Energy Prospectus

This is why you should not worry about announcements of big oilfield discoveries until they are online. When new discoveries are made outside of the U.S. and Canada my rule is that it will take 3X longer to bring the field online.

Hess Corporation / Exxon Mobil Corporation
Source: Barclays Research; Bloomberg

HES/XOM: Likely Minimal Direct Read Through from Tullow Disclosure; Could Dampen Upside Expectations

Last night (November 12th, 2019), Tullow (TLW.L, covered by European Oil & Gas E&P analyst James Hosie) announced that laboratory analysis of oil samples from the Jethro-1 and Joe-1 wells (both on the Orinduik Block, located directly west of XOM/HES’s Stabroek Block) has indicated that both discoveries contain a heavy (10-15 API), high sulphur crude.

We suspect that HES/XOM could underperform today given Stabroek’s proximity to Tullow’s block and since we think crude quality had not previously been perceived as a significant potential risk for the XOM/HES Guyana development (prior disclosure from XOM indicated that oil from the Liza discovery is 32 API and 0.51% Sulphur, and commentary was that pricing should be similar to Brent). Importantly, both Tullow discoveries are in the Tertiary trend compared to XOM/HES discoveries that are in the Cretaceous, with the exception of Hammerhead. Regarding Hammerhead, while this crude is somewhat heavier than Liza, the company believes it is commercial quality. At this time, we do not think the Tullow announcement has direct read-through to the XOM/HES announced Cretaceous discoveries but could introduce incremental uncertainty in both crude quality and project economics until proven otherwise, and potentially dampens expectations for prospectivity of the Tertiary trend on the Stabroek block.

We also note that XOM has cited the existence of heavy oil in Guyana-Suriname basin (and current heavy oil production from the onshore Tambaredjo field) as evidence of an active petroleum system in the basin, and as impetus for its interest in the basin in the first place.

Guyana Discoveries

What I have been telling you all in my podcasts for 6 months >>>>>>>>>>>>>>>

OPEC Sees Potential for ‘Sharp’ Cut to Non-OPEC Supply Forecast
2019-11-13 14:15:00.0 GMT

By Javier Blas
(Bloomberg) -- OPEC sees potential for a “sharp” cut in
projected oil supply from countries outside the group next year,
according to Secretary-General Mohammad Barkindo.
OPEC also sees a possible “upswing” in the demand-growth
forecast, particularly if the U.S. and China sign a preliminary
trade agreement, Barkindo said Wednesday on the sidelines of an
industry conference in Abu Dhabi.

“We are likely to see sharp revisions of non-OPEC supply
going into 2020, particularly from shale basins in the U.S.,”
Barkindo said at the Abu Dhabi International Petroleum
Exhibition and Conference. “I look forward to a very successful
OPEC conference in December. We are comfortable.”

The comments underscore a more upbeat outlook for the oil
market into the new year and signal that the Organization of
Petroleum Exporting Countries may keep current production
targets when it meets in Vienna on Dec. 5-6. The group has
partnered with several non-OPEC countries, notably Russia, to
manage the oil market.

Barkindo said some American companies have warned of
slowing growth in U.S. shale in 2020, with a projected expansion
of 300,000 to 400,000 barrels a day. Shale companies have come
under pressure from Wall Street to rein in spending and return
more money to shareholders.
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MY TAKE: Unless there is reversal of the decline in the active drilling rig count very soon, U.S. oil production will go on decline in 1H 2020.

Global oil demand to hit a plateau around 2030, IEA predicts .

Bloomberg . Global oil demand will hit a plateau around 2030 as the use of more efficient cars and electric vehicles ends an expansion that dominated the past century, the International Energy Agency predicts. While the current growth rate of 1 million barrels a day -- or about 1% -- will hold for the next five years, it will ebb to just 100,000 barrels a day in the 2030s, the agency said. By that time, the use of oil-based fuels in passenger cars will have peaked, the IEA said in its long-term World Energy Outlook. “Oil demand plateaus post-2030,” said Fatih Birol, executive director of the Paris-based agency, which advises most major economies. “Demand growth is robust to 2025, but growth slows to a crawl thereafter.”

MY TAKE: By 2030 I will probably not care, but forecasting oil demand ten years from now is easy because no one will remember what you said. I've been working in the oil & gas industry for over 40 years and I seen dozens of oil supply & demand forecasts. IMO demand for oil based products is "relentless" and will not decline until years after a peak in human population. Our speaker from Raymond James said today at our Houston luncheon that very soon we humans will need to decide if they want to feed people of make biofuels. That is a source of new oil demand that IEA may have missed.