USA

AAA wonders if premium gasoline is worth it

14 Dec 2017   USA

The benefit from using a premium blend of gasoline in a vehicle that doesn’t require it may not be worth the extra cost for some U.S. drivers, motor club AAA said. AAA reported a national average retail price for regular unleaded gasoline at $2.46 for Wednesday, more or less stable for the week. The average price for premium gasoline was $3 per gallon. The motor club said its research showed that the difference between regular- and premium-grade gasoline has increased from a historic norm of 10 percent to now at least 25 percent. For some vehicles, the higher octane premium blend means an improved fuel economy and better vehicle performance overall. “AAA’s testing reveals that drivers could […]

Regulated Utilities Could See Big Changes

14 Dec 2017   USA

Intuitively, business people grasp the idea of tangible expenses such as salaries, rent, and interest expense. But publicly held businesses also raise money in the equity markets. And here, as James Grant of Interest Rate Observer fame has often noted in various contexts, it is Mr. Market who sets the necessary or required level of equity return. And where Mr. Market sets that level depends in large measure on perceived levels of business and financial risk. A company may not earn cost of capital every year. But shareholders won’t put up money to finance operations if they didn’t think they have a reasonable chance of earning a satisfactory return on their investment. No one invests to lose money. Nor to earn a return below that called for considering the risk taken. But the regulated utility business is different. Unlike the situation for other private sector corporations, it is the […]

Indian Point closure should not impact reliability: NYISO

14 Dec 2017   Nuclear, USA

New York state’s power grid will operate reliably after the Indian Point nuclear plant closes early in the next decade as long as natural gas-fired and dual-fuel resources come online as planned, the New York Independent System Operator said Wednesday. NYISO’s analysis found “there will not be a system reliability need” following deactivation of Indian Point-2 and -3 in 2020 and 2021, Respectively, “assuming that sufficient replacement sources of power are added within the Lower Hudson Valley,” according to a statement. Indian Point owner Entergy submitted official notice to NYISO in November that it intends to deactivate the 1,299-MW nameplate capacity unit 2 on April 30, 2020, and the 1,012-MW nameplate capacity unit 3 on April 30, 2021. Indian Point unit 1 was shut in 1974. Governor Andrew Cuomo along with environmental groups have pressed to close Indian Point on safety grounds for years because they found the risk […]

Crude imports rise as fall turnaround season ends: In the LOOP

13 Dec 2017   Oil Supply, USA

Crude imports into the Louisiana Offshore Oil Port increased by 4.628 million barrels in November, as refinery maintenance season came to a close and amid a relatively stable Dubai/WTI spread. The move higher also comes as traders seek to draw down inventories to lower year-end tax bills. In November, LOOP took in 11.256 million barrels, compared with only 6.628 million in October, according to US Customs data. Of November imported volumes, 9.331 million barrels were supplied by Middle East producers and 1.924 million barrels came from Latin American suppliers. Increasing refinery run rates contributed to the uptick in imported barrels, as regional refiners completed fall maintenance periods. Run rates increased 521,000 b/d from October 6 to end December 1 at 1.255 million barrels, according to the US Energy Information Administration. As a result, USGC crude storage levels decreased 14.34 million barrels from October 6 to end December 1 at […]

Virginia board approves Atlantic Coast water permit, but delays effectiveness

13 Dec 2017   Pipelines, USA

Virginia’s State Water Control Board, in a split decision, agreed to grant a water-quality certificate to the 600-mile, 1.5 Bcf/d Atlantic Coast Pipeline but put off the effectiveness of the permit until the state Department of Environmental Quality reviews and approves studies on karst topography as well as plans for stormwater and erosion and sediment controls. DEQ spokesman Bill Hayden said his agency is not expected to approve the erosion and sediment control plans until March or April, and would then have to report back to the board. “Construction cannot begin until those plans are approved by DEQ,” he said. The project, a joint venture of operator Dominion Energy, Duke Energy, Southern Company and Piedmont Natural Gas has a targeted in-service date during the second half of 2019. Article continues below… Whether you’re a risk manager, research analyst, trader or broker, Platts Gas Daily brings you crucial competitive intelligence […]

