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Oil edges up, but set for worst first-half performance in 20 years

24 Jun 2017   Prices

Oil edged up on Friday, recovering slightly from steep falls earlier in the week, but is set for the worst performing first-half in two decades despite ongoing production cuts. Brent crude futures LCOc1 were at $45.31 per barrel at 0222 GMT, up 9 cents, or 0.2 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 10 cents, or 0.2 percent, at $42.84 per barrel. Oil prices have fallen about 20 percent this year despite an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by 1.8 million barrels per day (bpd) that has been in place since January. That’s the worst first-half performance for crude oil since 1997, when rising output and the Asian financial crisis led to sharp price falls. The weak markets are a result of doubts over OPEC’s ability to rein in a fuel supply […]

Expert Commentary: Is An Oil Comeback On The Cards?

24 Jun 2017   Prices

– 2Q’17 wasn’t supposed to go like this! Heading into the spring the broad consensus in the oil market was that aggressive global inventory draws would move WTI into the mid $50s and beyond. Unfortunately EIA data failed to deliver the bullish goods despite OPEC compliance near 100% due largely to output gains in the US, Canada, Libya and Nigeria. So here we are, back trading $43 and the physical rebalance + flat price rally narrative that held so much promise has spiraled into a George Costanza’s three month Yankee severance-like state of decay: But it was supposed to be the Summer of George!!! – Where can a market in disarray find support now that the aggressive inventory draw story has at least temporarily lost its fastball? The most potent bullish trend for the market in our view would be a slowdown in U.S. production growth. The EIA sees […]

Baghdad may ramp up legal challenge to Kurdish crude exports

24 Jun 2017   Iraq

Prime Minister Abadi orders lawyers to block any attempt by the autonomous Kurdistan region to ship oil to the United States following reports that a tanker bearing KRG crude is en route. A tanker loads Kirkuk crude at the Turkish port of Ceyhan in May 2015. (STAFF/Iraq Oil Report) Iraq’s Oil Ministry and its lawyers have been told to take legal action against all crude exports by the Kurdistan Regional Government (KRG), especially the tanker Neverland that appears to be heading toward the United States. Prime Minister Haider al-Abadi is now reconsidering his laissez faire approach to challenging KRG exports, following news of the Neverland, which Iraqi and U.S. officials said they believe – but aren’t certain – is U.S.-bound. This content is for registered users. Please login to continue. If you are not a registered user, you may purchase a subscription or sign up for a free trial […]

Market weighs ‘massive purchase’ of products by Venezuela’s PDVSA

24 Jun 2017   Venezuela

Venezuela’s PDVSA has issued a flurry of new tenders for oil products in the last few days and although the volume being sought at the same time is unprecedented, market reaction has been inconclusive about it being a reflection of low runs at the country’s refineries. “Never before have we seen this massive purchase of refined oil products, not in this volume,” a PDVSA source said. S&P Global Platts has seen at least seven of PDVSA’s tenders. Four of them are considered occasional for the purchase of up to 900,000 barrels of 10 ppm sulfur ULSD, 300,000 barrels of 95 RON blendstock, 300,000 barrels of 91 RON blendstock and up to 600,000 barrels of catalytic naphtha. Delivery of the cargoes is scheduled for July 1-20. The other three tenders are long-term purchases to be delivered from July to December. They are for 720,000 barrels of MTBE, up to 3 […]

Cheaper gasoline should give limited boost to U.S. fuel consumption: Kemp

24 Jun 2017   Prices

Cheaper gasoline prices should spur an increase in driving in the United States and provide a limited boost for gasoline consumption over the summer, after a slow start to the year. Gasoline consumption depends on the volume of traffic (vehicle-miles traveled) and the average fuel-economy of the cars on the road. Traffic volume in turn depends on demographic and economic factors (population, household formation, car ownership, urbanization, average incomes and employment) and to a more limited extent gasoline prices at the pump. Gasoline prices influence fuel consumption primarily through consumer choices about fuel-economy when purchasing new vehicles and choices about the amount of discretionary driving. Rising gasoline prices tend to be associated with slower growth in traffic volumes and slower growth in gasoline consumption (as measured by […]

API: U.S. crude oil imports up 1.9 percent from last year

24 Jun 2017   Oil Supply, USA

Despite a recent reversal, crude oil imports into the United States are up 1.9 percent year-to-date from last year, the American Petroleum Institute reported. API published monthly data from May , showing total U.S. crude oil production averaged 9.3 million barrels per day, up 0.9 percent from April and 5.1 percent higher year-over-year. Federal data show total U.S. crude oil production at 9.35 million barrels per day for last week, a 7.7 percent increase from the same time last year. Through June 16, total cumulative U.S. oil production is higher than last year by 2 percent, the U.S. Energy Information Administration reported Wednesday . “For year-to-date, crude imports were up 1.9 percent compared with year-to-date 2016,” the API reported. “For year-to-date, total petroleum imports […]

