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Nick Coleman

Articles by Nick Coleman

Insight Conversation: Alex Schneiter, CEO, Lundin Petroleum

October 8, 2019

Lundin Petroleum discovered the 2.7 billion barrel Johan Sverdrup oil field in 2010. CEO Alex Schneiter spoke to Nick Coleman shortly before first oil was produced in early October, about the company’s strategy, the challenges for small exploration and production firms, and how the sector can respond to changing societal and environmental demands.

What does the startup of the Johan Sverdrup oil field mean for Lundin and Norway’s oil and gas industry?
 It’s tremendous on all counts. Johan Sverdrup is transformational for Lundin Petroleum. If you go a little bit back in history, to 2015, Lundin Petroleum was producing about 20,000 boe/d, we quadrupled our production mainly through a field we discovered [in 2007] called Edvard Grieg, which was an important field because it gave us the key to

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Norway’s oil industry hides behind flagship project: Fuel for Thought

June 17, 2019

The imminent start of production from Norway’s giant Johan Sverdrup field this autumn has obscured some big challenges facing the country’s oil industry.
State-controlled Equinor has been trumpeting its progress on the 2.6 billion barrel oil project, due on stream in November, and particularly the reductions in its expected price tag by more than a third to NOK127 billion ($14.5 billion).

Production from Johan Sverdrup should ramp up to 440,000 b/d in the first year, with a second phase after that, alleviating a steep decline in the country’s oil output. Norway’s oil production has fallen 10% since 2016, and according to the International Energy Agency is set to drop 6% this year.

Those rates have exceeded the forecasts of the Norwegian Petroleum Directorate. But success with one

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Carbon capture projects gaining traction: Fuel for Thought

December 3, 2018

US upstream company Occidental Petroleum is committed to carbon capture and injection as a method of boosting oil recovery both in its Permian shale operations and outside the US, CEO Vicki Hollub said last week.
She was one of a number of industry leaders who outlined carbon capture projects around the world, many geared to utilizing CO2 from heavy industry in Europe and the US, at the Accelerating CCUS conference in Edinburgh.
In the US, carbon capture got a boost this year from new tax credit legislation known as 45Q.
Hollub said Oxy, as the largest “handler” of CO2 for enhanced oil recovery, was achieving recovery rates of as much as 70% at one of its conventional Permian reservoirs due to carbon injection, and aimed to extend CO2 injection to its Permian shale operations, following

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Big Oil’s shale revival prompts industry doubts: Fuel for Thought

November 19, 2018

Oil and gas majors have brushed themselves off after the industrywide downturn and are back on their feet trying to mimic the success of smaller companies in US shale. But many doubters still question whether Big Oil is up to the task after failing at earlier attempts in such plays.
The setbacks to global majors’ shale efforts earlier in the decade were well-publicized. Several invested heavily in shale gas before prices collapsed, as more nimble rivals charged into liquids-rich plays.
Shell shared in the pain with a $2 billion write-down in 2013 and is among the majors persisting in shale plays. The company plans to more than double its Permian Basin output by 2020 to 200,000 b/d of oil equivalent, with just a third of production being crude and the rest lower-value gas and gas liquids.

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Insight Conversation: Tony Durrant, CEO of Premier Oil

August 28, 2018

In our recent Insight Conversation video, the CEO of Premier Oil, a UK independent upstream oil and gas company with interests in the North Sea, the Falkland Islands, Southeast Asia and Latin America, sat down for a conversation with Nick Coleman.

Why would anyone invest in the declining North Sea?
The UK North Sea, on most people’s estimates, is something like two-thirds of the way through its producing life, having produced about 40 billion barrels out of a possible 60 billion barrels. Twenty billion barrels is a lot of life left in the UK. What you have seen as the province becomes more mature is that it becomes less material for the bigger companies. I think over the next one to two years there will be more and more examples of the majors, the bigger companies, in effect selling

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Caspian oil and gas: High hopes for a tough neighborhood

July 9, 2018

Azerbaijan has long been seen as a strategic gateway to vast oil and gas resources in the Caspian region and a source of energy security for Europe but has yet to live up to its promise as a bulwark against the influence of Russia and OPEC in the region.
Oil companies and politicians coined the term “contract of the century” to describe the 1994 deal to develop the giant oil complex Azeri-Chirag-Offshore Gunashli, which led to the construction of the BTC pipeline to the Mediterranean.
Azeri crude, produced by a BP-led consortium, has lately offset Libyan shortfalls. But the BTC pipeline operates at just two-thirds of capacity as expected volumes from across the Caspian have failed to materialize.
And this month’s launch of gas supplies from Azerbaijan’s Shah Deniz field to Europe via

