New base 677 special 01 september 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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NewBase 01 September 2015 - Issue No. 677 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

OMAN MAY IMPORT LNG AS DOMESTIC GAS USE SURGES Bloomberg + Gulf News + NewBase

Oman may start importing liquefied natural gas (LNG) to meet surging domestic energy demand, according to two people with knowledge of the matter, a shift in trade that would make it the fourth Arab country in the oil-rich Gulf to buy LNG.

Oman currently exports liquefied gas under long-term contracts to Spain and several Asian countries including Japan and South Korea. It’s now studying options to import LNG as well, to help generate power and for other uses, said the two people, who asked not to be identified because the plan isn’t public. Potential imports would arrive at the port of Sohar north of the capital city Muscat. Oman’s Ministry of Oil and Gas didn’t respond to calls for comment on Sunday.

LNG trade is expanding in the Middle East due to the growing regional use of electricity and the lack of cross-border pipelines for transporting natural gas. Combined imports of LNG by Kuwait and the United Arab Emirates increased 47 per cent in 2014 from the previous year, according to




the International Group of Liquefied Natural Gas Importers. Bahrain is building a receiving terminal for the fuel, while Jordan, Egypt, Morocco and Pakistan also plan to buy LNG.

Oman’s possible shift to importing the fuel follows years of rising local gas consumption and shrinking exports of LNG. Spare production capacity at Oman LNG LLC, which operates the country’s facilities for liquefying gas for export, last year reached its highest level since 2006, according to the company’s annual reports. Oman produced 7.95 million tons of the fuel in 2014 from plants with an annual capacity of 10.4 million metric tons, Oman LNG said in its latest annual report. Natural gas consumption in Oman jumped to 774 billion cubic feet in 2013 from 520 billion cubic feet in 2009, according to the US Energy Information Administration.

LNG imports would supplement Oman’s current supply of natural gas by pipeline from Qatar. Oman also hopes to receive gas from Iran through a separate pipeline that has yet to be built. Oman and Iran are discussing a route for this link, Mohammad Al Rumhy, Oman’s oil minister, said on April 14, though the two countries still haven’t agreed on a price for the Iranian gas.




Qatar, Saudi capitals metros top $61bn GCC rail projects Meed Projects

Railway and metro projects worth nearly $61bn are under construction in the GCC region, according to Meed Projects. Of these, $40bn comprise work on the Doha and Riyadh metro schemes, said the online projects tracking service.

The GCC states must decide soon on the fate of the long-awaited GCC rail railway network if it is to be operational by 2020, Meed Projects said.

While metro projects in Doha, Dubai, Jeddah, Mecca and Riyadh are pushing ahead rapidly, efforts to develop the ambitious GCC railway track that would link the six states have been sluggish.

Projects including Doha and Riyadh metro schemes will be discussed in detail at Meed’s 11th annual Mena Rail & Metro Summit in Dubai in October.

The only overland, mainline networks under construction currently are the final elements of the high-speed Haramain network between Jeddah and Medina, and the freight lines serving, Dammam, Jubail and the Waad al-Shamal mining development.

“Despite years of talks and planning, we are still no closer to the development of a GCC rail network even though we are just three years away from the official opening date,” said Ed James, director, Content & Analysis at Meed Projects.

“Long distance freight and passenger projects do appear to be problematic to develop in the region due to a range of issues such as cost, geo-politics, technology and rights-of-way.

“A good case in point is the estimated $5bn second phase of the Etihad Rail network which will be part of the GCC railway network linking the Abu Dhabi border with Saudi Arabia to Al-Ain where it would link up with the Omani section.

Despite tenders to build the project having been evaluated for more than two years, the client recently decided to retender the project resulting in even more delays. At the same time, Kuwait is no closer to awarding its section of the network, having considered both privately and publicly financed solutions to fund the project, while Saudi Arabia has been trying to get the estimated




$7bn Landbridge rail link between Jeddah and Riyadh off the drawing board for more than a decade.”

