Amid the most enduring global oil glut in decades, two OPEC crude producers whose supplies have been crushed by domestic conflicts are preparing to add hundreds of thousands of barrels to world markets within weeks.

Libya’s state oil company on Wednesday lifted curbs on crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially unlocking 300,000 barrels a day of supply. In Nigeria, Exxon Mobil Corp. was said to be ready to resume shipments of Qua Iboe crude, the country’s biggest export grade, which averaged about 340,000 barrels a day in shipments last year, according to Bloomberg estimates. On top of that, a second Nigerian grade operated by Royal Dutch Shell Plc is scheduled to restart about 200,000 barrels a day of flow within days.

While there are reasons to be cautious about whether the barrels will actually flow as anticipated, a resumption of those supplies -- more than 800,000 barrels a day in all -- could more than triple the global surplus that has kept prices at less than half their levels in 2014. It would also come just as members of the Organization of Petroleum Exporting Countries and Russia are set to meet in Algiers later this month to discuss a possible output freeze to steady world oil markets.

“If you have some restart of Nigeria and some restart of Libya, then the rebalancing gets pushed even further out,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by phone. “It complicates matters a lot before the meeting in Algeria.”

Libya Shipments

With a few exceptions, crude in New York and London has been stuck below $50 a barrel for months. The current global oil oversupply is about 370,000 barrels a day, according to data from the Paris-based International Energy Agency.

The resumption of shipments from the three Libyan ports would allow Libya to double crude output to 600,000 barrels a day within four weeks, National Oil Corp. Chairman Mustafa Sanalla said Tuesday in a statement on the company’s website.

The exports are possible after a substantial improvement in the security situation there, he said Wednesday in a separate statement. The Tripoli-based NOC lifted a measure called force majeure, which gives the company the right not to meet supply commitments.

Libya has made at least half a dozen failed pledges to restart shipments. What may be different this time is that the NOC has struck a deal with Khalifa Haftar, commander of forces who took control of Es Sider and Ras Lanuf. He also has control of the oil fields and pipelines that feed them.

Qua Iboe

Meanwhile Exxon has filled storage facilities at its Qua Iboe export terminal in Nigeria and is awaiting government clearance to resume shipments, a person familiar with the matter said Wednesday. Exxon declined to provide a timeline for a restart and said that a force majeure, in place since July, still stands.

In Nigeria, militant groups have repeatedly attacked oil infrastructure this year, making any resumption of flow reliant on pipeline and export terminals being secure from further incidents. Qua Iboe has been under force majeure since a “third-party impact” on a pipeline in July, according to Exxon.

“If it’s true, it’s another downward pressure for the markets because that would be a large amount to return to the market,” Thomas Pugh, commodities economist at Capital Economics, said by phone, adding that he doubts the resumptions will materialize given the situations in both countries.

West Texas Intermediate, the U.S. benchmark, was 0.3 percent higher at $43.70 a barrel at 12:56 p.m. in Hong Kong. Brent gained 0.5 percent to $46.09 a barrel on the London-based ICE Futures Europe exchange.

http://www.bloomberg.com/news/articles/2016-09-14/oil-field-restarts-in-nigeria-libya-set-to-worsen-global-glut-it35knqy

The exports of gas condensate from Iran's South Pars gas field experienced a 67-percent rise in the first five months of current Iranian calendar year, said semi-official Mehr news agency Wednesday.

"In the first five months of the current year, more than seven million tons of gas condensate were exported to the world markets bringing a profit about 2.9 billion U.S. dollars," Managing Director of Pars Special Economic Energy Zone, Mehdi Yousefi, said.

Heavy and light polyethylene glycol, diethylene glycol, mono-ethylene glycol, urea, butane, propane, p-Xylene, cement and methanol were among other major products exported from the gas field, he added.

The overall exports from Iran's South Pars gas field, in the same period, stood at 15.3 million tons and valued at 7.4 billion dollars, he said, adding that the figures show a 55-percent rise in weight and 36-percent rise in value compared with the same time span in the last year.

The South Pars/North Dome field is a natural gas condensate field located in the Persian Gulf. It is the world's largest gas field, shared between Iran and Qatar.

