Oil fell as two of the world’s biggest producers stopped short of making concrete proposals to coordinate output, pledging instead to cooperate to ensure market stability.

Futures lost as much as 0.9 percent in New York. Saudi Arabia and Russia agreed to work together to stabilize prices, without offering details on joint action, after Deputy Crown Prince Mohammed bin Salman and President Vladimir Putin met in China on Sunday. Crude rose the most in two weeks on Friday as Putin said he’d like OPEC and Russia to agree to an output freeze.

Oil rallied last month amid speculation members of the Organization of Petroleum Exporting Countries and other producers would agree to a plan to limit output when they meet later this month in Algiers. A similar proposal, originally put forward in February, was derailed in April after Iran declined to cap its production.

“At this stage, markets are probably just going to take the view that it needs to see some evidence, some tangible idea on what the agreement might actually amount to before responding to it,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “We will get a lot of statements about it but probably nothing really concrete until we get to the stage of the Algiers meeting.”

OPEC Record

West Texas Intermediate for October delivery fell as much as 38 cents to $44.06 a barrel on the New York Mercantile Exchange and traded at $44.28 at 1:52 p.m. in Hong Kong. The contract rose $1.28 to $44.44 on Friday, the biggest gain since Aug. 18. Total volume traded was about 48 percent below the 100-day average.

Brent for November settlement lost as much as 43 cents, or 0.9 percent, to $46.40 a barrel on the London-based ICE Futures Europe exchange. The contract added 3 percent to $46.83 a barrel on Friday. The global benchmark crude traded at a $1.85 premium to November WTI.

Putin said in an interview last week in Vladivostok that other producing countries now recognize Iran should be allowed to continue raising output since it was freed just months ago from international sanctions. The Russian president said at the time that he may recommend such a plan when he met with Prince Mohammed.

Saudi Arabia led OPEC’s decision in 2014 not to cut output amid a global glut in order to protect market share and force out higher-cost producers. Group production rose to a record 33.69 million barrels a day in August, just under a third of global demand, a Bloomberg survey showed last week.

http://www.bloomberg.com/news/articles/2016-09-04/oil-holds-above-44-as-saudi-arabia-russia-agree-to-stability

China's oil demand fell to 11-month lows in July on the back of erratic weather and feeble industrial growth, crushing hopes of a recovery in consumption which the market had expected after the country in June pulled itself out of the red for the first time in many months.

But analysts are hopeful that the fall would be temporary and demand would recover in the remaining months of the year.

Total apparent oil demand in the world's second-largest oil consumer fell to 10.75 million b/d in July, dropping 6.9% from June and witnessing the steepest year-on-year decline of 5.4% since January 2009, S&P Global Platts calculations showed.

China's apparent oil demand in June had increased 1.8% year on year to 11.54 million b/d, which was 6.1% higher from May.

"Apparent demand was dragged down by record high oil product exports in July, at around 860,000 b/d, a further reflection of overflowing supplies, overwhelming refiners," said Song Yen Ling, senior analyst at Platts China Oil Analytics.

Demand for key oil products grew either in single digits or fell year on year in July.

LPG, naphtha and jet fuel have largely been registering double-digit year-on-year growth in recent months.

The slowdown in July pulled down apparent oil demand over the first seven months by 1% year on year to 11.12 million b/d, lower than the average of 11.19 million b/d seen in the first half of the year.

Analysts said China's July real economic activity had disappointed, but they thought that would be temporary.

Manufacturing PMI edged down to 49.9 last month from 50 in June, dipping below the 50 mark for the first time since March 2016, with value-added industrial production growing at 6% year on year, which was slower than the growth rate of around 6.2% in June.

Fixed asset investment growth also softened to 8.1% in the year to date, slowing significantly from 9.8% in June and from 9.6% in May.

Growth in fixed asset investment and industrial output are related to energy consumption.

The National Bureau of Statistics partly attributed the slowdown to extremely hot weather and heavy rains following flooding.

Citing government data, Standard Chartered Bank said around 60 million people were affected by flooding in July.

