Ne base 26 feruary 2018 energy news issue 1145 by khaled al awadi

Copyright © 2018 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 26 February 2018 - Issue No. 1145 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: DEWA-ABB workshop discusses innovative technology
WAM/Hazem Hussein/Hassan Bashir
Saeed Mohammed Al Tayer, MD & CEO of Dubai Electricity and Water Authority, DEWA, has
today inaugurated a joint workshop between DEWA and Swiss firm ABB at Hyatt Regency Dubai
Creek Heights hotel.
The workshop on ‘Innovative Technology Knowledge Share for a Stronger, Smarter and Greener
Grid’ is part of DEWA’s strategy to enhance strategic partnerships with leading international
companies.
Waleed Salman, Executive Vice President of Business Development and Excellence; Abdullah
Obaidullah, Executive Vice President of Water & Civil, Dr Yousef Al Akraf, Executive Vice
President of Business Support and Human Resources; Marwan bin Haidar, Executive Vice
President of Innovation and the Future, and Khawla Al Mehairi, Executive Vice President of
Strategy and Government Communications at DEWA, all attended the workshop.
The workshop was also attended by Dr Mostafa Al Guezeri, Managing Director of the Gulf & Near
East, Noaman Amjad, Group Senior Vice President, Global Head of Marketing & Sales of the

Power Grids Division, and Jari Kaija, Group Senior Vice President and Head of Customer Service
at ABB Group.
The workshop included a number of sessions including: Digital Transformation with Asset Health
Management, Digital Distribution Transformers, Digital Substations solutions, Cyber Security, and
HVDC.
"I am pleased to welcome you to this workshop organised by Dubai Electricity and Water Authority
(DEWA) and ABB to exchange best practices, experiences and updates on Innovative Technology
Knowledge Sharing for a Stronger, Smarter & Greener Grid. At DEWA, we are guided by the
vision and directives of President His Highness Sheikh Khalifa bin Zayed Al Nahyan and the Vice
President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al
Maktoum, in all our ambitious initiatives and development projects.
This supports the objectives of the UAE Centennial 2071, the UAE Vision 2021, and the Dubai
Plan 2021 to secure a happy future and better future for generations to come, and raise the UAE’s
status to become the best country in the world.
We have a holistic approach for the energy sector and we have translated this approach into
workable strategies. We are securing our supply by diversifying the energy mix, to include clean
energy that will provide 75% of Dubai’s total power output by 2050, in line with Dubai Clean
Energy Strategy 2050.
To achieve this, we have launched many green programmes and initiatives including the
Mohammed bin Rashid Al Maktoum Solar Park, which is the largest single-site solar park in the
world with a total capacity of 5,000MW by 2030," said Al Tayer in his keynote speech.

Libya Oil Field Halted Amid Still-Fragile Recovery
Bloomberg + NewBase
A Libyan oil field halted production due to a labor dispute, underscoring the still-fragile nature of
the North African country’s recovery from a domestic conflict.
The company operating the 70,000 barrel-a-day El-Feel deposit, also known as Elephant,
suspended output late Thursday after armed guards who work at the facility decided to occupy it
to protest at unpaid wages, a person with knowledge of the matter said, asking not to be identified
because they’re not authorized to speak to the media. Most workers were evacuated and the
protesters threatened further action if their claims aren’t resolved.
It wasn’t immediately clear when production might resume, or when the labor dispute might be
resolved. The Petroleum Facilities Guard is seeking wages that have been held up for at least two
years, the person said. The field is operated by Mellitah Oil and Gas B.V., which is jointly owned
by Libya’s National Oil Corp. and Italy’s Eni SpA.
Calls to the Libyan company weren’t answered on what is a weekend in the country. Eni officials
didn’t immediately respond to requests for comment.
Libya, a member of the Organization of Petroleum Exporting Countries , has struggled to boost oil
production amid the lingering effects of civil war that began earlier in the decade. Its crude output
averaged 828,000 barrels a day last year, the highest since 2013, according to data compiled by
Bloomberg.

