Alberta authorities have granted reprieves from regulatory fees and drilling lease expirations for oil and gas operators to combat the twin plagues of the COVID-19 pandemic and unstable commodity prices.

The provincial government will pay C$113 million ($85 million) to cover costs of the Alberta Energy Regulator over the next six months that would normally be collected by a production levy on the industry. A one-year extension has been given to drilling leases with 2020 expiration dates.

“These actions are the first step in providing short and long-term financial relief to the oil and gas industry,” promised the government in the assistance announcement late Friday.

“These steps will provide the province’s oil and gas producers with additional flexibility, increasing their ability to protect their workforce,” said Gary Mar, a former Alberta cabinet minister now serving as president of the Petroleum Services Association of Canada.

In reaction to the coronavirus pandemic and untenable oil prices, Royal Dutch Shell plc on Monday reduced capital spending by $5 billion and Total SA cut its spending by $3 billion.

The Covid-19 virus continues to spread across the globe, with millions of people sheltering in place. Meanwhile, the oil price war that erupted earlier this month between Russia and the Organization of the Petroleum Exporting Countries (OPEC) shows no signs of abating.

Forced to operate with limited personnel during the coronavirus emergency, the U.S. oil and natural gas industry needs relief from a laundry list of non-essential compliance obligations, according to the American Petroleum Institute (API).

“The oil and natural gas industry, like other critical infrastructure sectors, is working tirelessly to ensure there is no interruption in our supply chains as a result of this pandemic,” API President Michael Sommers said in a March 20 letter to President Trump. 

“…We are grateful for the ongoing work of your administration in providing appropriate guidelines for mitigation of the pandemic. In light of these guidelines, the oil and natural gas industry needs to maintain safe and reliable operations, taking into consideration that there may be limited personnel capacity to manage the full scope of the current regulatory requirements. 

“As such, we will be requesting assistance in temporarily...

Only two months after predicting the first investment growth since 2014, the Canadian oil and gas industry has reversed course by retreating into austerity to survive the coronavirus pandemic and dizzying commodity price drops.

Corporate budget cuts announced so far add up to more than double the C$2 billion ($1.5 billion) collective increase forecast Jan. 30 for 2020 by the sector’s chief trade association, the Canadian Association of Petroleum Producers (CAPP).

Self-discipline is essential for surviving instability by preserving assets, production and capital, say two senior firms responsible for nearly half of the spending reductions: Canadian Natural Resources Ltd. (CNRL) and Husky Energy Inc.

In cutting its 2020 budget by C$1.09 billion ($818 million) or 27%, down to a “sustaining” C$2.96 billion ($2.2 billion), CNRL emphasized that strict financial restraint does not make production take a corresponding dive.

The firm said,...

As Lower 48 natural gas and oil producers signal cutbacks to spending and activity, the latest data on permitting indicates operators already are “clearly retreating” in the wake of a devastating decline in oil prices and the effects of the Covid-19 pandemic.

Evercore ISI’s analyst team led by James West on Friday said onshore permitting for the week ended March 13 slumped by 19% from the week earlier, “the second lowest weekly count so far this year.”

Most of the decline related to fewer wells permitted in Texas, with Eagle Ford Shale reporting a 43% decline week/week (w/w) to 32, and in the Permian Basin, off 19% to 139.

“Operators have consistently lowered permitting in Texas over the past three weeks to 140 (down 43% w/w),” West said. West Texas District 8 in the Permian reported an 11% decline w/w to 76, with District 9 falling 33% to only two permits.

“Driving the weakness in the Eagle Ford permit count have been Texas Districts...

Federal oil and gas leasing in Ohio’s only national forest has been suspended after a court agreed with environmental groups that the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) failed to adequately consider the impact of unconventional development when they opened the land for drilling.

