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ANS in war risk flux
Israel/Hezbollah ceasefire drop offset by OPEC+ output moderation talks
Steve Sutherlin Petroleum News
Alaska North Slope crude edged 6 cents lower Nov. 26 to close at $71.73 per barrel, while West Texas Intermediate shed 17 cents to close at $68.77 and Brent shed 20 cents to close at $72.81.
In four trading days ending Nov. 26, crude prices were whipsawed by changing perception of global war risk, but ANS ended the period priced just 20 cents less than its close of $71.93 on Nov. 20.
The most dramatic price movement of the week was on Monday, Nov. 25 when word broke of a pending cease-fire agreement between Israel and Hezbollah forces in Lebanon.
The news sent ANS plunging $2.19 to close at $71.79, as WTI plunged $2.30 to close at $68.94 and Brent plunged $2.16 to close at $73.01.
The cease fire was made official Nov. 26, but prices were supported by word that the Organization of the Petroleum Exporting countries and its allied producers were discussing an extended delay to a scheduled crude production increase due in January, according to OPEC+ sources quoted by Reuters.
The sources came forth after OPEC+ members Iraq, Saudi Arabia and Russia held talks Nov. 26 in Baghdad, Iraq, ahead of a Dec. 1 OPEC+ meeting to set 2025 production policy.
Prior to Nov. 26, crude prices were in an uptrend sparked by an escalation of long-range missile attacks between Ukraine and Russia.
On Nov. 22, ANS jumped 91 cents to close at $73.98, WTI leapt $1.14 to close at $71.24 and Brent jumped 94 cents to close at $75.17.
ANS leapt $1.14 Nov. 21 to close at $73.07, while WTI leapt $1.23 to close at $70.10 and Brent vaulted $1.42 to close at $74.23.
On Nov. 26, ANS traded at a $2.96 premium over WTI and at a $1.08 discount to Brent.
GasBuddy said its annual Thanksgiving Travel Survey revealed that 72% of Americans plan to take a road trip over the holiday -- a 75% increase from the 41% that planned to take a trip by car in 2023.
"Of those not traveling by car, 10% plan to fly and 87% are not traveling at all," GasBuddy said.
WoodMac: High-impact exploration reduces scope 1, 2 emissions Reduction of scope 1 and 2 emissions from extraction and refining is more effectively achieved through discovering new fields rather than improving existing fields, according to the November 2024 Horizons report from Wood Mackenzie.
Retrofitting old fields is expensive, it said.
New fields benefit from modern decarbonization technologies and increased facilities throughput, making them cleaner, WoodMac said.
Successful exploration lowers oil and gas prices to consumers, cuts carbon intensity and adds value for resource holders and explorers, WoodMac said, adding, "High-impact exploration, targeting resources large enough to support new infrastructure hubs, offers a compelling opportunity for those with the requisite skills and appetite to achieve economic and decarbonization goals."
New fields do not swell demand; global oil and gas demand growth of some 50% since 2000 exceeds everything happening in exploration, WoodMac said. Demand doesn't grow when exploration succeeds or shrink when it fails.
"Exploration through the current decade is on track to provide 12% of global oil and gas supply," WoodMac said. "If we assume that these new fields displace existing supply options with emissions intensity typical of older fields, then global scope 1 and 2 emissions in 2030 would be cut by around 6%."
Exploration does not increase demand; therefore, it does not add to global scope 3 emissions, it said.
For oil in particular, new supply in upcoming decades will come primarily from new investment in existing fields, it said.
Much of investment by large players is in high-impact exploration for new plays and basins that only begin to add revenues several years into the future, WoodMac said. High-impact explorers seek to improve portfolio quality; growth or replacing production might be secondary.
The industry urgently needs new barrels to help fix its acute shortage of advantaged resources -- low-cost, lower-emissions resources needed to displace dirtier and higher-cost alternatives, it said.
Better to find than buy Usually, it is cheaper to find oil and gas than to buy, especially if asset quality is important, WoodMac said, adding that the mergers and acquisitions market for advantaged pre-final investment decision assets is competitive and fully priced.
"First movers and fast followers into new basins and plays capture most of the value," it said.
Most of the bigger discoveries are in deepwater, WoodMac said. To move the needle, explorers will likely need new frontiers, deepwater, or both.
Frontier plays -- having no production from similar reservoirs in the same basin -- stand out by resource scale, accounting for over 40% of total volumes discovered in the past decade, WoodMac said. Frontier saw most giant discoveries -- more than 500 million boe -- versus emerging, established and mature plays.
Frontier drilling added more than 80 million boe per well, seven times wells in mature plays, it said. Most new frontiers are in deep offshore.
"Deepwater projects enjoy high recovery per well and tend to have lower emissions intensity than shelf and onshore projects," WoodMac said.
"After more than a century of exploration, it may seem that there must be few good prospects left to drill, but it was ever thus," WoodMac said. "The next big thing is seldom obvious before its discovery."
New technology often provides the key -- for example, ability to drill in ever deeper waters, it said.
"Today, the industry is excited about the potential of artificial intelligence to continue improving seismic data and interpretation," WoodMac said. "Ever sharper resolution of the subsurface could be the catalyst for a wave of innovation and new geological ideas."
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