Still, the country’s oil output remains well below where it was under the rule of dictator Muammar
Qaddafi. Major oil fields including El-Feel and Sharara have experienced sporadic disruptions,
occasionally setting back the revival.
Nonetheless, foreign companies are expanding their interest in the country. Last month Royal
Dutch Shell Plc and BP Plc agreed annual deals to buy crude. And as of January, Libya and fellow
OPEC member Nigeria agreed to limit their joint output to 2.8 million barrels a day. The nation’s
crude production was said to rise to 1.1 million barrels a day earlier this month, a person familiar
with the matter said Feb. 15.
Libya Woes, Oil's Up
Crude rose for a second week as American supplies drain and a key Libya oil field was shut.
News of a production halt at Libya’s 70,000 barrel-a-day El-Feel field helped cap a weekly drop of
more than 3 percent, after a report Thursday showed storage tanks at the Cushing, Oklahoma,
hub are at their lowest levels since 2014 as exports of U.S. crude surge.
The decline of stockpiles “is starting to turn into a potentially critical situation that could be very
supportive” for West Texas Intermediate crude prices, plus “the trouble in Libya seems to be on
the upswing,” he said.
West Texas Intermediate for April delivery rose 78 cents to settle at $63.55 a barrel on the New
York Mercantile Exchange, the highest level in more than two weeks. Total volume traded was
about 26 percent below the 100-day average.
U.S. crude exports surpassed 2 million barrels a day last week for only the second time on record,
according to Energy Information Administration data Thursday, while stockpiles at Cushing shrank
for a ninth straight week to 30 million barrels. Crude production edged lower for the first time since
early January.

Oil Field's Halt Disrupts Crude Exports From Key Terminal
Libya’s oil exports from the Mellitah terminal will be “modified” after protests disrupted production
at the key El-Feel deposit for the first time in two months, putting the OPEC nation’s crude
production at risk of a decline again.
Crude loadings at Mellitah, the export terminal for El-Feel, will be “modified” after force majeure
was declared on deliveries from the deposit on Feb. 23, the state-run National Oil Corp. said in a
document obtained by Bloomberg.
NOC said Saturday guards at the field were protesting over pay and other benefits. Force majeure
is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its
control.
Production at El-Feel, operated by a joint venture of NOC and Italy’s Eni SpA, was last disrupted
for one day in December due to a power outage. The field has production capacity of 90,000
barrels a day but it’s not clear what output was before the outage. NOC officials were not
immediately available to comment.
Libya, a member of OPEC, was allowed to increase oil production while other nations in the group
cut output to curb a global glut. The North African nation’s output earlier this month was 1.1 million
barrels a day, the highest since June 2013, a person familiar said Feb. 15. Oil finished a second
week of gains on Friday after news that El-Feel was shut and American supplies drained.
Mellitah was set to load four cargoes this month, each holding about 600,000 barrels, according to
a loading program seen by Bloomberg. One vessel was scheduled to be loaded Feb. 21 to Feb.
23.
With a fragile political accord barely holding the country together, Libya faces an array of
challenges preventing its return to the output levels of about 1.8 million barrels a day pumped in

2008. Pipelines and other facilities are targeted by armed factions and tribal groups jostling for
political control and a share of oil revenue. El-Feel was briefly shut in August after an armed group
closed its pipeline, prompting the NOC to declare force majeure back then.
NOC Chairman Mustafa Sanalla said El-Feel guards were under the Ministry of Defence and it
needed to respond to their demands.
The shutdown and evacuation of employees from El-Feel came after the "deterioration of the
security situation as members of Fazzan group from the Petroleum Facility Guards threatened
workers, entered the administrative offices in the field and tampered with official papers of the field
administration and firing in the air," the NOC said Saturday.

Kenya Pipeline Boosts Storage Capacity by 22% With New Tanks
Bloomberg-David Herbling
Kenya Pipeline Co. will spend 5.3 billion shillings ($52 million) building four new tanks that will
increase its storage space by more than a fifth, Managing Director Joe Sang said.
KPC is adding capacity to meet growing demand for fuels in East Africa, the continent’s fastest
growing sub-region, according to the African Development Bank. The additional tanks will
accommodate increased volume from a new pipeline being built from the port of Mombasa to the
capital, Nairobi, that will be completed in April, Sang said in an interview Friday.
“The project will enhance operational flexibility, capacity of product receipt and evacuation of
product in Nairobi once the new Mombasa-Nairobi pipeline is operational,” he said.
The tanks will be built in Nairobi by May and each hold 33.4 million liters, increasing the state-
owned company’s capacity to 745 million liters from 612.3 million liters. The Nairobi-Mombasa
pipeline, known as No. 5, will have a 20-inch diameter and replaces an existing 14-inch conduit.
Kenya’s strategic petroleum reserves will triple to 90 days once the new tanks are commissioned
and when an old refinery in Mombasa, which is now being used as storage, is refurbished, Sang
said. Increased storage capacity will also save fuel-importers demurrage charges they’ve been
incurring as vessels wait at the Mombasa port to discharge fuel into KPC’s system, he said.
Kenya distributes fuel to neighboring countries including Uganda, Rwanda, Burundi and eastern
Democratic Republic of Congo. KPC is currently building an oil jetty on Lake Victoria to improve
the reliability of its supplies.