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Politics complicates energy security: Fuel for Thought

April 9, 2018

Countries lacking abundant energy resources are often the most effective in ensuring reliable supplies, usually through a mix of pragmatism and openness to foreign investment. But this becomes ever more difficult at a time of rising political tension.
The latest Russian poisoning scandal has highlighted not so much the UK or Europe’s dependence on Russia for energy, but the extent to which energy supply in much of Europe is highly diversified, with multiple sources, delivery methods and intermediaries making it difficult for countries or leaders to intervene for political ends either on the supply or the demand side.
In the various conflicts swirling around Russia, foreign political leaders keen to take a stand are for the most part targeting individuals rather than vital commercial

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Back from the brink: Europe’s oil economy

October 16, 2017

Europe has long been assumed to play a declining role in the world of oil, a reflection of political and economic stagnation, dwindling North Sea production and efforts to banish fossil fuels.
But a run of strong oil consumption statistics together with stable North Sea production suggest a more buoyant picture for the region’s hydrocarbon industry.
In terms of European oil demand, the International Energy Agency has revised upward its assessments several times in recent months, putting in doubt its best-guess scenario in March of a half-million b/d drop in consumption in European OECD countries between 2018 and 2022.
For all its efforts to reduce oil consumption and promote electric vehicles, Europe remains a bigger oil consumer than China, with demand approaching 15 million b/d.

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BP, a company with a split personality, looks to the future: Fuel for Thought

October 17, 2016

It is six years since a prominent newspaper dubbed BP’s chief executive the “most hated and clueless man in America” and in that time the company has paid $62 billion in fines and compensation for its role in the Macondo Gulf of Mexico oil spill.
Perhaps surprisingly, much of the top leadership that visited the White House in 2010 to brief President Barack Obama remains in charge of the company. Among them are Bob Dudley, the then-director for Asia and the Americas and now CEO, together with Lamar McKay, head of BP America at the time and now Dudley’s deputy.
More striking is the extent to which BP is catching up with its competitors, but questions remain about the company’s future direction.
When Dudley took up the chief executive’s role in 2010 some saw him as a short-term crisis manager, called in to appease angry US authorities. Six years on, whether and how BP sustains its dual role, as a globe-trotting buccaneer, searching out resources, and as a responsible manager of legacy assets, remains one of the industry’s more intriguing questions.
BP has something of a split personality. On the one hand there is a focus on doing what it does best—drill, mainly for oil, in stable, preferably free-market locations such as the US and North Sea—and a resistance to “non-core” activities such as renewables.

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OPEC racked with division, but too soon to write it off?

September 27, 2016

Investors have been burnt before, and are now skeptical that OPEC will overcome its internal divisions and agree to do something about chronically low oil prices. But could that be the wrong conclusion to draw? Some contrarian voices argue that now is precisely the time to look for a change of stance, in which the fractious group at last gets its act together.
This week’s gathering of OPEC ministers in Algeria looks unlikely to spring surprises as the group again struggled for consensus. Investors have learnt that just because an oil minister from one or another country talks about agreement, that does not mean something will happen. Oil company shares have taken a hit as investors look elsewhere, including at other, more buoyant commodities, participants at an S&P Global forum heard on Tuesday.

But Paul Horsnell, global head of commodities research at Standard Chartered bank, is among those who argue it is too soon to write off OPEC, a group that, when natural gas liquids are included, accounts for well over a third of global oil production and has been expanding its membership.
At Tuesday’s forum he argued that unlike in 2008, when OPEC quickly reacted to the global financial crisis to effectively reduce oil prices, the group has long had difficulty dealing with questions of over-supply.

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US shale’s resilience touted despite output decline: Fuel for Thought

September 12, 2016

Last week’s announcement by US company Apache of a major find in West Texas’ Permian Basin seemed to vindicate the optimism about shale heard the previous week at a conference in Norway.
Scott Douglas Sheffield, chief executive of shale driller Pioneer Natural Resources, played the role of spoiler-in-chief at the ONS conference, harrying big oil with some uncomfortable assertions.
The bad news, for those in the industry who missed out on shale and expected it to fade with low prices, is that the Permian should be able to increase its output from 2 million b/d to 5 million b/d in the next 10 years, assuming prices reach $56/b in 2025, Sheffield said.
Pioneer itself is growing its output by 27-30% annually. “It’s in that [price] strip that I see the Permian adding 300,000 b/d per year in US supply,” he said.
Emphasizing his contrarian stance, he said he doubted some of the higher forecasts of long-term oil demand growth due to global warming, alternative energy and electric vehicles, while boasting of the company’s use of wind power in its own operations and the solar panels on his home.
In Sheffield’s view, the dip in US production has been misconstrued, with some underestimating the Permian as output falters in the Eagle Ford and the Bakken.