The bank expects a modest pick-up in growth in H2, supported by post-flooding reconstruction, although sluggish private investment poses downside risks.

GASOLINE'S SHARP FALL

Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly product output at Chinese refineries and net imports.

Apparent demand for gasoline in July fell by 4.1% year on year to 2.62 million b/d, the sharpest year-on-year fall since March 2010. It was also 5.45% lower than the average of 2.78 million b/d over the first seven months. Actual consumption would probably still witness single-digit growth because of destocking.

In addition, extremely hot weather encouraged gasoline consumption for air-conditioners, which could partly offset the fall in demand because of heavy rains.

The National Reform and Development Commission on August 26 said China's gasoline consumption in July increased 5.8% year on year.

Gasoline demand also found some support from a 25.3% year-on-year increase in sales of gasoline-guzzling sport utility vehicles, which jumped 47.8% year on year in July, according to data from the China Association of Automobile Manufacturers.

Moreover, gasoline stocks at the end of July retreated by 2.2% from the end of June, according to Xinhua.

Actual gasoline demand also include blended gasoline, in addition to the barrels produced from the refining sector. Blended gasoline is not included in apparent demand calculations because of a lack of official data.

It is hard to tell how many barrels of blended gasoline flowed in to domestic market in July, but heavy imports of mixed aromatics in 2016, used as blending material for gasoline, indicated the volume was unlikely to be low. China in July imported 669,737 mt of mixed aromatics, helping total inflows in the first seven months to surge 160% year on year to 7.41 million mt, data from the General Administration of Customs showed.

Almost all of China's mixed aromatics imports go into the gasoline blending pool, with 3 mt of mixed aromatics needed to blend 10 mt of gasoline.

GASOIL, JET FUEL

Gasoil in July was also hit by hot weather and heavy rains, which disrupted construction, mining and transportation, pulling down apparent demand by 8.8% year-on-year in July to 3.17 million b/d, lower than the average of 3.3 million b/d in the first seven months and only slightly higher than the recent 70-month low of 3.14 million b/d recorded in May.

The NDRC said that China's gasoil consumption in July fell 4.1% year on year.

According to data compiled by Xinhua, China witnessed a 3.53% month-on-month gasoil inventory increase by the end of July, following a 6.29% stock draw at the end of June, It suggested that actual consumption would be lower than implied demand.

Sinopec's chairman Wang Yupu said Monday that demand for gasoil was expected to fall further in line with structural changes in the Chinese economy.

Apparent demand for jet fuel edged up by 1.5% year on year to 766,000 b/d in June, lower than the average demand growth of 7.4% year on year to 753,000 b/d in the January to July period.

The slow growth in July was mainly due to heavy rainfall in the central and eastern regions in China, which resulted in widespread flight cancellations.

The latest data from the Civil Aviation Administration of China showed that overall aviation traffic turnover continued to register growth, rising 14.1% year on year in June and by 12.5% in the first six months.

NAPHTHA, LPG

Apparent demand for naphtha in July was at 949,000 b/d, with year-on-year growth dropping to 0.6% from double-digit levels over the previous eight months.

But the slower growth rate was mainly because of a high base registered in July 2015.

Apparent demand was still considered healthy, with average consumption hovering at 978,000 b/d in the first seven months, gaining 15.6% year on year. The growth was attributed to increasing production from independent refineries, which are increasingly using light feedstock to generate more light-end products than before. Production of naphtha rose 9.7% from July 2015, to 822,000 b/d.

Inflows were mainly used as feedstock to produce ethylene, output of which grew 0.3% in last month to 1.46 million mt. This may explain the reason for the 34.7% year-on-year decrease in naphtha imports in July.

Apparent demand for LPG rose 9.1% year on year to 1.48 million b/d in July, which was actually the lowest since March, and lower than the average of 1.51 million b/d for the first seven months of 2016.

