Mexico Plans Next Bidding Round For Energy Opening By End-July
The next bidding round in the opening of Mexico’s oil and gas sector will be called by the end of July and consist of 15 shallow water blocks for exploration and extraction in the Gulf of Mexico, Energy Minister Pedro Joaquin Coldwell said.
Coldwell announced the round, denominated 2.1, at an event in the northern city of Monterrey on Wednesday.
The following round, or 2.2, would be called by the end of the summer and comprise 14 onshore blocks for exploration and production in the gas-rich Burgos basin in the north of the country as well as in southeast Mexico, Coldwell added.
Mexico ended the oil and gas monopoly of national oil company Pemex at the end of 2013 to open up the industry to more private sector investment. However, the auctions of oil and gas blocks have been complicated by a sharp drop in crude prices.
Crude futures on Wednesday hit their highest levels in 2016, beyond $50 per barrel. Coldwell said it was very hard to forecast whether the recovery in prices would last
Copy right: Rig Zone
Mexico’s Pemex Approves Trion Field as First Farm Out
Mexican state oil company Pemex has picked the deep-water Trion field near the U.S. border as the first one it will farm out to other operators to help it develop untapped resources, the firm said on Friday.
The search for private capital to boost areas previously discovered by Pemex is a major step in the opening up of Mexico’s oil and gas industry, a process enabled by an energy reform that ended the company’s monopoly in 2013.
Pemex Chief Executive Jose Antonio Gonzalez Anaya told a news conference the company’s board had approved the step and that Trion would likely be operated by a company other than Pemex.
“It’s a big, important field,” Gonzalez said.
The Trion field, located in the Perdido area, will require about $11 billion worth of investment and more farm outs will follow, Gonzalez said. In total, the Trion field contained some 480 million barrels, he added.
Pemex did not have a specific number of investors in mind for the Trion field, he said. The companies involved in the farm out should be announced in December, when Mexico has scheduled its first auctions for deep water fields.
Speaking at the same news conference, Energy Minister Pedro Joaquin Coldwell said the Trion farm out would be in the form of a license and that the field was 2,500 meters (8,202 feet) deep.
Two years of falling crude prices have hurt Pemex, which wants partners to boost output and improve margins.
In the first quarter of this year, Pemex ran up its 14th consecutive quarterly loss at about 62 billion pesos ($3.6 billion), as both crude prices and output fell.
Earlier, Pemex announced that Luis Rafael Montanaro Sanchez had been named as the new director of Pemex’s ethylene unit.
Source: Rig Zone
Oil demand to peak in 2030 as energy experts slash forecasts
Global oil demand could peak by the end of the next decade even as global economic growth climbs.
The latest downward revision to forecasts, from consulting firm McKinsey, could leave major new investments uneconomic if demand for energy fails to meet expectations.
McKinsey said it has cut its forecast for growth in demand to 0.8pc a year to 2040, “well below mainstream base case perspectives”, including its own estimate of 1.1pc made last year.
Demand for oil is expected to grow even more slowly beyond 2025, with the research pointing to a possible peak of 100m barrels a day by 2030, from current levels of 94m.
The industry is mired in debt after the plunge in oil prices in recent years.
McKinsey’s Occo Roelofsen said despite an expected increase in global population of around 36pc, and a doubling in global gross domestic product (GDP), shifting energy sector dynamics are set to depress energy demand.
“ This change is driven by three factors: first, overall GDP growth is structurally lower as the population ages; second, the global economy is shifting away from energy-intense industry towards services; and third, energy efficiency continues to improve significantly,” he said. “Peak oil demand could be reached around 2030. ”
Meanwhile growth in electricity demand will outstrip other sources of energy by more than two to one, due to the steady “electrification” of building and industry in China and India.
Almost 80pc of the capacity needed to meet this increase will be from solar and wind power, McKinsey predicts.
Copyright: The Telegraph
What Works for Wind Power Could Also Work Under the Sea
Jim Dehlsen, a 79-year-old wind-energy pioneer who sold one turbine company to Enron and took another public, has spent his life thinking about the best way to make blades turn in the sky. For his latest effort, he’s flipping a turbine upside down and plunging it dozens of meters into the ocean, in waters that are up to 300 meters deep. There, marine currents rotate the 13.5-meter long blades to pull power from the sea.
