Following a year of unexpected volatility with oil and gas prices, anticipating what revenue streams will look like in 2023 is top of mind for mineral owners. 2022 started with expectations of a return to a typical, flatter price curve after the economic and demand disruption of COVID-19. However, Russia-Ukraine war and OPEC+ production cuts saw a return to $100 oil and natural gas that doubled its new year start. With barrels from the second largest producer off the market, urgent attention was suddenly focused on Europe’s energy security and a sustainable supply of natural gas.
Despite prices that have settled below their 2022 highs, the outlook for 2023 sees a return to higher oil prices and a bright, long-term future for natural gas. With operators shedding their pandemic-era hedges, leading indicators point to the same conclusion.
Commodity price outlook
U.S. mineral owners are part of a global energy market where geopolitics, regional conflicts and the standard of living in emerging economies all influence commodity prices and the size of revenue checks. The Russia-Ukraine war has brought this into sharp focus, though the impact on energy markets will take time to play out. Contrary to the attention-grabbing headlines, Europe’s energy supply has been preserved with 90% of energy contracts covered through the winter and sanctions on Russian oil exports only taking effect from December 2022 through February 2023.
Primary drivers of higher commodity prices include:
Russian sanctions on oil and refined products.
Slow build out of U.S. LNG export facilities influenced by ESG.
Evolving COVID-19 restrictions in China.
Potential for a colder winter signaled by once-in-a-generation “arctic invasion” in December.
Oil forecast
Look for oil prices between $80 to $120 in 2023, with prices settling around $90 for the year. Check stubs may start to look different though as operators continue to focus on completion of an entire drilling spacing unit on multi-well pads, capital discipline and returning value to shareholders. A low rig count and declining production mean that mineral revenue streams will only get a boost from the anticipated favorable oil pricing.
The downside for 2023 is that declining production could intersect with declining prices and drilling to create a revenue crater for mineral owners. Upside drivers include increasing demand for jet fuel and motor oil driven by business-related travel, India and China remaining open for business, and expanding vehicle purchases.
To make informed decisions and build the right mineral investment and management strategies with trusted insights, download the full version of the 2023 Mineral and Royalty Outlook Report.
CALGARY, Alberta (February 1, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its latest quarterly FundamentalEdge report focused on global drivers for oil and gas prices in 2023, the five-year oil and gas supply and demand outlook, as well as price forecasts.
“Unseasonably warm weather, record high supply and delays to the Freeport LNG restart inflated our end-of-winter natural gas storage estimate. This higher storage projection worsens the oversupply already expected for midyear, pushing our summer price forecast down by as much as $1/MMBtu from previous outlooks,” said Bill Farren-Price, director of EIR.
Meanwhile, oil prices are expected to rise on tighter balances in the year ahead. “We expect rising oil demand in the second half of 2023 to spark inventory draws and higher prices, with a price call for Q4 an estimated $20-$30/bbl above the current forward strip,” Farren-Price added.
Key takeaways from the report:
Bullish oil price outlook is driven by anemic supply growth and moderate projected demand.
The Permian Basin will drive the most global oil supply growth, however, we expect supply will struggle to offset Russian losses and OPEC will backstop with fresh cuts if Brent prices fall below $70/bbl.
Gas balances have a different story as we forecast sub-$3 NYMEX in 2023 supported by record warm winter weather and strong U.S. gas supply.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
In the face of ongoing cost inflation and economic uncertainty, operators are under increasing pressure to demonstrate efficiencies and fiscal discipline.
For operations and accounts payable teams, reviewing and approving high volumes of field tickets continues to be a major source of inefficiency. Field supervisors are particularly overwhelmed by the number of tickets they need to review and approve, and it’s especially challenging to validate the scope of unsupervised work. For those using paper field tickets, efficiency challenges are exacerbated by error-prone manual data entry, lack of visibility into spend and increased travel time required to collect paper field tickets.
To help all parties overcome these challenges, Enverus created OpenTicket, a cloud-based digital field ticketing software solution that enables operators and service providers to generate, review and approve digital field tickets for faster invoice approvals and payment.
Since its launch in 2016, OpenTicket has been instrumental in eliminating the need for paper field tickets in the oilfield. OpenTicket seamlessly integrates with OpenInvoice, making it the only digital field ticketing and invoice platform with automated reconciliation and compliance for a completely digital, end-to-end review and approval process. By managing e-ticketing and invoicing on the same platform, operators shorten and streamline the service-to-invoice process, reducing mistakes and duplicate tickets and invoices.
Currently, OpenTicket is used by more than 90 operators, with 7,500 suppliers submitting digital field tickets to the network. And using Enverus’ digital field ticketing solution is only getting easier.
Introducing OpenTicket Mobile
OpenTicket now offers even greater efficiency and time savings with the new OpenTicket Mobile app.
Oilfield services are often provided in remote areas and at unsupervised job sites which often don’t have Wi-Fi or cell service, making it tough to stay connected. OpenTicket Mobile’s GPS and geofencing capabilities eliminate this issue, providing visibility into work done on site — including work done at remote and unsupervised jobs sites — with detailed views of routes and hours spent on the entire job. Ticket details that match mobile data provided by the supplier are automatically validated, and approvers are alerted to erroneous tickets for further investigation or dispute.
Real-time tracking of work performed
During a job, GPS readings are recorded and matched to the digital field ticket provided by the supplier. Geofencing, the associated physical coordinates to a service site (i.e., well, storage tank, gas plant, etc.), can also be used to confirm the service provider was close to the location.
The service company representative can pause the trip time and locations during a trip if needed. They can also enter appropriate job information related to the work done and attach backup documentation, including site pictures, to the digital field ticket. The ticket is validated in the supplier’s OpenTicket system before submission, ensuring all business requirements, such as mandatory data and coding, are supported.
OpenTicket displays the trip summary, route details with time stamps and geofence information, making work time and route verification easy.
Save time with automatic ticket validation
When digital field tickets are submitted for validation and approval, additional information is added to each ticket, including:
The job route displayed in the ticket approval screen.
The hours taken between the start and stop times of the job, less any pause time.
Serviced locations identified by geofencing.
Ticket details that match mobile data provided by the supplier are automatically validated. Alerts signal approvers if the number of hours or service locations entered on the ticket don’t align with GPS and geofencing records. This allows you to switch to a manage by exception model for more time savings.
Creating value for operators and their suppliers
OpenTicket Mobile expands the value for both operators and their suppliers.
Save time: With automatic field ticket validation, approvers only spend time following up on inaccurate tickets. This allows operations personnel to focus more time on their job, and less time chasing information on work performed. For suppliers, this means a faster cycle from ticket approval to invoicing.
Improve spend management: Generating and managing digital field tickets with Enverus OpenTicket captures detailed electronic field ticket data for deeper and more timely visibility into accruals and operations.
Service delivery confirmation: With OpenTicket Mobile, viewing and confirming routing and work performed at unmanned locations becomes much easier.
Get started with OpenTicket Mobile
OpenTicket customers can provide OpenTicket Mobile to suppliers at no additional cost. The app is available for iOS and Android operating systems.
Buyers can determine which suppliers are required to use the application. Individual users are registered to the supplier, so field crews and drivers are identified through the application.
With the new mobile app, OpenTicket strengthens its value for LOE and D&C operations. Operations teams in the field can turn more focus on maximizing production and managing job safety. Suppliers can leverage IoT technology to accurately track the work performed so they can focus on the work at hand.
Want to learn more about OpenTicket Mobile? Please fill out the form to request a demo.
With the first month of 2023 almost in the books, we wanted to take a moment to look back at some of the key analyst takes on energy trends published by our Enverus Intelligence® | Research (EIR) team at the end of 2022, so you can confidently assess how they may affect your business decisions going forward.
Read on to stay ahead of the game when it comes to staying informed about current and future energy opportunities!
Oil prices to remain high through 2023: A constructive view driven by policy, investment and geopolitical factors (Dec. 22, 2022)
EIR’s constructive view on oil prices is driven by an interplay of policy, investment and geopolitical drivers, which will keep global oil supply tight through 2023 and beyond, pinning oil prices toward the top end of the post-COVID-19 range. High prices amid a spluttering global economy engender longer-term risks for oil however, since counter-cyclical high prices could deepen and prolong an economic recession, testing consumers’ tolerance until more violent demand destruction occurs.
Natural gas prices drop as warmer temperatures return: Will production freeze-offs repeat February 2021 event? (Dec. 19, 2022)
The prompt NYMEX contract has fallen more than 10% today to below $6.00/MMBtu as warmer temperatures have become more established for the latter part of the 15-day forecast. Near-term temperatures are expected to trend well below normal and bottom out around Christmas time. All eyes will be on the severity of production freeze offs and whether they will rival the February 2021 event which led to a 7 Bcf/d month-over-month decline in Lower 48 dry gas production. The Permian was the largest contributor to this decline with Midland, Texas, during the February 2021 event, recording about nine consecutive days of below freezing temperatures with the lowest daily mean temperature of 7.4 degrees Fahrenheit. Current forecasts are not nearly as dire and only show about three consecutive days of below freezing temps with Friday’s forecast of 14.7 degrees Fahrenheit being the coldest.