Market sources said actual consumption in July should be higher despite demand from the residential sector remaining low. Propane dehydrogenation plants were actually running at very high operation rates because of healthy profit margins, but the plants were consuming their existing stocks which were imported in previous months instead of processing new inflows.

http://www.platts.com/latest-news/oil/singapore/analysis-after-brief-resurgence-chinas-oil-demand-27662351

Iran is ready to raise its oil production to 4 million barrels per day (bpd) in the next two to three months depending on market demand, a senior official from the National Iranian Oil Company (NIOC) said on Monday.

"We can increase crude production based on market requirement," Seyed Mohsen Ghamsari, the director for international affairs at NIOC, said at the Argus Crude Forum.

Iran's plans to return output to pre-sanctions levels of more than 4 million bpd comes just ahead of an informal meeting later this month among members of the Organization of the Petroleum Exporting Countries (OPEC) in Algeria, where they are expected to seek to revive a deal on freezing global output.

OPEC's third-largest producer is currently producing a little over 3.8 million bpd, Ghamsari said.

Attempts by OPEC and non-OPEC oil exporters to reach a pact on stabilising output levels earlier this year foundered because Iran, which is anxious to increase exports after the lifting of international sanctions, declined to participate.

Tehran's aggressive moves to recoup market share that was lost under international sanctions targeting its nuclear programme has paid off in Asia, where its four biggest buyers raised their imports by 61 percent in July versus a year ago.

Iran is also eyeing shipping supplies to new Chinese crude buyers via trading company Trafigura.

Looking ahead, NIOC may raise its production capacity to 4.3 million bpd in the first quarter next year and eventually reach 5 million bpd in two to three years, Ghamsari said, noting that the bulk of any new production would be heavy crude.

"We believe that the market is more in favour of heavier grades and that's why we are going to introduce a new one."

http://www.reuters.com/article/iran-oil-idUSL3N1BH1QK

China increased its strategic crude oil reserves by 22.5 percent between the middle of last year and the start of 2016, taking the total to 31.97 million tonnes (233 million barrels), the National Statistical Bureau said on Friday.

The volume, equivalent to about 33 days of net oil imports to China, was higher than analysts had estimated.

"Stockpiling over the second half of 2015 was faster than our calculation," Sengyick Tee of SIA Energy said. "The numbers look like more till the first quarter, mostly likely also including stockpiling by some independents."

In its last update in December 2015, the government said it had 26.1 million tonnes, or about 190.5 million barrels, stockpiled by mid-2015.

The world's largest consumer bought the crude as global prices sank 40 percent in the second half of 2015 to below $40 per barrel, testing fresh multi-year lows on evidence of a growing worldwide glut.

The reserve is closely watched by analysts as a gauge of what proportion of China's oil imports is going into the reserves and how much is being refined and consumed.

Stockpiling should pick up significantly in the fourth quarter, but slower oil demand and some delays in preparing storage tanks will likely drag on the growth rate, according to Michal Meidan of Energy Aspect.

The current data includes strategic and some commercial stockpiles, the statistic bureau said. The government did not release a breakdown of the figure.

Reuters reported that a private company has signed a preliminary agreement to provide oil storage for 2.6 million barrels of commercial state crude reserves.

China intends to build crude reserves of 550 million barrels by 2020.

http://www.reuters.com/article/china-oil-reserve-idUSL3N1BE2W2

Rosneft, BP and Schlumberger have reached a deal on joint research and development of seismic exploration technologies.

A RIA Novosti correspondent reported Friday from the signing ceremony. The document provides for Rosneft to become a full partner in a project carried out by BP and Schlumberger subsidiary WesternGeco on wireless seismic data acquisition on land.

Read more: http://sputniknews.com/business/20160902/1044879887/rosneft-bp-schlumberger-deal.html

Asian liquefied natural gas (LNG) prices fell in a slow week as traders awaited the outcome of two tenders and Argentina turned away shipments due to mild weather curbing demand.

A major tender expected from Egyptian Natural Gas Holding (EGAS) to buy 120 cargoes for 2017, which sources said could be launched this weekend, was the market focus.