According to the International Energy Agency, the field holds an estimated 1,800 trillion cubic feet (51 trillion cubic meters) of in-situ natural gas and some 50 billion barrels of natural gas condensate.

http://news.xinhuanet.com/english/2016-09/14/c_135687639.htm

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China’s oil demand isn’t really slowing — it’s just changing, and that will help global energy demand to exceed supply by the end of the years, says  energy research firm  Wood Mackenzie.

The world’s second-largest economy is maturing,  increasingly supported by a growing middle class whose appetite for energy is offsetting wavering demand in Chinese manufacturing, Wood Mackenzie says. Household consumption of gasoline and other petroleum products accounted for 90 percent of the country’s total oil demand growth this year, compared to less than half the demand growth five years ago. Meanwhile, demand growth for diesel and other fuels used by industrial buyers has dropped from more than half to 10 percent over the same half-decade, according to energy research firm Wood Mackenzie.

“Oil has maintained its growth; in fact, it’s the exact same rate as 2011 despite the slowdown and the collapse in demand we saw in coal and gas,” said Ann-Louise Hittle, oil market analyst at Wood Mackenzie, during a recent meeting with journalists in Houston.

Chinese car retailers sold 21.1 million vehicles last year, and about 40 percent of those were gas-guzzling SUVs and multipurpose vehicles. Wood Mackenzie estimates China’s oil demand will grow between 350,000 and 450,000 barrels a day this year, the same rate as 2011.

“Despite the lower [economic] growth, there’s still a rising middle class, and with increasing income there’s a drive for personal mobility,” Hittle said.

If Wood Mackenzie’s assessment is correct, China’s consistent oil demand growth could be one factor that underpins the oil market’s return to normalcy.

At first glance, Wood Mackenzie’s conclusion appears starkly different from the recent gloomy report by the International Energy Agency, which on Tuesday predicted oil markets will remain oversupplied for at least the first half of next year, as demand slips further than expected. The report has sent crude prices lower.

One key element of the IEA’s forecast was its downward revision of global oil demand growth, by 100,000 barrels a day this year. It pointed to China and India as two large players contributing to the slowdown. China, in particular, has had an outsized impact on global energy demand in recent years; crude prices fell to 12-year lows in February in part because of heightened fears that both China’s economy and demand for energy were weakening.

But the IEA’s revised numbers puts global oil demand growth at 1.3 million barrels a day this year – the same figure Wood Mackenzie has forecast for months.

The IEA also said increased oil production from the Organization of Petroleum Exporting Countries has “more than offset” declining output from non-OPEC nations like the United States.

Similarly, Wood Mackenzie believes these offsetting trends will keep oil supply growth flat this year. Where they differ is when they believe the oil market will come back into balance. While the IEA said Tuesday demand and supply will realign after the first half of next year, Wood Mackenzie believes total worldwide oil demand will climb above supply in the fourth quarter of 2016.

“It’s September, and it’s looking like we’re going to end up with a slight (oil storage inventory) draw,” Hittle said. “We’ve got a rebalancing underway.”

http://fuelfix.com/blog/2016/09/14/chinas-oil-demand-shifting-to-consumers-not-falling-wood-mac-says/

Britain and Argentina have agreed to work together towards removing measures restricting the oil and gas industry, shipping and fishing around the disputed Falkland Islands, Britain's Foreign Office said on Wednesday.

The two countries fought a war in 1982 over the British-run islands in the South Atlantic, known in Argentina as Las Malvinas, and the issue has continued to cause tensions in the two countries' relationship.

The Foreign Office said London and Buenos Aires had agreed their first positive statement about South Atlantic issues since 1999.

It said the discussions that had taken place did not affect the sovereignty issue and Britain remained clear in its support of the islanders, the majority of whom want the islands to remain under British control.

http://www.reuters.com/article/us-britain-argentina-falklands-idUSKCN11K1EP

BP does not plan to increase annual investments this decade but still expects to bring nine new projects online in 2017 as it focuses on improving efficiency, Chief Executive Bob Dudley said in an interview on Wednesday.

