Atlantic Tropical Activity Beginning to Build
(The views and opinions expressed in this article are those of the attributed sources and do not necessarily reflect the position of Rigzone or the author)
[*Editor’s note – the comments below were gathered between August 25-27.]
In this week’s preview of what to watch in oil and gas markets, Rigzone’s regular energy prognosticators flag up dangerous weather patterns, continuing Covid concerns, lease sale developments and more. Read on to find out the full range of topics and trends the market observers will be on the lookout for this week.
Samuel Indyk, Senior Analyst at uk.investing.com: The tropical activity in the Atlantic is beginning to pick up and a system is forecast to approach the northern Gulf Coast at or near major hurricane intensity in the coming days, according to the National Hurricane Center. Texas and Florida could face the full impact of the storm, but the greatest risk is along the coast of Louisiana according to the models. This could impact production if companies decide to shut oil and gas platforms in the region. [This] week’s OPEC+ meeting will be one to watch after the Biden administration’s recent call for the cartel to increase oil output to tackle rising gasoline prices.
[*Editor’s note – Ida has since turned into a hurricane, knocking out approximately 95.65 percent of the current oil production, and approximately 93.75 percent of the current gas production, in the Gulf of Mexico.]
Tom Seng, Director – School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business: While it didn't seem to influence oil price direction [last] week, the delta variant continues to spread and ICU beds in parts of the U.S. are filling up. Tropical Storm Ida will be monitored for possible further strengthening as well as direction. The explosion at the Kabul airport in Afghanistan will certainly now lead to unrest in the region.
Jon Donnel, Managing Director, B. Riley Advisory Services: The Interior Department indicated it would restart the process of granting oil and gas leases on federal property. The next GOM lease sale could happen by October or November and onshore leases will be listed within a week for sales by the end of the year. It will be informative to see how this process progresses over the next few months from a variety of perspectives. First, does the administration stick to these new timelines, or will additional hurdles be put in place? Further, how actively will operators participate and what prices will they be willing to bid? Capital discipline has remained a top priority, especially for the publicly traded exploration and production companies, and if that holds the change in policy may have limited impact on near-term activity.
Tom McNulty, Houston-based Principal and Energy Practice Leader with Valuescope, Inc: We will see more and more of the large midstream players announce plans to develop assets that support carbon capture and storage. As this aspect of the energy transition grows, it will be the same companies that build oil and gas pipelines which will do the build out of a robust carbon capture and storage infrastructure. It is likely to require more than 70,000 miles of new pipe. This is a good example of just why so-called old energy companies will be driving elements of the “new” energy transition.
Mark Le Dain, Vice President of Strategy at Validere: Every week will continue to show how tight the gas market is and this week will likely be no different. The announcements continue to be largely positive too on the longer term supply and demand trends which will drive this dynamic for at least two years. Rigs aren't increasing in response to price, environmental restrictions are constraining new pipelines, and increasingly gas looks to be the big winner in the renewables sector as it provides the baseload power required. California was the latest example this past week as it committed to adding additional gas fired generation.
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