Bids under the Brent-priced tender will be due by October and awards are to be finalised by the end of November at the latest, one trading source said.

"They are trying to extend credit terms to 120 days," he added. In December EGAS extended payment terms to 90 days from the previous 15 days due to a foreign currency crisis.

Asian spot prices for October delivery traded at $5.30 per million British thermal units (mmBtu), 20 cents below last week's levels, trading sources said.

Gail India is set to award a purchase tender for one October cargo on Friday, while Exxon Mobil's Papua New Guinea LNG export plant is offering a cargo loading in late September.

Several cargoes changed hands in tenders.

Indian Oil Corp bought two for October, and Conoco Phillip's Darwin project in Australia sold one each to Trafigura and Gunvor on a free-on-board basis, at $5.10 per mmBtu, traders said.

BP sold a October cargo to Turkey's EGE Gaz for around $5.20 per mmBtu, trade sources said.

On supply, Indonesian liquefaction plants at Bontang and Donggi Senoro offered additional shipments to their long-term partners and possibly spot buyers.

The giant Gorgon facility in Australia is also set to offer more cargoes though spot tenders. The second production line at Gorgon is due to start up in the fourth-quarter and the third is to begin in the second-quarter 2017, a Chevron spokesman said.

Angola LNG, shut for maintenance since July, may resume output before late September as two vessels, the Lobito and Soyo, are due to arrive at the plant by mid month, shipping data shows.

Nigeria LNG shook off production disruptions caused by a pipeline leak last month with vessels now leaving the plant regularly.

"The September loading programme shows no disruption to supply," one source said.

In mid-August the plant canceled cargoes earmarked for project stakeholders, including 4-5 cargoes for Shell, 1 for Enel and 2 for Total, trade sources said.

Algeria's Sonatrach was still heard offering cargoes for October loading, traders said.

Argentina's state-run buyer Enarsa said it had canceled one shipment and delayed three cargoes until next year because of one of the warmest Augusts in a decade.

http://www.reuters.com/article/global-lng-idUSL8N1BE2O5

Russian gas giant Gazprom said on Sunday it had signed a contract with China National Petroleum Corp (CNPC) to build a section of the Power of Siberia gas pipeline under the Amur river.

Gazprom CEO Alexei Miller and CNPC President Wang Yilin inked the deal at a meeting on the sidelines of the G20 summit in the eastern Chinese city of Hangzhou, Gazprom said in a statement.

CNPC's pipe-building unit, China Petroleum Pipeline, will carry out the construction, Gazprom said.

http://www.reuters.com/article/us-g20-china-gazprom-cnpc-idUSKCN11A0IU

Petrobras rose the most in three weeks after completing a voluntary dismissal program to help reduce debt and adjust operations to lower oil prices.

The dismissal plan ended on Aug. 31 with 11,704 employees signing up, Petrobras said in a statement Friday, adding that the numbers may change. It is in line with the offshore-producer’s original plan to save 33 billion reais ($10 billion) through 2020 by shedding 12,000 jobs. The initial severance cost is estimated at 4 billion reais, it said.

Shares rose as much as 4.5 percent, the most since Aug. 11, and were up 3.7 percent at 13.88 reais at 11:32 a.m. local time. The company has slashed investments and kept domestic fuel prices stable amid the oil rout to improve cash flow and cut the largest debt load in the industry. The administration of President Michel Temer has pledged to reduce government interference in the state-run producer and implement policies aimed at lowering costs and increasing competition in the industry.

Petrobras’s stock price has doubled in price this year after sinking to the lowest since 1999 in January.

The country’s main oil union says the cuts are causing a brain drain at a company that needs experienced staff to extract crude from deep waters of the Atlantic Ocean. In 2013, Petrobras and its subsidiaries had a payroll of about 86,000.

"The company is giving up a work force of 20,000 in only two, three years. You would need more than a decade to restore this kind of knowledge," Jose Maria Rangel, a leader at the FUP oil workers’ federation, said in a phone interview from Rio.