OPEC+ to rollover oil supply targets as group watches impact of EU sanctions, G7 proposals and Chinese demand (Dec. 2, 2022)
The OPEC+ oil producers are set to rollover their oil supply targets when they meet virtually this weekend, following on from the 2 MMbbl/d nominal cut they announced in October. Despite Saudi comments over the last month that further cuts could be made in order to stabilize balances that are under siege from worsening recessionary indicators, the producer group is now planning to allow more time to establish the impact of the EU sanctions on Russian oil exports, the G7-proposed oil price cap on Russian exports and a better sense of the outlook for Chinese oil demand in 2023 as Beijing’s COVID policies remain in flux. While there is no date for a subsequent meeting, the OPEC president can call a meeting at any time to discuss further cuts if they are needed. A likely OPEC+ rollover does not in EIR’s view mark a departure in OPEC oil supply policy that aims to keep global stocks well below the 5YA and pin Brent around $90/bbl.
OPEC’s denial of oil output hike report highlights finely balanced markets and relevance of Saudi Arabia’s influence (Dec. 2, 2022)
Yesterday’s Wall Street Journal report suggesting that OPEC+ would consider an oil output hike of 500 Mbbl/d at its next meeting was enough to cloak OPEC’s recent pivot to supply management in a large cloud of doubt. With financial markets already on edge over recession and the pace of monetary tightening, oil slid fast to test lows not seen since January, before the Ukraine war broke out. But Saudi Arabia didn’t hesitate to correct the record. Within hours, the energy minister had made an unusual formal statement denying the report, reiterating the existing cuts and pointing out that OPEC+ could cut deeper if needed to help balance markets. Oil prices responded by erasing most of the earlier losses. For a group of producers who have long preferred issuing smoke signals through unnamed sources, refuted reporting is hardly new. But it does underline two important conclusions for market participants at a febrile moment for oil markets. First, what Saudi Arabia says and does on oil supply is still highly relevant to global oil balances. Second, this oil market is finely balanced, and while EIR still see structurally tight supply as bullish heading into 2023, we also acknowledge the risks of a more violent collapse in demand. EIR is not forecasting that, but it is a tail risk.
Johan Sverdrup field boosts Norway’s oil production: Equinor’s Phase 2 development on schedule (Dec. 15, 2022)
Equinor has started production from Phase 2 of the Johan Sverdrup field on schedule. The development will boost oil production from 500 Mbbl/d to 720 Mbbl/d, contributing about a third of Norwegian oil production. EIR expects the field to increase 2023 Norwegian production to ~2.1 MMbbl/d. Norway’s oil production growth is key to offsetting output declines in EIR’s NOCAR region (not OPEC, Canada, U.S. or Russia).
APA and partner TTE discover non-commercial well in northern Block 58, oil resource below FID threshold in eastern Block 58 (Nov. 28, 2022)
APA announced a non-commercial discovery on the Awari well (operated by 50-50 partner TTE), which follows the Bonboni well as the second such result in the northern portion of Block 58. In the western portion of the block, gas-commerciality snags are deterring FID; in the east, oil resource from several black oil discoveries appears below the FID threshold (especially after considering operator TTE’s cost carry). EIR estimates the JV requires finding an additional 300 MMbbl of black oil before sanctioning its first oil development hub in the eastern part of Block 58 between Sapakara South and Krabdagu.
West Coast gas market tightness worsened by cold weather and maintenance: Canadian operators stand to benefit from record-breaking prices (Dec. 15, 2022)
Short term issues like colder than normal weather and maintenance on El Paso Natural Gas and Gas Transmission Northwest (GTN) have exacerbated gas market tightness that was already prevalent on the West Coast gas after the Pacific Gas and Electric storage reclassification in the summer of 2021. Malin basis settled at $26.10/MMBtu recently, with the potential for more record shattering basis prints to come as West Coast temperatures are expected to plunge over the next five days. Canadian gas operators TOU, ARX, OVV and NVA all hold firm transportation on the GTN pipeline, which provides exposure to these historic prices.
Net Power’s innovative oxy-combustion technology poised to revolutionize low-cost, clean power generation with upcoming IPO? (Dec. 15, 2022)
Net Power’s (NPWR) announced IPO via SPAC will be a positive step forward in funding the company as it aims to develop its first utility scale power plant. NPWR developed an innovative technology that generates reliable, low-cost, clean power from natural gas using an oxy-combustion process to inherently capture CO2 emissions. The nature of oxy-fuel combustion significantly reduces the cost of capture but increases parasitic loads. Company disclosure suggests they can capture CO2 around $10/tonne, well below our average breakeven estimate of $65/tonne for similar sized natural gas plants retrofitted with MEA capture technology. However, these aren’t quite apples to apples comparison, as Net Power’s technology cannot be retrofitted onto existing plants. Using the 45Q carbon capture tax credits to offset fuel and operating costs, NPWR suggests it can operate at a cost of only ~$4/MWh, meaning it could compete with thermal power assets for dispatch. NPWR also calculates a $21 levelized cost of electricity (LCOE) at $3.50/MMbtu gas, which competes for capital with new wind and solar projects. However, EIR expects carbon transportation and storage to be major challenges for this technology in regions that are less friendly to pipelines. If their claimed power generation capacities, capture costs and LCOE prove true then this technology could be a game changer for low carbon, baseload power generation.
E3 Lithium secures funding for pioneering Direct Lithium Extraction in Alberta: Commercialization expected in 2026 (Nov. 18, 2022)
E3 Lithium, who is pioneering Direct Lithium Extraction (DLE) in Alberta, announced that it has received $27 million from Canada’s Strategic Innovation Fund. Although yet to be proven commercially viable, E3 Lithium has started on the path to commercialization, expected in 2026, with the completion of their first lithium evaluation well Oct. 27, 2022. At the site of their Clearwater Project, the well drilled into the Leduc Formation showed lithium concentrations in the range of 76 ppm, equal to roughly 64 grams of lithium carbonate equivalent (LCE) per barrel. With anticipated production of 20,000 tonnes of LCE per year, the project will need to flow massive amounts of water, more than 282 million barrels per year, or about 845,000 barrels per day. This will require a lot of wells. At 60,000 bbl/d per well, which EIR views as optimistic, the project will require at least 15 production wells and an equal number of injection wells.
CVX’s acquisition of Mercuria Energy’s Beyond6 highlights importance of securing CNG demand for RNG economics in the US (Nov. 22, 2022)
CVX’s acquisition of Mercuria Energy’s subsidiary Beyond6, which includes a network of 55 compressed natural gas (CNG) stations across the United States, highlights the importance of securing CNG demand to further strengthen RNG economics. Competition to gain access to transportation markets will increase as RNG project-level economics significantly improve after the passing of the Inflation Reduction Act. The Beyond6 deal is interesting as only 6% of Beyond6’s stations are in the California, the state where the maximum value for RNG occurs. Still, manure- and landfill-based biogas projects selling into transportation markets outside of California/LCFS-eligible state generate IRRs of 114% and 172% after the IRA.
Chevron recently cited reservoir pressure challenges due to water management systems as the main contributor to its inability to meet targeted 2021 CO2 injection volumes at its Gorgon CCS project (1.65 Mt of CO2 injected vs. target of 4 mtpa). We believe suboptimal reservoir quality, possibly including unforeseen small scale reservoir heterogeneities, could be worsening the problem. The operator’s intention to purchase offsets suggests that the anticipated injection rates from reservoir modelling may not have accounted for such variability in the reservoir rock.
Staying ahead of the game
EIR’s analyst takes can make all the difference when it comes to your business decisions. Staying ahead of the game is paramount in this fast-paced sector, and monitoring new developments is key to success. To further stay informed on the energy industry, subscribe to EIR’s LinkedIn page, where you’ll find more insights on what’s in store for 2023 and beyond. We look forward to providing more valuable insight into navigating today’s ever-changing energy landscape.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
Challenges such as the COVID-19 pandemic, the war in Ukraine, complex new energy policies and historic levels of inflation have created challenging conditions for oil and gas companies over the past two years. There is mounting pressure on E&Ps to produce in more efficient and environmentally sound ways, without sacrificing bottom line performance, even as demand for oilfield services continues to outpace supply, driving OFS costs higher and higher. Meanwhile, supply chain, operations, finance and accounting teams must find ways to handle more work with fewer resources.
With all these compounding factors at play, what can oil and gas companies do today to relieve their teams of unprecedented pressure while delivering maximum value to shareholders both now and into the future?
This fueled much of the discourse at Enverus’ 18th annual SPARK Conference in San Antonio, Texas.
