The Bureau of Land Management on Thursday auctioned off oil and natural gas leases on over 7,000 acres of land in New Mexico, generating more than $3 million in proceeds. The sale drew an average bid per acre of $403, outperforming a two-day auction held in August, but still a far cry from the $4,565 per acre average for federal lease sales in the state since President Donald Trump took office.
Despite an uptick in oilfield activity and rising oil and natural gas prices, the recovery remains fragile and conditions too weak to provide sustainable returns, according to Richard Hubbell, CEO of oilfield services company RPC. The oilfield services sector needs "sustained growth in the rig count, followed by higher service pricing," but increased consolidation among upstream players could create challenges, Hubbell said.
Interest in carbon storage projects is picking up, with plans in the works for up to 30 commercial-scale carbon capture systems in US, of which nearly a dozen have been proposed for the Gulf Coast. One player in this space is Occidental Petroleum, which is in the early stages of planning a 10-million-ton-per-year carbon storage project in Louisiana.
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US Gulf of Mexico operators, including W&T Offshore and Hess Corp, warned of lower-than-forecast quarterly production volumes due to the influx of storm-related disruptions this hurricane season. The most recent storm, Hurricane Zeta, shut down up to 85% of US Gulf oil production and almost 58% of natural gas production, and National Ocean Industries Association President Erik Milito expects oil production in the region to be roughly 200,000 barrels per day lower at the end of 2020 than it was at the beginning of the year.
Royal Dutch Shell will consolidate its refining operations from 14 sites to six that are integrated with chemicals. "This is expected to be followed by further evaluation and decisions on assets that could result in the recognition of significant provisions and charges to earnings, some as early as in the fourth quarter 2020," the company said.
The Colorado Oil & Gas Conservation Commission is considering tighter flaring regulations and may issue final rulemaking on the topic this week, which will be put to a vote by mid-November as part of a broader rule package. The commission is proposing to end permitted flaring and require companies to build natural gas gathering systems for gas capture by early 2022.
Occidental Petroleum will collaborate with the New Mexico Produced Water Research Consortium, a joint venture between the New Mexico Environment Department and New Mexico State University, on research studying the potential treatment and reuse of wastewater. Occidental will provide access to its oil production and produced water storage facilities for field testing and said "this project is a valuable opportunity to learn about the unique characteristics of water co-produced in oil and gas operations and determination of how we may do something good with it."
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EVENT | Eighth Annual COS Forum, November 10-12, Virtual
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