From artificial intelligence (AI) to the variables affecting oil prices, there are some interesting changes taking place in the oil and gas industry. Here are some of the most recent developments.
What’s Affecting Oil Prices?
Advisors have predicted prices to average $62.50/bbl for the week of November 6, 2017. The average indicated a mounting trend from previous weeks, and is based upon several different factors putting upward pressure on prices. If geopolitical unrest continues in regions such as Saudi Arabia and Nigeria, then prices will escalate along with market volatility. The global supply, demand, refining sector and oil trader sentiment are all putting additional upward pressure on prices as well.
Mexican Oil Discovery
Mexico recently announced its biggest onshore discovery in 15 years. The well is estimated to hold 1.5/bbl of oil in place, or about 350/MMbbl in proven, probable and possible reserves and production could begin as early as the end 2018.
According to the International Energy Agency (IEA), the use of artificial intelligence holds promise for upstream operations in the oil and gas industry. “AI could be used to analyze well performance, troubleshoot underperforming fields, suggest corrective actions and even deploy robots to carry out tasks,” the IEA said. “It could also enhance reservoir modeling, and thus aid operations by rapidly detecting and correcting suboptimal production behavior.” The IEA predicted that the use of some of these digital technologies could lead to a 10% to 20% drop in production costs.
US Tax Overhaul
Oil and gas corporations are expected to benefit substantially by President Donald Trump’s tax proposal. The new tax plan is expected to cut tax rates almost in half for most corporations, while expanding their ability to write off equipment. Most of the oil industry’s most cherished tax breaks will remain along with investment and production tax credits for renewable energy.
Largest Lease Sale to Date
The U.S. Interior Department is planning to make nearly 77 million acres available for oil and gas development. The sale is being planned for March 2018, and the blocks are located in the Gulf of Mexico (GoM) offshore Texas, Louisiana, Mississippi, Alabama and Florida. “The historic size of lease offerings in Proposed Lease Sale 250 presents an unprecedented opportunity for the industry to safely produce reliable and affordable oil and natural gas for American consumers, bolster the U.S. economy and increase domestic energy security,” National Ocean Industries Association (NOIA) President Randall Luthi said in a statement.
Oil and Gas Construction – Magellan Midstream Expansion
Magellan Midstream Partners LP plans to expand its refined petroleum products pipeline system to handle incremental demand for transportation of gasoline, diesel fuel and jet fuel to central and north Texas markets. The public corporation based in Tulsa, Oklahoma plans to build an approximately 135-mile, 16-inch pipeline from its terminal in East Houston to Hearne, TX.
American Midstream Partners (AMID)
(AMID), a natural gas transmission company based in Houston, TX, recently announced the completion of a new pipeline connection and commencement of deliveries into its AlaTenn pipeline system with Southern Natural Gas in Alabama.
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