At last year’s event, employees from diverse E&P, OFS and midstream companies took the stage in a series of customer-led sessions to share how they’ve been automating processes and streamlining workflows to create synergies across supply chain, operations and finance and accounting teams. SPARK 2022 also showcased the latest Enverus source-to-pay innovations in sessions led by our in-house product experts, giving attendees a sneak peek into upcoming innovations in oil and gas source-to-pay solutions. Finally, keynote presentations focused on macro trends impacting oil and gas professionals today and the role of technology and innovation in navigating some of energy’s greatest challenges in 2023 and beyond.
Let’s look back at the biggest takeaways and announcements from SPARK 2022 that oil and gas professionals can use in 2023 to achieve leaner, more efficient oil and gas operations in the face of extreme inflation and volatility.
1. Investment in technology, data and analytics is key to accelerate the speed of operations and make impactful decisions
In today’s environment of extremes — extreme volatility, extreme inflation, extreme pressure to deliver competitive shareholder returns — technological innovation is crucial as oil and gas companies continue to look for ways to achieve leaner, more efficient operations.
“Our industry still struggles with laggard technology that prevents accelerated operating efficiency,” says Enverus President Manuj Nikhanj. “You need to know where to focus and implement change.”
The themes shared in these opening remarks carry strongly throughout the 2022 SPARK Conference sessions. From customer-led sessions to keynote presentations, the message is clear: Investment in technology, data and analytics is key to accelerate the speed of operations and make impactful decisions.
Specifically, investing in a comprehensive, connected, energy-dedicated source-to-pay platform that unlocks advanced insights into data will enable oil and gas companies to see greater efficiencies and productivity. The following clip offers a look into the possibilities that become available to operators with the right technology and data solutions in place.
Your SPARK 2022 playlist: Technology, data and analytics
For industry professionals looking to get a deeper understanding of how technology, data and analytics solutions can be leveraged by oil and gas players to strengthen performance amid current market conditions, we recommend watching the following session replay:
Driving Value From Data: Weaponizing Data to Fuel Your Value Chain: In the current environment of cost inflation and supply chain constraints, the cornerstone to a successful operating strategy is your spend data. But data without context can be dangerous. In this session, we demo our OpenInsights solution, provide more context to the data and show you how you can access this spend data and unlock its value to go from supply chain to value chain.
2. Operations professionals are looking to digital field tickets for enhanced tracking, validation, approval and compliance
Whether you work in accounts payable, D&C operations or LOE operations, paper field tickets create headaches such as lost tickets, delayed approvals, error prone manual entry and unnecessary time spent “pushing paper.” For operator field supervisors in particular, the sheer volume of tickets being submitted for review and approval can be overwhelming. Meanwhile, audits continue to reveal that suppliers are overbilling.
To help all parties overcome these challenges, Enverus created OpenTicket — a cloud-based digital field ticketing software solution that enables operators and service providers to generate, review and approve digital field tickets for faster invoice approvals and payment. OpenTicket Mobile’s GPS and geofencing capabilities provide visibility into work done on site, including work done at remote and unsupervised jobs sites, with detailed views of routes and hours spent on the entire job.
Digitalizing oil and gas field ticketing with OpenTicket also unlocks advanced project spend insights, and its seamless integration with Enverus OpenInvoice makes OpenTicket the only oil and gas field ticket and invoice platform with automated reconciliation and compliance for a completely digital, end-to-end review and approval process compliant with accounting standards.
“OpenTicket makes everyone feel more accountable to what they’re approving.”
— Christina Barela, business integrity and vendor compliance at Diamondback Energy
As the need to do more with less continues to be a common theme for energy companies, digital field ticketing offers oil and gas companies an opportunity to relieve operations and accounting teams of busywork so they can focus more time and energy on high value activities, while integration with the OpenInvoice platform unlocks additional functionalities that can help prevent rogue spend and offer advanced project spend insights.
Your SPARK 2022 playlist: Digital field ticketing
For those looking to simplify the field ticketing process, gain additional insights into work performed or accelerate the invoicing process while reliving accounts payable teams of unnecessary and time-consuming manual tasks, we recommend starting with the following session:
Easy Work Validation With Mobile Job Tracking: Tracking and validating unsupervised labor used for production operations has been a challenge both before and after digital field ticketing. In this session, the newly released OpenTicket Mobile application is demonstrated. See how GPS tracking, geofencing and additional alerts can expedite tracking and approval of digital field tickets.
3. New solutions for strategic sourcing and contracting will help address supply chain challenges and tightness in OFS markets
At SPARK 2021, transforming supply chain into a strategic source of value through improved processes and cost efficiency was top of mind for many companies as they grappled with the first waves of pandemic-induced supply chain shocks. Not surprisingly, transforming supply chain into a strategic source of value remained a strong point of discussion at SPARK 2022 as companies face record-breaking inflationary pressures and tightness in OFS markets.
“Operators need sourcing strategies that increase efficiency for fiscally sustainable growth.”
— Dan MacDonald, senior director of Source-to-Pay at Enverus
To that end, exciting new advancements in oil and gas procurement software are already helping operators and midstream companies streamline processes and improve efficiency. With simplified ordering, end-to-end spend visibility and automated workflows and compliance checks, procurement automation solutions such as OpenOrder makes it easy for oil and gas companies to create and process purchase orders and work orders for dispatching services and ordering materials. At the same time, advanced spend analytics become available to these teams to help them make faster, more strategic decisions.
Your SPARK 2022 playlist: Strategic sourcing and contracting
To hear more from customers and Enverus’ product team about the latest solutions for smart sourcing, contracting and ordering, check out these SPARK sessions on the Enverus Knowledge Hub:
From Field to Finance: Faster Visibility Into Operations: Connecting the field to the office to gain more accurate, up-to-date visibility into operational spend was a key objective for one of our clients. Learn how we worked together to deliver streamlined job and dispatch management in this client-led case study session and gain insight into the future roadmap for these solutions.
From Point A to Point B: A Preview of Digital Inventory & Material Transfers: Flexible and robust materials management forms a new pillar of our expanding Source-to-Pay solution. Take a closer look at the capabilities that we’re building alongside customers to improve the visibility and tracking of materials and assets throughout their lifecycles and see a demo of our new inventory and material transfer application, including a preview of the upcoming operator mobile application.
4. Oil and gas companies are adopting end-to-end digitalization of the source-to-pay process to combat double-digit inflation
Companies who choose to digitalize the end-to-end source-to-pay process on a fully integrated cloud-based platform will be best prepared to navigate current and future disruptions in the energy ecosystem, such as the astonishing levels of inflation we’re experiencing in the aftermath of the global coronavirus pandemic. From accounts payable automations to supply chain innovations, full source-to-pay digitalization on an energy-dedicated platform unlocks opportunities to create more value with fewer resources.
“There is an opportunity that many energy companies haven’t fully tapped into that could and would have a profound positive impact on your operating efficiency and bottom line — digitalizing the entire source-to-pay process.”
— Colin Westmoreland, chief innovation officer at Enverus
Your SPARK 2022 playlist: Energy-dedicated source-to-pay
To see how all the solutions and themes we’ve discussed today can be brought together in a single, energy-dedicated source-to-pay platform to streamline processes across supply chain, operations, finance and accounting for improved efficiency, compliance and performance, we recommend starting with following session:
Innovation Acceleration: Source-to-Pay: The complexity of the energy industry requires a comprehensive, connected source-to-pay platform, and we are bringing it to life! Join our leadership team as we share an update of the vision and roadmap.
There’s more to explore
From industry-wide challenges to new product roadmaps for supply chain, operations, finance and accounting on the ever-expanding Enverus source-to-pay platform, to customer-led presentations that shed light on the onboarding experience and ongoing benefits of Enverus Source-to-Pay solutions — SPARK 2022 offered tremendous value for oil and gas companies looking to achieve leaner, more efficient, more profitable operations in 2023 and beyond.
While we tried to pack as much value into this one blog post as we possibly could, there is still so much more to explore. For the full menu of on-demand sessions from SPARK 2022, head over to the Enverus Knowledge Hub today.
CALGARY, Alberta (January 24, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, is releasing its summary of 4Q22 upstream merger and acquisition (M&A) activity. For 2022, U.S. upstream M&A saw $58 billion transacted in 160 deals, including $13 billion from 26 deals in the fourth quarter. While deal values are down just about 20% from pre-pandemic averages, the volume of deals has collapsed to a nearly two-decade low as activity has been driven by large companies targeting the highest quality assets in billion-dollar-plus deals.
“Large-cap public companies like Devon Energy, Diamondback Energy, and Marathon Oil dominated deal activity in the back half of 2022,” said Andrew Dittmar, director at Enverus Intelligence Research. “These buyers have the balance sheet strength and favorable stock valuations to take advantage of large, high-quality offerings from private sellers. Critically, they can strike deals that both accretive to current cash flow and extend their runway of drilling locations. For smaller companies, which are still having their equity value discounted, it is challenging to thread the needle of buying assets at accretive multiples and being able to pay for inventory.”
