MUMBAI: Pioneer Natural Resources Co.—one of the biggest shale gas companies in the US and partner of Mukesh Ambani’s Reliance Industries Ltd (RIL) in the Eagle Ford shale acreage—plans a 20% cut in the drilling and completion cost across its portfolio.
“As a result of the significant drop in commodity prices, the company has implemented initiatives to reduce capital spending, operating costs and general and administrative expenses to minimize spending in excess of estimated cash flows for 2015 and to maintain significant financial flexibility,” it said.
“This plan includes reducing drilling and infrastructure development activities until margins improve as a result of (i) increased commodity prices and/or (ii) decreased well costs,” its annual report said.
The report said that to date, Pioneer had achieved reductions of approximately 10% in drilling and completion costs, as compared with 2014 average well costs, and was targeting an additional 10% reduction.
Rigs have been terminated or stacked in the Spraberry/Wolfcamp and the Eagle Ford Shale areas and the its asset teams are also implementing initiatives to reduce controllable production costs, including costs associated with fuel surcharges, electricity supply, water disposal and compression rental, it said.
Pioneer has an asset spread across two main assets—Spraberry/Wolfcamp and the Eagle Ford while it divested its stake in the other three in 2014, namely Hugoton field in southwest Kansas, Barnett Shale field in North Texas and Pioneer Alaska.
RIL has a 45% stake in Pioneer’s Eagle Ford venture and 49.9% stake in a midstream company or oil and gas transportation and distribution business EFS Midstream Llc, set up to evacuate and provide service to the oil and gas available from Eagle Ford.
In November, both RIL and Pioneer had evinced interest in selling off the midstream venture.
Pioneer, in its annual report, pointed out that in the current market conditions a possible sale might be in doubt.
“The company is marketing its equity investment in EFS Midstream and no assurance can be given that a sale will be completed in accordance with the Company’s plans or on terms and at a price acceptable to the company,” the report said.
However, according to RIL’s third quarter statement, it continues got be bullish on Eagle Ford, which it considers has the best prospects among shale assets in the US.
“Eagle Ford shale remains one of the most competitive liquid shale plays in the US and is better positioned to remain competitive even in a volatile price environment,” RIL had said on 16 January post its third quarter results announcement.
As on December 2014, its Eagle Ford venture contributed almost 60% of the total shale-based oil and gas production of RIL. Its total shale oil and gas revenue stood at `1,488 crore and net operating profit was at `567 crore.
Pioneer said in the annual report that in 2015, the company expects capital spending for drilling operations to total $1.6 billion with approximately 75% of this amount to go into horizontal drilling of Spraberry/Wolfcamp and Eagle Ford Shale areas.
In 2010, RIL had ventured into the shale gas business in the US through joint venture agreements with three companies—Atlas Energy Inc. and Carrizo Oil and Gas Inc., in the prolific Marcellus region in south-western Pennsylvania and with Pioneer in the Eagle Ford shale acreage, in the Texas region of the US. It had invested a total of $2.046 billion acquiring the stakes.
(Source: Mint, February 21, 2015)
CENTRE TO STATES: RELAX CURBS ON ETHANOL SUPPLY
NEW DELHI: The Centre on Friday asked states to relax restrictions on the supply of ethanol for blending with petrol at a 5:95 ratio, so that the ability of the bio-fuel’s producers — sugar mills and co-operatives — to clear cane arrears improves.
In a letter to CMs of key cane-producing states, Union food minister Ram Vilas Paswan said: “It has been observed that the expected response to the new ethanol blending programme (EBP) has not been forthcoming. There are significant transaction barriers which impede smooth supplies of ethanol for blending.” cane arrears across states hit Rs 12,300 crore this week.
Despite the Centre’s push for mandatory blending of ethanol with petrol, various state-level levies on the bio-fuel and the requirement of obtaining permits from various authorities have made the matter worse for sugar mills.
While Uttar Pradesh imposes a levy of Re 1 per litre for ethanol supplies outside the state, Maharashtra charges Rs 1.50 per litre. Also, as many as nine states, including Gujarat, Maharashtra and Delhi, impose levies up to Rs 3 per litre on ethanol that comes from other states. Even some instances suggest Octroi is also levied on ethanol for entry into municipal limits.
Some states are not only imposing levy on molasses but also regulating the movement of non levy molasses, Paswan said. Moreover, for the inter-state movement of ethanol, ‘no objection certificates’ from state excise authorities are required along with permits from dispatching and receiving states, the minister said.
Paswan said the blending programme would help the sugar industry attain viability, pointing out that the Centre has taken several steps, including subsidised loans to mills, to help them clear dues to farmers. “The states would agree that transaction barriers are impeding the successful implementation of EBP and adversely affecting the financial health of the sugar industry and cane farmers,” a food ministry statement quoted Paswan as saying.
The government last year made it clear that it wanted to even double the current ethanol blending limit to 10% at the earliest. India could achieve only 2% ethanol blending in the last fiscal, even over a decade after the government first mooted the idea and endorsed it at various stages. Worse, the blending limit achieved so far this fiscal has been a meagre 1.37%.