Big Oil turns to big data to save big money on drilling

24 Jun 2017   Shale Oil

In today’s U.S. shale fields, tiny sensors attached to production gear harvest data on everything from pumping pressure to the heat and rotational speed of drill bits boring into the rocky earth. The sensors are leading Big Oil’s mining of so-called big data, with some firms envisioning billions of dollars in savings over time by avoiding outages, managing supplies and identifying safety hazards. The industry has long used sophisticated technologies to find oil and gas. But only recently have oil firms pooled data from across the company for wider operating efficiencies – one of many cost-cutting efforts spurred by the two-year downturn in crude oil CLc1 prices. ConocoPhillips ( COP.N ) says that sensors scattered across […]

US Oil Rig Count Rises For 23rd Week In A Row

24 Jun 2017   USA

The number of active oil and gas rigs in the United States rose again this week by 8—marking 23 weeks of gains and continuing to press upon battered markets who are growing increasingly dissatisfied with OPEC’s production cut efforts to rebalance the supply and demand equation. The number of oil rigs in operation increased by 11, while gas rigs decreased by 3. Combined, the total oil and gas rig count in the US now stands at 941 rigs, which is 520 rigs over a year ago today, when oil prices were significantly higher than they were today. Over the last two weeks, Canada saw significant gains in the number of active oil and gas rigs. This week, Canada saw another large growth spurt, adding 11 rigs. Prices were up slightly on Friday morning, after a rather horrific week—repeating last weeks’ trend—with WTI trading up 0.56% at $42.98, and Brent […]

Nigeria: Neiti – Over U.S.$21.8 Billion Unaccounted for By NNPC

24 Jun 2017   Nigeria

The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the Nigeria National Petroleum Corporation (NNPC) is supposed to remit over $21.8 billion billions to the Federation Account. The agency’s Director of Communications, Orji Ogbonnaya Orji, on spoke thursday on ARISE Television, a THISDAY sister broadcast station, said the discovery came as a result of the audited account of the NNPC. He explained that the unremitted amount was a combination of monies earned by the NNPC and all its subsidiaries from several projects executed in the oil sector in the past few years, but were not remitted to the federation account. He further said the agency’s report had been made known to the Acting President, Prof. Yemi Osinbajo, who was impressed with its findings. He said the agency discovered that the money was earned but not remitted to the Federation Account. He added that such unremitted money could be […]

Rosneft aims to export Egyptian natural gas

24 Jun 2017   Egypt, Russia

Russian energy company Rosneft is expected to start exporting natural gas from an Egyptian field considered to be among the world’s largest. Eni made its initial gas discovery in the Zohr field in Egypt two years ago and quickly described it as the largest ever made in regional waters and potentially the largest in the world. Egypt aims to become a regional hub for gas and liquefied natural gas, though availability at the domestic sector could complicate growth. In December, the Italian company sold off a 30 percent stake in the Egyptian basin to Rosneft in an agreement valued at about $1.6 billion. A source close to the company was quoted by Russian news agency Tass as saying Rosneft aims to deliver gas to regional […]

Using Energy to Extract Energy – the Dynamics of Depletion

24 Jun 2017   Peak Oil

The “Limits to Growth Study” of 1972 was deeply controversial and criticised by many economists. Over 40 years later, it seems remarkably prophetic and on track in its predictions. The crucial concept of Energy Return on Energy Invested is explained and the flaws in neoclassical reasoning which EROI highlights. The continued functioning of the energy system is a “hub interdependency” that has become essential to the management of the increasing complexity of our society. The energy input into the UK economy is about 50 to 70 times as great as what the labour force could generate if working full time only with the power of their muscles, fuelled up with food. It is fossil fuels, rfined to be used in vehicles and motors or converted into electricity that have created power inputs that makes possible the multiple round- about arrangements in a high complex economy. The other “hub interdependency” […]

Oil Companies’ Proved Reserves in 2016 Decline for Second Consecutive Year

24 Jun 2017   Oil Supply

Rest of world includes associated companies’ reserves with unspecified geographies. Annual reports of 67 publicly traded oil companies indicated that their aggregate proved liquids reserves declined in 2016 for the second consecutive year. The decline in proved reserves was heavily concentrated in a few companies that reduced their estimated reserves from Canadian oil sands projects. Downward revisions of existing resources , relatively low extensions and discoveries , and relatively high production also contributed to a decline in proved reserves. Source: U.S. Energy Information Administration, based on Evaluate Energy. Note: Rest of world includes associated companies’ reserves with unspecified geographies. The 67 oil companies included in this analysis are listed on U.S. stock exchanges and consequently are required to report their proved reserves annually to the U.S. Securities and Exchange Commission (SEC). Collectively, their global crude oil and other liquids […]

Finally, a Biofuel to Get Excited About

24 Jun 2017   Biofuels

Most biofuels news is bad—our current national program incentivizes the production and consumption of corn-based ethanol that somehow manages to increase food prices, increase gas prices, hurt American refineries, and hurt the environment. It’s a boondoggle, plain and simple. But not all biofuels are terrible. You can distill ethanol from cellulosic crops, an option that’s both green and beneficial to farmers. Scientists have also been working hard to figure out how to use algae to create oil, and as the FT reports , a team from ExxonMobil and Synthetic Genomics just made an algal breakthrough: Scientists at Synthetic Genomics, the biotech company founded by genomics pioneer Craig Venter, used advanced genetic engineering to double the oil content of their algal strain from 20 to 40 per cent, without inhibiting its growth. The findings are published in Nature Biotechnology on Monday. […] Previous attempts to boost the oil concentration in […]