EIA Bashers Should Check Their Own Numbers

13 Dec 2017   Oil Supply, USA

Summary Empirical data does not support multiple recent allegations that the EIA’s reporting or forecasts are “wrong.” The wave of frivolous accusations against the EIA in the blogosphere preys on the least protected category of investors. A competent, independent, bias-free EIA must be safeguarded. This idea was discussed in more depth with members of my private investing community, Zeits OIL ANALYTICS . Bashing the EIA (U.S. Energy Information Administration) has become trendy of late among a certain category of bloggers. However, the allegations that the agency’s analytics are “wrong” often turn out to be without substance or even without demonstrated understanding of what the EIA does. Disappointingly, the outbreak of the “can’t trust the EIA” fever among sensation-seeking amateur writers has coincided with less-than thought-out criticisms by some respected industry insiders and weak coverage of the subject by major financial news outlets. Unmerited attacks on the agency can produce […]

Big investors press major companies to step up climate action

12 Dec 2017   Climate, USA

More than 200 institutional investors with $26 trillion in assets under management said on Tuesday they would step up pressure on the world’s biggest corporate greenhouse gas emitters to combat climate change. Two years to the day since 195 governments adopted the Paris climate agreement, investors including Pacific Investment Management Co, Amundi, Legal & General Investment Management, Northern Trust and Aegon said they aimed to work with the 100 biggest polluting companies to curb emissions under a five-year plan. That, they said, would be more effective than threatening to pull the plug on their investments in such companies, which include Coal India, Gazprom, Exxon Mobil and China Petroleum & Chemical Corp. “We will be asking companies … to curb emissions and bring them down in line with the Paris goals,” said Anne Simpson, investment director of sustainability at the California Public Employees’ Retirement System. That would […]

The Massive Energy Bill In The $1 Trillion Infrastructure Package

11 Dec 2017   USA

The GOP tax bill working its way through Congress contains provisions that have huge ramifications for the energy industry , but legislators in Washington may not be done yet. A top Republican on energy issues, Senator Lisa Murkowski, is eyeing a sweeping piece of energy legislation for 2018. With her long-sought goal of opening up the Arctic National Wildlife Refuge (ANWR) nearly a done deal, Murkowski has plans to tee up a bipartisan energy bill that could potentially break through the usual Washington logjam. The Alaska Republican, according to Platts , is trying to pitch the energy bill as a way to spark momentum in the oft-cited but vague $1 trillion infrastructure plan supported by President Trump. In fact, the White House just said that President Trump would unveil “detailed legislative principles” for the massive infrastructure proposal in January. That would likely “serve as the building block” for the […]

Oil Imports From Mexico Soar After Hurricane Season

9 Dec 2017   Mexico, USA

U.S. imports of Mexican crude last month climbed above 800,000 bpd for the first time since November 2014. This is the result of a number of factors, but in large part due to hurricane disruptions in recent months. Mexican crude imports in September dropped to the lowest month on our records (since at least 2012), as Hurricane Harvey caused refineries along the U.S. Gulf Coast to temporarily shut down, reducing oil demand. In response to hurricane activity in the Gulf of Mexico, several vessels that were loaded on the east coast of Mexico have headed south instead, around Cape Horn and to the U.S. West Coast – a rare journey indeed. Accordingly, Mexican crude imports to the U.S. West Coast have climbed to the highest on our records in November at 111,000 bpd. That said, after an absence of nearly two years, the U.S. West Coast had already been […]

New U.S. energy agency head gets time to decide on coal, nuclear rule

9 Dec 2017   Coal, Nuclear, USA

The new chairman of the U.S. office that regulates energy projects was granted more time on Friday to decide on Energy Secretary Rick Perry’s directive to subsidize aging nuclear and coal-fired power plants. Perry had directed Federal Energy Regulatory Commission in September to decide on a rule by Dec. 11 that would allow power plants that maintain at least 90 days of fuel supply on site to recover their full costs through regulated power pricing. The secretary says coal and nuclear plants should be rewarded for keeping the power grid robust by diversifying sources of power. Low natural gas prices have pushed many coal and nuclear plants into retirement. Kevin McIntyre, a Republican lawyer who represented energy companies at law firm Jones Day, was sworn in to head FERC, an independent office of the Energy Department, on Thursday. McIntyre wrote to Perry later that day, proposing […]

