The recent oil price rally is encouraging US shale producers to step up hedging for future production, with an indicator of hedging activity hitting a five-month high in December, according to the Commodity Futures Trading Commission. "Producers locked in a certain amount of wells at a certain price and hedging at $50 makes you look like a rockstar. This year will be about free cash flow," one shale executive said.
Chevron has invested an undisclosed amount in Blue Planet Systems, a startup that develops carbon capture technology for converting flue gas from refineries and other industrial facilities into building materials. The two companies also signed a letter of intent to work together on pilot projects and the commercialization of the technology.
Tellurian is planning to begin construction on the $16.8 billion Driftwood LNG export plant in Louisiana this summer, said co-founder and executive chairman Charif Souki, noting that there's been a substantial increase in customer interest in the past month. Driftwood LNG will have a production capacity of 18.1 million short tons per year when the first phase of the project is completed in 2025.
The oil rally will encourage US shale operators to pump more oil in the second half of the year, according to OPEC, which expects US shale production to jump by 70,000 barrels per day this year to 7.37 million bpd. Meanwhile, global oil demand is seen increasing by 5.90 million bpd to 95.91 million bpd.
The Bureau of Land Management's final oil and natural gas lease auction under the Trump administration took place on Thursday, generating about $4.1 million in proceeds from the sale of 37 parcels covering roughly 6,848 acres of federal land in New Mexico, Texas, Kansas and Oklahoma. Most of the land made available was in New Mexico's Eddy and Lea counties.
The Trump administration is expected to publish today in the Federal Register a rule that would change how royalty payments for energy production on public lands are calculated by using an average weekly benchmark price and allowing higher deductions for transportation and processing costs. The rulemaking was initiated following a 2019 letter from the American Petroleum Institute.
The Office of the Comptroller of the Currency has formalized a rule that prohibits banks from refusing to offer loans or other services to firms in potentially controversial industries. The banking industry largely opposes the rule, finalized shortly before Brian Brooks' departure as acting comptroller of the currency.
Appalachian natural gas production has averaged 33.8 billion cubic feet per day so far in January, just 460 million cubic feet per day short of a single-day record set in mid-December, as strong cash and forward gas prices encourage producers to pump more, according to S&P Global Platts Analytics. Prices have gotten a boost lately from robust demand in the US Northeast and shrinking regional inventories.
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