Oil Prices Come Off Recent Lows

23 Jun 2017   Prices

Oil prices edged up Thursday but remained in bear-market territory on lingering concerns about a global supply glut. Light, sweet crude for August delivery settled up 21 cents, or 0.5%, at $42.74 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, gained 40 cents, or 0.9%, to $45.22 a barrel on ICE Futures Europe. The gains snap a three-session losing streak, but both contracts are still at their…

Traders test OPEC ‘whatever it takes’ resolve to defend oil price

23 Jun 2017   OPEC, Prices

When OPEC leader Saudi Arabia pledged in May to do “whatever it takes” to defend world oil prices, it didn’t expect the market to be testing its resolve just one month later. As the Organization of the Petroleum Exporting Countries extended oil production cuts, oil prices fell 18 percent in just 20 days. OPEC members appear determined not to rush into deeper output curbs despite market pressure. Oil traders have chosen to ignore bullish news for prices – including a long-awaited decline in U.S. oil stocks on Wednesday – and focused instead on negative factors such as a stubborn global glut. As a result, the oil market posted its worst performance in […]

Oil prices climb off 10-month lows as U.S. stockpiles drop

23 Jun 2017   Prices

Oil prices rose on Thursday after U.S. crude and gasoline stockpiles fell, but worries over whether OPEC-led output cuts would be able to rein in a three-year glut continued to drag. The market largely shrugged off comments overnight from Iran’s oil minister that members of the Organization of Petroleum Exporting Countries (OPEC) are considering deeper cuts in production. Brent crude futures were 4 cents higher at $44.86 a barrel at 0219 GMT, after falling 2.6 percent in the previous session to their lowest since August last year. U.S. crude futures were up 6 cents at $42.59 a barrel. On Wednesday, they settled down at $42.53, after touching their lowest intraday level since August 2016. Since peaking in late February, crude has dropped around 20 percent, with only brief rallies, completely erasing gains at the end of the year in the wake of the initial OPEC-led production cut. OPEC and […]

Oil market flashes warning about stock levels in 2018: Kemp

23 Jun 2017   Oil Supply, OPEC

Oil traders have become increasingly doubtful that OPEC will manage to cut crude stocks down to the five-year average in 2018 and keep them there. Calendar spreads for Brent futures throughout the rest of 2017 and 2018 have weakened significantly since OPEC agreed to roll over its production allocations at the end of May. Calendar spreads (price differences between futures contracts for delivery in different months) are closely linked to the expected level of oil inventories. Physical traders and refiners use spreads to hedge oil stored at tank farms and refineries as well as onboard ships in transit or acting as floating storage. But spreads can also be used by traders and specialist hedge funds to speculate on the level of global oil stocks in future. High and/or rising inventories are […]

Wednesday Is Fast Becoming Oil’s Least Favorite Day of the Week

23 Jun 2017   Prices

Focus on weekly EIA report highlights oversupply concerns Losses on WTI average 3.2% over the past four Wednesdays Every Wednesday, WTI gets whacked. With investors focused on the question of oversupply in the oil market, a familiar pattern is emerging in the price of crude. On Wednesdays — when the Energy Information Administration releases its latest data for U.S. production and inventories — oil prices take a tumble. The pattern has held for the past month, with losses on a barrel of West Texas Intermediate averaging 3.2 percent, or $1.56, over the past four Wednesdays. “No Wednesday without a good fall in prices seems to be the current motto of the market,” wrote analysts at JBC Energy GmbH, after the latest EIA data showed U.S. production increased to the highest since August 2015. While stockpiles of crude fell by 2.45 million barrels to 509.1 million last week, inventories remain […]

OPEC Has Few Escape Routes From Another Bear Market in Oil

23 Jun 2017   OPEC

Deeper cuts weren’t seriously discussed this week: delegates Resurgent Libyan, Nigerian production presents new challenge Oil’s back in a bear market and investors remain unmoved by last month’s agreement to prolong supply cuts, leaving OPEC and its allies with few remaining tools to boost prices. As Saudi Arabia, Russia and their allies reduce output, supply that’s beyond their control keeps rising. Libya and Nigeria — OPEC members exempt from the curbs — and U.S. shale producers are resurgent, undermining efforts to tame a global glut. Prices are back below where they were when the Organization of Petroleum Exporting Countries first struck its historic deal last year. Cutting even deeper — an idea rejected just a month ago — still looks unlikely. For now at least, the Saudi pledge to do “ whatever it takes ” to stabilize prices looks like not much at all. Further curbs could be necessary, […]

