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Australia
The View From Down Under
“Last year was arguably the most devastating year in history for the North American oil and gas industry. Even so, Rystad Energy’s analysis concludes that 2020’s round of Chapter 11 filings fast-tracked an overdue reduction in the number of market participants by removing troubled companies and allowing their healthier competitors to remain in the playing field,” Rystad Energy noted. “In essence, nearly all public E&P producers are now positioned to navigate 2021 without significant bankruptcy risks,” Artem Abramov, Head of Shale Research at Rystad Energy, said, adding that a certain low number of Chapter 11 filings would be an integral part of the oil and gas business. In 2020, the Texas upstream oil and gas economy suffered a 30% contraction, largely due to the pandemic and the resulting crash in global energy demand, the Texas Alliance of Energy Producers’ Texas Petro Index (TPI) showed in early February. At the end of 2020, the Texas share of total US crude oil production had grown to 44% from 42% in 2019. “A number of Texas upstream indicators have turned the corner from the worst of the COVID lows, most notably crude oil prices and the monthly statewide rig count,” the Texas Alliance of Energy Producers said.
“That the industry is adding jobs is encouraging, pointing to at least somewhat better times ahead in 2021,” Alliance Petroleum Economist Karr Ingham said. “The Texas Petro Index is poised to find its cyclical trough, hopefully in the first quarter 2021, and begin to register a long and steady recovery from the ravages of COVID in 2020.” Across the US, oilfield services and equipment sector employment rose by an estimated 8,421 jobs in January 2021, marking the fifth consecutive month of growth, according to preliminary data from the Bureau of Labor Statistics (BLS) and analysis by the Energy Workforce & Technology Council. The Council’s monthly Oilfield Services and Equipment Employment Report estimates that job losses due to pandemic-related demand destruction totalled 81,061 as of January 2021. Oilfield services employment has dropped by 80,014 jobs since January 2020.
Texas Freeze Boosts Oil & Gas Prices and Disrupts Production
The extreme winter weather in many parts of the US in February, including in Texas, disrupted oil and natural gas production, pipeline flows, power generation, and refinery operations. The lowest temperatures in Texas in three decades cut off one-third of US crude oil production in mid-February, with more than 50% of the output in the Permian estimated to be down. Freezing temperatures and rolling power outages in Texas hampered the pumping of oil, as wellheads froze, electricity was out, and icy roads prevented trucking of sand and water to well sites.
Natural gas prices jumped to above $3 per million British thermal units amid record demand for power and heating across the United States.
US oil production declined by more than 30% in the week of 18 February, and as a result, WTI oil prices shot up to nearly $62 per barrel—the highest price since the first week of January 2020.
By Andy Hogan
Perth, several cities in Eastern Australia and Auckland in New Zealand have had short duration snap lockdowns over the last month, all were related to the escape of variants of the COVID virus from quarantine accommodation and remind that the pandemic is still very much in full flow, despite the recent reduction of the infection rate across some areas of the globe. Fortunately, thus far the outbreaks have been successfully contained.
Australia started its’ vaccination programme in the last week in February with the goal to have all of the population vaccinated by October this year.
The Federal government is taking a pragmatic approach to critical industries by allowing exemptions for key overseas personnel and granting them visas to enable them to relocate to and work in Australia.
Oil and Gas is seen as critical, government policy is to have a ‘Gas Led Recovery’ from COVID while investing in renewable energy technologies. It should be noted that the granting of such a visa under exemption still requires 14 mandatory quarantine on arrival. Decommissioning and P&A in ANZ is still very much to the fore, in addition to ENI, Woodside and Cooper who have firm plans over the next 12 months, the NZ Government through the MBIE ministry, has issued all of the 3-part ROI for the decommissioning of the Tui Field. The first part concerns the removal of the FPSO Umuroa, which is expected to be done by the middle of this year. The second part relates to the removal of the flowlines and seabed infrastructure with the final part concerning the P&A of all 8 wells and removal of the trees and wellheads.
MBIE are seeking interest from owners of single hull intervention vessels, specialist intervention vessels and drilling rigs, the planned timing of the work is 100 to 120 days over the coming NZ summer. Offshore drilling activity continues to slowly recover from the 2020 hiatus, at the start of the year just one semi sub was working in ANZ waters, off NW Australia with a modular drilling rig working on a platform offshore New Zealand. A second semi commenced operation late in February off the coast of Victoria.
2 more semis and 2 jackups are expected to start up over the course of Q2 this year. Plans are in place, subject to FID and regulatory approvals, for drilling and P&A campaigns over 2022 which could see MODU count approach double figures for the first time since 2015.
