s sole congressman, speaking at his office in Bismarck, is bullish the state has built a strong enough economy to wait out weak prices. Bismarck, 365km from Williston, has also cashed in on the oil boom even though there are no oilfields in the capital. The city has built an entire north side that is lined with brand new hotels, fast food restaurants and departments offering sign-on bonus for as much as $600 and hourly salaries starting at $12 an hour, much more than the standard national minimum wage of $7.25.

“We are not on the verge of an unemployment crisis, largely because there are tens of thousands of unfilled jobs. If anything we have a workforce crisis,” said Kevin Cramer, a Republican.




Oil Price Drop Special Coverage

Oil prices fall on oversupply Oil prices fell more than a dollar on Monday as worries about oversupply and a strong dollar pushed Brent futures to around $58.50 a barrel and US contracts below $49 a barrel.

"The term structure of oil continues to weaken and inventories keep piling up," Bank of America Merrill Lynch said in a note. Brent crude was trading $1.66 lower at $58.56 at 8.26 a.m. ET. Benchmark US WTI crude April futures were trading down $1.54 at $48.80 a barrel. WTI's March futures settled at $50.34 a barrel on Friday, expiring as the front-month contract. The dollar was up 0.58 percent against a basket of currencies. U.S. drilling has slowed this year as producers react to the collapse in oil prices, but Goldman Sachs said the pace of the U.S. rig count decline was now slowing. U.S. oil production growth is expected to reach 440,000 barrels per day by the fourth quarter of 2015 compared with a year before, based on the current rig count, Goldman Sachs said in a note.

Analysts said that a cold spell in the United States, which has hit refinery output, could also prevent crude prices from rising further. Major U.S. East Coast refineries have been hit by cold weather, sending up heating oil futures on fears of tight supplies.




OPEC President Diezani Alison-Madueke said in a Financial Times report that she would call an emergency meeting of OPEC if prices continue to fall. Oil prices were buoyed by the news—briefly—until they fell again.

In addition to being president of OPEC, Alison-Madueke serves as Nigeria's oil minister, and cheap oil has helped sow crisis in her country. The Nigerian currency, the naira, is at all-time lows against the dollar, terrorist attacks by the Islamist group Boko Haram have worsened, and national elections were recently postponed more than a month. It makes a lot of sense that Nigeria would want to put a floor under oil prices by hinting at an OPEC resolution—even if such a resolution is unlikely.

Some reasons for doubt:

1. Another OPEC delegate told Bloomberg News today that OPEC has no plans to hold an emergency meeting. OPEC is scheduled to meet in June, and all 12 members must agree to hold a special meeting in the interim.

2. It's unlikely that Saudi Arabia, OPEC's biggest producer, would agree to such a meeting, not to mention actually cutting production. Saudi Oil Minister Ali Al-Naimi has said OPEC won't change course even if prices go to $20 a barrel.

3. Even if a meeting were called, it's not clear whether OPEC is capable of mustering support to cut sufficient production to boost prices. It would require imposing a shrinking market share for oil-dependent economies that are already stretched.

4. Even if OPEC members were to cut production enough to increase oil prices, how would the legions of U.S. oil producers respond? Probably by putting all those idled rigs back into action, adding more supply to the market and undermining OPEC's efforts.

In oil markets, perception is everything. It's very possible that today's talk of an emergency meeting was simply meant to reassure unstable markets. Sometimes the threat of taking action removes the need for taking action.

If that's what happened, it comes at a risk for OPEC. The fact that markets brushed off the threat so quickly may imply that OPEC's threat is losing credibility.

Analysts say worst is over for oil with price rebound in second half The National + NewBase

The worst of the market shock from the slump in oil is over and prices will rebound in the second half of the year, according to analysts.

Standard Chartered expects oil prices to approach US$85 per barrel after July as the oil glut “evaporates” amid a reduction in supplies from the US and Libya. The bank’s new projections are positive on the market’s recovery, but are less bullish than its October outlook, which said prices would reach more than $100 per barrel because of demand from emerging economies.

“Demand is not collapsing,” said Marios Maratheftis, the global head of research at Standard

Chartered, at a conference organised by the Dubai Economic Council yesterday. “We saw a

supply shock, but the excess supply will evaporate from the market even if Opec [decides to

maintain current production levels].”




He said that the excess supply will be less than 1.9 million barrels per day, although he believes it will be “even smaller”. “Even if no more rigs closed down, we think the month-on-month increase of supply in the US will pause by April,” he said.

The UK-based analyst Energy Aspects forecasts prices to increase this year, but more likely to be around $70 per barrel. “Prices have to come back up quickly because of very strong demand, but the longer prices stay low, the slower the balance will be for the market,” Amrita Sen, Energy Aspects‘s chief oil analyst, told The National.

“We expect US production to fall year-on-year, but there’s such a huge inventory so that will take a while to eat through,” Ms Sen said.

“We expect markets to start tightening by the fourth quarter.”

However, the UK-based Oxford Institute for Energy Studies said that a fall in demand from refineries, set to undergo seasonal maintenance around April, could dampen any recovery in the price of crude.

“The [refinery maintenance period] will come in the next couple of months, and this will affect the products as well,” said Bassam Fattouh, director of the UK-based Oxford Institute for Energy Studies, at the conference.

“Refineries are getting cheap crude currently, and they’re making a lot of cheap products. Refinery maintenance will play a bearish factor [on the oil markets],” said Mr Fattouh.