Kuwaiti official says OPEC-led production cuts not working

23 Jun 2017   Kuwait, OPEC

A multilateral effort to ease global oil supply-side strains on the market hasn’t worked as designed, a Kuwaiti official said Thursday. Photo by Oskari Porkka/Shutterstock June 22 (UPI) — The multilateral effort to bring the global energy market back to a balance between supply and demand has fallen short, an exporter told a Kuwaiti news agency. Members of the Organization of Petroleum Exporting Countries and a handful of other producers, notably Russia, started implementing a deal in January to ease the supply-side strains that weighed on oil prices last year through coordinated declines in production. In May, parties to the agreement decided to extend the terms by three months longer than originally planned, to March 2018. Market analysts were anticipating deeper cuts and crude oil prices have been on a steady decline since the start of June. Mohammed al-Shatti, a deputy chairman of the Kuwait Petroleum Corp., told the […]

House of Saud unites behind king’s son – for now

23 Jun 2017   Saudi Arabia

The elevation of Mohammed bin Salman as Crown Prince of Saudi Arabia has ended two years of speculation about a behind-the-scenes rivalry near the pinnacle of royal power, but he still has to win over powerful relatives, clerics and tribesmen. The 31-year-old favored son of King Salman was already in effect the day-to-day ruler, with sweeping powers over defense, energy and the economy, even though his cousin Prince Mohammed bin Nayef, 57, occupied the more senior job as crown prince. For two years the meteoric rise of Mohammed bin Salman stirred talk of strains and competition between the two princes, both known by their initials as MbS and MbN. That all ended on Wednesday when the Al Saud […]

Saudi Reshuffle Could Completely Shake Up Oil Markets

23 Jun 2017   Saudi Arabia

The power restructuring in Saudi Arabia this week led to the elevation of 31-year-old Mohammed bin Salman to crown prince, essentially ensuring that he will become the youngest king of Saudi Arabia in the not-too-distant future. The heir apparent has already been effectively running the country for the past few years, so the move was not entirely a shock. Nevertheless, the effects on the oil market could be profound. The new crown prince is known to be a bit unpredictable . In the early phase of the oil price meltdown, he said that prices did not matter. But the plunge below $30 per barrel in early 2016 seemed to have changed the calculus. Last year Saudi Arabia became the principle driver behind a return to “market management,” that is restraining output to stabilize prices. With the OPEC production cuts – which have had to be extended from six to […]

What Does Bin Salman’s Rise Mean For Oil?

23 Jun 2017   Saudi Arabia

The architect of Saudi Arabia’s Vision 2030 plan is now next in line to the throne, the Saudi Press Agency announced on Wednesday, paving the way for the 31-year-old nobleman to forward an assertive regional foreign policy and a much-needed economic overhaul. Prince Mohammed bin Salman, King Salman’s young son, replaced Prince Mohammed bin Nayef, the monarch’s 57-year-old nephew, as heir – signaling the rising tide of a new generation of the Saudi ruling class. The shift was approved by 31 of 34 members of the Allegiance Council, made up of the royal family’s most elite members. The new crown prince has handled the KSA’s two biggest conundrums in recent years: the war against Shiite Houthis in Yemen and the overhaul of an oil-dependent economy. “His ability to deliver on both fronts is still highly uncertain, as the country’s authorities are attempting to implement several generations’ worth of reforms […]

Nigerian Crude Exports to Hit 17-Month High in August

23 Jun 2017   Nigeria

Nigerian crude exports will top 2 million barrels per day in August, reaching a 17-month high, according to new data compiled by Reuters on Thursday. Attacks by militants in the Niger Delta had crippled production in 2016, but the African nation has been rebuilding output steadily through 2017. Drops in output last year were so bad that OPEC exempted Abuja from the bloc’s November deal to cut production by 1.2 million barrels per day. The new rise in exports can partially be attributed to delayed shipments from July, Reuters said. An estimated 2.02 million bpd of Nigerian crude will leave ports on 67 tankers in August, along with another 97,000 bpd of condensates. The Forcados crude grade began loading again earlier this month, when Royal Dutch Shell lifted a force majeure on facilities related to the grade. A total of 10.3 million barrels of Forcados crude will be shipped […]

Once Again, Tensions Are Rising In Nigeria’s Oil Sector

23 Jun 2017   Nigeria

On 2nd May 2017, Nigeria’s House of Representatives rejected a motion requesting that the House compel international oil companies (IOCs) to relocate their headquarters to the Niger Delta. The initiative initially emerged in March 2017, when then-acting President Yemi Osinbajo disclosed that the government was considering the move as part of a wider effort to restore peace to the oil-rich region, which has suffered from decades of ethnic and political unrest. Despite over half a century of oil production in the Niger Delta – which holds 95 percent of the country’s oil reserves – Nigeria’s key oil-producing region has remained subject to extensive corruption and severe underinvestment. The Niger Delta region consists of nine states: Edo, Delta, Bayelsa, Rivers, Akwa Ibom, Cross River, Ondo, Abia and Imo, but the majority of oil production is focused in Bayelsa, Rivers and Delta states. Due to endemic government corruption, and economic mismanagement, […]