(Source: Business Standard, February 21, 2015)
OIL MINISTRY PAPER LEAK WIDENS, 2 MORE ARRESTED
NEW DELHI: The sensational corporate espionage scandal got murkier on Friday with the arrest of two energy consultants as confidential documents including an input for the upcoming finance minister’s budget speech were allegedly leaked in the whole operation.
The alleged pilfering of ‘secret’ documents, which was thought to have been a racket confined to the petroleum ministry, actually covered matters in finance, coal and power ministries, Delhi Police said on Friday.
After Thursday’s arrest of five people, including two oil ministry staffers and three middlemen, two energy consultants — Santanu Saikia, a former journalist now running a petro web portal and Prayas Jain — were arrested on Friday as they were suspected to be receivers of the stolen documents.
“We have arrested two people, one of them is Santanu Saikia and the other is Prayas Jain. Both of them are some sort of independent consultants. One of them (Saikia) runs a website where he would run his analysis and people would subscribe to it. These two have been arrested and investigation is on,” police commissioner BS Bassi said.
The case FIR, produced in a local court, said an input on the National Gas Grid for the finance minister’s Budget speech of 2015-16 is among the various “secret” documents recovered from the accused.
All the seven arrested were produced before chief metropolitan magistrate Sanjay Khanagwal, who remanded Lalta Prasad and Rajesh Kumar (the oil ministry staffers) and Jain and Saikia in police custody till February 23 after the police said “sensitive” documents have been recovered.
The police alleged that “incriminating” documents of the coal, power and other ministries were recovered from the possession of the accused who were supplying these to certain corporate houses for benefit.
Regarding the other three accused — Ishwar Singh, Asharam and Rajkumar Chaubey — the police said they were not required for custodial interrogation, so they be remanded in judicial custody.
Police sources claimed two sacks full of photocopied documents were recovered by them during raids at offices and residences of those arrested so far. Bassi said these people did not steal specific documents and would just photocopy anything found on the table.
Police and experts from different ministries are still in the process of examining the documents found from them to see what all kind of documents were stolen. “The documents have to be examined in consultation with the specific officials and ministries concerned so that we can know about their security classification. Only then we can say if this falls in purview of Officials Secrets Act,” he said.
Police said the duo used to receive the stolen documents from the ministries. Sources said that another junior official working at Shastri Bhavan was also detained by the police for questioning and further arrests may take place while raids were still being carried out by police teams.
Bassi said that the police were investigating what kind of links these individuals had with companies.
“Until we are not sure whether there is a an organisation involved, naming a company will not be appropriate,” he told reporters who sought the name of the company allegedly involved in the racket.
Petroleum minister Dharmendra Pradhan said he wants the guilty to be brought to book and would comment only after the probe is complete.
“Let the investigation be over. No one will be spared,” he said.
Sources said the accused allegedly used fake ID cards to gain access to Shastri Bhawan, the building that houses the petroleum ministry, late at night.
They would allegedly use the duplicate keys to open rooms of senior officials and photocopy secret official documents for sale to corporates and consultancy firms.
The rooms that they had alleged accessed to steal official documents included rooms of oil ministry special secretary Rajive Kumar, joint secretary (refineries) Sandeep Poundrik, joint secretary (exploration) UP Singh and director (exploration-1) Nalin Kumar Srivastava, among others.
Sources said the locks of all the rooms are being changed and security and vigilance enhanced.
(Source: The Financial Express, February 21, 2015)
INDIAN REFINERS PROCESS 4.7 PCT MORE OIL IN JAN Y/Y – GOVERNMENT
Indian refiners processed 4.7 percent more oil in January from a year earlier at about 19.67 million tons, or 4.65 million barrels per day (bpd), preliminary government data showed on Friday. The data included estimated crude processed by Reliance Industries Ltd’s 580,000-bpd export-focused plant. Reliance’s two refineries in Jamnagar in western Gujarat state account for about 30 percent of India’s refining capacity.
The country’s oil output in December fell 2.3 percent to about 753,700 bpd, or 3.19 million tons, while natural gas output dipped 6.6 percent to about 2.87 billion cubic metres.
(Source: Reuters, February 21, 2015)
CAIRN INDIA CUTS 250 JOBS AS PRICE FALL DENTS PROFITS
MUMBAI: Cairn India, a part of the Anil Agarwal-led Vedanta Group, has cut 250 jobs, or about 14 per cent of its headcount, as a steep fall in crude oil price dented the company’s profit and the outlook on oil remained cloudy, industry sources said.
While the company confirmed the downsizing, it declined to comment on the number of employees who were let go of or other details. It had more than 1,800 employees. ‘The past few months have brought significant changes in the global oil and gas space.
The reductions in crude oil prices have deleteriously impacted the sector, globally. At Cairn, we are aligning our working to enable a sustainable competitive business and to deliver our business goals,’ the firm said in a response to ET’s query.
Crude oil prices have plummeted almost 60 per cent since June due to oversupply in the market. Benchmark Brent crude touched lows of $45 per barrel in January as against a high of $115 last summer. Oil has seen a rally recently and reached $60 a barrel again for the first time 2015.