Petroleo Brasileiro SA, as it is formally known, said it has implemented management training programs to guarantee the continuity and safety of operations as it cuts staff.

http://www.bloomberg.com/news/articles/2016-09-02/petrobras-sheds-11-704-employees-in-1-2-billion-dismissal-plan

Australian energy company Woodside has entered into binding sale and purchase agreements to acquire half of BHP Billiton’s Scarborough area assets in the Carnarvon Basin, located offshore Western Australia.

The acquisition includes a 25% interest in WA-1-R and a 50% interest in WA-62-R, which together contain the Scarborough gas field. Woodside will also acquire a 50% interest in WA-61-R and WA-63-R which contain the Jupiter and Thebe gas fields.

Woodside will operate WA-61-R, WA-62-R, and WA-63-R. ExxonMobil is the operator of WA-1-R.
Woodside will pay BHP Billiton $250 million on completion of the transaction and a contingent payment of $150 million upon a positive final investment decision to develop the Scarborough field. The effective date of the transaction is July 1, 2016.

According to Woodside, the Scarborough area assets include the Scarborough, Thebe, and Jupiter fields, which are estimated to contain gross 8.7 trillion cubic feet of gas resources at the 2C confidence level. Woodside’s net share of the resources is estimated to be 2.6 trillion cubic feet of gas.

Woodside CEO Peter Coleman said that adding Carnarvon Basin volumes to the Australian portfolio would complement Woodside’s growth strategy and leverage the company’s deepwater and LNG capabilities.

“We look forward to working with ExxonMobil and BHP Billiton following completion of the transaction to progress commercialisation of these world-class resources,” he said.

BHP Billiton President Operations, Petroleum, Steve Pastor said: “BHP Billiton considers the proposed sale to Woodside to be a positive outcome for all parties. Woodside is a strong partner with substantial LNG experience in Western Australia, and we believe they will contribute positively to the future development of the Scarborough resources.”

Completion is subject to pre-emption rights and customary regulatory approvals and is targeted by year end 2016.

http://www.offshoreenergytoday.com/woodside-buys-scarborough-stake-from-bhp-billiton/

Fourteen drilling rigs were added to onshore oil and gas fields this week, while seven offshore rigs were evacuated the Gulf of Mexico as Tropical Storm Hermine took shape.

The net gain for the amount of rigs actively drilling is eight rigs — including the addition of one inland waters rig — with seven of the net additions drilling for natural gas and one primarily seeking oil, according to the weekly count from the Baker Hughes oilfield services firm. However, the oil rig count’s net gain is skewed because most of the evacuated offshore rigs likely were drilling for oil.

The biggest gains came in Texas, Oklahoma and Wyoming. Texas’ Permian Basin and Eagle Ford shale regions each saw three rigs added this week. Nearly half of the nation’s active rigs are in Texas — 241 out of 497 rigs. The Permian alone accounts for 202 active rigs.

The oil rig count stayed flat in the week prior after eight previous weeks of increases.

The total rig count now is 497, up from an all-time low of 404 in May, according to Baker Hughes. Of the total, 407 of them are primarily drilling for oil. But the oil rig count is down 75 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.

http://fuelfix.com/blog/2016/09/02/oil-rig-count-sees-small-hike-despite-rigs-evacuating-the-gulf/

Drillers across the state added about 100 new jobs in July, the first monthly gain since the Texas energy industry’s employment figures began falling dramatically in January 2015, economist Karr Ingham says.

Texas upstream companies – oil producers, service companies and rig contractors – had shed more than 102,000 jobs since the beginning of last year, piling on losses month after month, but July’s small increase may be a sign things are finally turning around for the state’s energy workforce.

“It’s not spectacular, but it’s a gain rather than a loss,” Ingham said. Ingham has not yet released the Texas Petro Index, a monthly report he prepares for the state’s oil industry. “I believe it’s a recovery in the making, but it’s a slow, frustrating and torturous one because prices aren’t going up as much as most people hoped. But the first thing was the bleeding had to stop, and it looks like we may be at that point.”

