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US onshore taps open; OPEC+ holds steady in ‘slower recovery’
Steve Sutherlin Petroleum News
A majority of U.S. onshore operators plan to largely restore shut-in oil volumes by the end of the third quarter, while just a few will stretch curtailment into the rest of the year, according to a Rystad Energy analysis of 25 public oil operators’ second-quarter earnings released Aug. 14.
May curtailments at the companies peaked at 772,500 barrels per day, followed by cuts of a net 680,300 bpd in June, and 306,500 bpd in July, Rystad said, adding cuts are expected to fall to a net 74,300 bpd in August, with nearly all production to be reactivated by September.
Nearly all operators reported no issues bringing volumes back online, as work on issues such as maintaining reservoir pressure and well integrity preceded moderating output or shutting in wells, Rystad said. The operators - driven by economic and technical considerations - shut in lower margin wells while reducing flowback on others.
Oil prices continue to occupy a range in the low to mid $40s. Brent prices managed to stay above $45 per barrel Aug. 19, dropping 25 cents to $45.21, as West Texas intermediate fell 18 cents to $42.75. Alaska North Slope crude fell 7 cents to 43.26 Aug. 18.
OPEC+ stays the course The Organization of the Petroleum Exporting Countries and its allies, including Russia, held firm on adherence to a previously agreed deal on oil output cuts.
OPEC+ will maintain current output policy, under which the group is reducing output by 7.7 million barrels per day, after a review by OPEC's Joint Ministerial Monitoring Committee during a meeting held by videoconference Aug.19.
Following a review of crude oil production data for the month of July, the committee praised performance in overall conformity – recorded at 97% for participating OPEC and non-OPEC countries including Mexico.
The committee said there are some signs of gradually improving market conditions, including the inventory build in July being reversed and the lessening of the gap between global oil demand and supply.
“Nevertheless, the pace of recovery appeared to be slower than anticipated with growing risks of a prolonged wave of COVID-19,” the committee said.
The committee underscored the fragility of the market and significant uncertainties, particularly associated with oil demand, and called for vigilance by all participating countries.
Meanwhile the oil industry faces yet another challenge: recruiting a new generation of workers. Young talent is increasingly souring on oil and gas, and many workers affected by layoffs amid the pandemic are ditching the industry altogether, The Wall Street Journal reported.
- STEVE SUTHERLIN
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