New drilling activity in the Permian Basin is offsetting the rapid decline in legacy production, but as pipeline capacity becomes constrained, the discount of West Texas crude to WTI at Cushing, Okla., could widen from $3.50 per barrel now to $6 per barrel later this year, according to Lipow Oil Associates President Andy Lipow. Permian drillers added 122 drilled-but-uncompleted wells in March, down from 130 in February, and production in the region is expected to hit an all-time high of 3.18 million barrels per day in May, according to the Energy Information Administration.
Norway's oil production in March averaged 1.5 million barrels per day, about 5% lower than the Norwegian Petroleum Directorate's forecast. The energy regulator, which said natural gas production in March was 1.1% below expectations, blamed the oil-production decline on technical problems at some oilfields.
Oilfield services firms will likely report disappointing first-quarter results as severe winter conditions, limited opportunity to increase prices and overcapacity in hydraulic fracturing fleets take a toll on earnings despite Wall Street's expectations for a comeback. "There were substantial improvements in the second half of last year, but we took a surprising pause in the fourth and first quarters due to winter impacts," Bernstein analyst Colin Davies said.
The Illinois Senate's Environment and Conservation Committee voted 6-2 in favor of a hydraulic fracturing transparency bill that would require companies to reveal all chemicals used in fracking. The full state Senate was scheduled to hold a reading of the bill on Tuesday.
Interior Secretary Ryan Zinke said Tuesday he will not slash the current offshore royalty rate of 18.75% despite recommendations from an advisory panel made up of energy industry representatives to cut the rate to 12.5% in an effort to encourage offshore drilling. "Right now, we can maintain higher royalties from our offshore waters without compromising the record production and record exports our nation is experiencing," Zinke said.
President Donald Trump is seeking NAFTA amendments that could make it more difficult for US energy companies to invest in projects designed to sustain the wave of US natural gas exports to Mexico, jeopardizing the US export boom. Mexico is the biggest importer of US natural gas and America's No. 2 trading partner, with Texas exporting $26 billion worth of US energy goods to the country each year.
As shale production continues to grow, a significant share of US light oil supplies may be left stranded amid limited export opportunities and as American refiners approach their maximum capacity to process light crude, according to Morgan Stanley. This means traders could be forced to sell US light crude at a lower price to stay competitive and gain global market share.
US crude stockpiles unexpectedly fell last week by 1 million barrels, while gasoline and distillate supplies also plunged by almost 2.5 million barrels and 854,000 barrels, respectively, according to the American Petroleum Institute.
Proserv will upgrade subsea production control equipment at the Yme oilfield in the Norwegian North Sea for Repsol. The service company has a $5.5 million contract to provide high-speed data management capabilities and make topsides and subsea equipment over the next two years.
Australia's Northern Territory has ended a hydraulic fracturing ban enacted in September 2016. The territory's decision opens up onshore natural gas reserves in areas such as the Beetaloo Basin, where Origin Energy says it will resume drilling efforts.