Brazil plans to hold two subsalt oil auctions in 2017, putting new exploration areas up for bidding in November for what should be the "most competitive" round of the year, the country's oil secretary tells Reuters.
The first 2017 auction, expected during H1, will offer areas next to existing discoveries already in development, while the November auction will be for fresh exploration areas and should generate more government revenue than the first, the secretary says.
The auctions will be the first since state-run Petrobras (PBR +1.7%) was freed from its required role as operator for all new projects in the subsalt, and the government hopes the opportunity to buy into new areas in one of the world's major deep-sea oil areas should attract offshore majors such as Royal Dutch Shell (RDS.A +0.8%), Total (TOT +1.4%) and Statoil (STO +1.1%).
Shell says it is studying whether to participate in this year's oil auctions, adding that the terms would be an important factor.
The secretary also says Brazil will hold three oil auctions in 2018, including one subsalt auction.
Royal Dutch Shell (RDS.A -0.6%) wins unanimous approval from the town council of Potter, Pa., to proceed with construction of a ~$6B petrochemical project, Reuters reports.
The facility will use low-cost ethane from shale gas producers in the Marcellus and Utica basins in Pennsylvania, Ohio and West Virginia to produce 1.6M metric tons/year of polyethylene for use in products from food packaging and containers to automotive components.
Shell, which is still waiting for a permit from the state of Pennsylvania, hopes to begin construction sometime near the end of 2017, with a target in-service date early in the next decade.
Oil and gas discoveries around the world fell last year to just over 6B boe, the lowest since the 1940s, after companies reduced their search for new resources amid falling oil prices, according to the Rystad Energy consultancy.
The decline in discoveries means companies such as Exxon (NYSE:XOM) and Shell (RDS.A, RDS.B) are likely to struggle to offset the natural depletion of existing fields, reinforcing forecasts of a supply shortage by the end of the decade, Rystad says.
Companies were able on average to replace only 10% of their oil and liquid gas reserves last year, compared with a reserve replacement ratio of 30% in 2013, and the number of exploration wells drilled fell by 40% from 2014 when oil prices began their sharp decline.
The companies - including oil producers Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT), and automakers BMW (OTCPK:BMWYY), Daimler (OTCPK:DDAIF), Honda (NYSE:HMC), Hyundai (OTC:HYMTF) and Toyota (NYSE:TM) - say they will seek to boost investment in developing and commercializing the hydrogen sector, currently amounting to just €1.4B/year, vs. hundreds of billions of dollars invested annually by the oil sector.
"We are not trying to bring hydrogen only to cars or trains. We are trying to bring a systemic approach," says Air Liquide (OTCPK:AIQUF) CEO Benoit Potier.
Shell Gabon's staff of ~400 began striking last week and are threatening to toughen their stance, saying they should be paid damages even though the employees are expected to be retained by the company's new owners.
The ongoing strike already has led to production cuts of 30%-50%, according to the union.
Argentina's government announces a deal with labor unions and energy companies aimed at luring investors to the Vaca Muerta shale, which contains the world's second largest reserves of shale gas but is largely unexplored.
In return for the investment commitments, the government says it will extend a subsidy that enables companies to sell gas at $7.50/MMBtu and eliminate a 15-year-old export duty on oil and oil products; unions promise more flexible working conditions, as high labor costs have been a barrier to Vaca Muerta's development.
Argentina's Pres. Macri proclaims a “new era” for the country’s languishing energy sector, which will see foreign companies including Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), BP, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) as well as state oil company YPFinvest an initial $5B in 2017, rising to $15B in subsequent years.
A Dutch court today upheld a government decision to cap production at the Groningen gas field at 24B cm until Oct. 1, 2021, a step aimed at easing the risk of earthquakes triggered by drawing gas from the field.
The court was responding to requests for a preliminary injunction against the June decision, opposed by groups who sought a halt or a deeper cut to production at Groningen.
Output has been cut several times from 53.9B cm in 2013 amid criticism that Dutch authorities had failed to adequately assess the risk to citizens from earthquakes caused by gas production.
Groningen is operated by a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM).