U.S. Rig Count Rises Amid Falling OPEC Output

9 Dec 2017   USA

While OPEC continues to curb its in-house oil production among its members, US drillers are ramping up, adding rigs for the fifth week in a row. This week, Baker Hughes reported that active oil and gas rigs in the US had climbed by 2. The total oil and gas rig count in the United States now stands at 931 rigs, up 307 rigs from a year ago, with the number of oil rigs climbing by 2 and the number of gas rigs holding steady. The number of oil rigs stand at 751 versus 498 a year ago. The number of gas rigs in the US now stands at 180, up from 125 a year ago. The WTI and Brent benchmarks had slipped earlier in the week after the EIA and API reported a massive build in gasoline inventories. But prices had started to recover on Friday on threats of […]

US oil rig count continues upward crawl for third straight week

9 Dec 2017   USA

The US oil rig count continued its upward crawl for a third consecutive week, rising on Friday by two to 751 amid persistently higher oil prices and a growing confidence voiced by upstream operators now planning 2018 capital budgets. In addition, the Permian cracked the 400 mark for oil rigs, up by three from last week and a 63% jump from the 246 working during the same week in 2016, Baker Hughes said in its weekly North American rig count. The last time the oil rig count was 400 or greater was the week ended February 6, 2015, when 413 rigs were deployed, figures from Baker Hughes, the world’s second-largest global oilfield service provider, showed. “[We’ll see] a few more rigs added by year-end,” Evercore ISI analyst James West said. Baker Hughes uses data from S&P Global Platts RigData in calculating its own rig count. Analysts have said the […]

Democratic leaders, indigenous groups, say ‘no’ to Alaskan drilling

8 Dec 2017   Arctic, USA

Alaskans who rely on the state’s pristine resources for survival don’t want the drilling outlined in the Republican tax bill, members of the indigenous community said. A $1.4 trillion, 479-page tax reform bill passed along partisan lines early Saturday morning with Republican leaders in the Senate pushing the measure through on a 51-49 margin. The bill contains a section drafted by U.S. Sen. Lisa Murkowski , R-Alaska, that would open up a section of the Arctic National Wildlife Refuge to oil and gas drillers. Members of the indigenous communities in Alaska were joined by Sens. Elizabeth Warren , D-Mass., Jeff Merkley , D-Ore., and Tom Udall , D-N.M., and Rep. […]

GE’s Power Division to Eliminate 12,000 Jobs After Misjudging Demand

8 Dec 2017   Coal, USA

Workers on a gas-turbine assembly line at the General Electric plant in Greenville, S.C., on Jan. 10, 2017. General Electric Co. said Thursday it was cutting 12,000 jobs in its power business, or nearly 18% of the unit’s workforce, as the conglomerate slashes costs and battles overcapacity in an industry in upheaval. GE’s Power unit has been a drag on earnings for the struggling company as global demand has dropped in tandem with GE integrating its acquisition of power assets from France’s Alstom SA . GE has said it misjudged the market as volume dropped in traditional coal and gas-fired power, while renewable energy sources grew. Read More The shrinking of the power business is part of a broader reorganization at GE under new Chief Executive John Flannery, who last month cut the once-sacred dividend in half and sharply lowered profit targets. The power business, which makes turbines for […]

U.S. liquefied natural gas exports have increased as new facilities come online

8 Dec 2017   LNG, USA

Natural Gas Monthly (data for October and November 2017 are EIA estimates based on tanker loads) In August 2017, total U.S. natural gas liquefaction capacity in the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) following the completion of the fourth liquefaction unit at the Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. With increasing liquefaction capacity and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November. Sabine Pass, located on the U.S. Gulf Coast near the Louisiana-Texas border, consists of four existing natural gas liquefaction units, or trains, with a fifth train currently under construction. When complete, Sabine Pass will have a total liquefaction capacity of 3.5 Bcf/d. Five additional LNG projects are currently under construction in the United States, and they are expected to increase total U.S. […]