However, despite the lack of progress, there are signs that mainline rail development in the region is picking up. Bids were submitted to Oman Rail earlier this year for the estimated $6bn first phase of its Oman network, while Qatar Rail says it plans to tender the first stage of its $15bn long-distance passenger and freight line early next year.

All told, there are more than 34,000km of railway projects planned across the Middle East & North Africa. This will require more than $200bn of investment, making the region one of the most active globally in the sector.

It is the regional metro sector, though, that is moving fastest. In addition to the Doha and Riyadh metros which are now well under way, contract awards to build the estimated $11bn Mecca metro are imminent, while tenders are expected soon for the $13bn Jeddah metro and next year potentially for the Medina and Dammam metro networks. Similarly, bidding is ongoing for the extension of the Dubai metro’s Red Line to link it with the site of the Expo 2020 development.

“Metro projects appear to be more of a priority for governments in the region which are facing increasing traffic congestion in their major cities,” James said.

“On the other hand, the thinking on mainline rail networks appears to be that there is not such an immediate return on the substantial investment required. This has resulted in delays over project implementation,” he added.




Saudi Rising oil production lifts Saudi’s economic growth Reuters + NewBase

Rising oil output boosted Saudi Arabia’s economic growth to its fastest pace in over a year in the second quarter of 2015, data showed yesterday, but growth looks likely to slow in coming months as low oil prices make themselves felt.

Gross domestic product, adjusted for inflation, expanded 3.8% from a year earlier in the second

quarter, accelerating from a revised 2.3% in the first quarter, the state statistics department said.

It was the fastest growth since 6.4% in the first quarter of 2014 - showing

the economy of the world’s biggest oil exporter is still coping comfortably with cheap oil, which is less than half its mid-2014 price. To defend its share of the global oil market, Saudi Arabia pumped a record 10.56mn bpd in June, up 231,000 bpd from May.

This helped the oil sector grow 5.1% from a year ago in the second quarter, accelerating from 1.8% in the first. Growth in the non-oil sector was little changed at 3.1% against 3.0%.

Analysts think Saudi Arabia can’t escape the impact of cheap oil indefinitely, however. Growing concern among businessmen over the government’s huge budget deficit, expressed in the Saudi media over recent weeks, suggests companies and consumers may become more cautious about spending.

Meanwhile, there are signs that the government has started slowing or shelving some of its huge infrastructure projects to save money. For example, Spain’s Talgo said in July that Saudi Arabia had cancelled a $201mn contract for six high-speed trains.

“We are likely to see a gradual deceleration in growth going forward - though it will not be abrupt,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

Any slowdown may become more pronounced in 2016, as market pressures make it harder for Saudi Arabia to keep raising oil output at such rapid year-on-year rates. State spending may drop as a one-off bonus of two months of salary for public employees, paid in early 2015 to mark the accession of King Salman, is not repeated next year.

A Reuters poll of economists published earlier in August found them predicting Saudi GDP growth would ease to a median 2.6% next year from 3.0% in 2015.




Egypt :Eni mulls stake sale in 'supergiant' gas field Reuters + NewBase

Italy's Eni is open to selling a stake in its "supergiant" Zohr gas field discovery off of Egypt, its chief executive said, as the state-controlled energy company looks for funds to bankroll development without sacrificing dividends.

Eni said on Sunday it had discovered the largest known gas field in the Mediterranean off Egypt, covering an area of about 100 sq km and containing a potential 30 trillion cubic feet (tcf) of gas. The find could help meet energy-starved Egypt's gas needs for decades and pose a challenge to other gas projects in Egypt, Israel and Cyprus. Eni last year was the first oil major to cut its dividend