Nigeria’s cut exemption at risk from oil revival

23 Jun 2017   Nigeria

Upward production trend could be maintained Producer faces joining OPEC pact as output recovers August exports seen surging to 18-month high Security situation fragile despite fall in attacks Nigerian oil output has recovered to its highest level in more than a year as militant attacks have declined substantially, along with the return of key export grade Forcados. Including crude and condensate, output from OPEC’s biggest African producer plummeted to near 30-year lows of around 1.2 million b/d in 2016, from 2.2 million b/d previously, as attacks on oil facilities in the Niger Delta rose at an alarming pace due to resurgent militancy. But Nigerian crude oil production in May jumped to 1.73 million b/d, up 80,000 b/d from April, its highest level since March 2016, according to the most recent S&P Global Platts OPEC survey. Since then, the Forcados restart has boosted flows and production is expected to increase […]

Venezuela’s PDVSA to buy up to 17 fuel cargoes on the open market -tenders

23 Jun 2017   Venezuela

Venezuela’s oil company PDVSA is seeking to buy up to 6.32 million barrels of fuel in one of its largest offers on the open market in recent years, according to documents seen by Reuters on Thursday. The firm, whose refining network is working at record lows since March due to lack of light oil, equipment malfunctions and other incidents, has increased fuel purchases this year to avoid gasoline shortages in the country. The 17 fuel cargoes of gasoline blendstock, ultra-low sulfur diesel (ULSD), catalytic naphtha, vacuum gasoil (VGO) and components for motor gasoline are expected to be received from July through December, the tender documents say. Earlier this month PDVSA awarded a group of firms, including Russia’s Lukoil, previous tenders to buy 600,000 barrels of […]

China Aims For Market Share In African Refining Sector

23 Jun 2017   Africa, China

On 22 March 2017, Sinopec agreed a deal to buy out Chevron’s downstream businesses in South Africa and Botswana, in China’s first major investment into the downstream oil industry in Africa. Although China already has an extensive footprint in Africa, the majority of these operations have been confined to the upstream sector – in oil and gas exploration. China has been steadily expanding its upstream operations outside China since the late 1990’s, through its three main state-controlled oil companies : CNPC, Sinopec and CNOOC, in an attempt to meet the country’s growing oil demand. Over the past several decades, China’s oil demand has risen drastically, driven by continued economic growth, an expanding middle class and a growing demand for consumer goods. China is now the world’s second-largest oil consumer, but due to a steady drop in domestic production – thanks to high production costs, a deterioration in mature oilfields, […]

China, India, Japan hamper Asia oil demand growth, efforts to balance market

23 Jun 2017   Asia

As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance. A fuel glut in China, a hangover from demonetization in India, and an ageing, declining population in Japan are holding back crude oil demand growth in three of the world’s top four oil buyers. The three countries make up a fifth of 97 million barrels per day (bpd) in global oil consumption, and any hiccups among them will mean lower-than-expected oil demand growth in Asia, helping to undercut the OPEC-led effort to support prices. “We are indeed seeing lower demand from more than a few clients – air, marine, road, industrial … They are actually consuming less fuel than anticipated,” said Michael Corley, managing director of Mercatus […]

Xi Jinping Is Set for a Big Gamble With China’s Carbon Trading Market

23 Jun 2017   China, Climate

BEIJING — As other countries look to China to take the lead in fighting global warming after President Trump’s rejection of the Paris climate agreement , President Xi Jinping is pushing ahead with an ambitious plan to build the world’s largest market for carbon emissions permits. The start of a national carbon trading market in China by late this year has been years in the making, but is now shaping up as Mr. Xi’s big policy retort to Mr. Trump’s decision to quit the Paris accord. The Chinese government said in a greenhouse gas policy guide released on Wednesday that the 2017 start was on track. “Carbon trading on a national scale will send a signal to the world that China is serious about this,” said Wang Yi , a professor at the Chinese Academy of Sciences in Beijing who also belongs to the national legislature and advises the […]

Trump’s ‘Solar Border Wall’ Claim Sends Stocks Soaring

23 Jun 2017   Prices, Solar

BBC . During the rally, he suggested that the idea to install solar panels on the hypothetical wall was originally his, though the green amenity had been included in several companies’ bids to plan and construct the wall. “ We’re thinking of something that’s unique, we’re talking about the southern border. Lots of sun, lots of heat,” Trump said. “ We’re thinking about building the wall as a solar wall, so it creates energy, and pays for itself. And this way Mexico will have to pay much less money…Pretty good imagination, right? Good? My idea.” The Mexican border wall had been a cornerstone of Trump’s campaign for president last year. The Department of Homeland Security invited construction companies to submit proposals for the wall’s design after the January inauguration. Two hundred companies have responded so far and 20 have been short-listed. Bloomberg reported that stocks of solar panel companies […]

A First-of-Its-Kind Clean Coal Plant May Not Burn Coal at All

23 Jun 2017   Coal

Mississippi wants deal that’d have plant fueled by gas only Southern has spent years constructing the Kemper coal plant A first-of-its-kind “clean coal” power plant that utility owner Southern Co. spent years constructing in Mississippi may end up burning no coal at all — and instead just run like a natural gas generator. After years of delays and billions of dollars in cost overruns, Mississippi regulators on Wednesday called on Southern to work up a deal that would have the Kemper plant fueled only by gas. The state Public Service Commission said in a statement that it’s looking for a solution that eliminates the risk to ratepayers “for unproven technology,” which involved converting coal into gas that could then be used to generate electricity — all while capturing emissions. Settling for gas only at Southern’s Kemper plant threatens to undermine the business rationale for the kind of clean-coal technology […]