U.S: Tight oil remains the top source of future crude oil production
Source: U.S. Energy Information Administration, Annual Energy Outlook 2018
EIA’s recently released Annual Energy Outlook 2018 (AEO2018) Reference case projects that
U.S. tight oil production will generally increase through the early 2040s, when it will surpass 8.2
million barrels per day (b/d) and account for nearly 70% of total U.S. production.
Tight oil production made up 54% of the U.S total in 2017. Development of tight oil resources is
more sensitive than nontight oil to different assumptions of future crude oil prices, drilling
technology, and resource availability, but tight oil remains the largest source of U.S. crude oil
production in all of the AEO2018 sensitivity cases.

Recent growth in U.S. crude oil production has been driven by the development of tight oil
resources, primarily in the Permian Basin. Three major tight oil plays in the Permian Basin—the
Spraberry, Bone Spring, and Wolfcamp—accounted for 36% of U.S. tight oil production in 2017.
Production from these three plays is projected to increase and to account for 43% of cumulative
tight oil production through 2050 in the Reference case. The Bakken and Eagle Ford formations
remain major contributors to U.S. tight oil supply through 2050, accounting for 20% and 17% of
cumulative tight oil production in the Reference case, respectively.
In the AEO2018 Reference case, tight oil production increases to 8.2 million b/d in the early 2040s
and then remains relatively constant through 2050 as development moves into less productive
areas. As a result, total U.S. oil production is expected to increase over the next 20 years, from
9.3 million b/d in 2017 to nearly 12 million b/d in the early 2040s, and then decrease slightly
through 2050.
However, future growth potential of domestic tight oil production depends on the quality of
resources, technology and operational improvements that increase productivity and reduce costs,
and market prices—factors with futures that are both interconnected and uncertain. AEO2018
includes several sensitivity cases that incorporate different assumptions regarding price,
technology, and resource recoverability.
The High Oil and Gas Resource and Technology case uses more optimistic technology and
resource assumptions than in the Reference case under the same base world oil price
assumptions. In this case, tight oil production increases throughout the projection period, reaching

14.6 million b/d by 2050, or 77% of total U.S. production, as higher productivity reduces
development and production costs.
In the Low Oil and Gas Resource and Technology case, which uses more pessimistic technology
and resource assumptions under the same base world oil price assumptions, tight oil production
still increases from its current level, reaching 5.6 million b/d in 2021, and then decreases to 4.4
million b/d by 2050.
Total U.S. oil production in 2050 in this case reaches 7.2 million b/d, which is well below the
Reference case level of 11.3 million b/d.
Oil production is also sensitive to prices. The AEO2018 contains two cases that assume higher
and lower oil prices under the same resource and technology assumptions as in the Reference
case.
In the High Oil Price case, where West Texas Intermediate (WTI) spot prices rise rapidly and are
sustained at higher levels, domestic crude oil production increases to nearly 15.0 million b/d by
2030, before declining to 12.2 million b/d in 2050. In this case, tight oil production reaches more
than 10.0 million b/d in 2025 (double the 2017 rate of 5.0 million b/d) as higher prices increase the
pace of drilling.
Tight oil production then declines to 8.4 million b/d in 2050 as drilling moves to less productive
areas.
In the Low Oil Price case, sustained low oil prices still allow total domestic production to increase
from 9.3 million b/d in 2017 to 9.7 million b/d in 2021 before gradually declining through the rest of
the projection. Tight oil production is relatively flat through 2050, averaging near 5.0 million b/d,
and accounts for 64% of total domestic oil production in 2050.