after a plunge in global oil prices. It has already sold part of its gas discovery in Mozambique and is seeking to sell another 15 per cent. Eni chief executive Claudio Descalzi did not rule out also selling a stake in the Egypt find. "It's an open door to give value and solidity to Eni's balance sheet," Descalzi said in an interview published on Monday by Italian newspaper La Repubblica. "But it will not be a necessary outcome. There is much less to spend than in Mozambique and the new gas is aimed at the local domestic market with prices disconnected from those of oil, which today are at six-year lows," he said. Once an energy exporter, declining oil and gas production and increasing consumption has forced Egypt to divert energy supplies to the domestic market, turning it into a net importer. It began imports of liquefied natural gas (LNG) in June. The Zohr discovery along with planned import deals from Israel could potentially allow Egypt to resume some gas exports. It follows other significant gas discoveries in the Mediterranean in recent years, including off Egypt, Israel and Cyprus. The projects are seen as a means of lowering Europe's dependence on Russian gas imports. Eni shares rose as much as 4 percent on Monday. By 0817 GMT the stock was up 1.9 percent at 14.68 euros. Israel energy shares fell sharply, with Delek Drilling and Avner Oil both down by more than 13 percent and Ratio Oil Exploration down 18 per cent. Santander analyst Jason Kenney said the Egypt discovery was material and supportive of deep value for Eni. He said Eni was very likely to look at monetising a sizeable stake, possibly 30-40 per cent, within 3-4 years.-Reuters




Libya's NOC, Central Bank woo oil majors in London in struggle for contracts Source: Reuters + NewBase

Libya's National Oil Company and Central Bank chairmen engaged in another round of blitz meetings with oil majors in London in a renewed effort to stop its rival wooing its clients. The head of the Tripoli-

based NOC, Mustafa Sanallah, said he and Tripoli-based Central Bank Chairman Saddek El-Kaber held meetings with 26 oil firms over the course of three days in London, including Britain's BP and U.S. major ExxonMobil, as well as OMV, Motor Oil Hellas, Hellenic Petroleum and Vitol.

'We got the response from the oil sector that they are committed to all contractual terms' with us, Sanallah said. Rival NOC and central bank leaders appointed by internationally-recognised premier Abdullah al-Thinni, seeking to gain control over Libya's oil sales, hope to discuss contracts with oil majors at a conference in Dubai next month. 'We don't expect (our partners) will go there,' said Sanallah. 'They are committed to working with the NOC' in Tripoli.

The internationally-recognised eastern government said in March it wanted oil buyers to pay through a new Dubai-based bank account, replacing a decades-old payment system via NOC Tripoli. Oil customers have thus far eschewed such discussions due to legal concerns.

Libya, which relies on oil revenue for nearly all of its income, has been battered by the oil price drop of around 60 percent over the past year, coupled with production losses from fighting and protests from various local factions since a group called Libya Dawn seized control of the capital last year.

The fighting has depleted oil revenue to just over $5 billion in the first six months of the year, compared with some $50 billion in total during peak production and higher oil prices in 2012. Current production of 360,000 barrels per day (bpd) is less than a quarter of the peak.

This has also raised questions about the solvency of the central bank and its access to foreign currency.




Sanallah said the NOC is working to switch the country’s power grid in the coming months from gasoil, which it is currently forced to import, to natural gas it produces itself. He added that Kaber has more than 30 other 'austerity' measures aimed at stemming the loss of currency reserves.

Sanallah is also working to reopen certain fields, such as El Sharara, which is currently closed as a result of protests from local community leaders. The field accounts for nearly 20 percent of Libya’s production, and has been open for just four months in the past year; the lost revenue during that time has approached $10 billion. 'We're trying to open the valves and keep the dialogue going,' Sanallah said.

While the NOC and central bank have fastidiously avoided politics to keep the country’s oil lifeline flowing to the Libyan people, Sanallah said successful talks between the two factions could provide a salve to the beleaguered oil industry. 'If they reach a conclusion, I think immediately we could go back to full production,' Sanallah said, adding the 'atmosphere itself' would change.




Thailand: Loyz Energy reports significant increase in oil production .. Source: Loyz Energy

Loyz Energy, a fast-growing Singapore-based upstream energy group, has seen positive results from its 20% equity investment in the oil producing concession located in the Phetchabun Basin, Thailand.

Loyz Energy is pleased to announce the successful completion of the recent drilling programme in Thailand. Three wells in the programme were completed as production wells, with the fourth successfully appraising the reservoir’s oil water contact. In total, the three new production wells delivered an initial combined production rate in excess of 4,000 barrels of oil per day ('bopd') on testing, with gross field production at 9,466 bopd as at 1 July 2015. Whilst total well capacity is in excess of 10,000 bopd, total production will likely be set at the 4,000 to 6,000 bopd level for the rest of 2015 to manage reservoir performance and value for the long term.