Aquantis, Dehlsen’s Santa Barbara, Calif., company, will start deploying turbines in 2018 in waters near Wales and the Isle of Wight. Its most ambitious project is a 200-megawatt field of marine turbines in the strong Gulf Stream off the coast of Florida, due to come online in 2019 or 2020. The world’s oceans remain relatively untapped as an energy source, compared with wind and solar. By 2030, Dehlsen says, marine energy could serve 8 percent or 9 percent of U.S. power needs. “The oceans are the major remaining potential for renewable energy,” he says. “Getting on that now is really urgent.”
It took wind at least 15 years to become a viable, cost-effective resource. In the late 1970s, when scientists first started experimenting with wind turbines, “people laughed at you and said, ‘Wind will never work,’ ” says Robert Thresher, a research fellow at the National Renewable Energy Laboratory in Golden, Colo. In the ’80s and ’90s, the industry settled on the three-blade turbine design considered the standard today. Many aspects of turbine design can be applied to the oceans, adjusted to handle the slower, heftier fluid dynamics of seawater.
Aquantis is developing systems to capture energy from waves, from tidal currents, which switch direction twice a day, and from gyre, or steady, currents. Much of Dehlsen’s obsession these days is with the Gulf Stream. Its constant current can rotate turbines day and night, allowing Aquantis to squeeze more power out of each turbine. That will cut the price per kilowatt-hour. “Because the stream flows all the time, it’s probably the one that can become cost-effective most easily,” Thresher says.
Aquantis, which isn’t the first company to design underwater turbines, wants to lower the cost of marine energy. Dehlsen says deploying an Aquantis device—towing it out to sea, filling it with seawater ballast, then anchoring it—runs about $347,000 per turbine. The rotor’s two blades can withstand huge volumes of water moving as fast as 4 knots. The topmost part floats just above the surface, and the rest of the equipment is held in place with mooring lines to the ocean floor, making it quicker to deploy and cheaper to maintain. Repair crews take an elevator down the shaft. Rival turbine makers dig deep into the ocean floor to anchor the machinery so that it can withstand the strength of the currents; their repairs require raising the structure to the surface. That pushes up the cost significantly, Dehlsen says, to about five to seven times more than Aquantis’s.
Dehlsen plans to install his turbines in a few test sites and sell power to the grid. He sees a second revenue stream in marine turbines housing data centers for the world’s tech giants, using the turbine’s shaft as a storage area for racks of servers. That can save companies money on air conditioning by using cold ocean water to cool the equipment. Aquantis designed and built a pilot test chamber for Microsoft that housed a data center underwater for 105 days off California’s San Luis Obispo pier last year. The test was a success, Microsoft said, with minimal ocean heating and no leaks or hardware failures. Dehlsen is reaching out to Apple, Facebook, and Google about similar efforts.
Dehlsen is courting tech companies and investors while trying to lock down test sites from the north coast of Brazil to Cape Agulhas, on the southern tip of Africa. Little testing has taken place in the U.S. Aquantis has won Department of Energy grants and received some venture capital from Mistubishi Heavy Industries. Dehlsen has self-funded a lot of the work; additional income comes from projects like the data center program. His track record in renewable energy reassures potential partners, says Charles Vinick, Aquantis’s chief executive officer. “Jim is seen as the father of American wind—that opens the door.”
Marine turbines face some challenges, such as concerns over unknown environmental effects. Their blades could strike whales or create noise that confuses sea life. Dehlsen says studies conducted in the U.K. show turbines are safe for fish and marine life. The bigger challenge, he says, is creating marine energy that is cost-competitive. He expects to get to less than 10¢ a kilowatt-hour in three to five years. (Wind energy hovers from 3¢ to 8¢ a kilowatt-hour, solar from 4¢ to 7¢, and conventional gas from 5¢ to 8¢.) “In renewable energy, people get enthusiastic about an idea, and yes, maybe you can make electricity. But if it’s 8¢ a kilowatt-hour, so what?” he says. “Don’t even bother.”
Dehlsen’s best argument may be a slide in his presentation about the urgency of global warming. “The time that’s left in which we can make a change is relatively short,” he says. “Five to 10 years, and you’re beyond being able to stem it.”
