Today’s Key Takeaways: Light oil discovery on the North Slope. Decision on ANWR leasing expected in July. Latest strategic petroleum reserve purchase attempt cancelled. AI Technology power demand will boost natural gas demand.
NEWS OF THE DAY:
88 Energy Confirms Light Oil Discovery in Alaska Asset
Rocky Teodoro, Rigzone, April 3, 2024
Australia’s 88 Energy Limited has confirmed a light oil discovery at the Hickory-1 discovery well, located in Project Phoenix on the North Slope of Alaska.
The company reported successful flow testing of the Upper SFS reservoir in its Hickory-1 well, according to an announcement Tuesday on the Australian Securities Exchange. Hickory-1 is located in state lands on the North Slope of Alaska, adjacent to the Dalton Highway and Trans Alaska Pipeline, within Alaskan Oil and Gas lease ADL392314. 88 Energy holds a 75 percent working interest in the well and is the operator. The well spudded in March 2023 and was drilled to a total depth of 10,650 feet.
The test produced a peak flow rate of over 70 barrels of oil per day (bopd). Oil cuts increased throughout the flow back period as the well cleaned up, reaching a maximum of 15 percent oil cut at the end of the flow test program, 88 Energy reported in an announcement Wednesday on the Australian Securities Exchange.
The well produced at an average oil flow rate of approximately 42 bopd during the natural flow back period, with instantaneous rates ranging from approximately 10 to 77 bopd with average rates increasing through the test period.
Multiple oil samples were recovered with measured oil gravities of between 39.9 to 41.4 API, representing a light crude oil, the company noted.
Further, 88 Energy said that some natural gas liquids (NGLs) were produced but not measured. The presence of NGLs was demonstrated by samples from the flare line and by visible black smoke in the flare.
OIL:
Interior expects decision about Arctic refuge leasing after July 1, court document says
Yereth Rosen, Alaska Beacon, April 2, 2024
A Biden administration decision about how the Arctic National Wildlife Refuge oil-development program should proceed is expected in the third quarter of this year, a bit later than previously anticipated, according to a document filed in federal court on Friday.
The status report was filed in U.S. District Court in Anchorage by the U.S. Justice Department on behalf of the Department of the Interior and its leader, Secretary Deb Haaland. It said a final supplemental environmental impact statement on refuge oil leasing is expected to be released in the second quarter of the year. A record of decision to follow that is expected in the third quarter, the status report said.
The status report was filed in an active lawsuit launched in 2020 by three Gwich’in tribal governments in Alaska. That lawsuit seeks to overturn a decision by former President Donald Trump’s administration to sell leases in the refuge’s coastal plain. The decision to allow oil exploration there, the complaint said, violates cultural and traditional rights in an area that the Indigenous Gwich’in call Iizhik Gwats’an Gwandaii Goodlit, meaning “The Sacred Place Where Life Begins,” because of its importance to the Porcupine Caribou Herd that ranges between northeastern Alaska and northwestern Canada.
The supplemental environmental study process started in 2021, a few months after the Biden administration took office. Interior started it after determining that presale study used by the Trump administration was indeed deficient in ways cited by the Gwich’in tribal plaintiffs. A draft supplemental study was released in September 2023.
Interior had earlier estimated that a final supplemental report would be issued in the first quarter of this year and a record of decision in the second quarter, according to the status report.
The new timeline would produce a decision just a few months before the deadline for a second oil lease sale in the refuge’s coastal plain. While President Biden, Haaland and other top officials in the administration are on record opposing oil development in the refuge, current law requires leasing. Under the Tax Cut and Jobs Act of 2017, Interior’s Bureau of Land Management must hold the second lease sale by Dec. 22, 2024.
GAS:
AI Technology Set to Boost U.S. Natural Gas Demand
Tsvetana Paraskova, OilPrice.Com, April 1, 2024
U.S. natural gas producers believe they have a role to play in providing gas for the soaring power demand from data centers and AI technologies.
While most large technology corporations seek solar or wind capacities to power their AI developments and data centers, renewables alone would not be enough to cover the growing demand for electricity, executives have told the Financial Times.
Natural gas, which currently meets 43.1% of U.S. utility-scale electricity generation, will continue to meet a large part of American power demand as new renewables capacity installations will need backup power generation, according to gas industry executives.
POLITICS:
SPR LATEST: One takeaway from the decision, announced this morning, to cancel the latest strategic petroleum reserve purchase because of high prices: The Energy Department has struggled to refill the emergency stockpile in line with its end-of-year target, or under the prices originally outlined.
In October, it announced a buyback plan targeting oil prices of between $67 to $72 per barrel to replenish the SPR, which it later raised to $79. In its most recent refill, last month, the department exceeded those prices— spending an average of $81 per barrel to replenish the reserves.
Why it matters: The administration earned intense criticism for President Joe Biden’s 180-million-barrel sale of SPR oil in March 2022, the largest one-time drawdown in history that sent SPR levels plummeting to a 40-year low.
Though the SPR sales were effective in helping lower gas prices, Republicans blasted Biden as using the SPR for political gain by ordering the sales ahead of the 2022 midterm elections.
TheSPR currently stands at around 363 million barrels, according to data from the Energy Information Administration— down from 600 million at the start of 2022.
As today indicates, recovery efforts are likely to be slower than anticipated: WTI crude was trading above $85 Wednesday, and futures were trading above $80 for most of the rest of the year.
Some analysts see oil heading much higher over the summer. JP Morgan said it now expects Brent prices to rise to $90 per barrel by May and $100 per barrel by September, while Bank of America Global Research said in a new market note today that it expects more bullish prices for both Brent and WTI, with prices expected to peak around $95 per barrel by summer.
From the Washington Examiner, Daily on Energy, April 3, 2024