Chevron Cuts Total 2018 Capex, Boosts U.S. Shale Investment

Chevron Corporation plans to cut its total capital and exploratory budget for a fourth consecutive year in 2018—to $18.3 billion, compared to the $19.8 billion that it planned for this year, but the supermajor is significantly boosting spending on U.S. shale, especially in the Permian. Chevron’s capital expenditure for 2017 envisaged a $2.5 billion allotment for shale and tight oil and gas, most of which was to be invested in the Permian Basin in Texas and New Mexico. For 2018, Chevron’s investment in U.S. shale includes $3.3 billion—just for the Permian—and another $1.0 billion for other shale and tight rock investments, for a total of $4.3 billion. “We’re fully funding our advantaged Permian Basin position and dedicating approximately three-quarters of our spend to projects that are expected to realize cash flow within two years,” Chairman and CEO John Watson said in Chevron’s press release. “With production currently exceeding guidance […]

Texas’ Austin Chalk Booms While Shale Plays Remain Mostly Dormant

8 Dec 2017   Oil Supply, USA

New technology applications are breaking records in the Austin Chalk. Somewhere down the line, someone coined the phrase, “Big oilfields only get bigger.” Now an adage, the observation was made when large oilfields had reached peak production, only to reveal later they had much more to give when new technology was applied. The Austin Chalk formation, which sits right on top of the Eagle Ford formation, was a hot play in the mid-1900s, mid-1970s and 1990s. However, it was all but forgotten during the shale boom when the Eagle Ford formation took front and center. With the majority of shale plays still on the shelf, the Austin Chalk is back on the radar and stronger than ever, proving a prominent contender in the ever-growing oilfield category. “Discussing the Austin Chalk again is very much a surprise to us,” said William R. Thomas, chairman and CEO of EOG Resources, Inc., […]

Renewable Energy Is Surging. The G.O.P. Tax Bill Could Curtail That.

A wind turbine generator outside Peetz, Colo. The Republican tax bills seek to scale back tax preferences for renewable energy like wind and solar. WASHINGTON — The Republican tax bills moving through Congress could significantly hobble the United States’ renewable energy industry because of a series of provisions that scale back incentives for wind and solar power while bolstering older energy sources like oil and gas production. The possibility highlights the degree to which the nation’s recent surge in renewable electricity generation is still sustained by favorable tax treatment, which has lowered the cost of solar and wind production while provoking the ire of fossil-fuel competitors seeking to weaken those tax preferences. Whether lawmakers choose to protect or jettison various renewable tax breaks in the final bill being negotiated on Capitol Hill could have major ramifications for the United States energy landscape, including the prices consumers pay for electricity. […]

More U.S. oil export capacity in the works

7 Dec 2017   exports, Shale Oil, USA

A gas pipeline running from Texas shale could be converted to send oil to the Gulf Coast by the start of the next decade, Enterprise Products Partners said. The company announced plans Wednesday to convert a pipeline in its portfolio that carries natural gas from the Permian shale basin to a crude oil pipeline. With a new gas pipeline coming into service at the end of 2019, Shin Oak, the company said it has flexibility to repurpose another line for shale oil. “We have had strong demand for crude oil transportation, storage and marine terminal services for crude oil production from the Permian Basin,” CEO Jim Teague said in a statement . In its latest drilling productivity report, the […]

Next foreign influence target of U.S. LNG is Venezuela

7 Dec 2017   LNG, USA, Venezuela

Liquefied natural gas is a way to extend influence over the horizon to Europe, though similar gains are possible for Latin America, a U.S. senator said. Polish Oil and Gas Co., known commonly as PGNiG, signed a five-year contract in November to secure LNG from the Sabine Pass terminal in Louisiana, the first mid-term contract of its kind. U.S. Sen. Bill Cassidy, R-La., a member of the Senate Committee on Energy and Natural Resources, said the agreement would reduce “Russian President Vladimir Putin’s ability to bully Europe.” European leaders have said LNG sourced from U.S. shale basins could present a source of diversity with the right infrastructure in place. Some countries in Eastern Europe like Poland rely almost exclusively on […]

