Intelligence brief: Asset sales make up for cash-flow shortfall; Wind power win-win for oil recovery

Upstream oil and gas news you need to know

DNV GL says wind-powered water-injection for oil recovery can be done (Image credit: DNV GL)

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Oil producers use asset sales, capital markets to compensate for cash-flow shortfall

Companies raised $100 billion in 2015 by selling assets and accessing capital markets, the US Energy Information Administration found in an annual survey of publicly listed global oil and gas companies.

These funds helped fill in for a revenue shortfall that saw capital expenditure and cash flow fall $152 billion and $192 billion respectively in 2015, the largest year-on-year change since at least 2007.

The EIA surveyed 77 companies that filed statements to the US Securities and Exchange Commission. Of these, 10 companies exceeded one million barrels of liquids production per day, and a further six produced at least 500,000 bbl/d. Fifty of the companies are based in the United States, seven in Canada, nine in Europe, and the remaining 11 elsewhere.

Liquids production grew 6.4% in 2015, after growing by a little more than 2% in 2014. Natural gas production grew 0.8% last year, after declining slightly the previous year. Downward revisions of more than 5 billion barrels of oil equivalent (boe) of liquids and more than 3 billion boe in natural gas partially offset discoveries of about 7 billion boe of liquids and 5 billion boe of natural gas.

In liquids, the reserve-replacement ratio fell to 80%, the second year in which it was less than 100%, meaning the amount of barrels produced exceeded the amount of barrels added to reserves. In gas, reserve-replacement fell to about 20%, the lowest since at least 2008.

GoM to offset decline in US onshore production

Production from new Gulf of Mexico operations is expected to partially offset an expected decline in US crude oil production, the EIA predicted in its monthly Short-Term Energy Outlook. Production is projected to decrease from an average of 9.4 MMbbl/d in 2015 to 8.6 MMbbl/d in 2016 and 8.2 MMbbl/d in 2017.

Several GoM projects that began operations in 2014-15 or that will begin operations later this year are expected to help increase the region’s production from an average of 1.5 MNbbl/d in 2015 to 1.9 MMbbl/d in the fourth quarter of 2017, the EIA said. Some projects may start production later than expected, potentially shifting some of the anticipated production gains from late 2017 into early 2018.

US crude-oil production is expected to decrease by 0.8 MMbbl this year (Source: EIA)

Brent crude oil prices are forecast to average $41/bbl in 2016 and $51/bbl in 2017, the EIA said, lifting its forecasts by $6/bbl and $10/bbl respectively from its previous monthly outlook. It forecast that West Texas Intermediate crude oil prices would average slightly less than Brent in 2016 and be the same as Brent in 2017.

Brent crude averaged $52.35/barrel in 2015 after spending almost the entire final quarter at sub-$50.

Wind power is win-win for oil recovery

Wind-powered water-injection for oil recovery is technically feasible, cost-competitive, and capable of meeting performance targets, DNV GL has declared.

For the past year, DNV GL has worked with participants from the renewable and oil and gas industries to develop and assess the concept of using floating wind turbines to power a water-injection system. Participants include ExxonMobil, Statoil, ENI Norge, Nexen Petroleum UK, PG Flow Solutions and ORE Catapult.

No major challenges have been identified through the study, DNV GL said. Analyses of system performance examining site-specific cases from partners have shown that wind-powered water injection (or WIN WIN, as the study is being called) is able to meet the operator’s key performance requirements such as injection-volume targets, reliability and minimized downtime.

The costs for wind-powered water injection have been compared with a conventional alternative where water is injected via a flow line from the host platform. While the WIN WIN technology has higher operational expenditures compared to a conventional alternative, the significantly lower capex means it compares favorably over the long term, particularly when host-platform capacity is limited or injection wells are located far away, DNV GL said.