A worker waits to connect a drill bit on Endeavor Energy Resources’s Big Dog Drilling Rig 22 in the Permian basin in 2014. (Brittany Sowacke/Bloomberg)

Ingham noted the Texas Petro Index, which measures drilling and related activity in Texas, still contracted in July. August and September may yield bigger bumps in drilling activity metrics and jobs, though: Oil companies have resurrected 68 rigs across Texas in the past four months, bringing the state’s rig count to 241. Drilling permits in Texas also are on the rise.

In the downturn, falling oil prices forced Texas oil companies to set down 733 rigs across the state as they cut jobs by the thousands. It was “a set of falling dominos,” Ingham said. “They’re being set up again.”

Ingham, an Amarillo economist who studies the upstream oil industry in Texas, makes adjustments to Texas Workforce Commission numbers to reach his conclusions, stripping out some official figures associated with statewide mining jobs.

http://fuelfix.com/blog/2016/09/02/texas-drillers-added-jobs-in-july-for-first-gain-in-19-months/

Oil wells in the biggest U.S. oil field remain profitable even when crude prices drop below $30 a barrel, said Pioneer Natural Resources Co. Chairman and Chief Executive Officer Scott Sheffield.

The so-called break-even price for drilling in the Permian Basin in Texas is “sub-$30” a barrel, Sheffield said during a Bloomberg Television interview on Friday. For shale drillers such as Irving, Texas-based Pioneer, “break-even” typically means operating costs plus a 10 percent or 15 percent return.

Pioneer closed a $435 million acquisition of drilling rights across 28,000 acres in the Permian region from Devon Energy Corp. earlier this week. When the transaction was announced in June, Pioneer said wells drilled in the acquired assets will generate returns of 50 percent or more.

http://www.bloomberg.com/news/articles/2016-09-02/permian-oil-fields-turn-profit-with-oil-below-30-pioneer-ceo

Canadian small-cap oil and gas stocks are poised to outperform U.S. peers as their moves to cut costs and lower debt begin to gain traction with analysts and investors.

Analysts have increased their price targets for Canadian producers with market valuations of up to C$2 billion ($1.5 billion) more than equivalent U.S. peers. Canadian companies are expected to gain 21 percent over the next 12 months, compared with 13 percent for U.S. competitors, according to data compiled by Bloomberg.

That valuation gap has made Canadian companies including Bonterra Energy Corp., Torc Oil & Gas Ltd. and Vermilion Energy Inc. attractive buys relative to U.S. peers, said Swanzy Quarshie, a money manager at Sentry Investments in Toronto.

“There’s a lot more value in Canada because Canadian businesses’ capital requirements have gone down significantly,” said Quarshie, who helps oversee C$18 billion in assets. “The stocks are really well priced.”

The higher price targets suggest the Canadian energy stocks may reverse six months of lagging returns. U.S. stocks have gained 34 percent more than their Canadian peers in the six months to Aug. 31, according to the data, which analyzed 59 Canadian companies.

Two years into a commodity-price downturn, executives in Canada’s oil and gas hub have sold assets, raised equity and looked for ways to scale back costs. Investment since the slump began in 2014 has been slashed the most since 1947, according to the Canadian Association of Petroleum Producers.

Low Costs

Canadian companies remember the importance of controlling debt and keeping costs low from the collapse of petroleum prices after 2008 and the recession that followed, said Robert Mark, director of research at MacDougall, MacDougall, McTier in Toronto, which oversees C$6 billion in assets.

“There’s definitely better upside on the Canadian side,” he said “The Canadian guys learned their lesson post-2008.”

Investors gave a boost to U.S. shale producers over the past two quarters as crude almost doubled from a 12-year low in February to almost $50 a barrel in June. That encouraged some companies including Oklahoma City-based Continental Resources Inc. to return crews to finish wells left uncompleted when prices began to tumble two years ago.

Continental’s shares have more than doubled over the past six months, while Oasis Petroleum Inc. of Houston has gained 69 percent. Canadian share gains have been modest in comparison.