Top 5 U.S. upstream deals of 4Q22
Date
Buyers
Sellers
Deal Type
U.S. Play
Value ($MM)
10/17/22
Hamm Family
Continental Resources
Corporate
Multiple
$5,219
11/02/22
Marathon Oil
Ensign Nat. Res.
Property
Eagle Ford
$3,000
10/11/22
Diamondback
Firebird Energy
Property
Midland
$1,592
11/16/22
Diamondback
Lario Oil & Gas
Property
Midland
$1,548
11/02/22
Sable Offshore
ExxonMobil
Property
Conventional
$625
Source: Enverus M&A Analytics.
Two of the largest deals in the fourth quarter of 2022 were Midland Basin acquisitions by Diamondback, historically one of the more active buyers in the region. Cumulatively, the company spent a little more than $3 billion to add nearly 500 new drilling locations that are highly economic in the current oil price environment. For Diamondback, adding inventory is more of a luxury than a necessity as the company already has more than a decade’s worth of top-tier inventory. Marathon is also well positioned with about 10 years’ worth of drilling locations economic down to $45/bbl. The company still added another 550 locations to its portfolio though when it purchased private Ensign Natural Resources in the Eagle Ford’s largest deal since Chesapeake purchased WildHorse Resource Development for nearly $4 billion in late-2018.
“E&Ps of all sizes have proven to investors they can be profitable and pay dividends,” added Dittmar. “Now the key question is how long they can sustain profitable margins, determined by commodity prices which they can’t control and the quality of their drilling opportunities which they can control, at least to an extent. Inventory life is where large caps have a substantial advantage over smaller rivals and investors recognize that by giving them a premium on their stock. In turn, they can use that premium to buy more assets. It is a market where the rich get richer.”
Private equity sellers have accounted for most of the assets on the market in recent years, and Enverus anticipates that trend continuing. These capital providers still have substantial investments in oil and gas they are looking to unwind, either because they are coming up against the end of a fund life, for ESG reasons, or both. Public companies’ concurrent appetite for inventory is giving them an ideal window to sell. That said, there are few fire-sale bargains to be had, and sellers are willing to walk away from a deal if none of the offers meet their minimum price. That further makes it challenging for small companies.
“There are a few options available for small cap companies struggling to secure inventory in the current market,” added Dittmar. “Corporate M&A hasn’t been a significant part of the market since 2020, but we could see a return to public company deals this year either from small companies combining in mergers of equals to build scale and hopefully get a higher multiple on their stock or selling to larger competitors that already trades at a premium valuation.”
Most likely, however, these smaller companies will stay independent and focus on adding less expensive inventory in areas like the Permian Rim or Powder River Basin. They could also try to capitalize on non-core assets shed by large cap companies. Already in 2023, Chesapeake Energy sold its Brazos Valley asset at what looked to be a buyer-friendly price, although that was scooped up by private WildFire Energy rather than a small cap public buyer. If large, strategic M&A is too expensive, smaller companies could also look to build inventory block-by-block in a return to a higher volume but lower deal value M&A market. That is the type of transaction Permian Resources has already struck early this year as they added incremental high-quality inventory at an attractive price in the New Mexico portion of the Permian.
Another interesting type of corporate M&A, but one unlikely to play a major role in the market, is public companies being taken private. A go-private transaction accounted for the largest deal of 4Q22 when the Hamm family acquired the public portion of Continental Resources for more than $5 billion. However, that was a unique situation because they already owned most of the company. A few others could be in the same position such as Comstock Resources, largely owned by Jerry Jones, or, on a larger scale, Berkshire Hathaway trying to consolidate Occidental Petroleum as a private investment.
Overall, the need for public companies to secure inventory is likely to keep the M&A market active in 2023. “The challenge for deals, as is often the case in this industry, will be bridging the bid-ask spread and navigating commodity price volatility,” concluded Dittmar. “Oil prices are likely to be steady or rising during the first half of the year while gas struggles, meaning more oil deals and fewer for gas to start 2023. However, we could see interest in buying gas assets mid-year to take advantage of low prices ahead of a U.S. LNG export ramp that will eventually drive gas higher.”
Members of the media can contact Jon Haubert to request a copy of the full report or to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
Oil and gas operating companies and non-ops — mineral, royalty and working interest owners — are two sides of the same coin. In the digital age, non-ops need to be just as data and software savvy as E&Ps, but technology innovation has historically focused on operators. However, there is good news for non-ops.
With Enverus’ purpose-built mineral management technology and business automation solutions, non-ops are able to automate revenue delivery and manage portfolios at any scale. With critical data sets built directly into these tools (wells, volumes, mineral appraisals, units, rig activity, etc.), users can manage the entire investment lifecycle from pre-acquisition due diligence , mineral portfolio management through maximizing deal value for divestitures.
Let’s review the day-to-day management of a non-op portfolio and show how mineral funds, family offices, banks, foundations and endowments know that they are always in pay, ensure revenue accuracy and optimize their G&A costs.
What’s holding back the non-op back office?
While operators and non-ops may be two sides of a coin, mineral, royalty and working interest investors have very different business drivers with tough questions that need answers, such as:
Am I getting paid correctly for my interest in a well?
Were the right commodity prices used to calculate my revenue?
Are operators charging me correctly for deductions?
Am I in pay on all new producing wells on my property?
Am I being paid correctly following the payout conversion on a well?
Were the correct oil, gas and NGL volumes used to calculate my revenue?
These are straight forward questions that are all too often impossible to easily answer.
One of the biggest barriers is the massive paper data problem and persistent manual data entry that non-ops face in the back office. It’s not uncommon to receive a check stub for a stripper well that’s more than 300 pages, making it cost more to process revenue details than the hydrocarbons are worth. Many non-ops struggle to close their month and that leaves precious little time to consider the big picture, missing wells and underpayments.
Non-ops also contend with a fragmented digital ecosystem of software and data silos, presenting a complicated mix of paper-based processes and digital revenue and JIBs. Organizational barriers to answering simple questions also persist that impede efficient mineral management workflows, including departmental layers of ownership where land owns leases and division orders, while accounting owns revenue and expenses.
These old methods of managing the non-op back office stand in the way of answering important questions. The main cause for underpayments (or non-payment for missing wells) is simply operator oversight. Today’s fast-paced production environment places enormous strain on operators who are being asked to produce more. Underreported volumes, missing wells on revenue detail statements, incorrect decimals and improper deductions (e.g., being charged for a no-cost lease) fall through the cracks.
A better way forward through automation and integration
One hundred percent of your non-op revenue can now be delivered straight into Enverus’ cloud-based mineral management software for touchless revenue processing. This is achieved through a combination of an automated operator data exchange and scanned document data extraction services for out-of-network operators, making all your revenue available within a few days instead of weeks or even longer. This completely replaces manual entry and check detail processing, eliminating human errors.
There’s tremendous payoff for hunting down and eliminating underpayments. And just think what higher value tasks accounting staff can be redirected to!
Spotting missing wells
Building a list of well names and API numbers to spot missing wells is a simple solution that would normally require hours of painstaking work. But increasing M&A activity results in well names changing several times within a few years, which can make it difficult to know when a new well goes in on your property. Enverus’ cloud-based mineral management software makes this a fast, simple process. This technology also empowers users with email alerts and cloud-based maps to monitor acreage by exception, track rig movement and see when frac crews show up for a completion to identify wells they should be in pay on.
Auditing improper deductions
Depending on the type of interest you own and the terms of a lease, you might be exempt from paying some post-production costs, but the operator charges you anyway through revenue deductions or even adjusting realized prices. To prevent taking a hit on your margins or even a negative royalty, users of cloud-based mineral management solutions can run a no-cost lease audit to spot improper deductions using a pre-built report. Simple!
Finding incorrect ownership decimals
Don’t assume your interest decimals are correct! Mineral interest is tracked to the eighth decimal place, so even a small miscalculation, dropped decimal place or rounding error can impact your bottom line or result in you cutting a check to the operator from an overpayment. Enverus’ mineral management technology helps you find decimal issues by digitally managing land information in a central location so you can stay organized and take action to correct and recover missing revenue. No more filing cabinets!
Identifying underreported volumes
Oil and gas operating companies are driven by two monthly production reporting cycles. The complexities of accounting for sales and paying interest owners, plus state regulatory reporting, doesn’t always produce the same financial statements and underpayments are often missed.
By bringing production verification tools, check stub details and public data sets together, mineral management and business automation solutions equip non-ops to find the underreported volumes that they are owed on faster than ever.
Payout and interest conversion
Preventing this type of underpayment is especially tough because payout on a new well can take years with multiple factors determining the timing. Missing a payout conversion can have huge implications, especially if there is an unleased interest in a drill tract that is not subject to forced pooling.
Enverus’ mineral management technology helps you avoid interest conversion underpayments by ensuring land records are effectively managed, allowing for easy data mining of agreements involving payout provisions. Then you can match those agreements with relevant wells and reconcile payout status and revenue to address any issues.
