A shake-up of Saudi Arabia's oil leadership by King Salman has introduced a new element of unpredictability to its energy policymaking at a moment when Riyadh is grappling with slumping crude prices and its war in neighbouring Yemen.

State oil giant Aramco has been without a permanent chief executive since April, when Khalid al-Falih was made health minister, and the old Supreme Petroleum Council, where energy policy was historically made, was abolished in January.

While the world's top crude exporter has always prized stability and consistency in crafting oil policy, the changes, alongside a shift in market strategy that contributed to the world price slump, have left analysts and traders guessing as to King Salman's long-term vision.

The main tenets of Saudi oil policy - maintaining the ability to stabilise markets via an expensive spare-capacity cushion and a reluctance to interfere in the market for political reasons - are still set in stone, say market insiders.

But the uncertainty has led to speculation over the fate of both veteran Oil Minister Ali al-Naimi and the wider composition of the kingdom's energy and minerals sectors, with rumours abounding that a sweeping restructure could be imminent.

"There will be changes (at the oil ministry), but no one knows when or what will happen next. It could be tomorrow, next week or a month from now," said a Saudi insider.

"The decisions are being taken by a small circle of people and a few advisers."

The key person in that small circle is Prince Mohammed bin Salman, the young deputy crown prince who without having any previous oil experience has emerged since his father's accession to power as the most powerful figure in Saudi economic and energy policy.

The prince heads both an economic development supercommittee and a new council overseeing Aramco, making him the first royal ever to directly supervise the state oil giant, the world's biggest energy company.

The sense of unpredictability has only been sharpened by the wider geopolitical and market climate.

"It's anybody's guess what will happen next," said a Western diplomat in Riyadh.

http://www.reuters.com/article/2015/09/08/saudi-oil-policy-idUSL5N11D2UW20150908

British oil and gas production is set to rise for the first time in 15 years this year as investment in more efficient technology pays off, the industry's association said on Wednesday.

Britain's oil and gas output has more than halved in the past 10 years due to easy-to-reach resources running low and a lack of investments in new areas.

This trend will likely reverse this year when production is expected to rise 3-4 percent, the first increase since Britain's oil and gas output peaked in 2000, lobby group Oil & Gas UK said.

"Despite a very difficult business climate we are beginning to turn a corner," Mike Tholen, economics director for Oil & Gas UK, told Reuters at the launch of the association's yearly economic report.

"We are turning a corner in terms of the massive spend on North Sea fields pulling production up with it and on top of that we're now begininig to get to terms with the cost base to find ways to make businesses cope in a much weaker environment."

Preliminary government data showed oil and gas output over the first six months of this year rose 3 percent compared with 2014.

The increase comes after years of investments in new technologies that have meant new fields are run more efficiently.

However, the recent slump in oil prices has tightened oil companies' purse strings and Oil & Gas UK expects capital expenditure to fall to 10-11 billion pounds ($16.91 billion)this year, down from 14.7 billion pounds last year.

Low oil prices in combination with high operating costs in the North Sea have caused many operators to question the economic viability of continuing to run some of their oldest fields.

Maersk Oil said last month it would file for early decommissioning permission for its Janice field in the North Sea.

"Inevitably there will be some more fields decommissioned as a result of low prices," Tholen said.

"It's a significant concern but it's not the edge of the cliff."

Bringing down operating costs in the North Sea is a key priority for operators and the British government which hopes a rebound in production will also increase tax revenue.

Since the start of oil production in the 1970s, the industry has paid over 330 billion pounds in taxes to the British government.

Oil & Gas UK expects operating costs to fall by more than 2 billion pounds, or 22 percent, by the end of 2016 as companies work more efficiently.

http://www.reuters.com/article/2015/09/08/britain-oil-production-idUSL5N11E2RT20150908

The wave of defaults and debt restructuring hurting oil bonds around the world looks set to reach China.

Notes of oil services firms are the nation’s worst performers this quarter with a 5.9 percent slide amid record industry debt and slumping crude prices, according to a Bank of America Merrill Lynch index of foreign-currency notes. Explorers have lost 1.4 percent. Some private-sector companies have dropped to distressed levels with the 2019 notes of Honghua Group Ltd. at38.5 cents on the dollar and Anton Oilfield Services Group’s 2018 paper at 44 cents.

China’s quest to secure resources for the world’s second-biggest economy has sparked a fourfold expansion in petroleum industry debt in the past decade to 1.3 trillion yuan ($205 billion). Crude’s14 percent slide this year is adding to stress on energy firms’ finances. Standard & Poor’s says oil and gas companies account for 28 percent of all corporate defaults globally this year, and that they are among the most vulnerable to failures in coming months.

