USD 39 million in Oil & Gas R&D Project Grants

USD 39 million in Oil & Gas

The US Department of Energy declared up to USD 39 million in federal funding for cost-incurred research and development plans that aim to develop oil and natural gas technologies.

Chosen projects will come under two DOE Office of Fossil Energy funding opportunity announcements (FOA), DOE announced recently. The National Energy Technology Laboratory will oversee the projects under both FOAs; it was declared.

Following the first FOA, DOE will contribute up to USD15 million for projects that improve the potential for intensified oil recovery of conventional resources offshore and contemplates that the projects will be accomplished in two phases.

It has been announced that Phase 1 would include proof-of-concept validation of tools, technologies, and methods in a laboratory or field analog environment. Whereas the Phase 2 will include an interspersed full-scale prototype demonstration in a relevant background to persuade stakeholders to proceed to develop the technology to commercialization, DOE announced.

Concept writings will be due three weeks after the FOA’s announcement, while the full application will be due 60 days later.

Below the second FOA, DOE stated it would provide as much as USD 24 million for projects encouraging the development of tools, processes, and technologies to cost-effectively improve the safety and efficiency of the nation’s gas production, collection, transmission, and storehouse systems. This FOA focuses mainly on advanced technologies to decrease methane emissions and increase the effectiveness of the gas transportation infrastructure. Secondly, process-intensified technologies for the upcycling of flare gas within transportable, value-added products. Lastly, advanced methane apprehension and measurement technology validation.

Oil & Gas Cash Flow Hits All-Time High

On the flip-side, the world’s publicly registered oil and gas businesses are bringing in cash at the best rate ever observed even though oil prices have only partly recovered from the vast drop suffered in 2014 and 2015, as per Rystad Energy.

Unconstrained cash flow for public exploration and production (E&P) corporations skyrocketed last year to almost USD 300 billion, indicating the return of the “super profit” for industrial areas. For these members, 2019 could turn out to be another blockbuster time.

A Rystad Energy report of estimated global free cash flows (FCF) for all public E&P corporations since 2010 shows that FCF topped in 2011. In the years specifically 2012 to 2014, FCF weakened as E&P businesses took on more responsibilities and investment budgets developed. In 2015, as the oil price dropped, FCF was diminished considerably. Since 2015, FCF has healed gradually to the all-time high we see now.

According to experts, analysis of the latest year-end reports from the majors indicates that ‘super profits’ are back for big E&P companies. Free cash flow before investment activities was at a record high in 2018, and the mega profits were basically used to pay down debt and improve payments to shareholders.

For 2019, Rystad Energy assumes the high free cash flow for E&P businesses will continue, suggesting that this could be another blockbuster year for these players. Three main factors that drive this enhanced profitability include higher oil prices: The oil market has continuously returned to balance after a period of oversupply, lower costs: Following 2014 the cost of developing new projects has decreased on average by 30 percent, and lower activity: Global expenses within the upstream industry have plummeted from around USD 900 billion to USD 500 billion.

Rystad Energy has examined recent cash flow reports from all the majors plus Norway’s Equinor to get a strong sense of who benefits from these profits. For these organizations, cash from operations which may be described as revenue, without all operational costs and taxes was USD 211 billion in 2018. Investments totaled USD117 billion in 2018, giving a profit of USD 94 billion before financing. Out of this, USD 25 billion was paid on reducing debt, while USD 69 billion was disbursed as dividends to shareholders. This indicates that almost 70 cents for every dollar in profits generated last year for these organizations ended up in shareholders’ pockets.