Final thoughts
The digital oilfield presents a widening technology capability chasm. Like operating companies, non-ops are just as hungry for technology that enables them to focus on A&D decisions, audits and deal analysis, instead of being bogged down in revenue processing. Enverus has leveled the playing field. MineralSoft and EnergyLink have become the gold standard for non-ops to manage their business, a powerful combo that empowers them to automate revenue delivery and manage portfolios at any scale. Combined with Enverus data sets (wells, mineral appraisals, units, activity analytics, placed wells), Enverus helps you manage the entire mineral asset lifecycle from pre-acquisition due diligence through maximizing deal value for divestitures. We have more than 1 million properties under management accounting for 85% of North American royalty revenue and 350,000 wells (nearly half of total well count).
To get more details on solutions to help you manage your mineral assets, stay in pay and maximize revenue, fill out the form below to talk to an expert.
The past two years have taught us that without supply chain, our world seemingly falls apart. Supply chain permeates every facet of our lives. Whether it’s for appliances we store our foods in or medicine for our children. It’s no different for energy — from sourcing services, equipment and materials for oil and gas to transporting and refining finished products to consumers in a timely and efficient manner.
The energy supply chain permeates every facet of our lives.
As recent events in Europe and the current natural gas crisis have shown us, price volatility and geopolitical risk have posed a threat across the value chain. One way to mitigate those risks is through effective supply chain management and strategic sourcing. And for that, supply chain needs fuel — data and digital transformation.
Data is essential in making accurate and timely decisions, ensuring the efficient and effective movement of goods, and identifying and addressing any potential procurement bottlenecks.
Data feeds into your strategy. The strategy, the “how,” requires a deep understanding of your business and your current position in a market. Strategy involves making complex decisions with long-lasting impact, analyzing and predicting trends and changes in the market — in other words, connecting the dots.
And when we underestimate the importance of connecting the dots, we create silos. As red tape between departments increases, silos slow down even the smallest of initiatives, dipping productivity. To connect the dots, you need accurate, timely and relevant data from a reliable source; this is where source-to-pay solutions come into play.
In addition to automating your procurement and invoicing processes, a source-to-pay suite captures valuable spend data that provides insights by evaluating many factors, identifying patterns and flagging risk areas. These insights are used to make informed, timely procurement decisions.
A source-to-pay suite fuels your supply chain management with data to drive your strategies and digital transformation to boost operational efficiency and seamless collaboration.
Here are three ways Enverus’ Source-to-Pay suites enhance your oil and gas supply chain management.
Take the pain out of IT integrations during mergers and acquisitions
While mergers and acquisitions (M&A) occur to achieve cost and revenue enhancements through the realization of synergies, according to a 2011 report by the Harvard Business Review, between 70 and 90% of M&A projects fail. A fact that still applies today.
One of the main reasons cited in this report is a poor integration process, specifically the neglect of a proper IT integration strategy. Surprising given how an IT integration strategy minimizes the risks of downtime and interruption to operations and ensures data integrity.
When it comes to M&As, a source-to-pay suite helps with IT integrations by providing a centralized platform to manage procurement, fulfilment and invoicing processes. It provides a framework to facilitate the transition and maintenance of your ERP so your operations can continue to run smoothly even in the peak of transition.
An environment conducive to cross-functional communication and data sharing that reduces the need for multiple systems, manual data entry and reconciliation. With this consistent set of tools and processes, you can manage supplier relationships and price agreements, and simplify the integration of these functions across the newly merged or acquired organization.
With a source-to-pay suite, you have access to all your data in a single platform, serving as the single source of truth. So, you can manage the procurement of goods, fulfilment of services and invoicing of suppliers without having to juggle between several systems and data formats. Source-to-pay suites also reduce the risk of disruptions to an organization’s oil and gas supply chain and ensure the newly combined organization continues to operate smoothly.
Learn how Callon Petroleum and Carrizo Oil and Gas implemented our Source-to-Pay solutions across its newly formed company post-merger to increase process efficiency and increase cost savings.
Improve security, confidentiality and procurement compliance
Historically, energy companies have run procurement and invoicing processes on paper, leading to increased risk of theft or reputation damage from sensitive information, trade secrets or leaked customer data.
Add to that procurement compliance risk due to the lack of real-time visibility into spend and supplier relationships and the need to process large amounts of spend data to derive actionable insights. The result? Wasted resources, overcharges and more cost overruns.
Source-to-pay suites help enforce and assess compliance by providing visibility into the organization’s procurement processes.
With features like a Secure Portal and Customizable Access Setup for suppliers, you can prevent unauthorized access to sensitive information.
Your digital documents are password-protected, encrypted and backed up regularly to prevent unauthorized access, loss or damage. Meaning you can easily share them with authorized stakeholders without the risk of physical copies being lost, damaged or intercepted. Finally, you can tamper-proof documents with electronic signatures for an extra layer of security.
While built-in compliance controls, automated workflows and approval processes provide you with the ability to track and audit all procurement transactions and enforce compliance with internal policies and external regulations.
Recently, NextEra shared how they were able to optimize price compliance and strengthen supplier relationships with Enverus’ Source-to-Pay suite, more specifically our OpenInvoice and OpenContract PriceBook solutions.
Audit and make “G” for governance easy (supply chain management criteria)
A global pandemic, geopolitical unrest and other factors keep extending the recent supply chain crisis.
Manufacturers still fight over a shrinking pool of resources while scrambling to restructure other critical components of the supply chain. This crisis will likely continue into the foreseeable future and our ecosystem is unlikely to revert to its pre-pandemic state.
With this in mind, organizations are prioritizing modernizing procurement technology. According to a survey conducted by Ivalua, procurement leaders are looking for solutions that provide more visibility into supplier risk, integrate source-to-pay processes with existing systems and support more comprehensive spend reporting.
Enverus’ Source-to-Pay suite includes features made for the energy industry, such as:
Supplier Benchmarking to screen and evaluate suppliers based on specific criteria and monitor supplier performance over time.
Procurement Automation to streamline processes engaging with suppliers.
Pricing Optimization and Compliance to systematically control payments against rates and realize payment terms and conditions with suppliers, and even secure early payment discounts.
Compliance Tracking and Alerts to monitor compliance as well as identify and address any non-compliant behavior internally but also with suppliers.
Through Enverus’ Source-to-Pay suite, you gain access to Procurement Automation, Payment Optimization and Compliance Tracking and Alerts capabilities. We are finalizing our Materials & Inventory Management and Job Dispatch modules. Once launched, Supplier Management will be the next evolution phase of our Source-to-Pay suite. Our vision is to further enhance visibility into supplier risk and support better supply chain ESG governance for operators so that we can continue to usher you into the next era of oil and gas source-to-pay.
Enverus, your trusted partner through oil and gas challenges
With Enverus’ Source-to-Pay suite, you will be better equipped to implement strategies to enhance your oil and gas supply chain management by:
Taking the pain out of IT integrations during M&As.
Improving security, confidentiality and procurement compliance.
Auditing and making governance easy (supply chain management criteria).
We can help reduce the risk of disruption to your operations through the diversification of suppliers, and better assess and monitor procurement risk, contracts and agreements. Enverus’ Source-to-Pay suite allows you to collaborate and communicate internally and externally so you can address potential oil and gas procurement risks faster.
Calgary, Alberta (January 17, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released two congruent reports on emission trends related to the oil and gas industry, and the impact of the EPA’s proposed updates to its emission reporting process. EIR’s first report analyzes how the oil and gas industry’s upstream emissions profile evolved since companies began introducing more explicit ESG policies in 2019 and explores how and why emissions have decreased. The second report details the changes the EPA is proposing to pneumatic controller emission reporting and assesses the impacts on basins and operators, assuming the proposal is finalized as currently written.
“EIR believes the current macro environment provides a golden opportunity to change the public image of the North American oil and gas industry as geopolitical tensions and high energy prices drive home the importance of a strong domestic energy industry, yet the push to lower emissions continues to gain relevance. The emission reduction seen by the upstream industry since 2019 is equivalent to swapping 7.7 million gasoline-powered vehicles to EVs, which is great progress but still far from getting to net zero,” said John Gutentag, senior data analyst at EIR.
“We believe the EPA’s proposal is a step in the right direction as it updates old emission factors and provides much needed clarity regarding reported operating time, but the significant uncertainty around regional variability is a headwind for operators trying to prioritize emission reduction strategies. The overall net impact to the U.S. production industry is a slight 5% increase in pneumatic controller volumes based on 2021 reported data and excluding the impact of a new two-tier option involving in-field surveys. Considerable variation exists at the operator and regional level,” Gutentag said.
Key takeaways on emissions trends from oil and natural gas production:
Reported annual upstream emissions decreased by 34 Mt CO2e between 2019 and 2021, a reduction of 28%, which is equivalent to swapping 7.7 million gasoline-powered vehicles to electric vehicles. We see no widespread evidence of emissions being pushed further downstream with other sectors largely flat over the same period.