Refineries must go through maintenance periods to switch between seasonal blends such as from winter blend fuels to summer blend fuels. The process usually begins around February and ends around June and this creates less demand for crude oil.

Refining affects inventory levels not only for crude oil, but also for products made from refining such as petrol. “The issue with the European refineries is if the supply of gasoline is higher than the demand, which is what we’re seeing at the moment. So there’s always a risk that lower gasoline prices can feed into crude prices,” said Mr Fattouh.

US shale oil's crash diet likely to bring forward output dip Reuters + NewBase

Shale oil producers are throttling back so quickly on drilling that U.S. crude output could fall sooner than expected, within months, executives say as they slash costs to cope with tumbling crude prices and compete with Persian Gulf rivals.

About a dozen chief executives who talked to Reuters or who spoke publicly, acknowledged they were taken aback by the scale and speed of the cutbacks, noting how this oil price downturn was different from several previous episodes in their careers.




For one, companies are cutting costs deeper and faster than before as Wall Street investors increasingly place a premium on capital discipline rather than just production growth. Some also say the nature of shale makes it easier for companies to defer work and wait for prices to recover. The wells that drove the U.S. energy boom of the last decade rapidly deplete, so overall output will fall unless new holes are constantly bored and oil extracted via hydraulic fracturing, or fracking.

"The thing that has surprised me ... is that companies large and small, financially strong, financially weak have really cut capital spending much quicker than I have seen before," said Bruce Vincent, who retired as CEO of Swift Energy Co this month after 40 years in the industry.

Just few weeks ago, the prevailing view among industry insiders and analysts was that U.S. oil production would keep rising for several months despite falling rig numbers because of rising productivity of active wells and drilling inertia.

In the past, if a producer had a rig contract, they would continue drilling. Now, producers are paying fees to break those contracts, a fact that has hastened the steep drop in the rig count, said Vincent.

LOCKED IN ROCK

In the old days, producers felt compelled to pump in a downturn, fearing competitors with wells in the same reservoir would take the oil. That is no longer a risk as shale is locked in rock.

"(Now) you can leave it in the ground. In the old days you had to produce because everybody was sucking on the same straw,"

Harold Hamm, CEO of Continental Resources, said at a conference in January.

Already, many companies have announced 25-70 percent reductions in drilling and a total of at least $25 billion in spending cuts.

Some went even further. Magnum Hunter Resources Corp has halted all drilling and told services firms it will not resume work unless its costs fall 40 percent, the company's Chief Executive Gary Evans told a conference in Houston.

Such pullback, combined with shale well decline rates of some 60 percent or more a year, has Evans predicting U.S. production will begin falling "in the next two months."

His view is largely echoed by several other executives, though they say their own output will hold up or rise and expect much of the decline come from the shuttering of older, low-yielding wells known as strippers.

Assuming that many drilling contracts will be carried out, the U.S. Energy Information Administration (EIA) still sees output climbing early this year to peak at 9.42 million barrels per day in May, with a decline starting in June.

After nearly doubling since 2008, U.S. crude production should stabilize, though not necessarily decline, in the second half of this year, analysts at IHS said.

Lower output, along with rising gasoline consumption, would help reduce 1.5 million bpd in estimated global oversupply and might allow crude prices to recover from a 50 percent slide since mid-2014.




While some analysts expect the slide to continue for some time, with Citibank predicting U.S. benchmark prices to bottom out at $20 per barrel, industry insiders count on a faster price recovery because of two factors pulling U.S production down.

One is the much faster than expected decline in the number of active rigs. Oilfield services company Baker Hughes said on Friday, nearly 50 rigs were shed last week, bringing the U.S. land rig count to 1250, about the level EIA had forecast would be reached in October.

"There's been a real rapid response, probably faster than I've ever seen," Jack Stark, president of Continental Resources told an IHS conference in Houston this month.

LEANER AND TOUGHER

The rig fleet alone is not the best predictor of output because well lengths and the frequency of fracks along a well have been rising rapidly to boost output. However, in the past few weeks companies have also started to refrain from fracking wells to bring them online, so-called completion, which normally accounts for 60 percent of a well's total cost.

On its fourth-quarter earnings call, Devon Energy Corp. said it had cut its completion crews working in the Eagle Ford oil basin to four from nine, while Anadarko Petroleum said it reduced its completion crews by a third.

After years of breakneck growth, top shale companies Apache Corp and EOG Resources have said their oil and gas output this year will be flat.

Producers who had grown accustomed to oil at $100 a barrel say they aim to cut costs to profitably drill shale wells at $40 a barrel or less. That is well below the $70 now needed to work in some basins and less than current U.S. benchmark crude prices of about $51 a barrel.

The path to slash costs is to pressure service companies - already cutting thousands of jobs - to lower prices as well as rely on technology to speed up drilling and improve well productivity.

"The services companies have always found a way through time to do business," said Stark. "The shale business will continue to exist and this renaissance will continue."

U.S. executives, some of whom proudly call themselves wildcatting "rednecks" from "cowboyistan," say they will come out leaner and meaner from the downturn and be able to better compete with top OPEC producer Saudi Arabia. Many believe the top OPEC oil producer has let

oil prices fall and refused to cut output to squeeze shale rivals out of the market.

"The most ironic thing about what we are in today is the fact that when we emerge from this the Saudis will have toughened up the American oil industry," said one prominent shale oil executive who spoke on condition of anonymity.




NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 24 February 2015 K. Al Awadi

new base 547 special 24 february 2015

Economy & Finance

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