Based on an independent qualified person’s report dated 1 January 2015 on the updated oil reserves estimates as of 31 December 2014 prepared by Chapman Petroleum Engineering, proved reserves have increased by 46.5% to 11.6 million barrels and proved and probable reserves have increased by 14.9% to 34.0 million barrels. For the avoidance of doubt, the figures stated herein relate to the entire Concession, in which the Group has an equity interest of 20%.

Mr. Adrian Lee, the Group’s Managing Director, commented:

'The impact of these new wells and reserve estimates are positive for Loyz Energy. They are sub-US$14/bbl operating cost barrels that helped us achieve EBITDAX of US$1 2015; a key target for the business. We look forward to the second phase of the drilling programme in the later part of 2015, which will be fully funded by cash flows generated from the on-going production at the SW1, L44/43 and L33/43 concessions in Thailand.




Tanzania: Swala Energy obtains licence extension to progress Tanzania drilling campaign Source: Swala Energy

Swala Energy has advised that the Tanzanian Ministry of Energy and Mining ('MEM') has agreed to extend the period within which an exploration well must be drilled in each of the KilosaKilombero and Pangani licences in Tanzania to the 20th February 2017. This one-year extension is to be deducted from the 4-year additional exploration extension period currently due to commence on 20th February 2016, resulting in the additional exploration period having a duration of three years.

Under the Production Sharing Agreements ('PSAs') that govern activity on each of these two licences, the Joint Venture ('JV') was originally obliged to drill an exploration well in each licence by the 20th February 2016.

The JV carried out a seismic survey that was completed in December 2014 and in the same month the JV and the Tanzanian Petroleum Development Corporation ('TPDC') agreed to carry out the processing and interpretation of the seismic data during the first half of 2015. This left

relatively little time in which to confirm drilling locations and secure long lead-time items, and the JV therefore requested TPDC and MEM to allow it to complete its exploration drilling obligations in the next exploration phase. Both entities have now consented to this modification.

Dr. David Mestres Ridge, Swala CEO, said: 'The joint venture has been actively preparing to drill the two licences and we are grateful to MEM and TPDC for their pragmatic flexibility in respect of the drilling timetable. In June, Swala Oil and Gas (Tanzania) appointed an Operations Manager with responsibility for the drilling campaign and it is in the process of engaging a consultant to carry

out the Environmental Impact Assessments for the drill locations. In parallel, it has been further interpreting the seismic data so as to optimise those eventual drilling locations. The extension of the time limit for completing the exploration drilling allows the JV to continue its preparatory work with the comfort that all steps are being taken to maximise the chances of success and minimise costs whilst not compromising on either health, safety or environmental integrity.'

Joint Venture participants in the Kilosa-Kilombero and Pangani Licences: Swala Oil and Gas (Tanzania) (Operator) 50%; Otto Energy (Tanzania) (Subsidiary company of Otto Energy) 50%.




US: Big Rail's little cousins find boon in oil-by-rail bust REUTERS - JARRETT RENSHAW

Amid the rolling mountains surrounding this quiet town in southwest New York state, tucked away on miles-long stretches of underused rail tracks, hundreds of idle oil tank cars attest to the extent of fallout from oil's rout.

The oil tank cars - a year ago sought-after to haul crude from North Dakota to New Jersey - now stand idle as a result of two converging trends: the reversal in U.S. shale oil production and the completion of new pipelines.

They show how the pain from the slump in the oil-by-rail industry has spread far and wide.

Big rail lines, such as Berkshire Hathaway-owned BNSF Railways or Union Pacific are losing what used to be their fastest-growing source of new traffic; refiners such as PBF Energy are left with millions of dollars worth of unused rolling stock; and leasing firms such as Trinity Industries and Greenbrier Companies Inc have seen monthly rates fall to a third of peaks above $2000 per car.