Drilling and completion-related emissions increased by 3 Mt CO2e in 2021, and we predict that they will rise another 1.5 Mt CO2e when 2022 emissions data is released this fall.
EIR correlated satellite-derived flaring emissions with historically reported data to estimate a flaring emissions profile for 2022 of 14.8 million metric tons of CO2e, a reduction of 30% Y/Y.
EIR noted large Y/Y decreases in reported venting emissions, and expects this overall trend to continue as operators prioritize methane reductions voluntarily and the EPA moves closer to finalizing the OOOO b/c regulations, which were recently revised and reproposed during COP 27.
Key takeaways on EPA’s proposed rule change:
The most impactful change in the June 2022 EPA Subpart W reporting proposal is the updated methodology for pneumatic controller emissions, which currently account for 52% of U.S. upstream and gathering methane emissions. The suggested revisions will directly impact operators’ exposure to the upcoming excess methane fee.
The overall net impact to the U.S. production industry is a slight 5% increase in pneumatic controller volumes based on 2021 reported data and excluding the impact of a new two-tier option involving in-field surveys. Considerable variation exists at the operator and regional level.
Despite the changes, we continue to believe the impact of the excess methane fee will be minimal on the industry as most operators will get below the threshold before the 2025 implementation date based on 2024 data.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
Calgary, Alberta (January 11, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its list of themes it expects will shape energy markets in 2023.
“We’re seeing divergent opportunities across commodity and power markets this year. Fundamentals for oil look strong in 2023, we expect returning to $100/bbl, while natural gas prices are anticipated to remain weak around $3.50/MMBtu in North America given limited expected U.S. export growth,” said Dane Gregoris, a managing director at EIR and report author.
Geography will continue to play a deciding factor and EIR expects oil growth around Deepwater opportunities in Latin America by the middle of this decade, as well as expansion in the Permian, Haynesville and Montney.
“In addition, we expect energy transition-related investments to continue to grow on the back of the Inflation Reduction Act in the U.S. and anticipate other countries will look to compete with accommodative American policy. Policy, technology and profits will be the deciding factors as more nations follow suite. Carbon capture and sequestration (CCS), renewable natural gas (RNG) and hydrogen will continue to capture industry and investor attention. Emissions scrutiny is likely to take another leap forward as E&Ps respond to the call to produce in more efficient and environmentally sound ways.”
Key takeaways from the report:
Enverus expects 1 MMbbl/d of Y/Y global demand growth, half driven by China relaxing COVID-19 restrictions and reopening its economy. Conversely, the combination of modest U.S. supply growth (0.4 MMbbl/d E/E), OPEC intervention and Russian sanctions prevents critical OECD crude, product and SPR inventory builds, leaving the market undersupplied if an anticipated pickup in the global economy materializes in the second half of 2023.
Enverus estimates L48 dry gas supply will grow another ~1.5 Bcf/d E/E this year, driven mostly by the Permian. Haynesville production is expected to increase at half last year’s pace based on an anticipated slowdown in activity. Together, our supply projections refill inventory to 3.9 Tcf by October, which we anticipate will push prices to $3.50/MMBtu by summer.
We believe the recent energy selloff provides a compelling entry point for investors to add exposure to the sector. This year we believe institutional investors are more likely to continue adding energy exposure on weakness given strong commodity fundamentals and low sector leverage. In this new market regime of higher inflation and interest rates, real asset exposure with high dividends should continue to perform relatively well, in our opinion.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
Calgary, Alberta (January 10, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its latest oil preview focused on drivers for oil prices in 2023, near-term global oil demand and supply, inflationary impacts and emerging market conditions.
EIR’s constructive view on oil prices is driven by an interplay of policy, investment and geopolitical drivers, which will keep global oil supply tight through 2023 and beyond, pinning oil prices toward the top end of the post-COVID-19 range.
“Looking forwards to 2023, we see more reasons to be bullish oil prices than bearish, with global oil supply constraints set to keep balances tight despite a pronounced global economic downturn,” said Bill Farren-Price, director of EIR. However, Farren-Price noted that high prices amid a spluttering global economy engender longer-term risks for oil, since counter-cyclical high prices could deepen and prolong an economic recession.
Key takeaways from the report:
Oil supply tightness means EIR is bullish on prices heading into 2023, despite considerable economic headwinds that accompany a disjointed COVID-19 recovery, geopolitical crises and a historic tightening phase for G7 monetary policy. As of December, EIR forecasts Brent at $93/bbl in 1Q23, rising to $108 in 4Q23 (Appendix 1).
Sanctions on Russian oil exports will create a net loss to the market at a time when OPEC+ has pivoted toward supply management again. OPEC production capacity remains at historically low levels, giving limited scope to offset any unexpected loss of supply elsewhere. These three factors alone should ensure that oil prices gravitate toward the higher end of the post-COVID-19 range in 2023.
As U.S. oil supply growth establishes a lower trend around 0.5 MMbbl/d per year and the NOCAR (non-OPEC, Canada, America and Russia) supply wedge stays flat until mid-decade, it is hard to see how supply will meet some agencies’ more bullish estimates for demand growth in 2023 and the years beyond without oil prices higher than the current strip. Geopolitical risk in the Arabian Gulf and Central Asia compounds EIR’s view that supply risks remain to the downside.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser.
The Northeastern U.S. has some of the most ambitious decarbonization goals in the nation, and some of the most vocal detractors to new infrastructure. This is notable when any project advances, let alone begins construction, as in the case of the Champlain Hudson Power Express (CHPE) HVDC line. Meanwhile, a project in Maine is in the early stages, but its advancement starts to hint at costs and challenges coming down the pike.
Of course, these are just two projects of note. Look for continuing research from Enverus’ experts as more milestones are reached. The first quarter of 2023 will be exciting with the launch of 90-day forecasts for both NYISO and ISO-NE. These projects are well beyond 90 days out, but what we study today will help us understand what happens in the future.
Now, let’s take a further look at these two transmission projects.
New York
The CHPE is a planned 339-mile HVDC transmission project designed to move clean, hydro power from Quebec to New York. The project’s capacity is listed as 1,250 megawatts and it will blend submarine and terrestrial elements, snaking under Lake Champlain and through the Hudson River Valley.
The project announced financial close Nov. 1 and has since ceremonially broken ground and started the construction phase. The project will run from an existing HVAC converter at the Hertel substation outside Montreal, to the Canada-U.S. border at Riviere Richelieu. Hydro Quebec will be responsible for all construction on the Canadian side of the border. The terminus of the project is in Astoria, Queens in New York. While the project is scheduled to finish construction in 2026, it’s not too early to begin evaluating the impact.
What happens when you inject 1,250 megawatts of power into the existing 345 kilovolt system in Astoria? Astoria is a complex area, and many projects in the interconnection queue plan on connecting in the Astoria area or within Queens County, New York. Enverus data show more than 1,200 megawatts of energy storage projects are at some phase of development in the immediate vicinity of the Astoria Annex 345 kilovolt substation, where CHPE will connect.
Source: Enverus PRISM.
There are also some large wind projects slated to connect in the vicinity, and Clean Path New York is planning to connect to the grid just south of Astoria, at the Rainey substation.
Injecting what amounts to gigawatts in the Astoria area will create and exacerbate local congestion. Two constraints jump to immediate attention: ASTANNEX 138 ASTORIAE 138 1 and ASTANNEX 345 E13THSTA 345 1, with the Astoria-Hellgate basket of constraints also showing higher flows. The energy storage projects, to the extent they are completed, will provide some balancing support for congestion and energy cost during peak hours, but with short discharge durations, they aren’t expected to overshadow the influx of power.
The increase in congestion will start to drive more basis between Zone J and update regions with the J/K spread also taking a jump, all else being equal. But all else is not equal, given the projects in the works. Offshore wind coming online in New York, New Jersey and New England, will play an important role in the market landscape by the time CHPE is energized.
New England
There are two projects taking a step forward in Maine. State regulators granted initial approval for a transmission line and wind farm located in Aroostook County in Northeast Maine. Both projects have some hurdles to clear, including how much ratepayers will contribute to each project.
LS Power’s bid won approval for a 345 kilovolt transmission line that would connect a portion of wind-rich, rural Maine to the rest of the New England system. Currently, there is a small pocket of Maine that lies outside of ISO-NE, connected to New Brunswick. The proposed line would allow for delivery of the planned wind farm’s energy directly into New England instead of flowing into Canada, where it may or may not flow back into the states via existing interfaces.
The following image shows existing 345 kilovolt infrastructure and proposed transmission additions in green. Note, the path has not been finalized for the northern branch. In this case, crossing critical habitat (Canadian lynx and Atlantic salmon) is not viewed as insurmountable. Proposed projects are also shown in the image. Other planned projects are in western and southern areas where existing infrastructure makes connection more attractive.
Source: Enverus PRISM.
