Hurricane Michael caused roughly 42% of U.S. Gulf of Mexico oil production to be shut in as it marched across the eastern Gulf. About 32% of natural gas production was also shut in, according to the Bureau of Safety and Environmental Enforcement (BSEE). Overall, 89 production platforms, or 13% of manned platforms in the Gulf of Mexico, were evacuated, cutting off 718,000 barrels per day of oil and 812 million cubic feet per day of gas production, the BSEE said. The Energy Information Administration reported that crude output lost in the two days of the storm represents about 9% of U.S. production. Nearly 30 million people in the southeast U.S. found themselves in the crosshairs of the category 4 storm.
Meanwhile, Exxon Mobil Corp. was in the news again this week. This time for a $1 million donation to a political action committee's lobbying campaign to promote a U. S. tax on carbon-gas emissions. The contribution was disclosed less than a month after Exxon Mobil agreed to contribute $100 million to oil companies' efforts to develop technologies to reduce greenhouse gas emissions. Exxon Mobil spokesman Scott Silvestri told Reuters, “Applying a uniform cost across the economy is consistent with our principles on how to manage the risk of climate change.” The donation will be spread over two years.
In A&D news, offshore driller Ensco said it will buy out rival Rowan Cos. in an all-stock acquisition worth about $2.4 billion. As part of the merger agreement, Rowan shareholders will receive roughly 2.2 Ensco shares for each Rowan share, or about 281 million Ensco shares, to own roughly 39.5% of the combined company. Ensco shareholders are expected to hold a roughly 60.5% stake. The merger will result in a combined enterprise value of $12 billion and annual cost synergies of about $150 million.
Finally, Chevron became the first oil major to exit the Norwegian Continental Shelf as it transfers its last stake in an exploration license, according to a government letter. According to a letter from the Norwegian oil and energy ministry to Chevron obtained by Reuters, Chevron has agreed to transfer its 20% stake in an exploration license in the Arctic, called PL859, to Norway’s DNO ASA. A Chevron spokesperson confirmed that the company reached the deal with DNO in July but did not disclose its value. Exxon Mobil, BP and Royal Dutch Shell have all scaled down their presence in Norway by selling or merging their assets in the mature region to focus on new growth opportunities elsewhere.
South Korea has been testing Permian light crude as a substitute for Iranian condensate.
Long suspension could cut refining operations in Eastern Europe and reduce Russian output.
Pundits weigh in on whether the stars will align for a successful 2019 and how the oil and gas industry can navigate the headwinds and tailwinds ahead.