Cairn India’s net profit plummeted 53 per cent year-on-year to Rs 1,350 crore in the quarter through December, due to the fall in crude prices and lower production. Its revenue fell 30 per cent to Rs 3,504 crore during October-December.
Its shares have been under pressure too, taking cues from global crude prices. Since June, the time when crude oil prices started falling, shares of the company have fallen 26 per cent on the BSE to end at Rs 254 on Thursday. In the same period, the Sensex has gained 19 per cent.
‘We are working on resource optimisation to drive efficiencies for value generation, in the current environment,’ Cairn said in the response on Thursday.
(Source: The Economic Times, February 21, 2015)
BP LOSES BID TO CUT MAXIMUM $13.7 BILLION GULF SPILL FINE
A U.S. judge on Thursday rejected BP Plc’s (BP.L) attempt to reduce the maximum civil fine it could face for its role in the 2010 Gulf of Mexico oil spill, leaving it potentially liable to pay $13.7 billion under the federal Clean Water Act.
U.S. District Judge Carl Barbier in New Orleans agreed with the federal government that the maximum civil penalty that BP could face is $4,300 per barrel spilled.
BP had sought a $3,000 per barrel maximum, equal to a maximum $9.57 billion civil fine. Barbier has not decided how much BP should pay, and it is unclear when he will.
Setting a fine is the last step in a civil trial overseen by Barbier to determine responsibility and penalties for the April 20, 2010 blowout of the Macondo oil well, which killed 11 workers and caused the largest U.S. offshore oil spill.
BP spokesman Geoff Morrell said the company disagrees with the decision and is considering its legal options.
Barbier previously ruled that BP had acted with gross negligence or willful misconduct and that 3.19 million barrels of oil were spilled. These factors are used to set the maximum civil fine.
BP had argued that the Clean Water Act in 1990 capped the maximum fine at $3,000 per barrel in cases of gross negligence or willful misconduct.
But the judge agreed with the government that the U.S. Environmental Protection Agency could raise the maximum to account for inflation and was required to do so by Congress.
Accepting BP’s position “would invalidate nearly every agency’s attempt to inflate civil penalties that can be sought in federal court,” Barbier said.
BP has incurred more than $42 billion of costs for the spill, including for cleanup, fines and compensation to victims.
It has said any Clean Water Act penalty should reflect the company’s extensive cleanup efforts and that the Gulf region has had a solid recovery from the spill.
The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. — Reuters
(Source: The Financial Express, February 21, 2015)
OIL FALLS BELOW $60 AS OVERSUPPLY WEIGHS
London: Brent crude oil fell below $60 a barrel on Friday as oversupply, supported by record-high US crude stocks, weighed on the market.
US crude inventories rose 7.7 million barrels to 425.6 million last week, rising for a sixth straight week to record highs, data from the Energy Information Administration (EIA) showed on Thursday.
Stockpiles of West Texas Intermediate (WTI) US crude at the Cushing oil hub in Oklahoma rose the most in six years, the EIA said.
“With total crude stocks now about 425 million barrels and Cushing north of 46 million barrels, WTI is looking increasingly mispriced high above $52 per the April contract,” said Jeffries Futures analysts in a note to traders.
Brent crude futures for April were down 27 cents at $59.94 by 0915 GMT, having hit an intraweek low of $57.80 in the previous session.
US crude for March delivery CLc1 was down 24 cents at $50.92. The contract expires on Friday.
Trading was quiet in Asian hours as China and other countries were closed for the Lunar New Year holiday.
While swelling US crude inventories tend to soften prices, falling US rig numbers support oil as they signal supply reduction.
The number of rigs drilling for oil in the US fell to its lowest since August 2011 last week. This week’s rig-count numbers, produced by oil services firm Baker Hughes Inc., are due around 1800 GMT on Friday.
“I assume we’re going to continue to see another big fall [in rig numbers] and that’s going to provide support for the market,” said Tony Nunan, a risk manager at Mitsubishi Corp. in Tokyo.
But Jeffries Futures analysts said a rise in oil prices on falling rig numbers would be premature.
“Although the market could receive another pre-weekend boost from a plunge in rig counts, we will reiterate a substantial lag time of months before the rig numbers begin to force a levelling in output.”
Expectations of continued oversupply were supported by rising production levels from top oil exporter Saudi Arabia.
Barclays oil analyst Miswin Mahesh said exports from Saudi Arabia could reach 9 million barrels per day next year as it focuses on protecting market share.
“It is uniquely positioned relative to other oil producers in a highly competitive market,” he said.
(Source: Mint, February 21, 2015)
GLOBAL CRUDE OIL PRICE OF INDIAN BASKET WAS US$ 59.90 PER BBL ON 18TH FEBRUARY, 2015
The international crude oil price of Indian Basket as computed/published by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 59.90 per barrel (bbl) on 18th February, 2015. In rupee terms, the price of Indian Basket was Rs 3728.78 per bbl on 18th February, 2015 Rupee closed at Rs 62.25 per US$ on 18th February, 2015.
(Source: Indian Oil & Gas, February 21, 2015)