Rig Trends: Offshore Rig Market Recovery Reports Premature

23 Jun 2017   Offshore

For quite some time now, many oilfield analysts have reported the beginning of a recovery in offshore rig demand. For quite some time now, many oilfield analysts have reported the beginning of a recovery in offshore rig demand. Recent report headlines, however, have now started to use phrases like “elusive recovery” or something similar. The fact of the matter is that a recovery never really started. Yes, there have been isolated positive developments in some markets for some rig types, but reports of a recovery have most definitely been overstated. As seen in the figure below (courtesy of the June 2017 RigOutlook forecast), the competitive jackup, semisubmersible (semi) and drillship rig fleet totaled 700 rigs comprising 431 jackups, 150 semis, and 119 drillships. While this was down by 6.2 percent from 747 in September 2014 (generally recognized as when the current downturn began), the drop in rig demand during […]

High Costs Are Pushing Investors Away From The Permian

23 Jun 2017   Shale Oil

The Permian has enjoyed a rush of capital since oil prices began to recover from a low of $26.21 in February of last year. The play is home to some of the best economics in the country, making it a prime target for E&P companies looking to maximize profit in a lower price environment. But the surge in land costs is leaving little room for new investors to profit. The Delaware basin, the Permian’s hottest zone, is beginning to become a victim of its own success. EnerCom Analytics’ well economic models indicate that the internal rates of return (IRRs) in the Delaware are now lower than those seen in the Midland due to the high cost of land. At $45 WTI, EnerCom’s well economics models show IRRs in the Midland of 22.8 percent compared to 21.5 percent in the Delaware when acreage costs are included in the equation. The […]

Earthquake trends in Oklahoma and other states likely related to wastewater injection

23 Jun 2017   Earthquakes

U.S. Geological Survey Earthquake Catalog According to the U.S. Geological Survey (USGS), the number of earthquakes east of the Rocky Mountains has increased dramatically since 2009. More earthquakes in these areas have coincided with the increase in oil and natural gas production from shale formations. Seismic events caused by human activity—also known as induced seismicity—are most often caused by the underground injection of wastewater produced during the oil and natural gas extraction process. Source: U.S. Geological Survey Earthquake Catalog Most induced earthquakes are small, measuring in the three- to four- magnitude range on the moment magnitude scale . These earthquakes are large enough to be felt by most people, but they do not often cause damage to structures. In Oklahoma, where production is in areas with high water-to-hydrocarbon ratios (meaning there is more produced wastewater that must be disposed), the number of earthquakes has increased significantly since 2009. […]

Demand to ship gasoline on top U.S. pipeline at six-year low

23 Jun 2017   Pipelines

The operator of the biggest U.S. fuel pipeline system said on Thursday demand to transport gasoline to the country’s populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply. Summer is typically when gasoline demand peaks in the world’s biggest oil consuming country as motorists hit the road for vacation, and keeping their gas tanks full strains the capacity of U.S. refiners and pipelines. This year, so much fuel is stored in tanks in the Northeast that Colonial Pipeline Co [COLPI.UL] said in a notice to customers that demand from refiners and fuel traders to bring gasoline through its pipeline to the region from refining hubs in the South was the worst in six years. For the first time since 2011, demand for the pipeline was below capacity for a five-day period starting early next week, Colonial said on Thursday. […]

Russian Maritime Oil Exports Fall For First Time In 2017

23 Jun 2017   Russia

Russia exported 4.822 million bpd of crude oil by sea in May, down from a record 5.21 million bpd in the previous month, energy data provider Kpler has said, adding that this is the first monthly decline in Russia’s crude oil exports this year—another tentative gleam of hope for oil bulls, after the Energy Information Administration yesterday reported a 2.5-million-barrel decline in crude oil inventories. What’s more, Kpler says, this month should see another draw in Russian exports. The data provider sees them, based on loadings until now, at between 4.2 million and 4.4 million barrels daily. This, the company notes, is the lowest since August 2016. Further falls are also likely: preliminary loadings data seen by Reuters suggests that loadings from Russian ports on the Baltic Sea are set for a decline in the first 12 days of July. The decline is seen at 300,000 tons of crude, […]

Brent oil slides below $45 for first time this year

22 Jun 2017   Prices

Brent crude oil remained mired below $45 a barrel on Thursday leaving it further in a bear market as traders continue to lose faith in Opec’s ability to balance supplies.  Oil prices have now dropped by more than 20 per cent since the start of this year, with Brent on course to post its worst first half since 1997 and energy stocks getting hit. Brent fell under $45 on Wednesday for the first time in 2017. The sell-off has accelerated since late May when Opec extended a deal with Russia and other producers to cut supplies by 1.8m barrels a day.  US shale producers have increased the rate of drilling, stepping into the void and showing they can compete in a world of sub-$50 oil. Many traders believe the price slide will only be arrested when US shale drillers are either forced to slow their expansion plans or Opec kingpin Saudi Arabia agrees to lead the cartel in bigger supply cuts. Brent, the international benchmark, was down a further 0.2 per cent on Thursday at $44.73 a barrel, after finishing the previous session down 2.6 per cent at $44.82. US benchmark West Texas Intermediate fell 0.2 per cent to $42.44, extending Wednesday’s 2.3 per cent drop.

