Will the BLM accept and process a new permit application on an “existing valid lease”? I don’t know despite listening to four hours testimony. It was stated that there are 7,700 permits unused (stockpiled by E&P companies).
Clearly, there is a moratorium on new leases. Rep Haaland said existing permits on existing leases are “moving forward”. No senators asked her about new permits on existing leases.
The government can delay or impede valid permits on existing leases in numerous bureaucratic ways, no senators probed this issue.
Many wind turbine operators may have to file bankruptcy because of hedges they signed on power sale contracts that created huge bills when they couldn’t perform during the cold snap. Is a WSJ article, so a paywall involved.
Colorado O&G Association gives award to North Face, after the clothing manufacturer refused to manufacture jackets for a Texas O&G Company. The award was based on North Face’s outstanding use of polyester and other petroleum based fibers in its clothing.
Big win for mineral owners in the Texas Supreme Court. The court released its opinion in the Bluestone case, and held that an addendum to a Producers 88 that had gross proceeds language, and specifically says it overrides the Producers 88 in the event of a conflict, did not allow the operator to latch onto “at the wellhead” language in the Producers 88 to be able to deduct post-production costs. The opinion also dealt with off lease use of gas by the operator under the free use provision.
Based on current geological understanding, 99% of anything Fed in SE NM that is worth drilling is leased. A ban on new Fed leases there means nothing at this point. It’s the perfect move by this administration, signals a move away from oil while actually doing nothing. It’s like saying you are gonna build some jacked-up wall.
Thus far they seem to be permitting on existing leases. Which is where the rubber meets the road.
Will concede that this doesn’t apply to places offshore or Alaska etc.
This probably belongs under the Biden executive Order thread, but there are some rumblings they are going to review all existing permits issued, plus they issued some permits after January 20 but then reversed course on those. Right now, it seems unclear whether they are going to continue issuing permits as they had been.
There are laws that may restrict them from refusing to issue permits. The thought has been that they would instead enact a new host of regulatory hurdles to get a permit that would make it a practical impossibility. Early on in the Biden thread, I posted an article from an Ohio newspaper that explains how they could go about it doing an effective permitting ban without calling it that.
It could end up being a empty gesture, but I would not bet on it.
The bigger problem is what does this do to an operator who is operating on federal lands until it gets sorted out? Won’t a bank be pretty nervous about loaning money to an operator who drills there?
Well, we will see. If you ask most people in the oil business that live on Twitter/Facebook, there is a ton of angst for sure. The people I know in permitting departments don’t think that the world is gonna end. Harder, footdragging? Yeah sure. Same as under Obama. Hence everyone building up a permit backlog. Maybe they don’t know. Right now since Jan 21st there have been 210 Fed permits issued in SE NM which is 2-3 times faster than they are drilling Fed wells in SE NM. So if there is gonna be a hurdle, it’s yet to manifest itself from publicly available information. The last I saw from the BLM news (below) was encouraging from an existing lease standpoint.
Will concede that may be a rhetorical question, but I’m not sure how the scenario works out where a bank lends you money and you spend it and they get nothing back. They stop point here is before you spend the money.
By Jennifer A. Dlouhy 2021-03-15
(Bloomberg) – An order temporarily putting decisions about
drilling permits and other matters in the hands of top Interior
Department officials will not be renewed when it lapses this
weekend.
With the expiration of the 60-day order, career officials at
the Bureau of Land Management will process drilling permits andother activities on valid, existing leases in a timely manner,
Interior spokesman Tyler Cherry says in email
Good to hear. Some signs of hope for more sanity in the process. My issue all along has been not developing federal lands does nothing significant to reduce carbon output. Others will make up the production loss, and it will probably come from countries with fewer environmental restrictions than we have.
Federal Reserve Bank of Dallas posted its quarterly Energy Survey 3/24/21 on its website. Oil and gas prices were $64 and 2.59 when responses were collected March 10-18 from 142 executives.
New well breakeven price is $52 for whole region, 6% higher than last year’s $49. New well breakeven is $46 Permian/Midland, $46 Eagle Ford, $49 Delaware Basin. New well breakeven improved 6% in Delaware Basin, from $52 in 1Q20 to $49 now. Midland/Permian new well breakeven is unchanged.
Break-even oil price for existing wells is $31/bbl, $33 Permian, $27 Midland, $26 Delaware Basin, $17 Eagle Ford.
No surprise first quarter 2021 production and oilfield employment increased, servicer activity too.
E&P CapEx spending will increase in 2022, per respondents.
Executives expect $61 WTI by year end 2021; respondents range from $45-$84. Expect Henry Hub gas price $2.80 by year end.
Increased Federal regulation will render their business unprofitable according to 58% of respondents. Predictably, some individual comments were very pessimistic about the Biden administration. Curtailment of federal leases will increase oil prices and the value of reserves. This survey has more anonymous quotes than usual, many fears about the Biden administration, far more negative than their quarterly earnings webcasts for Wall Street analysts. Comments by oilfield service executives are mixed.