“We see the possibility of a default scenario for private Chinese oil companies in the next year or so given their stretched liquidity," said Annisa Lee, credit analyst at Nomura Holdings Inc. "Some of them will run into trouble if banks don’t roll over their loans. They could resort to debt exchanges to cut coupon costs as well as to extend maturities.”

Obligations at Chinese oil and gas companies have shot up to 29 percent of assets from 19 percent, data compiled by Bloomberg show. The situation is especially tough for private firms because they have less access to funding than state-owned peers, saidSandra Chow, a high-yield bond analyst in Singapore at CreditSights Inc.

http://www.bloomberg.com/news/articles/2015-09-08/oil-default-wave-seen-spreading-to-china-with-40-cent-bonds

Repsol SA, Spain’s largest oil company, said it will postpone maintenance at its joint-biggest refinery, fueling speculation that collapsing crude prices are boosting margins and encouraging European plants to limit routine works.

The company will carry out work at the 220,000 barrel-a-day plant on the Mediterranean Sea at some point in 2016 rather than in the fourth quarter, spokesman Kristian Rix said by phone on Tuesday. He didn’t say if the entire plant will halt or give a reason. The works, when they happen, will last about 45 days and take about 110,000 barrels a day offline, according to Wood Mackenzie Ltd., an Edinburgh-based energy consultant.

The oil-price slump has cut costs for refiners while simultaneously helping boost demand for fuels, buoying profits. From the North Sea to West Africa, crude supply in the Atlantic is poised to jump next month, according to loading programs obtained by Bloomberg. Repsol’s refining margins rose to $9.10 a barrel in the second quarter from $3.10 a barrel a year earlier, the Madrid-based producer said July 30.

“They must make hay while the sun shines,” said Steve Sawyer, a consultant at FGE Energy in London. “It doesn’t come around very often for a refiner, so it doesn’t surprise me at all.”

Low oil prices and demand for heating fuel will support margins for the rest of the year, Lydia Rainforth, an analyst at Barclays Plc, said in a research note Tuesday. Its estimate for margins in northwest Europe, the region’s oil hub, was $5.10 a barrel last week, compared with a negative figure for last year. Its estimate for the Mediterranean was $6.80 a barrel last week.

http://www.bloomberg.com/news/articles/2015-09-08/repsol-postpones-work-on-oil-refinery-in-spain-as-margins-climb

Liquefied natural gas (LNG) spot prices for buyers in Japan, the world's top consumer, averaged $8.10 per million British thermal units (mmBtu) in August, up 20 cents from the previous month, trade ministry data showed on Wednesday.

The rise was largely in line with Asian spot prices, which were mostly higher last month than they were in July.

The price of Asian spot cargoes was around $7.50 per mmBtu on Friday, down 50 cents from a month ago, underscoring how markets have shifted into an era of oversupply.

The trade ministry surveys spot LNG cargoes bought by Japanese utilities and other importers, while excluding cargo-by-cargo deals linked to benchmark prices such as the U.S. natural gas Henry Hub index.

It only publishes a price if there is a minimum of two eligible cargoes reported by buyers. Prices are converted to a delivery-ex ship basis.

The following table lists the monthly average prices in mmBtu for contracted and arriving spot LNG cargoes.
   
  Year   Month   Contract price   Arrival price
  2015     Aug            $8.10           $7.70
  2015    July            $7.90             n/a
  2015    June            $7.60           $7.60
  2015     May              n/a             n/a
  2015   April            $7.60           $7.90
  2015     Mar            $8.00           $7.60
  2015     Feb            $7.60          $10.70
  2015     Jan           $10.20          $13.90
  2014     Dec           $11.60          $15.10
  2014     Nov           $14.40          $14.30
  2014     Oct           $15.30          $12.40
  2014    Sept           $13.20          $11.30
  2014     Aug           $11.40          $12.50
  2014    July           $11.80          $13.80
  2014    June           $13.80          $15.00
  2014     May           $14.80          $16.30
  2014   April           $16.00          $18.30
  2014   March           $18.30             n/a

http://www.reuters.com/article/2015/09/09/lng-japan-spot-idUSL4N11F1DN20150909

Noble Energy today provided new third quarter 2015 sales volume guidance, with the midpoint of the Company's new expectation representing a 10 thousand barrel of oil equivalent per day (MBoe/d) increase over the midpoint of its prior estimate. Following strong volume performance in July and August, the Company has raised its anticipated third quarter 2015 sales volume range to between 360 and 370 MBoe/d. The increase was driven primarily by enhanced well performance and infrastructure expansion in the DJ Basin. In addition, strong production is resulting from the Company's assets in Texas (Eagle Ford and Delaware), Marcellus Shale, Israel, and Equatorial Guinea. Natural gas sales in Israel set a record in August as the Company's Tamar asset averaged more than one billion cubic feet of natural gas per day, gross, for the month.