There is one winner, though.

Short-line railroads from Utah to Pennsylvania are making millions of dollars every month by providing refiners, producers and traders a place to park their unused tank cars.




Outside this town of 14,000, along sidings that once helped ship vast volumes of coal, lumber and other raw materials during the region's industrial heyday, the Western New York and Pennsylvania Railroad is now collecting fees for about 800 cars.

“They’ve been here for about five months, and we hear rumors more are coming,” Carl Belke, chief operating officer for the line, told Reuters. WNY&P's main rail line is about 190 miles (306 km) long. By comparison, BNSF has 32,500 route miles in 32 states.

Gennessee and Wyoming, the nation’s largest short line rail road, is collecting as much as $5 a day on each of about 2,000 idle crude rail cars in Utah, the Midwest and Canada, according to chief commercial officer Michael Miller.

The company is also storing up to 700 frac sand cars, as plummeting oil prices have pushed production into reverse for the first time in five years. Demand has been rising since late last year, accelerating further in the past three months, Miller said.

Reading Blue Mountain & Northern Railroad and the North Shore railroads in Pennsylvania are also storing cars, according to company officials. Neither company would provide specific numbers.

To be sure, the extra revenue offsets only some of the income lost because of a drop in traffic caused by declining coal use and slowing crude shipments. "We'd much rather be moving cars than storing them," Miller said.

Still, rail car storage is a fast-growing business. In addition to oil traffic decline, tens of thousands of cars may need to be retrofitted or replaced to meet tough new safety regulations. "Clearly, the number of cars being displaced over the coming months exceeds the existing capacity for storage," Todd Cecil, vice president at Chicago-based Iowa Pacific Holdings said in a July news release announcing its storage expansion plans.

The short rail company also said it already had three unit trains in storage in Colorado and was planning to use its tracks in upstate New York, along with others, to capitalize on demand for up to 50,000 cars that it expects to come off the tracks as the new rules are phased in.

IMPORTS AND PIPELINES

Short line railroads have traditionally served as a temporary storage hub for underused rail cars, particularly in regions where industry has shut down or scaled back.

“Simply, they have the space,” Barton Jennings, a professor of supply chain management at Western Illinois University, said. “Many of these short lines have a one or two customers and they




can utilize their sidings for storage. Also, they are located at the beginning or end of a trip, so it makes sense.”

Crude shipments by rail soared to 1.1 million barrels per day (bpd) in December 2014, or more than a tenth of total U.S. production, from 20,000 bpd in 2009, but volumes have been falling since the start of this year, according to the data from the U.S. Energy Information Administration. (Graphic:link.reuters.com/xag55w)

Some of the decline may reflect lower demand from refiners such as PBF, which found it cheaper to import crude this year than to haul it by rail from North Dakota, where most traffic originates.

While the firm has invested in new facilities to allow its two East Coast refineries to unload up to 210,000 bpd of crude oil from rail cars, it only ran about 60,000 bpd in the second quarter, less than its contractual amount, CEO Tom Nimbley told investors last month. Shipments are set to fall to as little as 40,000 bpd this quarter.

Rival refinery Phillips 66 has also cut oil-by-rail shipments.

“We actually set cars on the siding. We brought imported crudes in the system," CEO Greg Garland recently told investors. In addition, construction of several new pipelines from North Dakota to a major storage facility in Cushing, Oklahoma, has been completed, providing a cheaper alternative for shippers and further reducing demand for tank cars.

For the first time since 2012, pipeline shipments from North Dakota are due to overtake exports by rail, state data shows. If the slump in shipments and tank car glut persists companies could consider scrapping some cars, though analysts say it is unlikely.

"It's too big of a write off," said Taylor Robinson, president of PLG Consulting, which works with crude by rail firms.“They will hold on to them and hope things improve. These are 30-40 year assets.”




NewBase 01 September - 2015 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil jumps 8 percent, biggest three-day surge since 1990 Reuters + NewBase

Oil futures soared on Monday for a third consecutive day, rising more than 8 percent, as a downward revision of U.S. crude production data and OPEC's readiness to talk with other producers helped extend the biggest three-day price surge in 25 years.