Copyright: Bloomberg
Success through more efficient use of technology – DEA at EAGE 2016 in Vienna
From 30 May to 02 June, DEA is presenting recent projects and technology highlights at Europe’s most important technology event of the oil and gas industry, the 78th EAGE Conference and Exhibition.
“In exploration and production of oil and gas, sustained quest for technical solutions and the constant search for efficiency-enhancing concepts are daily business”, says Manfred Böckmann, Senior Vice President Exploration DEA Deutsche Erdoel AG.
These measures are a prerequisite for a continuing assurance of our high safety and environmental standards on the one hand and the economic viability of the projects on the other. In times of low oil prices, this is becoming increasingly important and the EAGE offers an ideal platform for the essential exchange of ideas and the discussion of new approaches, together with the experts of other E&P companies, the service industry and the representatives of science”, Böckmann adds.
At DEA’s booth (Stand No. 2230, Hall B), the visitors can experience live presentations of case studies from international DEA projects and are invited to discuss current industry topics with the DEA experts during the coming days.
DEA Deutsche Erdoel AG is an international operator in the field of exploration and production of crude oil and natural gas based in Hamburg. Its focus is on safe, sustainable and environmental conscious exploitation of oil and gas. DEA has 117 years of experience working along the whole upstream value chain as operator or project partner. With a staff force of 1,400 employees DEA has shares in production facilities and concessions in, among others, Germany, Norway, Denmark, Egypt and Algeria. Moreover, in Germany, DEA also operates large subsurface storage facilities for natural gas.
Copyright: Your Oil and Gas News
Over 20 Oil Companies Register for Auction Mexican Gulf Blocks
For the auction of 10 blocks in waters of the Gulf of Mexico 21 oil companies have registered to participate, among them Spanish Repsol, Norwegian Statoil and French Total, together with Mexican Pemex, it was known today.
British BP, Anglo-Dutch Shell, Chevron and Exxon Mobil, both of the United States have also registered.
These four international megacorporations, which in the past made up the influential group known as The Seven Sisters, and for decades were owners of the Mexican crude, attempt to recover the exploitation of oil fields, says daily La Jornada.
Through the license contract, the National Commission of Hydrocarbons (CNH) allows winner companies to exploit oil deposits.
Up to 1938, before nationalization of the oil industry, decreed by president Lazaro Cardenas, seven foreign companies -five of the U.S. and two British- were owners of Mexican oil.
As it transcended, the seven transnationals were baptized by Enrico Mattei, considered father of the Italian energy industry, as the Seven Sisters.
The opening date for presentation of proposals for handing concessions on exploitation of a máximum period of 50 years of the 10 auctioned blocks, located in deep waters of the Gulf of Mexico, will be set on December 5, 2016.
Copyright: Prensa Latina
Exxon, Total, Chevron In Talks With Pemex On Gulf Prospects
Petroleos Mexicanos is in talks with Exxon Mobil Corp., Total SA and Chevron Corp. as Mexico’s struggling state-run oil producer seeks partners to develop deepwater crude in the Gulf of Mexico.
Pemex may also start discussions with Oslo-based Statoil ASA, according to company press officials who asked not to be named because of policy. Pemex seeks Areas of Mutual Interest agreements to evaluate whether the companies have opportunities to work together in offshore areas.
The talks would indicate the world’s oil majors are interested in partnering with Pemex to produce the country’s underdeveloped crude reserves or bid with Mexico’s state-owned operator in the country’s first-ever deep water auctions in December. Pemex, which deferred investments in deepwater fields this year amid a $5.5 billion budget cut, has reiterated that it seeks to partner with the world’s largest producers to develop Mexico’s crude reserves, estimated by the country’s oil regulator at the equivalent of 10.24 billion barrels of crude at the end of last year.
“They will use the tools in the energy reform to do this,” Nymia Almeida, a senior credit officer for Moody’s, said at a conference in New York, when asked about Pemex forming partnerships and selling assets, which the company intends to do. “Any deal would be better than none, even if it starts little by little.”