Dudley met with government officials during an investment forum in Argentina and said BP was testing in the Vaca Muerta shale area, where U.S. rivals Exxon and Chevron have invested, and expected results next month.

http://www.reuters.com/article/argentina-bp-idUSE6N17G06K

                                                                       Last Week   Week Before   Last Year

Domestic Production '000................. 8,493             8,458              9,117
Alaska ............................................    458                 428                 469
Lower 48 ....................................... 8,035              8,030             8,648

http://ir.eia.gov/wpsr/overview.pdf

U.S. crude oil refinery inputs averaged over 16.7 million barrels per day during the week ending September 9, 2016, 200,000 barrels per day less than the previous week’s average. Refineries operated at 92.9% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging over 4.9 million barrels per day.

U.S. crude oil imports averaged about 8.1 million barrels per day last week, up by 993,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 8.2 million barrels per day, 10.1% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 650,000 barrels per day. Distillate fuel imports averaged 140,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.6 million barrels from the previous week. At 510.8 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories increased by 0.6 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 4.6 million barrels last week and are above the upper limit of the average range for this time of year. Propane/propylene inventories rose 2.0 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 6.0 million barrels last week.

Total products supplied over the last four-week period averaged 20.6 million barrels per day, up by 5.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.5 million barrels per day, up by 4.2% from the same period last year. Distillate fuel product supplied averaged over 3.6 million barrels per day over the last four weeks, up by 1.3% from the same period last year. Jet fuel product supplied is up 2.7% compared to the same four-week period last year.

Cushing falls 1.245 mln bbl

http://ir.eia.gov/wpsr/wpsrsummary.pdf

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Now, instead of looking for a pop in oil prices just around the corner, companies working in the 400-mile Eagle Ford Shale oil and gas field in South Texas have shifted their focus to what will keep them alive: trimming costs and making technical improvements.

“We have to lower our cost to survive in this sub-$50 oil world out there,” said Richard Mason, chief technical director of Hart Energy.

The company opened its DUG Eagle Ford and Midstream Texas conferences in San Antonio on Monday with a networking reception. The conferences got into the nitty-gritty Tuesday and Wednesday at the Convention Center with an exhibition and talks from energy executives and analysts.

“Hopefully, prices recover, but I think we need to be prepared to be in this kind of world for some time yet,” Mason said.

He said the industry is cautiously optimistic that the worst is in the past — likely at $26-per-barrel oil in January and February, though prices haven’t moved high enough to support a big expansion of activity in the Eagle Ford.

Drilling in the Eagle Ford started in late 2008 during a long period of high oil prices.

U.S. energy companies had figured out they could unlock oil trapped in tight shale rock with a combination of technologies: horizontal drilling with hydraulic fracturing, which pumps millions of gallons of water, chemicals and sand at high pressure to break the rock and prop open the cracks, releasing oil and gas.

U.S. production soared, and Texas oil reversed the long death spiral it had been stuck in since the early 1970s. But the price of a barrel of the benchmark West Texas Intermediate peaked around $107 in June 2014. It closed at $45.65 Friday.

Energy companies have slashed spending and jobs in response.

In the Eagle Ford, the budget cuts have slowed the flow of oil from the field. Production peaked at more than 1.7 million barrels per day in March 2015 and has fallen to just above 1 million barrels daily this month, the U.S. Energy Information Administration reports.

Mason said the mood varies from despair to optimism, depending on which sector of the oil and gas industry someone works in.

On the finance side, people looking to invest in projects have a two- to five-year timeline and have a positive outlook.

Those who are closest to the oil field, though, continue to feel the pain. Services companies, which supply the workers and equipment for the workaday tasks of the oil patch, are fighting for business and survival.

“There’s so much excess capacity. People are bidding jobs at below cost,” Mason said. For companies that provide fracking services in particular, “it’s a knife fight at midnight as people try to capture market share.”

George Wommack, founder and CEO of Petro Waste Environmental, which disposes of solid and water waste in the Eagle Ford and Permian Basin, said service companies of all kinds are under pressure to lower costs to the break-even point.

“They’re providing services at what they think is break even, and many times it’s not,” Wommack said. “The service companies are having to have those difficult conversations with their operators where they have to say they’re losing money on the account and they can’t keep doing the work at that price. Everyone is of the sentiment that they have to find a way to make money at $40 oil.”