In a 72-page ruling, the U.S. District Court for the Southern District of Ohio said the agencies “demonstrated a disregard for the different types of impacts” caused by horizontal wells completed with modern hydraulic fracturing techniques, compared to less intensive conventional drilling. Regulators, the court said, specifically failed to consider surface area disturbance, impacts on the Indiana Bat and the Little Muskingum river and on regional air quality.

The ruling is the latest in a long-running battle over whether exploration and production companies should be allowed to operate in the Wayne National Forest (WNF). The case will now...

Signaling that producers are coming to grips with a grim new reality for crude markets, the U.S. rig count fell sharply during the week ended Friday (March 20), the latest data from Baker Hughes Co. (BKR) show.

Oil-directed drilling in the United States plummeted 19 units to 664 rigs, while gas-directed activity also fell by one rig for the week. That dropped the combined U.S. rig count to 772, versus 1,016 at this time last year.

All of the declines occurred on land for the week. Horizontal rigs fell by 17, joined by four vertical rigs exiting the patch. Directional rigs increased by one on the week, according to BKR.

The Canadian rig count fared even worse, falling 77 units overall to end at 98, down from 105 in the year-ago period. The oil-directed count fell by 63 units, with 14 gas-directed rigs also packing up shop.

The combined North American count dropped to 870 overall, down from 1,121 at this time last year.

Among...

Texas regulators are considering a change to policy that could allow the state’s producers to curtail oil output in light of the epic decline in crude pricing.

The Railroad Commission of Texas (RRC) has not proposed a formal change in prorationing oil production yet for exploration and production (E&P) operators, a spokesperson for Chairman Wayne Christian told NGI’s Shale Daily.

“A couple of Texas producers have inquired into the feasibility of the Railroad Commission prorationing production,” said Travis McCormick. “No formal change in policy has been proposed. Staff is looking into what that change in policy would entail from a practical standpoint at the agency.”

The proposal, which the RRC has not done since 1972, comes as West Texas Intermediate (WTI) prices remained below $30/bbl early Friday even after rising by double-digits a day before.

The E&P, midstream and oifield services sectors are reducing capital budgets,...

U.S. crude production is at risk because a large portion of  volumes are in the hands of distressed E&Ps, according to Tudor, Pickering, Holt & Co. (TPH).

“Elevated leverage profiles, seized up capital markets, and tightening bank lending standards will have a notable impact on U.S. production growth moving forward, especially with WTI now  under $25/bbl,” the TPH team said.

In their updated at-risk production analysis, TPH analysts estimate 2.3 million b/d of supply is held by distressed producers, “which accounts for a notable 22% of total onshore U.S. production.”

Not all of the distressed E&Ps are expected to go into decline, but “we’re likely to see meaningful output decline...in 2020-21.” In TPH’s update in December covering a group of 50 E&Ps, the biggest contributors at risk were listed as California Resources Corp., Chesapeake Energy Corp., Oasis Petroleum Corp. and Whiting Petroleum Corp.

TPH has now added Callon...

Fitch Solutions Inc. is forecasting a year/year (y/y) decline of 7-10 million b/d in global oil demand for the second quarter of 2020 from the one-two punch of the coronavirus pandemic and a price war between Russia and the Organization of the Petroleum Exporting Countries (OPEC), analysts said on a webinar Thursday.

The consulting and research unit of Fitch Ratings Inc. sees a y/y decline in 2020 total oil production of 300 million bbl, meaning about 3% of global demand would evaporate, with most of that impact concentrated between February and May, said senior oil and gas analyst Emma Richards.

Citing the “unprecedented” supply and demand shocks that have rocked the industry, Richards said Fitch has revised its 2020 forecast for the Brent crude benchmark to $43/bbl from $63/bbl.

The Brent spot price had fallen below $26/bbl Tuesday morning, down about 50% from 10 days earlier, “which is quite a shocking thing,” said Fitch Solutions’ Richard...

The United States should embargo oil from Russia and Organization of the Petroleum Exporting Countries (OPEC) nations in response to their efforts “to distort energy markets,” according to Sen. Kevin Cramer (R-ND).