Oil prices climb off 10-month lows as U.S. stockpiles drop

22 Jun 2017   Prices

Oil prices rose on Thursday after U.S. crude and gasoline stockpiles fell, but worries over whether OPEC-led output cuts would be able to rein in a three-year glut continued to drag. The market largely shrugged off comments overnight from Iran’s oil minister that members of the Organization of Petroleum Exporting Countries (OPEC) are considering deeper cuts in production. Brent crude futures were 4 cents higher at $44.86 a barrel at 0219 GMT, after falling 2.6 percent in the previous session to their lowest since August last year. U.S. crude futures were up 6 cents at $42.59 a barrel. On Wednesday, they settled down at $42.53, after touching their lowest intraday level since August 2016. Since peaking in late February, crude has dropped around 20 percent, with only brief rallies, completely erasing gains at the end of the year in the wake of the initial OPEC-led production cut. OPEC and […]

Oil holds near multi-month lows as glut fears persist

22 Jun 2017   Prices

A worker fills a tank with subsidized fuel at a fuel station in Jakarta April 18, 2013. Oil prices held around multi-month lows in early Asian trading on Wednesday as investors discounted evidence of strong compliance by OPEC and non-OPEC oil producers with a deal to cut global output. Brent LCOc1 was down 6 cents at $45.96 barrel at 0035 GMT. The global benchmark ended down 89 cents, or 1.9 percent, on Tuesday at its lowest settlement since November. U.S. crude futures CLc1 for August were trading down 3 cents at $43.48. The July contract, which expired on Tuesday, settled down than 2 percent at its lowest since September. The Organization of the Petroleum Exporting Countries and other producers agreed to cut output by 1.8 million barrels per day (bpd) for six months from January and compliance with the agreement has reached more than 100 percent. “The lack of […]

Is There Still Hope For Higher Oil Prices?

22 Jun 2017   Prices

Oil prices have cratered in recent weeks, dipping to their lowest levels in more than seven months and any sense of optimism has almost entirely disappeared. All signs point to a period of “lower for longer” for oil prices, a refrain that is all too familiar to those in the industry. WTI dipped below $44 per barrel on Tuesday, and the bearish indicators are starting to pile up. Libya’s production just topped 900,000 bpd, a new multi-year high that is up sharply even from just a few weeks ago. Libyan officials are hoping that they will hit many more milestones in the coming months. Next stop is 1 million barrels per day (mb/d), which Libya hopes to breach by the end of July. U.S. shale is arguably the biggest reason why prices are floundering again. The rig count has increased for 22 consecutive weeks, rising to 747 as of […]

Can U.S. Shale Survive Below $40?

22 Jun 2017   Prices

Many U.S. shale drillers have said that they have full-proofed their operations for $40 oil, having lowered breakeven prices substantially over the last few years. They may soon have to prove it. Oil prices dropped to fresh seven-month lows on Tuesday, officially entering bear market territory, down more than 20 percent year-to-date. The declines have raised questions about the possibility of WTI hitting $40 soon. A rising U.S. rig count, multi-year record production levels from Libya, and a general mood of pessimism more than outweighed the positive news that OPEC and non-OPEC producers increased their compliance rate in May. There is now a growing consensus that the OPEC deal won’t be sufficient to bring down inventories at a fast enough pace to balance the market this year. Can U.S. shale survive in a world of $40 oil? There are very different answers out there depending on who you ask. […]

Can U.S. Shale Survive Below $40?

22 Jun 2017   Prices

Many U.S. shale drillers have said that they have full-proofed their operations for $40 oil, having lowered breakeven prices substantially over the last few years. They may soon have to prove it. Oil prices dropped to fresh seven-month lows on Tuesday, officially entering bear market territory, down more than 20 percent year-to-date. The declines have raised questions about the possibility of WTI hitting $40 soon. A rising U.S. rig count, multi-year record production levels from Libya, and a general mood of pessimism more than outweighed the positive news that OPEC and non-OPEC producers increased their compliance rate in May. There is now a growing consensus that the OPEC deal won’t be sufficient to bring down inventories at a fast enough pace to balance the market this year. Can U.S. shale survive in a world of $40 oil? There are very different answers out there depending on who you ask. […]

Day Of Reckoning in 2018? US Rig Count Poised For Loss

22 Jun 2017   Oil Supply, USA

E&Ps’ continued austerity, coupled with swelling oilfield service costs, will choke off the US rig count surge and bring down as many as 100 rigs by the end of 2017, analysts at Barclays say. Unless they’re missing something – and really, that’s pretty unlikely – analysts at Barclays believe U.S. oil and gas will lose as many as 100 onshore rigs by the end of the year. As of June 16, there were 933 rigs at work in the United States – that’s up 270 rigs since January. But as rigs efficiency reverses and oilfield service costs trend upward, fewer rigs will remain active during the remainder of the year, Barclays said in a June 20 note to investors. In fact, for the rig count to linger above 900, exploration and production (E&P) companies would have to increase spending by 70 percent this year and well costs would have […]