China is world’s second largest LNG importer, behind Japan
Source: GIIGNL LNG reports (2013-16), Global Trade Tracker export-import trade statistics (2017), and IHS Markit
China surpassed South Korea to become the world’s second-largest importer of liquefied natural
gas (LNG) in 2017, according to data from IHS Markit and official Chinese government statistics.
Chinese imports of LNG averaged 5 billion cubic feet per day (Bcf/d) in 2017, exceeded only by
Japanese imports of 11 Bcf/d. Imports of LNG by China, driven by government policies designed
to reduce air pollution, increased by 1.6 Bcf/d (46%) in 2017, with monthly imports reaching 7.8
Bcf/d in December.
China’s imports of natural gas have grown to meet increasing domestic natural gas consumption,
which has been primarily driven by environmental policies to transition away from coal-fired
electricity generation.
The Chinese government has also implemented policies to convert several million residential
households in China’s northern provinces, which traditionally rely on coal heating in the winter, to
use natural gas-fired boilers instead.
Natural gas storage capacity in China is relatively limited, estimated at just 3% of total natural gas
consumption. China’s seasonal peak demand is met primarily by natural gas imports, either by
pipeline from Central Asia or by shipments of LNG.
Despite increases in China’s domestic production and in pipeline imports in 2017, natural gas
shortages in northern China led to record levels of LNG imports during the 2017 winter. Overall,

natural gas imports accounted for 40% of China’s 2017 natural gas supply, and LNG made up
more than half of those imports.
Source: IHS Markit, China National Development and Reform Commission, China Customs, National Bureau of Statistics
China has 17 LNG import terminals at 14 ports along its coastline, with a combined regasification
capacity of 7.4 Bcf/d. Annual utilization rates at LNG import terminals averaged about 50% from
2013 through 2016, but the rate increased to 69% in 2017.
Colder-than-normal winter weather increased natural gas demand and led LNG import terminals in
the northern and central coastal regions of China to exceed nameplate capacity by 30% and 20%,
respectively, in December 2017.
LNG imports and import capacity

By region
LNG import regions and terminals
EIA expects natural gas consumption in China to continue to increase—driven by economics and
environmental policies—and imports and increasing domestic production will be used to meet
growing demand.
China’s LNG import capacity is expected to reach 11.2 Bcf/d by 2021, once capacity expansions
at existing terminals and new terminals currently under construction are completed. EIA also
expects China’s imports of natural gas by pipeline to increase, especially as the Power of Siberia
pipeline from Russia comes online by the end of 2019.
U.S. LNG exports to China increased significantly last year, from 17.2 Bcf in 2016 to 103 Bcf in
2017. China accounted for nearly 15% of U.S. LNG exports in 2017, behind only Mexico and
South Korea. In November 2017, the United States and China signed several preliminary
agreements for U.S. LNG exports to China, including exports from Sabine Pass on the Gulf Coast
of Louisiana, the fully approved Delfin LNG offshore export project off Louisiana’s coast, and the
proposed Alaska LNG project. In February 2018, Cheniere Energy and the China National
Petroleum Corporation signed two long-term contracts for LNG from Sabine Pass and new LNG
facility under construction near Corpus Christi, Texas.

NewBase February 26 - 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil hits 2-week high as Saudi Arabia to keep output well below cap
Reuters + Bloomberg + NewBase
Saudi Arabia's oil minister said the country hoped OPEC and its allies will be able to relax production curbs next
year and create a permanent framework to stabilize oil markets.Oil prices extended gains to hit two-week
highs on Monday, supported by comments from Saudi Arabia that it would continue to curb
exports in line with the OPEC-led effort to cut global supplies.
U.S. West Texas Intermediate crude for April delivery was up 25 cents, or 0.4 percent, at $63.80 a
barrel by 0301 GMT after rising 3 percent last week. London Brent crude gained 13 cents, or 0.2
percent, to $67.44, after climbing nearly 4 percent last week.
Both benchmarks earlier hit their highest since Feb. 7.
"The rise in equities made it easier to buy risk assets such as oil," said Tomomichi Akuta, senior
economist at Mitsubishi UFJ Research and Consulting in Tokyo. "But amid worries over U.S.
crude production at near record highs, oil is struggling to make a move."
Oil price special
coverage

