OIL
U.S. oil producers bet on $42 oil prices in 2021
Paul Takahashi, Houston Chronicle, October 27, 2020
U.S. oil producers are betting that crude prices will stay low well into next year, hedging some of their production at around $40 a barrel in 2021. Exploration and production companies have so far hedged 41 percent of their forecasted 2021 oil output at an average West Texas Intermediate price of $42 a barrel, 25 percent lower than this year’s hedged price floor of $56 per barrel, according to Rystad. The hedge is in line with current crude prices, which are hovering around $39 a barrel as of Tuesday morning.
GAS
From LNG Unlimited, October 27, 2020
ConocoPhillips bets on America natural gas value to couple with global LNG
ConocoPhillips, one of the pioneers of LNG in North America, is taking over unconventional onshore oil and gas company Concho Resources in an all-stock deal for $9.7 billion plus debts to lower future production costs and cash in on value of US gas assets. The ConocoPhillips deal also includes Concho’s net debt of $3.9Bln, valuing the transaction at $13.6Bln.
Larger
The combination will be the largest independent oil and gas company, with production of over 1.5 million barrels of oil equivalent per day.
ConocoPhillips said the transaction brings together contiguous and complementary acreage positions across the Delaware and Midland basins and includes positions in the Eagle Ford Shale and Bakken Basin in the Lower 48 States and in the Montney Shale in Canada.
The largest of Concho’s core areas is in the Delaware Basin where its position spans 520,000 gross acres.
The Delaware Basin is a large geographic area spanning the southwest corner of New Mexico and parts of West Texas.
Analysts noted that the US major had always been a pioneer with American resources and its predecessor company started LNG exports to Japanese utilities more than 50 years ago from the small-scale Kenai Peninsula plant in Alaska that has now closed.
ConocoPhillips also still holds key LNG resources, including the operatorship of the Australia-Pacific LNG export plant in Queensland with partners such as China Petroleum & Chemical Corp., known as Sinopec.
Its other LNG assets include a stake in the Qatargas III project, a mega-Train in Qatar with partners Qatar Petroleum and Mitsui & Co. of Japan.
ConocoPhillips said that the Concho deal is expected to capture $500 million of annual cost and capital savings by 2022 from lower general and administrative costs and a reduction in ConocoPhillips’ future global new ventures
MINING
Reinventing Our Domestic Minerals Supply Chain in a Post-Pandemic World
Real Clear Politics, Bipartisan Roundtable Discussion, October 1, 2020
The past year has laid bare the myriad problems associated with the U.S.’ overreliance on mineral imports and adversarial approach to domestic mineral production. U.S. mineral import reliance has more than doubled over the past 25 years while mineral demand for key technologies and industries is soaring. Whether through global shutdowns imposed by countries holding the position as a lead supplier of a key commodity or trade tensions with geopolitical rivals, multiple threats have emerged to American industry’s ability to get the minerals needed for energy, technology, medical and manufacturing supply chains. Congress has taken note with a flurry of key pieces of legislation intended to support minerals mining in the U.S. This roundtable will discuss the severity of the challenge in the U.S., the increasing demands that lie ahead, the policy solutions that are within reach, and how the election may impact it all.
POLITICS
Factbox: How a Biden presidency would transform the U.S. energy landscape
Reuters, October 27, 2020
Should Joe Biden win November’s U.S. presidential election, there could be a number of changes in energy policy. Here are the issues at stake:
INTERNATIONAL OIL SUPPLIES
President Donald Trump’s unilateral sanctions on OPEC members Iran and Venezuela have together taken around 3 million barrels per day of crude oil off international markets, a little more than 3% of world supply. That has fit neatly into Trump’s “Energy Dominance” policy of maximizing U.S. energy production while constraining the supply of geopolitical rivals, for both economic and political advantage. With the Trump administration continuing to ramp up sanctions measures on both countries in recent weeks, there is no sign there would be a change of course if Trump is re-elected. Biden, however, has shown an interest in multilateral diplomacy similar to previous Democratic administrations. That could mean an eventual path for Iran, and perhaps Venezuela, to get out from under Washington’s sanctions and start pumping again, if the right conditions are met. In Iran, that path could include a partnered approach between Washington and Europe, similar to a deal struck under Obama’s administration.