Gary W. Willingham, the Company's Executive Vice President of Operations, commented, "The expansion of natural gas processing systems in Greater Wattenberg has continued to unlock the productive capacity of our DJ Basin operations. Production from our legacy vertical wells and older horizontal wells are benefitting from substantially reduced line pressures and improved third-party plant uptime. We have also continued to materially grow production from the East Pony Integrated Development Plan, which is primarily crude oil and is entirely handled by Noble Energy owned midstream assets. Strong production performance in our business is resulting from execution momentum and the benefits of operating a high-quality and diversified portfolio, despite reducing capital investment materially quarter over quarter throughout the year."

The third-party Lucerne-2 plant has been tested to a nameplate capacity of 200 million cubic feet of natural gas per day (MMcf/d). Addition of the Lucerne-2 plant has expanded total system natural gas processing capacity to 840 MMcf/d, resulting in line pressures being reduced by between 50 and 100 psi in various parts of Greater Wattenberg while also providing additional capacity for future growth. Noble Energy's net DJ Basin production has averaged approximately 115 MBoe/d through the first two months of the third quarter of 2015.

http://finance.yahoo.com/news/noble-energy-increases-third-quarter-113412437.html

A net 19.3 million shares of the biggest exchange-traded fund that tracks oil were sold back, a weekly record since the ETF’s inception in 2006, according to data compiled by Bloomberg. Total shares outstanding dropped to 176 million on Sept. 4, the lowest since Aug. 11.

Investors withdrew from the fund as oil’s trading volatility reached the highest since March last week. The weekly redemption represents an outflow of $290.9 million, the most since December 2013.



“There’s a lot of volatility in the market,” said Carl Larry, head of oil and gas for Frost & Sullivan LP in Houston. “We are seeing money being pushed away from oil.”

The CBOE Crude Oil Volatility Index, which measures the volatility of the ETF, increased to 57.51 on Sept. 1, the highest since March 17.
 
The U.S. Oil Fund, which holds West Texas Intermediate futures, slipped 0.4 percent Tuesday to $15.02. WTI crude lost 0.2 percent to $45.94 a barrel on the New York Mercantile Exchange.
 
The ETF is down 26 percent this year, compared with a 14 percent decline for front-month futures. The fund’s performance is trailing oil because the market is in contango, meaning futures for delivery in later months trade higher than nearby contracts. The structure erodes gains as the ETF sells the expiring contract and buys the more expensive next-month futures.

http://www.bloomberg.com/news/articles/2015-09-09/investors-flee-biggest-u-s-crude-oil-fund-as-volatility-surges

A US House Energy and Commerce subcommittee is expected Thursday to approve a bill to lift all limits on US crude exports.

The House energy and power subcommittee is scheduled to vote on a bill from Texas Representative Joe Barton, a Republican, to repeal these limits, which have been in place for roughly four decades.

In a joint statement, Michigan Representative Fred Upton, a Republican and the full committee's chairman, and Kentucky Representative Ed Whitfield, a Republican and the subcommittee's chairman, said current limits on US crude exports have become "obsolete."

"We have taken a thoughtful approach to reconsidering oil exports, and the time to lift the ban is now," Upton and Whitfield said.

The subcommittee vote, which will be the first of its kind in the House, is expected to set up a potential full House vote as early as this month. There are enough votes in the House for the bill to pass easily, according to congressional staffers. Barton's bill currently has 113 co-sponsors, including 13 Democrats.

The path is much less clear in the Senate, congressional staffers and lobbyists claim.

The Senate Energy and Commerce Committee in July approved a bill from Alaska Senator Lisa Murkowski, a Republican and the committee's chairman, which includes a provision to repeal existing limits on US crude exports.

Senate Majority Leader Mitch McConnell, a Kentucky Republican, has indicated that he will not bring any crude export bill to the Senate floor until he has assurances that it has 60 votes to pass, sources have said.

http://www.platts.com/latest-news/oil/washington/us-house-panel-set-to-approve-crude-oil-exports-21094523

Continental Resources, Inc. (CLR) (Continental or the Company) today announced plans to spend approximately $300 to $350 million less than its previously approved capital budget for 2015 to better align spending with cash flow at current commodity prices. The Company plans to defer well completion activity, except for where it has contractual considerations or it accomplishes specific strategic objectives. Continental is also reducing its operated rig count in the Bakken from 10 to eight rigs by the end of the month.