Prices were supported after Saudi Arabian oil minister Khalid al-Falih on Saturday said the
country's oil production in January-March would be well below output caps, with exports averaging
below 7 million barrels per day (bpd).
Saudi Arabia hopes OPEC and its allies will be able to relax production curbs next year and create
a permanent framework to stabilize oil markets after the current supply cut deal ends this year,
Falih added.
"A study is taking place and once we know exactly what balancing the market will entail we will
announce what is the next step. The next step may be easing of the production constraints," he
told reporters in New Delhi.
"My estimation is that it will happen sometime in 2019. But we don't know when and we don't
know how". U.S. energy companies last week added one oil rig, the fifth weekly increase in a row,
bringing the total count up to 799, the highest level since April 2015, Baker Hughes energy
services firm said on Friday.
Hedge funds and money managers upped their bullish wagers on U.S. crude oil for the first time in
four weeks, data showed on Friday.
A powerful 7.5-magnitude earthquake struck Papua New Guinea's Southern Highlands province
early on Monday, disrupting communications and oil and gas operations. Meanwhile, Libya's
National Oil Corp said on Saturday it had declared force majeure on the 70,000 bpd El Feel oilfield
after a protest by guards closed the field.
Saudis See Oil Output Cuts Easing in 2019
OPEC and its allies including Russia may next year ease the crude-output curbs that have helped
prices recover from the worst crash in a generation, according to Saudi Arabia’s oil minister.
With the market moving toward equilibrium and bloated inventories shrinking, the next step for
global producers will be to phase out the reductions, Khalid Al-Falih told reporters in New Delhi on
Saturday. The nations taking part in the supply curbs are currently studying what a crude re-
balancing will entail, and will announce their next steps once that’s analyzed, he said.
The production curbs may be eased “sometime in 2019, but we don’t know when and we don’t
know how,” Al-Falih said. “What we know is that it’s going to be done in a way that it will not in any
way disturb the balance and undo the hard work since 2016.”

A deal between the Organization of Petroleum Exporting Countries and its partners aimed at
shrinking a global glut began in 2017 and runs through the end of this year. With U.S. production
booming and the International Energy Agency predicting that expanding supply from non-OPEC
countries may cover global demand growth for the next two years, speculation has increased over
how long the cartel will have to curb supply.
U.S. Oil “Welcome”
Al-Falih welcomed the rise in U.S. production, saying that demand is seen remaining strong in
2018 and that the market will be able to absorb that supply. While America is pumping out record
volumes, that’s being accompanied by a surge in exports, which has jumped to a four-month high.
Even Saudi Arabia has considered shipping American crude abroad. The demand for cargoes is
helping drain the nation’s stockpiles, easing concern that OPEC’s efforts to erode a glut will be
undermined.
While countries involved in the production cuts are considering how to extend their partnership in
coming years, keeping output constrained could be a challenge as the deal has shown some
signs of strain. Russian oil companies, eager to press on with new projects, have pushed for a
swift end to the curbs, while OPEC members like Iraq, Iran and Libya are keen to expand capacity
after years of lost revenues amid sanctions and conflict.
“The framework beyond 2018 is yet to be determined, but for sure from the Saudi and from the
OPEC standpoint, there is a determination to translate the success of 2017 and 2018, partial as it
may be, into a lasting framework that allows us to avoid instability in the oil markets,” Al-Falih said.
Saudi Arabia is committed to meeting its production curb pledge and balancing exports, he said,
adding that the nation, the world’s biggest oil exporter, will keep overseas shipments in March
below 7 million barrels a day.
The country is also committed to the initial public offering of its state-run producer, Saudi Arabian
Oil Co., known as Aramco, Al-Falih said. “We will announce the details of the listing venues and
exact timing in due course.”
The IPO is the centerpiece of the kingdom’s plan to wean its economy off oil. The government has
estimated the share sale could value the company at $2 trillion, though analysts make lower
estimates.
Top Oil Buyer's Imports Seen Strained by Fear of New China Tax System
Oil purchases by some refiners in the world’s biggest crude importer are being constrained as the
firms assess the potential impact of a new tax system in China.
A revamped tax rule that’ll be implemented in March is spurring concern among the nation’s
independent processors, known as teapots, that it would erode margins, according to Shanghai-
based commodities researcher ICIS-China. The new regulation is seen as a government effort to
close a loophole that allowed oil traders to profit from beefing up more expensive fuels by blending
it with cheaper chemicals.
The refiners -- which have risen to prominence in the oil market over the past two years as they
helped lift Chinese crude imports past the U.S. -- are now holding back as uncertainty swirls over
the fallout from the complicated new levy system, according to Li Li, an analyst with ICIS-China.
That may drag down import volumes in the first quarter, though double-digit growth is still
expected for the full-year period, Li said.