Oil bear market separates strong, weak U.S. shale producers

22 Jun 2017   Shale Oil

A service truck drives past an oil well on the Fort Berthold Indian Reservation in North Dakota, November 1, 2014. Crude oil’s bear market is highlighting the haves and have nots among U.S. shale producers, with the stronger promising to keep pumping even as prospects dim for some of their financially strapped peers. Crude prices have dropped more than 20 percent since late February, in part because of rising U.S. shale production that is offsetting OPEC’s efforts to tame global stockpiles. On Wednesday, prices fell more than 2 percent to $42.58 after touching a 10-month low during the day. The price tumble has dragged down shares of oil and natural gas producers and raised the specter of trims to drilling budgets set when oil was trading around $50 a barrel. Oil producers’ average capital spending was previously projected to rise by 50 percent this year over depressed levels of […]

World Energy 2017-2050: Annual Report

22 Jun 2017   Oil Supply

A Guest post by: Dr. Minqi Li, Professor Department of Economics, University of Utah E-mail: minqi.li@economics.utah.edu This Annual Report evaluates the future development of world energy supply and its impact on the global economy as well as climate change. The report projects the world energy supply and gross world product (global economic output) from 2017 to 2050. It also projects carbon dioxide emissions from fossil fuels burning and the implied global average surface temperature from 2017 to 2100. Figure 18 Sources: World historical oil, natural gas, and coal consumption from 1950 to 1964 is estimated from carbon dioxide emissions (Boden, Marland, and Andres 2017); world primary energy consumption and its composition from 1965 to 2016 is from BP (2017); world primary energy consumption and its composition from 2017 to 2050 is based on this report’s projections. To project the future oil and natural gas production, this report uses Hubbert […]

Iran starts gas exports to Iraq, Iranian official tells IRNA

22 Jun 2017   Iran, Iraq

Iran has begun exporting gas to Iraq, an Iranian official told the state-run Islamic Republic News Agency (IRNA) on Wednesday, after a several years of delays. The neighbors, both members of the Organization of the Petroleum Exporting Countries, initially signed a deal in 2013 for Iran to supply Iraqi power stations, but officials in the past blamed poor security in Iraq for hampering implementation. Exports had started at approximately 7 million cubic meters per day and would eventually reach up to 35 million cubic meters per day, Amir Hossein Zamaninia, the deputy oil minister for trade and international affairs, told IRNA. Iran signed two contracts to export gas, one for the Iraqi capital Baghdad and the other for southern Iraqi city of […]

Iran says OPEC considering deeper output cuts, delegates skeptical

22 Jun 2017   Iran, OPEC

Iran’s Oil Minister Bijan Zanganeh talks to journalists before the beginning of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, May 25, 2017. OPEC members are considering further oil output cuts but should wait until the effect of the current reduced level of production is made clear, Iran said on Wednesday, hinting at possible further OPEC action after oil sank to a seven-month low. OPEC and allied outside producers agreed on May 25 to extend an existing supply cut into 2018, but oil has declined sharply since on rising production from the United States and Nigeria and Libya, two OPEC members exempt from cutting output. “We are in discussions with OPEC members to prepare ourselves for a new decision,” Iranian oil minister Bijan Zanganeh said after a cabinet meeting, according to the website for the Islamic Republic of Iran Broadcasting (IRIB). “But making […]

Iran: Production cuts difficult for OPEC members

22 Jun 2017   Iran, OPEC

Cutting back on production levels is a difficult task for members of the Organization of Petroleum Exporting Countries, Iran’s oil minister said Wednesday. Iran ranks third among OPEC member states in terms of proven crude oil reserves. Production has been more or less steady since the fourth quarter of 2016 at 3.7 million barrels per day, though that’s up about 8 percent from 2016. While other OPEC members are cutting output in a coordinated effort to balance the market, Iran can increase production as it works to recapture a market share lost to global sanctions. Speaking from Tehran, Oil Minister Bijan Zanganeh said his country was in talks with other OPEC members on current market conditions. With a steady gain in […]

Kazakhstan ‘hugely’ important to oil and gas industry

22 Jun 2017   Kazakhstan

The head of the oil and gas division of GE says Kazakhstan has a significant role to play in global energy industries. Photo courtesy of the North Caspian Operating Company June 21 (UPI) — Kazakhstan, with its strategic trade position and strong energy portfolio, is “hugely” important to the global energy sector, a director at GE Oil & Gas said. General Electric hosted a forum in the Kazakh capital of Astana to focus on emerging regional trends in the transportation and energy industries. Lorenzo Simonelli, the head of the company’s oil and gas division, said Kazakhstan is the ideal place for a global discussion on those industries. “Rich in resources and a key trade corridor, Kazakhstan and the broader Central Asia region are hugely important to the global oil and gas industry,” he said in a statement . Oil is Kazakhstan’s primary export commodity and the country is party […]