The wind farm, a 1,000-megawatt plant named King Pine, has been awarded to Longroad Energy. It stands to reason that the fate of the wind farm is dependent on the completion of the transmission project, although that is not explicitly stated based on research.
Putting aside any doubt that these projects will be completed, how will these projects change the landscape? Congestion is already common when there is strong wind in Maine. The transmission and wind projects are sized in relation to the other to an extent. A 1,000 megawatt wind farm connected to a 345 kilovolt line around 100 miles long would almost fully utilize the line’s capacity. The doubling of a circuit between Cooper’s Mill and Maine Yankee substations hints at the underlying engineering and subsequent impact. While power will move somewhat unimpeded to the area south of Augusta, it will eventually reach a bottleneck flowing further south into New Hampshire and Massachusetts. The further downstate the congestion occurs, the more impactful it will be on the Maine Zonal price. While current wind driven constraints are moderately bearish on Maine, the new additions are viewed as being high impact. Zonal basis between Maine and Massachusetts will increase upon completion of these projects.
The projects in New York and Maine are quite different but do underscore the need and willingness to pay to improve system reliability while marching toward a lower carbon future. New York and New England have little to no dispatchable generation in their planning queues — it’s predominantly wind, solar and short duration batteries. Maine, New Hampshire and Vermont all have a history of being unfriendly to transmission projects. Will the LS Power project fare different?
Transmission is an effective way to tap existing hydro power in Quebec and allow for the build out of wind in rural areas. With another winter in full swing and ever-increasing competition for natural gas, will the public open their mind to transmission? Hopefully it won’t take a catastrophe to turn public opinion, but time will tell.
Our power analysts will keep a close eye on these projects and their impacts as they progress. To stay up to date with Enverus’ expert analysis, or to request access to our power market publications, please contact [email protected].
Calgary, Alberta (January 4, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a new natural gas-focused report that provides various scenarios for long-term global LNG demand and compares to existing and post-final investment decision (FID) supply to infer the need by 2030 for projects that could reach FID in the coming year.
“We modeled four LNG demand scenarios through 2030, with three out of the four producing oversupply in 2026-2028. Under those three scenarios, global demand for LNG will exceed supply until 2026, by which time European policy will cut the continental pull for volumes to make up for lost Russian gas and demand growth will switch to Asia. Until then, European demand should underpin Dutch TTF at a premium to JKM, as it did for most of 2022,” said Jonathan Snyder, a vice president at EIR and report author.
Key takeaways from the report:
Global LNG supply will increase 37% from 2022 to the equivalent of 71 Bcf/d by 2030, assuming all sanctioned projects come online, according to Enverus projections. The largest components of LNG growth are from Qatar and North America, whose planned projects together account for 13 Bcf/d of growth, the bulk of which will come into service from 2025-2027.
We modeled four LNG demand scenarios through 2030, with three out of the four producing oversupply in 2026-2028. Under those three scenarios, global demand for LNG will exceed supply until 2026, by which time European policy will cut the continental pull for volumes to make up for lost Russian gas and demand growth will switch to Asia. Until then, European demand should underpin Dutch TTF at a premium to JKM, as it has for most of this year.
In the 3% growth per annum scenario, global LNG demand reaches over 68 Bcf/d by 2030, 16 Bcf/d higher than 2022 levels. In the 5% growth per annum and 8% growth per annum scenarios, global LNG demand reaches 76 Bcf/d and 92 Bcf/d respectively. Yet-to-be-sanctioned projects require the 8% demand growth scenario if full utilization of pre-FID LNG projects is to be realized.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.
Since early 2020, ERCOT has experienced tremendous load growth. From 2019 to 2021, the number of 4CP days grew approximately 4%, and reached 11% in 2022.
During this time, Off-Peak load growth, which is likely coming from datacenters, has outpaced On-Peak load growth.
During the COVID-19 pandemic, lockdowns kept people in their homes. This required people to work and attend school from home, which accelerated e-commerce and online entertainment, necessitating new datacenter growth. This growth is helping drive up demand for electricity, with data processing services, internet and information centers. As you can see in Chart 2 below, these have grown from 20%-30% since 2020, putting enormous pressure on the power grid.
Texas also saw the largest population growth in the country from 2010-2020. This trend continued in 2021 and preliminary data indicates it continued into 2022. This growth is also driving up demand for electricity.
Hot ERCOT 2022 Summer
Strong load growth combined with this summer’s sweltering temperatures shattered all time load records in ERCOT on multiple days. Let’s look at how the 2022 summer’s let’s 4CP temperatures this compared to 2011, which was considered one of the hottest summers of the early 21st century. As you can see below, 2011 was slightly hotter.
However, there is no comparison when it comes to peak load on 4CP days in 2011 and 2022. The load growth is phenomenal.
If you look at the daily peak load graphs below, almost all peak load days from June through September 2022 are records. While 2011 had hotter temperatures, load was much lower.
As ERCOT’s load grows, we will need to continue to build new resources to cover this increasing load. This needs to include not only renewable resources and battery storage, but also thermal resources to provide flexibility during low renewable events, which happen during heat waves (low wind generation) and evenings (when solar generation is ramping down).
Enverus continually monitors load growth and how it impacts the market, and provides daily and bi-weekly analysis. Ready to get started? Request a sample view of our power market publications.
Calgary, Alberta (December 20, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a report on oil and natural gas emissions management. Using PRISM, its proprietary operating system, EIR investigated trends across global monthly flared volumes collected from third-party satellite data. The report presents insights at the country, play and operator level.
“The U.S. and Canada contributed 6% and 1% to global estimated flaring volumes — or 212 Bcf and 25 Bcf — over the 12 months ending in June 2022, respectively. Yet, the two countries accounted for 24% and 4% of 2021 global natural gas supply, highlighting the relative strength of North American emissions management programs,” said Matthew Holloway, associate at EIR. “In contrast, Iraq and Iran released the most flared volumes at 15% and 14% of the global total, or 531 Bcf and 490 Bcf.”
Key takeaways from the report:
The U.S. and Canada contributed 6% and 1%, respectively, to global estimated flaring volumes (212 Bcf and 25 Bcf) over the 12 months ending in June 2022. Yet, the two countries accounted for 24% and 4% of 2021 global natural gas supply.
In contrast, Iraq and Iran released the most flared volumes at 15% and 14% of the global total, or 531 Bcf and 490 Bcf, respectively.
The Bakken, Delaware and Eagle Ford exhibited the highest number of flaring events among North American oil and gas plays over the 12-month period. The Tuscaloosa Marina Shale (TMS), Yeso formation and Gulf of Mexico posted the largest average flaring rates, primarily due to outlier events.
Flaring during upstream, gathering and processing operations in the U.S. contributed 33 million metric tons of CO2e in 2021 which equates to 14% of the sector’s emissions and 1% of total point source emissions in the country.
PRISM, and the flaring information contained within the report, is available to all ESG Analytics subscribers.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.
In North America, increasing demand for electric vehicles and energy storage systems is driving a need for a reliable and sustainable source of lithium. Direct lithium extraction (DLE) could help meet this demand by providing a domestic source of lithium, reducing the need for imports and improving energy security in the region. Additionally, by using a more sustainable extraction method, DLE could help to reduce the environmental impact of lithium production.
In a recent report, Enverus Intelligence Research (EIR) analysts explore the potential production of lithium from produced water in the Permian Basin.
While not yet commercially proven, DLE is a method of extracting lithium from brine without the need for large evaporative ponds or mines. This provides multiple advantages over traditional lithium production in North America, such as:
Lithium can be extracted more quickly as it does not require evaporation or the need to go through the entire mining process.
It is more environmentally sustainable than traditional methods. Without the need for mining or evaporation ponds, DLE nearly eliminates the chance to contaminate freshwater aquifers and entails a much smaller land footprint.
It does not need to clear the same legal and regulatory hurdles as new mines, which can take many years to commission.
It could be produced from oil and gas wastewater, offsetting the cost of dealing with the fluid.
It can use talent and infrastructure from the oil and gas industry, producing water from active oil and gas wells or from depleted legacy fields.
Recent changes to North American critical minerals policy incentivize local lithium production, with the Inflation Reduction Act implementing a stackable 10% tax credit on both mining and refining and the Defense Protection Act providing $1 billion per year to boost domestic mineral development. Canada has also joined the band with $3.8 billion allocated to projects in the form of infrastructure investments and tax credits.
If DLE can be proven commercial, there is an incredible opportunity for oil and gas producers to bolt on lithium processing for their wastewater, which all contains some concentration of lithium, with yearly production of lithium carbonate equivalent to more than 11,000 tons.
All formation water contains some concentration of lithium. Unconventional shale operators in the U.S. produce massive amounts of water, introducing the potential of an additional source of revenue for operators — if it can be extracted. Enverus analysts looked at several operators in Texas who have potential to produce lithium carbonate equivalent over their acreage from produced water. Source: Enverus Energy Transition Research.
Want to learn more about lithium, electric vehicles or how Enverus analysts can help you navigate the energy transition? Fill out the form below to speak with an Enverus expert.