Wommack said the activity indicator he’s looking for — a healthy rise in the drilling rig count — hasn’t happened in the Eagle Ford.

The number of drilling rigs in the Eagle Ford soared as high as 259 in 2012, when it took longer to drill shale wells and, in a necessary but time-consuming exercise, rigs raced from ranch to ranch to drill a well before a mineral lease could expire. The rig count dipped into the lower 200s through the end of 2014, as drillers got faster and operators started putting several wells on the same small patch of gravel.

After oil prices busted, the number of drilling rigs in South Texas spiraled from 200 at the start of 2015 to 29 in late May. It rose to 38 rigs last week, according to the Baker Hughes rig count.

Mason said there’s reason for optimism in the field, with drilling in the Austin Chalk, the rock layer that sits atop the Eagle Ford, the opportunity to sell natural gas in Mexico and continued technical improvements that squeeze more oil from the Eagle Ford.

“The Eagle Ford has been a place where the industry has been good about innovating,” Mason said. “We’re getting better at what we do. At $100 oil, we were all geniuses. Everything worked. The other side of $100 is there’s a lot of waste. At $45 to $50 oil, we can make it work.”

Around 1,500 people are expected at the event, which hosted more than 4,000 attendees during the boom times.

http://www.houstonchronicle.com/business/energy/article/DUG-Eagle-Ford-and-Midstream-Texas-conferences-9222275.php?t=5654fa3918438d9cbb&cmpid=twitter-premium

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Canadian Prime Minister Justin Trudeau plans to approve at least one new oil pipeline project in his first term, with Kinder Morgan’s Trans Mountain expansion to the Pacific Coast the most likely candidate, people familiar with his plans said.

The prime minister is seeking to strengthen environmental standards and build confidence in new regulatory rules while also stoking growth in Canada’s sluggish economy by backing a pipeline. Trudeau therefore plans to neither approve all the projects under consideration nor reject them all, according to the people who spoke on condition of anonymity because the discussions are private.

Trudeau faces a series of high-profile energy decisions over the next three months, including a final cabinet ruling onKinder Morgan’s Trans Mountain proposal and a legal appeal related to Enbridge Inc.’s Northern Gateway pipeline. Trudeau will also decide on Petroliam Nasional’s PacificNorthWest natural gas project, while TransCanada’s Energy East pipeline is due for a decision in about two years.

Kinder’s proposal is seen as likeliest to win approval despite opposition among key figures in vote-rich Vancouver, the people said. The Trans Mountain expansion already has conditional regulatory sign-off from the National EnergyBoard.

BOGGED DOWN

Red tape and environmental opposition bogged down major Canadian energy proposals during the nine-year reign of the previous Conservative administration led by Stephen Harper. Northern Gateway, Trans Mountain and EnergyEast have all been delayed in Canada, while the Keystone XL pipeline to the Gulf Coast was rejected by the US government.

Trudeau’s government believes it must demonstrate to investors the country is capable of reaching consensus to build major energy projects, while not alienating environmentalists who make up a key constituency for the Liberal Party. The government hopes to approve one projectbefore the next election in 2019, the people said.

The prime minister routinely says, when asked about pipeline issues, that his government is balancing environmentconcerns and the economy. Trudeau didn’t specifically address his plans for Kinder Morgan when asked Tuesday afternoon. “There’s always going to be speculation by one side or the other about what we might do,” he told reporters in Ottawa. “The fact is, we need to get our resources to market in safe and reliable ways.”
‘National Interest’

Natural Resources Minister Jim Carr didn’t directly answer when asked in a recent interview whether the government had decided it must build at least one pipeline.

“We have an obligation to the proponents and to those people who are involved in each of these major projects to assess it on their own merits, and to determine the national interest on the basis of what’s been proposed, and what has been recommended by the regulator,” he said Aug. 25.

Trudeau has signaled he doesn’t support Northern Gateway on its current route through British Columbia, and any major new routing could force the company to restart its approval process, the people said. A spokeswoman for National EnergyBoard, however, said that’s not necessarily the case. If a route-change request is made “we will take a look and develop a process for reviewing the application,” spokesperson Sarah Kiley said by e-mail.
Canadian ‘Alarm’

Jim Prentice, former Alberta premier and federalenvironment minister, welcomed the news but warnedKinder Morgan’s project alone won’t be enough.