"While we do not believe today's low commodity prices are sustainable long term, we are committed to living within cash flow until they recover," said Harold Hamm, Chairman and Chief Executive Officer. "We are reducing capital expenditures to protect our balance sheet and to preserve the value of our world-class assets until commodity prices improve."

The Company's 2015 guidance remains unchanged.  Continental continues to expect production growth of 19% to 23% for the year, compared with 2014, but now expects to exit the year with production in a range of approximately 200,000 to 215,000 barrels of oil equivalent (Boe) per day. The bottom end of the range is 10,000 Boe per day below its previously stated outlook, reflecting an increase of inventory from the previously expected 100 gross operated wells that are drilled but not yet completed at year-end 2015 to the current estimate of 160 gross wells drilled but not yet completed at year-end 2015.  Maintenance capital to maintain 2016 production at the 2015 exit rate is now projected to be $1.6 to $2.0 billion.

"We continue to focus on achieving cash flow neutrality in the current environment," said John Hart, Chief Financial Officer. "We believe it is in the interest of shareholders to defer new production growth until we see stronger commodity prices. We can achieve this objective due to our focus on costs, operating efficiencies and having a large portion of our high-potential leasehold already held by production," he said.

"We are pleased with our results year-to-date, and operating performance versus guidance remains strong, especially in terms of production growth and cost controls. Annual production growth is expected to be toward the top end of our guidance range, even with deferred completions," he said. "Production expense per Boe and general and administrative expense per Boe are also trending positively toward the low end of guidance. Lower capex spending and excellent operating performance should position us to be cash flow neutral for the remainder of 2015 in an environment of approximately $50 per barrel for West Texas Intermediate. In a $40 per barrel WTI environment, our updated spending outlook would result in capital expenditures being approximately $150 million over cash flow.  We continue to have ample liquidity with approximately $1.3 billion available under our credit facility at August 31, 2015, basically in line with our June 30, 2015 balance."


http://finance.yahoo.com/news/continental-resources-reducing-2015-capital-201000523.html

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Attached Files

On August 1, the Rockies Express Pipeline reversed its direction on a portion of the pipeline called Zone 3 and began flowing 1.8 billion cubic feet per day (Bcf/d) of Marcellus and Utica Shale gas to the Midwest . REX Zone 3 stretches from Clarington, OH to Mexico, MO (see the map). Further good news. The Federal Energy Regulatory Commission (FERC) has granted a favorable Environmental Assessment (EA) for REX to beef up capacity along Zone 3 by expanding two existing compressor stations and building three new compressor stations along the Zone 3 section.

http://marcellusdrilling.com/2015/09/reversed-rex-pipeline-from-marcellusutica-to-midwest-will-expand/

Amid the corn and canola fields of eastern Saskatchewan, oil foreman Dwayne Roy is doing what Saudi Arabia and fellow OPEC producers are loath to do: shutting the taps on active wells.

Inside a six-foot-square wooden shed that houses a basic hydraulic pump, the Gear Energy Ltd employee demonstrates how shutting down a conventional heavy oil well in this lesser-known Canadian oil patch is as simple as flipping a switch. His company has already done so hundreds of times this year, making the Lloydminster industry among the first in the world to yield in a global battle for oil market share that has sent crude prices tumbling to six-year lows.

Gear Energy Ltd, has idled up to 500 of its least efficient wells this year, many of them in the past weeks. Some cost of up to C$28 ($21.22) a barrel to operate. It costs another C$7 in royalty and transportation fees to get the crude, among the densest in the world, to regional rail hubs - where it was fetching barely $20 a barrel during last month's lows.

"We ask every day: is this well making money today? Will it make us money going forward?" says Roy.

Such questions have been nagging oil industry veterans since crude prices started sliding last year as a result of a supply glut caused by a battle between exporters' group OPEC and North American shale oil producers.

Energy firms around the world have responded by laying off thousands of workers and slashing spending by billions of dollars. But producers here are the first to do what the global market needs to rebalance: turn off the taps.

All told, at least 8,000 barrels per day (bpd) of local heavy conventional oil production has been idled by firms such as Gear, Canadian Natural Resources Ltd and Baytex Energy Corp this year.

So far their actions are merely symbolic - the output loss represents less than a rounding error in a global market that produces 95 million barrels each day.

Yet if prices stay low, other firms such as Husky Energy and Devon Energy could also shut in similar wells that produce conventional heavy crude, which accounts for roughly 11 percent of Canada's 3.7 million bpd output.

http://www.reuters.com/article/2015/09/08/canada-crude-shut-ins-idUSL1N11A1VA20150908