Calgary, Alberta (December 14, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a report uncovering the economic and environmental potential behind direct lithium extraction (DLE) in the oil- and gas-rich Permian basin. The report dives into E&P operators capitalizing on the hidden potential within their wastewater, and at approximately 225,000 tons of estimated lithium carbonate per year, EIR is pointing to the possibility of an untapped, $19 billion industry in this single basin alone.
“Direct lithium extraction is the key to unlocking lithium security in North America,” said Graham Bain, vice president at EIR. “DLE is more environmentally friendly than traditional lithium mines, projects don’t take as long to commission and they have the potential to generate billions of dollars in revenue to E&P companies through the extraction of lithium in wastewater.”
Key takeaways from the report:
Critical minerals projects in the U.S. benefit from policy enhancements with the Inflation Reduction Act, which brought in a 10% tax credit on mining and refining of lithium, and through federal funding of up to $1 billion per year with the Defense Production Act.
Canada’s Critical Minerals Strategy will provide up to CA$3.8 billion over eight years in the form of infrastructure investments and exploration tax credits.
E&P companies could turn wastewater into a revenue stream by leveraging DLE. EIR estimates wastewater in the Delaware Basin could produce ~225,000 tons of lithium carbonate per year, generating $19 billion in additional revenue.
Permian lithium potential was calculated through the connection of academically sourced lithium concentrations with water production data from Enverus Foundations.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.
Electric utility providers’ primary objective is to deliver reliable energy to customers and plan for the future. Utilities closely monitor energy demand and if they have capacity to meet future needs or not. Market conditions evolve — plants reach the end of their lifecycle, new policies get introduced, communities grow or decline. Emerging technologies, such as electric vehicles, surge, and energy security and natural disasters risk arise.
Utilities prepare for upcoming supply and demand shifts with short- and long-term plans that preserve reliability and strengthen infrastructure to supply sustainable energy for future generations. In the past 30 years, we have seen 200 gigawatts of wind and solar power come online.
What is an integrated resource plan?
An integrated resources plan (IRP) is a roadmap that large utilities develop to meet forecasted energy needs using supply and demand resources to ensure cost-efficient, reliable energy distribution to customers. Utilities use IRPs to identify the five, 10 or 20-plus year outlooks of plant retirements and how utilities plan to meet future demand and invest in new technologies.
Integrated resource plans also address market factors such as:
Growing and declining population.
Future energy demand.
Generation capacity.
Crisis response.
Energy security.
IRPs offer a long-term perspective into the future energy landscape, some with a view through 2050. However, they are lengthy documents and time-consuming to digest at scale, thus, it can be difficult to easily locate the valuable information.
Source: Enverus PRISM.
How can IRPs help?
Understanding which generation a utility plans to add, decommission or invest in is essential to a business development strategy. You can use IRPs as a pre-screening tool for entering a new market or understanding how the utility generation will change. When paired with power plants, LMP, parcels, suitable land analytics and grid infrastructure, you have a powerhouse of tools to confirm your market analysis.
Source: Enverus PRISM.
Project developers can leverage IRPs to identify potential renewable energy partnerships with PRISM for Power & Renewables. Position yourself in advance and uncover utilities plan to meet demand and the various incentives and mandates to add more renewable energy and storage to the grid. With Enverus IRPs you can:
Browse through key IRP content
Source and analyze utilities’ near- and long-term plans to meet electricity demand and upcoming plant decommission. Easily visualize projects by added and decommissioned capacity.
Conduct a market potential analysis
Drill down and analyze ISO areas, companies and projects by stage. View the market players associated with projects, infrastructure and find available parcels for development.
Easily synthesize and compare data
Quickly review and compare multiple utility IRPs and turn policy data into an actionable business development strategy.
Ready to identify potential renewable energy partnerships and see IRPs in Enverus PRISM? Fill out the form below and request a demo.
Calgary, Alberta (December 7, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released several natural gas-focused reports.
EIR’s Permian Gas Report investigates whether we have seen operators shift activity to gas production because of higher natural gas prices and analyzes how relative well-level economics compare between gassy and oily regions. Also included is EIR’s view on Permian gas takeaway and expectations for Waha basis differentials in the near term. Since the beginning of 2021, EIR has seen a substantial rally in spot natural gas prices, resulting in a shift in permitting activity across the Delaware Basin.
“Permitting activity across the Delaware has shifted from the liquids-rich regions of the basin to the gas-weighted areas,” said Stephen Pratt, report author and senior associate at EIR. “The relative well-level economics in the gas-weighted areas generate comparable returns and value when compared to the core of the basin and should compete for capital for operators with regional optionality.”
EIR analysts also investigated well productivity in the Haynesville and Marcellus and looked at operational trends in its U.S. Gas Productivity report. Their findings estimate how productivity per foot will likely change in each of the two plays in 2023.
“Average well productivity has increased this year in the Haynesville, deteriorated in the northeast Marcellus and remained flat in the southwest Marcellus” added Jimmy McNamara, vice president at Enverus Intelligence Research and report author.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
About Enverus Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.
About Enverus Intelligence Research Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.
Understanding the timing of each stage of preproduction, known as efficiency metrics, is imperative for having confidence in forecasting cycle times of operators and service companies. This helps ensure equipment is fully utilized and groups know what’s needed for each development phase.
To decipher efficiency metrics, it’s necessary to create a complete picture of what happens pre-production, including permits, pad construction, spud, rig release, DUC and turning-in-line first production.
Luckily, Enverus has made identifying these metrics easier than ever. Let’s take a look at three key efficiency metrics that can be identified using Enverus’ Activity Analytics within PRISM.
Conversion rates: Identify areas of growth
Conversion rate is a good key performance indicator (KPI) for permit as it helps identify areas where operators continue to invest by showing who follows through on drilling commitments. As we have seen in areas like the Delaware Basin, where regulatory environments can be in flux, operators may stock up on permits before administration changes. But those permits aren’t a true indication of planned activity. Being able to identify continued investment beyond the initial drilling permit instills confidence in which sites will be developed and where production will be coming from.
We can look at conversions, or the number of permits with detected pad construction. Evaluating conversions across basins helps decide if permits are good indicators for growth.
Permit numbers can be a quick way to gauge changes in future activity. However, some basins are far from a reliable indicator. PRISM Activity Analytics makes it easy to see this KPI change. As illustrated in Figure 1, Marietta has an ideal conversion rate of 1-1. This instills more confidence in areas with high conversion rate, compared to San Juan or even parts of the Permian where permits are more speculative.
For drilling, we can add confidence to our analysis by detecting exactly when rigs move to the pad, based on proprietary GPS unit data. This gives us a better sense of the changing market share, who’s holding steady, declining or increasing.
Figure 1: Conversion rate for permitted pads to pad construction.
DUC inventory count: Indicator for future activity
As we consider outstanding investments in an area, DUC inventory is a key metric that offers insights on future activity levels. During the pandemic, we observed operators following through on drilling commitments and completing rig contracts, but not bringing frac crews on site to convert the DUCs.
Figure 2: Exxon Permian rigs through time.
For example, in Figure 2 and 3, we see Exxon maintaining their rig obligations in the Permian through the first portion of 2020, with an associated DUC build, but not bringing crews to continue work on those DUCs until much later.
Figure 3: Exxon Permian DUCs through time.
With PRISM, we can see frac crews arriving on site and determine how long the DUCs have been sitting to evaluate which is closest to development. Not all DUCs are created equal, so understanding which well will be prioritized allows for more competitive service bids, better volume predictions and more accurate understanding of oilfield activity.
Downtime: Improve planning and financial modeling
Understanding the typical duration for each instance of work and the downtime between development phases enables better planning and financial modeling. With Activity Analytics, we can evaluate efficiency at every stage, including KPIs for:
Permit to spud. Instead of taking a permit at face value, users can understand how immediately applicable a permit is to an operator’s development schedule, and how likely the permit is to be acted upon.
Spud to rig release. Given that not all drilling jobs require equal work, users can anticipate how long equipment will be needed on site, allowing for more competitive bid creation and higher win rates.
Completion to first production. Ideally, all available production will be turned in line as soon as possible. However, timing may be dependent on infrastructure constraints, weather conditions or lease conditions. Understanding the turnaround time from completion to TIL allows users to understand when volumes will enter gathering systems and impact prices, and when different equipment will be necessary.
Data for Lower 48 basins indicates that the overall efficiency timeline takes from a few months to more than a year, underscoring the need to get to know your operators’ behavior. PRISM also makes it easy to apply a cluster plot to any of these well stages to get a feel for how much we can trust the numbers.
Activity Analytics provides insight into each separate phase of development, from permit to production, and enables more specific business development, transparency into proposed schedules and enhanced equipment utilization. Without PRISM, teams are reliant solely upon reported data and quarterly updates.
Click here to learn more about how Activity Analytics can help you optimize the many stages of preproduction, and fill out the form below to speak with an Enverus expert.
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