In a letter to President Trump Wednesday, Cramer, who represents the United States’ second most prolific oil-producing state, urged the administration to implement through the Trade Expansion Act of 1962 an oil embargo against Russia, Saudi Arabia, Iraq and other OPEC members.

“In 2018, the United States imported nearly 1.5 million b/d from the three aforementioned countries,” Cramer wrote. “Today, these same nations expect our producers and workers to absorb these impacts without recourse. We must send the immediate signal; the United States will not be bullied or taken for granted.”

Earlier this month, Saudi-led OPEC recommended members and allies reduce oil output through the rest of the year, beyond a voluntary deadline of March 30,...

The Colorado Oil and Gas Conservation Commission (COGCC) on Monday announced a series of changes to legislation passed last spring that reflect the regulator’s new mission to “regulate” instead of “foster” oil and gas development.

Among the changes being proposed to state Senate Bill (SB) 19-181, the new rules would evaluate and address potential cumulative impacts, adopt alternative location analysis processes, expand public participation in COGCC proceedings and reform the permit process, according to the commission.

The rules also would improve protections for public health, safety, welfare and the environment, and address recordkeeping of oil and gas operations as well as reordering and cleaning up COGCC rules and definitions.

“SB 19-181 changed the mission of COGCC to put public health, safety, welfare, wildlife and the environment protections first,” said COGCC Director Jeff Robbins. The commission has filed with the Colorado Secretary of...

The global crash in energy prices and demand is expected to cause a significant increase in idle wells in North Dakota’s Bakken Shale, prompting the state to look for ways to protect taxpayers who could be stuck with the bill for remediation.

Department of Mineral Resources Director Lynn Helms said the Industrial Commission (IC), whose members are the governor, attorney general and agriculture commissioner, may take action to provide protections. Five years ago, in the midst of the severe global oil price crash, the IC suspended requirements that inactive wells had to be plugged and abandoned.

“Inactive wells and abandoned ones are a huge concern long-term for the commission,” Helms said. “We’ll be looking at a price trigger and whether there should be a time limit on the policy” regarding oil prices. “What we don’t want is for candidate wells for refracturing being prematurely abandoned.”

Regardless, the inactive well count is expected to...

Denver-based Centennial Resource Development Inc. Chairman and CEO Mark Papa, an industry icon before he took over in 2016, is planning to give retirement another go, but he is not going quietly, and per usual offered his take on the markets on Wednesday.

Papa shared his concerns during a conference call to discuss Centennial’s fourth quarter performance and expectations for 2020.

“Two things are apparent regarding the 2020 global oil supply-demand picture,” he told investors. “First, U.S. oil year/year growth will be less than past years. And second, global demand will likely be less than 1 million b/d this year.”

A big factor is the coronavirus, he said, which upended the stock market on Monday and slammed energy stocks.

Centennial’s business plan for 2020, in which it has reduced its outlook for oil production from from the Permian Basin to about 3% this year from 7% in 2019, is in part in response to the virus, as it is reducing...

Ohio pure-play Ascent Resources Utica Holdings LLC, the state’s largest natural gas producer, plans to slash capital spending significantly this year as it battles low commodity prices across the Appalachian Basin.

The privately owned company has a capital expenditure (capex) plan of $700-800 million for the year, compared with $1.3 billion in 2019 and $2.8 billion in capex in 2018. The company generated positive free cash flow (FCF) of $17 million for the first time ever in 4Q2019 and is forecasting FCF again this year at current commodity prices and activity levels.

Ascent, which operates solely in the Utica Shale, expects production volumes to increase to an average of 2-2.3 Bcfe/d in 2020. The company produced 1.97 Bcfe last year, up 45% from 2018, reflecting what CEO Jeff Fisher said is “the strength of the southern Utica and the talents of our team to develop this prolific asset.”

Ascent exited 2019 producing 2.3 Bcfe/d. Last year’s...