At least four of the teapots clustered in the eastern province of Shandong and southern region of
Guangdong haven’t issued letters of credit for financing their purchases since the start of this
year, according to officials from five buyers and suppliers. The cargoes were originally scheduled
to be delivered in the first quarter, they said, asking not to be identified. Apart from the new tax
system, they also cited volatile global benchmark prices for stalling purchases.
“There are some purchase agreements being paused from the buyer side after prices and
volumes were preliminarily settled,” ICIS-China’s Li said, citing her discussions with the refiners.
“We might have a clear picture after March when the new taxation system starts operation.”
Import Growth
Still, crude shipments from overseas into China in 2018 will probably be higher than last year’s
levels as more refining capacity is added, she said. Purchases are seen growing 10 percent,
backed by more imports to replace falling domestic output and build strategic storage, according
to BMI Research.
The independent refiners have also received government approval to use 142.42 million metric
tons of crude -- higher than in 2017 -- in a first batch of allocations for 2018. They will need to use
the quotas or risk received smaller or no volumes in the next batch, according to the officials from
the firms.
The processors may also benefit from Shanghai’s upcoming yuan crude-futures contract as it
allows traders to take delivery of prompt-loading, small volumes of oil from domestic storage and
offer them to the firms, Nevyn Nah, an analyst at industry consultant Energy Aspects Ltd., said
this month.

NewBase Special Coverage
News Agencies News Release February 26-2018
Chevron's 10-K Puts the Permian on a Pedestal
Shale helped the oil major replace reserves at a healthy pace last year.
By Liam Denning
Chevron Corp. is not shy about touting its 1.7 million acres of real estate in the prolific Permian
basin, the center of the U.S. tight-oil boom. And its annual filing, which dropped late Thursday,
showed just how big the basin figures in one important respect: reserves.
Replacing reserves is an obsession for oil majors; it's hard to be an oil major for long if you don't
replenish what you pump. According to its 10-K, Chevron replaced 161 percent of its production
organically -- before factoring in purchases and disposals -- a healthy figure after several pretty
mediocre years:
Booked Up
Chevron's additions to proved reserves took a quantum leap in 2017, relative to production
Source: Company filings
For that, Chevron can thank the U.S. and its Permian position in particular. The company's home
operations added almost 6 cubic feet of natural gas to proved reserves for every one produced
and almost four barrels of oil for every one pumped out.

Home Advantage
Chevron's U.S. operations powered the big jump in the company's reserve-replacement ratio in
2017
Note: Organic reserve-replacement ratio.
By extension, Chevron can also thank OPEC, the Russians and a handful of other countries
cutting supply and thereby pushing average benchmark U.S. oil prices up by about $7.40 a barrel
last year. Roughly a third of the additions last year were revisions to existing reserves, where oil
and gas prices play a significant role (because they can make reserves economically viable or
unviable at any given year-end).

And a better price environment encourages oil and gas companies to get back to work; Chevron
drilled or participated in 310 wells in the Permian basin last year versus just 201 in 2016.
Consequently, it added almost as many barrels of oil equivalent to its U.S. proved reserves via
extensions and discoveries in 2017 as it did in the prior three years combined.
This was important, especially, in the crucial half of the reserves equation: oil. Chevron's additions
to lower-value natural gas reserves were split fairly evenly between the U.S. and international
areas. But in liquids, it was definitely a case of America first:
Texas Tea
Chevron's replacement of oil production in 2017 was dominated by the U.S.
Note: Additions are organic reserve replacement, excluding purchases and disposals.
This shift toward home isn't confined to Chevron. Exxon Mobil Corp. hasn't filed its 10-K yet, so
details on reserves are scarce. Still, we know from its announcement earlier this month that about
800 million -- or almost a third of the 2.7 billion barrels of oil equivalent added to its proved
reserves in 2017 -- came from its unconventional operations in the U.S., mainly in the Permian
basin.
Chevron, however, has an advantage here. It has been established in the Permian basin for a
long time and consequently pays low or no royalties on its acreage there. Exxon, meanwhile, has
been buying its way into the oil world's equivalent of Manhattan real estate, in part to help fill a
project pipeline looking somewhat thin due to sanctions on Russia. Barclays estimates Exxon's
average royalty rate in the Permian at about 20 percent, versus less than 10 percent for Chevron.
Both companies have yet to fully demonstrate they can make the capital-intensive business of
shale development work for a supermajor's needs (read: dividends). Chevron, however, would
appear to have the edge in terms of taking those proved reserves and proving itself.
This column does not necessarily reflect the opinion of NewBase LP and its owners.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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Khaled Al Awadi is a UAE National with a total of 28 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
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Ne base 26 feruary 2018 energy news issue 1145 by khaled al awadi