Hakon Fonseca Nordang, head of communication for Statoil in the U.S. and Mexico, declined to comment on any discussions, saying that Statoil and Pemex have for years had a General Cooperation Agreement involving research and technology exchange between the two companies. Scott Silvestri, an Exxon spokesman, declined to comment, as did Isabel Ordonez, a spokeswoman for Chevron in Latin America.
Deepwater Auction
Mexico hopes to raise $44 billion in investment in its first-ever sale of deepwater areas in the Gulf of Mexico, scheduled for Dec. 5. The country will auction 10 areas in the Perdido area near the maritime border with the U.S. and in the southern gulf’s Cuenca Salina.
Seventy-six percent of the country’s prospective oil resources are located in the deep waters of the Gulf of Mexico, according to Energy Minister Pedro Joaquin Coldwell. Pemex, Statoil, Chevron and Exxon are among 16 companies that are in the process to qualify to bid in the deep water auctions
Copyright: Rig Zone
What Will Drive LNG Growth for the Next Decade?
Question: What will be more localized, more widely dispersed and more transparent a decade from now? Answer: The liquefied natural gas (LNG) industry.
A recent Deloitte report on the changing LNG landscape presents such a scenario, and one of the report’s authors credits the United States’ emergence as a gas exporter as a catalyst for the evolution.
“The beginning of exports of LNG from the U.S. in 2016 adds an interesting new component to the global market, expanding the range of options available to buyers both geographically and in terms of pricing basis,” said Andrew Slaughter, executive director of the Deloitte Center for Energy Solutions.
Slaughter, who wrote the report with colleague John England, also sees liquid hub-based pricing becoming a more viable option compared to longstanding oil-linked LNG pricing formulas.
“It will be interesting to see whether this type of competition results in changes in strategy from the more traditional LNG suppliers,” Slaughter said.
In a recent interview with DownstreamToday, Slaughter elaborated on the Deloitte report’s findings. Moreover, he explained why – despite the unease felt by many in the LNG sector – he sees reason for industry players to be optimistic. Read on for his insights.
DownstreamToday: How would you summarize the current upheaval in the global energy market, and where does LNG fit in amid this dynamic environment?
Andrew Slaughter: In the short term, the global energy market is still adjusting to a lower oil price environment, in which crude oil prices dropped from above $100 per barrel down to $30-$40 levels since June 2014. While the primary causes of this were an accumulating imbalance of oil supply growth, relative to oil demand growth, the LNG market was not immune to the consequences. Long-term contract prices for LNG, which are linked by formula to crude oil price levels, have declined along with crude oil, negatively impacting the cash flow of existing LNG suppliers, as well as putting into question the expected economic returns for new and proposed LNG supply projects.
Over the longer term, in a world where most nations have committed to carbon mitigation policies at COP21, we expect natural gas to be able to increase its share of energy demand around the world, both because of its intrinsically lower carbon intensity than other fossil fuels and also because of its complementarity with renewable energy in the power sector, providing grid stability and reliability when renewable generation is not available. We expect LNG to play a significant part in meeting this growth in gas demand around the world over the next two or three decades.
DownstreamToday: Deloitte has observed that the LNG trade has quadrupled over the last two decades and is poised to double over the next two decades. What were some key attributes of the previous growth period, and what major characteristics would you expect during the next one? Any particularly prominent similarities/differences?
Slaughter: LNG market growth over the past 20 years has predominantly been characterized by the development of large integrated gas projects in which most LNG has been committed to buyers under long-term contracts. This model has been necessary to secure project financing for multi-billion dollar investment in upstream gas development, liquefaction trains, specialized ships and regasification terminals. Using this model, new LNG supply sources have been developed in resource-rich countries like Qatar, Australia, Trinidad and Nigeria; and large new markets have been opened up, such as India and China.
Over the next 10 to 20 years, we expect growth in the LNG market to be associated with the opening up of many more, often smaller, markets served by more flexible supply options, such as floating storage and regasification units, smaller, more modular liquefaction technologies and the growth of both portfolio supplies and LNG traders to more flexibly match supply with market needs. We also expect new and emerging applications for LNG to grow, creating an additional boost to demand – such as LNG as a marine fuel and as a fuel for heavy trucks and rail.
DownstreamToday: You’ve identified seven key factors that should drive LNG growth in the next 10 years. Which of these factors is supported by the strongest evidence? Which factors are more of a guessing game?