Vermilion Gains

Vermilion has risen 26 percent over the past six months. The company, while posting a loss in the second quarter, has targeted as much as C$50 million in cost reductions and has lowered per unit expenses by 18 percent. Vermilion has exposure to global prices and “flexibility to allocate capital,” said Kyle Preston, a company spokesman. The producer expects a “modest” increase in spending next year, he added.

Torc Oil & Gas Ltd. has gained 21 percent over the same period. The Calgary-based producer arranged financing worth C$75 million as part of a bought deal, has a bank facility of C$400 million and has hedged as much of 60 percent of its production against commodity price fluctuation. Chief Financial Officer Jason Zabinsky wasn’t available to comment.

“The Canadian oil and gas space continues to look more attractive than the U.S. space on most 2017 metrics,” Chris Feltin, an analyst at Macquarie in Calgary, wrote in a note. “Many companies have taken dramatic steps over the last year to address their leverage issues, including asset sales, more focused capex programs, and opportunistic hedging.”

Birchcliff, which has gained 74 percent in the past six months, is the “most attractive name” in North America, Feltin said. The company in July purchased assets from Encana Corp. in Alberta’s Gordondale region, giving a boost to the stock whose largest shareholder is resource investor Seymour Schulich.

Price Sensitive

Smaller oil producers are generally more responsive to fluctuations in commodity prices than larger companies such as Suncor Energy Inc. and their prices have more potential to rise along with petroleum, analysts said.

Still, there may yet be trouble ahead for Canadian petroleum companies. The rebound in U.S. crude prices from a low of about $26 a barrel this year hasn’t pushed oil high enough for most companies to start investing in new production.

Oil has recovered almost 70 percent from the February doldrums, and recently fell below $45. Most companies say they need prices to rise to between $50 and $60 before new investment can be considered.

In addition, investors have raised concerns about a sinking Canadian dollar, pipeline access and increased regulation. Those have helped keep stock gains in check.

For now, if oil continues its slow climb back to more than $50 by the first quarter of 2017, as forecast by analysts surveyed by Bloomberg, Canadian producers’ parsimony and careful approach will pay off.

“There’s more impetus for Canadian companies to be prudent,” said Quarshie. “They’re at the back of the line in getting product to market.”

http://www.bloomberg.com/news/articles/2016-09-02/canada-s-small-cap-energy-stocks-set-to-outpace-u-s-in-catch-up

The Ohio Dept. of Natural Resources (ODNR) has just issued production numbers for the second quarter of 2016. 

Compared with second quarter 2015, production numbers in 2Q16 were a mixed bag. Oil production in 2Q16 dropped by 19%–that’s the bad news. But natural gas production from shale is up 51% year over year–that’s the good news. 

CONSOL Energy’s CNX Gas division had the #1 producing gas well in Monroe County, the Brewster well, producing 1.6 billion cubic feet of natgas during 2Q16. 

Eclipse Resources had the #1 producing oil well in Guernsey County, the monster Purple Hayes, which produced an astonishing 71,072 barrels of oil in 2Q16. 

Below we have the ODNR’s high level overview of the numbers, along with MDN’s own exclusive analysis showing: the top 25 producing gas wells, the top 25 producing oil wells, and then the top 25 gas and oil wells as ranked by average production per day.




http://marcellusdrilling.com/2016/09/ohio-2q16-utica-production-who-produced-og-where-how-much/

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Attached Files

One of the lowest cost producers that gets some of the highest prices for its natural gas in the Marcellus/Utica is Rice Energy.

The difference between what it costs Rice to produce gas ($0.90/thousand cubic feet, or Mcf) verses what they sell it for (an average $3.12/Mcf) means Rice makes a whopping 247% internal rate of return, or IRR–which is THE most profitable driller among 10 of the largest Marcellus/Utica drillers surveyed

The Rice boys’ stellar performance has not gone unnoticed by analysts at investment and research firms. In fact, one such analyst, from Wolfe Research, says Rice “could be” a target for takeover/buyout by a larger competitor.

http://marcellusdrilling.com/2016/09/rice-energy-prime-prospect-for-ma-buyout/

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Attached Files

Enbridge Inc, Canada's largest pipeline company, said it will withdraw its regulatory applications pending with the Minnesota Public Utilities Commission for the Sandpiper Pipeline Project.