Chevron (NYSE:CVX) says it has resumed production at one of its two units at the Gorgon liquefied natural gas plant off Western Australia after an outage of more than a month.
Train 1 of the $54B project was halted in late November to address performance variations and has suffered from a string of outages since its start in March 2016; output at the plant's Train 2 production unit remained unaltered during the period.
CVX is the operator of Gorgon LNG with a 47.3% stake, while Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.A, RDS.B) each hold 25% stakes.
Royal Dutch Shell (RDS.A, RDS.B) promised to make up for its $50B splurge on BG and pare down some of its $78B in debt by selling $30B worth of assets during 2016-18, but WSJ reports that so far Shell has fallen short of its target, announcing asset sales totaling only ~$5B during 2016 vs. the $6B-$8B the company had said it would reach last year.
“Shell’s high net debt and the slow progress against its divestment plan are the last major concerns for investors, with the view that it remains the key risk for a dividend cut,” Bernstein analysts say.
Shell has said it is already working on several asset sales and should close some of them early this year; WSJ says that likely will include a package of fields in the North Sea worth ~$3B and assets in Gabon worth nearly $1B, and in Iraq the company is in discussions to sell its stake in the West Qurna oil field to a Japanese consortium.
Macquarie's Iain Reid says Shell seems determined to sell at a price of its choosing, which could push the completion of its asset sale plan beyond 2018.
Credit Suisse names Royal Dutch Shell (NYSE:RDS.A) one of its potential surprise stocks for 2017:
"Several of the current CEO's predecessors have struggled to regain focus and efficiency in an effort to turn the business around and made bad capital allocation decisions. Whilst it may be hard to believe in cultural change, especially for an organization with a distinctive culture such as RDS, we would argue that (a) under the right leadership, and (b) when a downturn has been sufficiently long, organizations can create lasting improvements. For example, RDS is taking on board some of BG’s best practices, and has no intention of pursuing complex ‘iconic’ projects, of which there were many in the past cycle with weak returns (due to cost overruns)."
Firm says planned divestments may be easier to complete given the faster-than-expected rebalance of oil markets.
Seeking Alpha contributor Dallas Salazar has reported that Cheniere Energy (NYSEMKT:LNG) has executed its 20-year contract with BG Shell (RDS.A, RDS.B) after confirming the news with members of LNG management.
"What Cheniere is doing is unique from the standpoint that it's doing it on a global scale. While having generated meaningful revenues already, at scale, the BG Shell contract will be enormous. Given the size of the physical infrastructure in place, and the cost of this infrastructure, the BG Shell contract goes a long way into confirming the viability of the Cheniere enterprise - something that the investment and operational communities will be sure to take notice of."
The contract, at scale, will generate ~$723M in expected annual cash flows - from fixed fees alone, and will generate additional revenues in volume-based payments.
It'll be reported at Q4/2016 reporting with an "in-force" date of late-November.
PBR says its production vessel in the Lapa field has the capacity to process 100K bbl/day of oil; oil production operated by PBR at the pre-salt layer already exceeds 1.2M bbl/day, and last month the company said it reached the 1B-barrel mark produced in the pre-salt layer.
Pres. Obama is ready to use a 1953 law to block the sale of new offshore drilling rights in much of the U.S. Arctic and parts of the Atlantic, perhaps as early as tomorrow, a move that could restrict oil production there indefinitely, Bloomberg reports.
The provision has been used sparingly to preserve coral reefs, walrus feeding grounds and marine sanctuaries, and a move to expand it to withdraw U.S. waters from future oil and gas leasing surely would draw a legal challenge, and there is scant legal precedent on the matter.
The move would block the sale of new oil and gas leases in most of the Chukchi and Beaufort seas north of Alaska, but likely would not affect drilling or production under existing leases, including 42 parcels owned by Royal Dutch Shell (RDS.A, RDS.B), Eni (NYSE:E) and others.
Environmentalists have been pressing for a decision, but such a move could backfire, as Republicans in Congress could repeal the law entirely so it could not be used to protect environmentally sensitive areas in the future.