Oil boom sets off an energy boom, the Wall Street J
- by admin
Oil and gas production in the United States, and the rest of the world, has been growing for the better part of a decade.
In the past two years, it has surged to nearly double annual production, and by 2020, the U.S. will have added about 2.5 million barrels per day (bpd) of oil and gas, a record.
In addition, the United Arab Emirates, Saudi Arabia and others have increased production, with Saudi Arabia, which will start production on Monday, the world’s largest oil exporter.
U.K. shale production, however, has slowed and has been declining since mid-2015.
What’s behind the boom?
The U.B.E. has long relied heavily on a pipeline system called the North Sea Pipeline (NSP), which carries natural gas to its refineries in the U-shaped fields of North Sea and Outer Shelf, and supplies electricity and heat.
At times, the system has been shut down by pipeline explosions or spills, or by political unrest.
In 2017, however: •The U.N. said the pipeline was operating smoothly and that it was safe to resume using it.
•The Saudi government, in a statement, said it would invest in new pipelines and upgrade the existing ones to improve safety and security.
•Russia’s Gazprom, the country’s biggest gas producer, said that it would boost its production by about 100,000 bpd.
In April 2018, Russia’s state oil company, Rosneft, announced that it had completed construction of a gas pipeline linking the countrys largest fields in the northern Urals to its major refineries, and in September 2018, Rosnaft and Total, Russias biggest gas operator, said they were planning to expand their pipelines.
In December 2018, Gazprom announced that a second pipeline would be built linking its fields in North Sea to the restive North Caucasus.
What about the Middle East?
Oil and natural gas prices have plummeted, with U.A.E.-produced crude, for instance, now selling for less than $30 a barrel in the Middle Eastern market.
In contrast, the cost of producing oil in the Persian Gulf region has soared in recent years, as the region’s economic growth has slowed.
In May 2018, Saudi Aramco, the state-owned oil company that supplies oil to Saudi Arabia’s government, said the price of its oil in U.Y.E.—the U.AKE—was now more than three times higher than it was in 2013, when it was $2.90 a barrel.
•In January 2019, the Saudi government agreed to sell off its shares in two of its state-run oil companies, Aramco and Saudi Aram, in an effort to curb the cost-cutting drive of its top executive, Prince Turki al-Faisal.
•Last month, OPEC’s top member, Russia, announced plans to cut production by 3 million bpd in 2019, with a target of 1.8 million bp per day.
In August, the Organization of the Petroleum Exporting Countries said that its oil production would increase by more than 4 million bps by 2020.
Will oil prices continue to decline?
U-turns on the market, including on OPEC’s decision to cut output in response to the UAEs gas deal and on Iran’s plans to ramp up its production, have led to a fall in prices.
oil price fell $1.36 a barrel last month.
However, analysts said that the decline may be temporary, and prices could rise again in the second half of the year.
The average U. S. crude oil price of $39.98 per barrel last week was the lowest in more than five years.
Will U. oil prices remain low?
The long-term outlook for oil prices is for the price to rise, as demand increases and prices fall.
Oil prices have fallen since the summer of 2018, and have declined in the past three months.
As oil producers work to cut costs, however — and as U.R.
Os. have made the most progress on energy efficiency and renewables — the long-run price of oil is likely to remain below $40 per barrel.
That would represent a decline of about 10% from where it was last summer.
But even if prices rise to $60, that’s not necessarily good news.
As long as oil prices stay low, it will not help OPEC and its allies to secure more revenues from OPEC’s market share, and will make it more difficult for them to achieve other goals.
Oil experts say the longer the price declines, the more likely that OPEC and others will resort to new strategies to keep oil prices low.
Will prices increase?
Yes, according to experts.
Oil analysts say that the long term outlook is for prices to increase.
That could mean that oil prices will rise again, as U-R.O.s and other producers
Oil and gas production in the United States, and the rest of the world, has been growing for the better…