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Shale and demand uncertainty put Big Oil on its back foot

September 2, 2016

Under pressure from low oil prices and their rising debt levels, top oil executives at the ONS 2016 conference this week might well have found the blunt message of shale driller Scott Douglas Sheffield unsettling.
The chief executive of Pioneer Natural Resources seemed to enjoy the role of spoiler-in-chief, harrying Big Oil with some uncomfortable assertions.
The bad news, for those in the industry who missed out on shale and expected it to fade in the face of low prices, is that the Permian basin should be able to increase its output from 2 million b/d to 5 million b/d in the next 10 years, assuming prices reach $56/b in 2025, Sheffield said. Pioneer itself is growing its output by 27-30% annually.
“It’s in that [price] strip that I see the Permian adding 300,000 b/d per year in US supply,” he told the Offshore Norwegian Seas conference, held Aug. 29 through Sept. 1 in Stavanger. Ramming home his contrarian stance, he said he was skeptical of some of the higher forecasts of long-term oil demand growth due to global warming, alternative energy and electric vehicles, while boasting of the company’s use of renewables in its own operations and the solar panels on his home.
In Sheffield’s view, the dip in US production has been misconstrued, with some in the industry underestimating the Permian basin as output falters in the Eagle Ford and the Bakken.

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Qatar’s OPEC MAX meeting and the oil price rout that wasn’t

April 20, 2016

There was much gnashing of teeth as Qatar’s grand meeting of oil producers failed to reach agreement Sunday to freeze production at January levels. Commentators predicted a collapse in oil prices and some discerned the demise of OPEC itself.
But since then the expected rout in prices has yet to materialize, stock markets have been unfazed, and the outcome from the point of view of OPEC’s dominant Arab Gulf members may not be unsatisfactory.
No doubt some delegates found it annoying to needlessly spend 12 hours cooped up in a five-star hotel in Doha, albeit with a visit to pay their respects to the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. The failure of the talks was an embarrassment and will be felt by OPEC’s weakest nations, particularly Venezuela, which is in a state of crisis and badly needs oil prices to rise.
That prices did not immediately fall more than a couple of dollars owed something to a strike by oil workers in Kuwait, which caused the country’s production to fall initially to just 1.1 million barrels per day, barely a third of normal levels. In the aftermath of the talks, Russia, which had invested much effort trying to broker a deal, indicated it would continue pumping at record levels, above 10.8 million b/d, helping to cap prices.

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Central Asian oil: destined to disappoint?

April 14, 2016

The stagnation pervading Central Asia’s oil industry could be alleviated by a couple of big announcements in the coming months, on the Kashagan and Tengiz fields.
But industry veterans are more heedful of the numerous obstacles presented by the region, from the geological to the bureaucratic, and an unpromising global context.
Home to some of the world’s largest oil and gas fields, ex-Soviet Central Asia and particularly Kazakhstan was once an exciting frontier for the industry. But of late Kazakh oil production has stagnated at around 1.7 million barrels per day, partly because of a decade of delay starting output from the giant Kashagan project.
A consortium led by Chevron has also delayed plans to increase output at Tengiz from around 600,000 b/d to nearly 900,000 b/d, a project that could cost tens of billions of dollars.
In neighboring Turkmenistan, planned gas exports to Europe have made little headway due the cost of building a trans-Caspian pipeline, doubts about European demand, and difficult regional politics.
Turkmenistan’s gas exports have increased — the International Energy Agency expects it to have pipeline capacity for 80 billion cubic meters/year of exports to China by the early 2020s — and it has hopes of eventually building another pipeline across Afghanistan to South Asia.
But for now Turkmenistan is increasingly reliant on China as a sole client.

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Costs bear down on venerable Shetland oil industry

November 5, 2015

The North Sea oil industry, particularly the Shetland region at its core, is showing the strain of low oil prices, raising questions about its viability.
The demise of the four-decade old UK industry has been predicted many times, with recent concerns centered on taxation and possible independence for Scotland.
After oil prices collapsed last year, lobby group Oil and Gas UK predicted 20% of UK oil production could be shut down this year. Instead, only a few fields have been shut and oil production is booming, rising 14% year on year to a million barrels per day in the second quarter. Investment reached a record GBP14.8 billion ($23 billion) last year, Oil and Gas UK now says.
But the reality of oil prices halving, and staying that way, is hurting. That companies have hesitated to decommission aging facilities is perhaps unsurprising. Dismantling the offshore structures of a past era, when output reached three times today’s levels, is complex, costly work, as Shell is experiencing at the region’s best-known field, Brent.

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