U.S. crude oil prices have skyrocketed more than $10 a barrel in three days, erasing the month's declines as a series of relatively small-scale supply disruptions and output risks prompted bearish traders to take profits on short positions, which had been near a record a week ago.

On Monday, prices fell initially but reversed course mid-morning. The three-day gains were more than the 20 percent mark that often signals a bull market. Even so, few were prepared to call a definitive end to the slump.

"Sharp gains over the past three trading sessions were driven by a combination of short covering and chart-readers again looking to call a bottom falsely," Citi said in a report, saying that prices may yet test new lows before year's end.

Brent LCOc1 October futures rose $4.10, or 8.2 percent, to settle at $54.15 a barrel, with volumes relatively muted by a British public holiday.

U.S. crude CLc1 gained $3.98, or 8.8 percent, to settle at $49.20 a barrel, taking three-day gains to 27.5 percent, the most over three days since August 1990. In dollar terms, it is the biggest three-day gain since February 2011.

Oil price special

coverage




While some analysts have been expecting prices to rebound after a one-third slump since late June, most have been shocked by the whiplash of the past few days, and wondered whether it was an overreaction to headlines.

On Monday, some cited a commentary in the latest OPEC Bulletin publication suggesting the group may be increasingly willing to talk to other producers about curbing output, even though it was broadly in line with previous comments. There has been no indication this summer that core Gulf OPEC members are pushing for more talks.

"As the organization has stressed on numerous occasions, it stands ready to talk to all other producers. But this has to be on a level playing field. OPEC will protect its own interests," according to the report.

The rally was also fueled by revised U.S. government figures showing that domestic production in the first half of the year was lower than initially reported.

The Energy Information Administration said its new survey-based data showed the United States pumped just below 9.3 million barrels per day (bpd) in June, down by 100,000 bpd from a revised May figure. The June data was also nearly 250,000 bpd below what the EIA had estimated a few weeks ago.

Additionally, the largest synthetic crude oil producer in Canada halted output after a fire, lifting Canadian light crude prices and further supporting futures.

"There's extreme volatility, with London out and the market is rallying on the OPEC headline," said Scott Shelton, commodities specialist at ICAP in Durham, North Carolina, referring to a bank holiday in Britain.




NewBase Special Coverage

News Agencies News Release 25 Aug 2015

Walking Oil Rigs Spur Cheaper, Quicker Drilling in Supply Glut Bloomberg + NewBase

Have you ever seen an oil rig walk?

Some of the newest rigs can travel hundreds of yards to the next well under their own power, lurching along like 150-foot-tall robots on pneumatic legs that raise the equipment five inches at a time, nudging forward at about a foot per minute. While that sounds slow, it is faster and cheaper than dismantling a rig and trucking the parts to a new site nearby.

More efficient drilling rigs that cost a third less than just a year earlier are changing the face of the U.S. shale industry, helping boost per-rig output in the four largest fields by at least 40 percent since the crude price plunge began in 2014. While helping producers pump more oil, the new rigs have a downside. Companies such as Helmerich & Payne Inc., Nabors Industries Ltd. and Patterson-UTI Energy Inc. that provide the equipment face investor concern that the improvements they’ve made might translate into fewer sales in the future.

Producers “are being incentivized to continue drilling to keep cash coming in the door because costs have come down so much,” Rob Desai, an analyst at Edward Jones in St. Louis, said in a telephone interview. “Even though the rig count is down by half, you can do more with the half that’s still working.”

U.S. Production

Even though the number of rigs has dropped by more than half since prices began falling in June of last year, U.S. output is down just 3.3 percent from a four-decade high.

The rigs aren’t the only factors increasing efficiency in U.S. oil fields. Over the past few years, service companies such as Schlumberger Ltd. and Halliburton Co. have also been crafting more efficient systems to complete wells, including the use of 3-D seismic imaging that can track where cracks are going in the oil-soaked rock underground.