The long-planned and often-delayed Sandpiper pipeline project will be put on hold until crude oil production in North Dakota recovers sufficiently to support the pipeline's capacity, Enbridge said on Thursday in a statement.

This comes against the backdrop of a dramatic decline in oil prices that has weighed on production in North Dakota's Bakken play.

The company also said its $1.5 billion investment or 27.6 percent stake in the Bakken pipeline system, will be jointly funded 75 percent by Enbridge and 25 percent by subsidiary Enbridge Energy Partners.

The Enbridge-Marathon Petroleum Corp joint venture will pay $2 billion to Energy Transfer Partners and Sunoco Logistics Partners for a 49 percent stake in the holding company that owns 75 percent of the system.

Phillips 66 owns the remaining 25 percent of the Bakken Pipeline System. Once in operation, Sunoco Logistics will be the pipeline operator.

http://www.reuters.com/article/usa-oil-bakken-pipelines-idUSL3N1BD5I4

One of the strongest earthquakes ever recorded in Oklahoma rattled the area northwest of Pawnee on Saturday, fuelling growing concern about seismic activity linked to energy production, a federal agency said.

The magnitude 5.6 quake, which was felt from South Dakota to Texas, prompted the closure of some 35 wastewater disposal wells in the area, officials said.

It shallow quake struck 9 miles (14 km) northwest of Pawnee in north-central Oklahoma at 7:02 a.m. CDT (1302 GMT). Its 5.6 magnitude matched a 2011 earthquake for the biggest on record in the state, the U.S. Geological Survey said.

There were no immediate reports of injuries in Pawnee, where about 25 percent of the residents are Native Americans. Damage in the town appeared to be minor, and the Pawnee Nation declared a state of emergency for its area.

Stonework litters the sidewalk outside an empty jewelry store at the corner of Sixth and Harrison in Pawnee, Oklahoma, U.S. September 3, 2016 after a 5.6 earthquake struck near the north-central Oklahoma town. REUTERS/Lenzy Krehbiel-Burton

"You heard it before it happened," Pawnee resident Jasha Lyons Echo-Hawk said. "Watching my drawers all shake out and my headboard rattle, it felt like I was watching 'Paranormal Activity.' It felt like I was in a movie."

Pawnee Mayor Brad Sewell said the tremor lasted nearly a minute, far longer than previous ones that lasted only a second or two. Part of the facade of an early 20th-century bank building fell into a downtown street, he said.

The earthquake, which was only 4.1 miles (6.6 km) deep, could fuel concerns about the environmental impact of oil and gas drilling, which has been blamed for a massive spike in minor to moderate quakes in the region.

Following the tremor, the state Corporation Commission ordered 35 wastewater disposal wells within a 500-square-mile (1,295-square-km) area to shut down, Governor Mary Fallin said via Twitter.

Oklahoma has been recording 2-1/2 earthquakes daily of magnitude 3 or greater, a seismicity rate 600 times greater than before 2008, the Oklahoma Geological Survey (OGS) said.

Oklahoma's economy is heavily dependent on energy production, which accounts for one of every four jobs in the state.

Oklahoma geologists have documented links between increased seismic activity in the state and the injection into the ground of wastewater from oil and gas production, according to a report from a state agency last year.

The drilling technique known as hydraulic fracturing, or "fracking," also generates large amounts of wastewater. The OGS report said fracking is responsible for only a small percentage of the total volume of injected wastewater.

Zachary Reeves, a seismologist with the USGS National Earthquake Information Center in Golden, Colorado, said the agency had received reports of the Oklahoma quake from South Dakota, Wisconsin, Kansas, Missouri, Arkansas and Texas.

http://www.reuters.com/article/us-quake-usa-idUSKCN1190IV