As world crude oil prices head towards $40 a barrel, traders are now suggesting prices could fall into the $30s. New forecasts from the International Energy Agency and the US Energy Information Administration (EIA) predict that the surplus will continue and US production will fall until late next year at which time production and oil prices will begin to rise. The EIA’s sees US production falling from 9.7 million barrels per day to 8.8 million b/d by the fall of next year.

The US Energy Information administration said Iran could be exporting an additional 600,000 barrels per day of crude oil by the second half of 2016. Experts are busy estimating how much oil Iran has stored on tankers which could be brought to market immediately. Estimates range from 30 to 52 million barrels.

Iran has identified 45 new crude oil and natural gas projects that it plans to present at a conference of international oil companies in December. The Iranians hope to attract enough foreign investment to increase their oil production to 5.7 million barrels per day from the current 2.8 million b/d over the next few years.

The US announced that it will allow limited sales of US crude to Mexico for the first time, a step towards lifting the ban on US crude exports to countries other than Canada. The exports to Mexico will come as a swap in which heavy Mexican oil which is suitable for US refineries will be traded for lighter shale oils which will allow Mexico’s aging refineries to produce more premium fuels.

The Western sanctions which prevent technology transfer to Russia’s oil industry are beginning to slow projects to exploit arctic and shale oil which are expected to be the future of Russia’s oil industry.

North Sea crude oil production continues to surprise. After an increase last year, the region’s production will rise again this year to almost 3 million barrels per day, the first consecutive annual gains in 15 years.

Production from Canada’s oil sands reached 2.34 million barrels per day in 2014, 11% higher than 2013’s 2.08 million b/d. However, 2015 is turning the tide. Lower world crude oil prices and reduced demand resulting from a global economic downturn is expected to reduce oil sands capital expenditures through 2017, the Canadian Energy Research Institute said. The Canadian government said that production from the oil sands in May was down 15% from a year earlier as operators cut back on production.

Kenya and its African neighbour Uganda agreed on the route of a planned $4.5 billion oil pipeline to the Indian Ocean that will export crude from companies including Tullow Oil Plc. Tullow has found oil in both countries, with Uganda estimating finds at 6.5 billion barrels and Kenya at 600 million barrels.

In order to promote shale exploration, the UK said it plans to fast-track the permit process for shale oil and gas exploration to ensure the industry can become successful. Shale oil and gas exploration is in its infancy in a country looking to reduce its dependency on foreign fossil fuels. The government announced it was ordering local municipalities to decide on shale permits within 16 weeks of an application.

To the surprise of many, shale oil in the US state of North Dakota remains profitable at prices less than $30 a barrel as companies tap bigger wells and benefit from lower drilling costs, according to a Bloomberg Intelligence analysis. It appears new technologies are allowing companies to reduce the costs of exploiting shale reserves every year.  See Riding the Energy Wave to the Future.

The US will start exporting liquified natural gas (LNG) to France next year. French energy company EDF has signed a sales agreement for up to 26 cargoes of LNG through 2019.

US offshore wind developer, Deepwater Wind, has started construction on what is expected to be the first offshore wind farm in that country. The project will be located three miles southeast of Block Island, Rhode Island. With five turbines totaling 30 megawatts (MW) of electrical generation capacity, the Block Island Wind Farm is expected to start operating in 2016.

 

with h/t Tom Whipple

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