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Vol. 27, No.34 Week of August 21, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

ANS fetches premium

North Slope spread over Brent hits $6-plus as US draws down reserves

Steve Sutherlin

Petroleum News

Oil prices edged higher Aug. 17 as plummeting U.S. reserves offset China demand worries that had carried prices lower in the preceding three sessions.

ANS rose 98 cents on the day to close at $99.72, as West Texas Intermediate jumped $1.58 to close at $88.11 and Brent rose $1.31 to close at $93.65.

ANS sold at a whopping $6.07 premium to Brent, reflecting its importance to busy West Coast refiners in the absence of Russian crude, which is banned in the United States.

U.S. commercial crude oil inventories for the week ending Aug. 12 - excluding the Strategic Petroleum Reserve - plunged by 7.1 million barrels from the previous week, according to U.S. Energy Information Administration data released Aug. 17. At 425.0 million barrels, U.S. inventories stood 6% below the five-year average for the time of year. Analysts had expected a decline of 1.7 million barrels, according to a poll conducted by S&P Global Commodity Insights.

The SPR fell by 3.4 million barrels over the week, to 461.2 million barrels.

Total motor gasoline inventories decreased as well - by 4.6 million barrels - and are 8% below the five-year average for the time of year, the EIA said.

ANS fell $2.07 Aug. 16 to close at $98.74, while WTI slid $2.88 to close at $86.53, and Brent slid $2.76 to close at $92.34.

ANS dropped $2.93 Aug. 15 to close at $100.81, as WTI dropped $2.68 to close at $89.41 and Brent plunged $3.05 to close at $95.10.

On Aug. 12 ANS fell $1.62 to close at $103.74, WTI fell $2.25 to close at $92.09, and Brent fell $1.45 to close at $98.15.

Price rose Aug. 11. ANS was up $2.26 to close at $105.36, WTI was up $2.41 to close at $94.34 and Brent lifted $2.20 to close at $99.60.

From Wednesday to Wednesday, ANS fell; its Aug. 17 close of $99.72 was $3.38 below its close of $$103.10 on Aug. 10.

Banner year for high-impact wells

On a positive note for global hydrocarbon supply, discovered volumes in 2022 from high-impact wells have exceeded 1.7 billion barrels of oil equivalent - four times the tally in 2021 - with more than four months to go in the year, Rystad Energy said in an Aug. 17 release.

“These critical wells have found hydrocarbons 47% of the time so far this year, up from a measly 28% for 2021,” Rystad said.

A total of 33 high-impact wells are planned for 2022, the largest annual number since Rystad started tracking the sector in 2015, it said. In 2021, 29 high-impact wells yielded only 450 million boe due to the low success rate.

Rystad said it classifies high-impact wells via a combination of factors, including the size of the prospect, potential to unlock new hydrocarbon resources in frontier areas or emerging basins, and significance to the operator.

Discovered liquids accounted for 1.2 billion boe - some 70% of volumes this year, while gas discoveries were 550 million boe, Rystad said, adding that in previous years, gas discoveries vastly outnumbered liquids volumes.

The reversal in 2022 is mainly due to two significant oil offshore discoveries in Namibia - TotalEnergies’ Venus and Shell’s Graff, the consultancy said.

“Last year was disappointing for discovering gas and liquid volumes from high-impact wells, but 2022 is on track to make up for that slump,” said Taiyab Zain Shariff, Rystad senior analyst. “If the success rate seen in the first half of 2022 holds for the full year, we could be in for one of the most productive annual volumes total on record.”

Global majors have drilled eight high-impact wells, with four commercial discoveries, including the Namibia discoveries, ExxonMobil’s Fangtooth oil find in Guyana and Eni’s XG-002 gas discovery in the UAE.

“More than 45% of wells completed so far in 2022 are in South America and Africa, followed by Australia and Europe with 16% each of completed wells,” Rystad said, adding that Australia had three wells, while Guyana and Namibia had two wells each.

Of 19 high-impact wells completed this year, one is awaiting results, 47% struck a commercial discovery, and the rest were either dry or uncommercial, Rystad said. One find was a pure oil discovery, while the rest were either gas or liquids with associated gas.

Rystad expects 14 high-impact wells to be completed or spudded for the rest of the year, six of them by majors.

Eni operates two high-impact wells currently being drilled, the Cronos-1 well off Cyprus at a water depth of 2,350 meters targeting a Cretaceous play, and the Dan Tranh-1X well off Indonesia targeting a newly identified Miocene play in the Song Hong Basin, Rystad said. The other two in-progress wells are the play-opening Rencong well operated by Repsol in the Andaman-III block off Indonesia, and Shell’s Jaca-1 well in Block 6 in the frontier Rio Muni basin of Sao Tome & Principe.

“The rest of the wells planned for this year are distributed throughout Africa and the Americas, with some exciting wildcats to watch in Southeast Asia as well,” Rystad said.

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