The newest rigs, though, are making a substantial difference at a time when producers, historically heavy users of debt to fund exploration, need to keep cash flowing as prices remain mired below $50 a barrel. West Texas Intermediate lost 3 percent to $47.71 on the New York Mercantile Exchange at 12:37 p.m. Singapore time.




Anadarko Petroleum Corp. plans to boost the number of horizontal wells it drills this year in Colorado’s Wattenberg play to more than 380 from about 360 last year, employing just a little more than half the number of rigs it used in 2014, said John Christiansen, a spokesman for The Woodlands, Texas-based producer.

Better Technology

“Technology continues to improve and enhance the way we’re able to do things," Christiansen said. "The walking rig is another evolution in that process.”

Rigs have been improving since the shale revolution began almost a decade ago. The so-called AC rigs of today run on alternating current, enabling drillers to tweak the power going to different components, such as the mud pumps that shoot fluid into the well and the top drive that controls the drilling. The older, mechanical rigs were less accommodating, with a series of belts and pulleys that powered all of the components equally.

The walking rigs allow producers to take advantage of a new system of "pad" drilling in which clusters of wells are drilled within a small area. Giving the rigs mobility cuts both costs and time in moving them, said James West, an analyst at investment bank Evercore ISI in New York. At the same time, the day rate for renting the most advanced rigs has fallen to about $20,000 from a high of as much as $30,000 last year, according to West. With the price of oil down, equipment suppliers have had to trim their own prices to stay competitive.

Cannibalizing Demand

While newer technologies will cannibalize some rig demand, there will still be a need for a wide variety of rigs, said Sean Roach, vice president of drilling systems and services at Schramm Inc., a West Chester, Pennsylvania-based maker of walking rigs. Shale producers are taking the toolbox approach to drilling, with a variety of rigs for different types of wells, he said.

Nonetheless, Desai of Edward Jones said he doesn’t see how drilling contractors will be able to keep expanding their rig fleets after the rollout of new, more sophisticated rigs over the past few years.

“We need fewer rigs than we did a while ago for the same amount of production,” he said. “That is kind of a long-term fear we have for the onshore drilling market.”




Barclays: There's a New Oil Glut in Town Bloomberg - Luke Kawa

As crude oil continues to rip higher—it's currently in the midst of its best three-day performance since January 2009—analysts at Barclays highlight one reason why this rally could prove to be short-lived.

Resilience in U.S. shale production and supply increases from members of OPEC have left global oil markets in a prolonged state of surplus. Earlier in the year, this oil surplus was relatively easy to spot in the form of rising U.S. inventories.

But with U.S. crude stockpiles trending downward since late April, a new glut has emerged, according to Barclays. "The surplus in the petroleum market is increasingly evident in refined products," says the team led by commodities analyst Miswin Mahesh. "Global refinery throughput touched a record high of 80.6 million barrels per day in July, with utilization rates at the highest in eight years."

This product glut is less intense than the crude surplus and took a little longer to materialize, as elevated crack spreads and heavy demand for gasoline prompted refiners to run on full blast.

Elevated refinery margins and a steep contango structure in the oil futures curve that created incentivizes for traders to lock in profits by engaging in storage arbitrage were two key sources of demand for crude that helped pull WTI crude off its March lows. The gap between the spot price and the 12-month futures contract has proceeded to narrow since then, effectively eroding the profitability of the storage trade.




And with refiners heading into the traditional fall period of scheduled maintenance, this global source of demand for crude is poised to wane by 2 million barrels per day in September and by 2.7 million barrels per day in October, according to Mahesh. This development could cause worries about U.S. storage tanks getting filled to the brim to reemerge unless crude output is suitably curtailed as refineries go offline.

"If supply does not adjust swiftly by then, crude stocks could swell faster again," writes Mahesh. "To a certain extent, as the market trades the shoulder month contracts, these expectations are getting priced in."

Barclays is sticking with its call that oil prices will rise by year's end as the supply-demand imbalance eases, while cautioning that higher than anticipated refinery maintenance, a slowdown in China, continued strength in the U.S. shale industry, increased supply from Iran, and a U.S.-dollar rally together constitute a long list of notable risks to its forecast.




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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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New base 677 special 01 september 2015