“We need pipelines, we need pipelines to the West Coast, and most advantageous for Canada of course are pipelines into the Asia-Pacific basin and Trans Mountain would certainly be helpful,” Prentice, a Calgary-based adviser in the energygroup at Warburg Pincus, said Tuesday at the Bloomberg Canadian Fixed Income Conference in New York. “But we also need to bear in mind that Trans Mountain won’t solve the problem” because tankers that can navigate the region are too small to service Asia, he said.

Canada needs an energy port that can ship up to two million barrels per day to Asia, Prentice said, and Canadians should be concerned that investors are cooling to the country’s oil patch. “The concern that really should alarm us as Canadians is low-cost capital is exiting the Canadian basin,” he said.

QUEBEC CONCERNS

Trudeau is also concerned about the electoral impact o fEnergy East, which is unpopular in Quebec, where the Liberals hold 40 of 78 electoral districts, the people said.TransCanada’s plan would see a new pipeline delivering crude from the oil sands in Alberta to the Atlantic Coast via the second-most populous province, a much longer route than the other proposals.

The prime minister has spoken favorably about the Kinder Morgan pipeline in the past and his government is said to consider it a net-positive for its so-called “progressive” political movement nationally. Though opposed byVancouver’s mayor, it would be popular in Alberta, where Premier Rachel Notley’s New Democratic Party government is advancing carbon-emissions limits favored by Trudeau.

Trudeau’s cabinet has until December to make a decision onTrans Mountain. Finance Minister Bill Morneau and Trade Minister Chrystia Freeland are the loudest voices around the table in favor of energy sector development, the people said.

Kinder Morgan’s C$6.8-billion ($5-billion), 715-mile Trans Mountain expansion would carry Alberta crude toVancouver, tripling capacity of an existing line to 890,000 barrels per day. Vancouver Mayor Gregor Robertson,environmental groups and indigenous leaders have all expressed opposition to the pipeline, though polling shows it’s generally popular in British Columbia and very popular inAlberta.

VANCOUVER OPPOSITION

“There is no consent there and we are at great risk of impacting Canada’s most successful urban economy,” Robertson told reporters in Ottawa during a June visit to advocate against the pipeline. Fifteen of the 184 Liberal lawmakers elected last year are from the Greater Vancouver area and were “very vocal” in opposing the Kinder Morgan pipeline, the mayor said. “That certainly resonated and helped them get elected.”

TransCanada’s Energy East proposal has been beset by delays. The members of its regulatory panel resigned last week in the wake of conflict-of-interest allegations stemming from a meeting board members had with former QuebecPremier Jean Charest, who was working for the company at the time. The project also made headlines in last year’s election when it was revealed Trudeau’s campaign co-chair,Dan Gagnier, was advising TransCanada on how to lobby whichever party won the vote.

Enbridge’s Northern Gateway runs through the Great Bear Rainforest, which the prime minister says regularly is no place for a pipeline. However, Trudeau has also made improving indigenous relations a top priority and Enbridge has expanded the potential stake for indigenous groups in the pipeline. In June, a court rescinded permits for the pipeline that had been approved under Harper. Trudeau has until September 22 to appeal the decision.

http://www.miningweekly.com/article/trudeau-said-to-plan-pipeline-approval-favour-kinder-morgan-2016-09-14

PATTERSON-UTI ENERGY, INC. announced today that it has entered into an agreement to acquire Warrior Rig Ltd. and certain related entities.  Based in Calgary, Warrior designs, manufactures and services high-spec rig components with a recent focus on top drive technology for improved drilling performance.  The pending transaction is subject to customary closing conditions, and is expected to close promptly.

Andy Hendricks, Patterson-UTI's Chief Executive Officer, stated, "This acquisition will enhance our competitive position within the high-spec rig market and expand our technology portfolio.  We are very excited by the innovative technology that Warrior offers, and we look forward to welcoming the highly talented group of people from Warrior into the Patterson-UTI family."

http://www.fox5vegas.com/story/33090567/patterson-uti-energy-announces-agreement-to-acquire-drilling-technology-company

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