Slaughter: Of the seven key factors identified in the Deloitte report, three represent challenges for LNG development, at least for the next several years. The potential slowdown in global economic growth, and perhaps particularly in China, may lead to a near-term slowing of LNG demand, as will continued improvements in energy efficiency which work to decouple demand growth rates from economic growth rates. Thirdly, the amount of new LNG supply capacity planned or announced is a threat to sanctioning the next wave of LNG projects which will likely be needed post 2020.
On the side of opportunity, the other four factors are more favorable to LNG development. These are the reduction of LNG shipping costs, allowing markets to be served more economically; the development of new markets geographically, such as in South East Asia and Latin America; the emerging penetration of LNG into new applications such as for road and marine transport fuels, as well as the larger-scale expansion of LNG as a source for natural gas as a power generation fuel; and the expansion of market liquidity, with more buyers, more sellers, more diverse contract terms and durations making it easier for market participants to structure the right deals to expand their business.
There is fairly strong evidence supporting all these factors, and it will be fascinating to watch how they play out over the next 10 years or so.
DownstreamToday: You’ve no doubt seen industry headlines proclaiming that the era of mega-LNG projects is drawing to a close and that small- and mid-scale projects are on an upward trajectory. What effects on the broader LNG market do you anticipate with the rise of smaller-scale projects?
Slaughter: Smaller-scale projects are emerging on the liquefaction side of the business with project developers proposing smaller and more modular units than have historically been the norm; and also on the regasification side of the business with the increasing deployment of floating regasification and storage units to serve new market locations. Such developments reduce the upfront capital required to launch an LNG project, potentially opening up new sources of financing. And these developments add more flexibility and optionality to the market, and will contribute to the development of new markets and the growth of portfolio players and traders who can play a role in enhancing the efficiency of the market.
DownstreamToday: What is the most surprising thing you learned while preparing your report?
Slaughter: Despite higher-than-accustomed levels of uncertainty about LNG prices, growth prospects and the viability of new supply investments, market participants maintain a high degree of long-term optimism about the future of LNG as a growing and strategic part of the world’s energy supply and trade. This is founded on the attractiveness of natural gas as a fuel in major and emerging markets, for which its lower carbon intensity than other fossil fuels plays a major role; and on the maturing of LNG market structures globally, to accommodate new contractual options.
Copyright: Rig Zone
OPEC’s Stable Market Outlook Points to Status Quo at Meeting
OPEC kept forecasts for global oil supply and demand unchanged in its last monthly assessment before members meet to review the market.
The 13 nations of the Organization of Petroleum Exporting Countries pumped 32.44 million barrels a day in April, slightly less than will be required to meet demand in the third quarter. Production rose as gains in Iran and Iraq compensated for losses in Nigeria and Kuwait. Investment by the global oil industry through 2018 will slump to less than half the amount spent from 2012 to 2014 following the collapse in prices, OPEC said.
Oil prices have rebounded more than 75 percent from the lows reached in February as U.S. shale production falters, signaling that Saudi Arabia’s strategy to re-balance oversupplied world markets is taking effect. OPEC, which failed to complete an accord with non-members last month on capping output, has no current plans to revive supply limits when ministers meet on June 2, six delegates said on May 4.
“We shouldn’t expect any freeze and definitely not any cut because OPEC sees things are improving from a fundamental point of view,” said Torbjoern Kjus, an analyst at DNB ASA in Oslo. “The structural decline based on lower investment is starting to show up in numbers for non-OPEC. That damage is done, even if prices recover in the second half.”
April Increase
OPEC production increased by 188,200 barrels a day last month to 32.44 million, according to the report. While the group’s supply has typically exceeded the required amount in recent months, April output is about 380,000 barrels a day below the 32.8 million that OPEC estimates will be needed in the third quarter. That potential shortfall is a further indication the organization’s policy is working.
Global oil demand will increase by 1.2 million barrels a day, or 1.3 percent, this year to 94.18 million a day, according to the report. Supplies from outside the group will shrink by 740,000 barrels a day to 56.4 million.
“A return to balance is a shared interest among consumers and producers alike,” the group’s Vienna-based research department said in the monthly report.
Font: Bloomberg
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