Summary of Weekly Petroleum Data for the Week Ending December 1, 2017

7 Dec 2017   USA

U.S. crude oil refinery inputs averaged 17.2 million barrels per day during the week ending December 1, 2017, 192,000 barrels per day more than the previous week’s average. Refineries operated at 93.8% of their operable capacity last week. Gasoline production decreased last week, averaging about 9.8 million barrels per day. Distillate fuel production increased last week, averaging 5.4 million barrels per day. U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 127,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.6 million barrels per day, 4.9% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 488,000 barrels per day. Distillate fuel imports averaged 145,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased […]

The Drastic Drop Off In U.S. Oil Imports

7 Dec 2017   Oil Supply, OPEC, USA

While the dust may now have settled on last week’s OPEC meeting, the cartel’s impact on U.S. oil inventories is set to linger on. Stocks are at their lowest level since January 2016, and are down over 80 million barrels from their peak in March – in spite of a 30 million barrel injection from the SPR. As we head into the holiday season, the U.S. should expect little in the way of holiday cheer from OPEC flows. U.S. imports of OPEC crude have averaged 3.26 million barrels per day through the first eleven months of this year, a smidge higher than last year’s average. Although imports started out the year at 3.7mn bpd in January, the highest monthly level since 2013, we have seen them dropping below the 3mn bpd mark in recent months – led by a significant drop in deliveries from Saudi Arabia. (Click to enlarge) […]

The GOP Tax Bill Is A Big Win For U.S. Oil And Gas

7 Dec 2017   USA

The GOP tax overhaul passed both chambers of the U.S. Congress, although a lot remains to be done before a bill can reach the President’s desk. Still, there are a lot of changes in store for energy, and because much of the discrepancy between the two chambers is focused on some big-ticket tax items—and not energy—we can be reasonably confident about what to expect from the legislation in regard to the energy sector. On its face, the GOP tax proposal seems to be a big win for oil and gas. The most obvious item is the opening of the Arctic National Wildlife Refuge (ANWR), which, if not for the multi-trillion-dollar tax overhaul in question, would be a blockbuster proposal on its own. Republicans have pushed for years—decades—to open up ANWR to drilling, but have been stymied by opposition from the other side of the aisle. It’s hard to believe […]

More interest from Asian economies in Alaskan LNG

6 Dec 2017   Arctic, LNG, USA

A Japanese company becomes the second possible Asian consumer to express interest in Alaskan LNG in less than a month. Map courtesy of Alaska Gasline Development Corp. Dec. 5 (UPI) — A letter of intent was signed with a Japanese company to secure liquefied natural gas from a possible development in Alaska, a state pipeline company said. The Alaska Gasline Development Corp. signed a letter of intent with Tokyo Gas Co. on the possible sale and purchase of liquefied natural gas from the Alaskan company’s portfolio. “The letter of intent signed today signifies the continuation of this decades-long relationship between Alaska and Tokyo Gas Co., Ltd. and helps round out the sales volumes from the Alaska LNG project,” the Alaskan company’s president, Keith Meyer, said in a statement . The Japanese handshake is the second Asian nod for Alaskan LNG in less than a month. China Petrochemical Corp., known […]

China’s Blow to Recycling Boosts U.S.’s $185 Billion Plastic Bet

6 Dec 2017   China, USA

Asian nation will stop accepting scrap imports as of Jan. 1 New-made material will fill the gap, benefiting U.S. producers China is upending the global plastics market. The world’s biggest user of scrap has stopped accepting shiploads of other countries’ plastic trash as it phases in a new ban. That’s bad news for the recycling industry, as China has been a major consumer of salvaged materials it processes into resin that ends up in pipe, carpets, bottles and other cogs of modern life. China has begun buying brand new plastic to replace all the recycled scrap — and that’s great news for U.S. chemical makers such as DowDuPont Inc., which are scrambling to find markets for millions of tons of new production amid an industry investment binge. U.S. exports of one common plastic are expected to quintuple by 2020. “It’s a good time to be bringing on some new […]

‘Out of control’ Southern California fire explodes as growing blazes force tens of thousands to flee

6 Dec 2017   Climate, USA

A Ferocious fires tore through Southern California on Tuesday, burning massive stretches of land in a matter of hours and forcing tens of thousands of people from their homes. Firefighters in multiple locations in the region battled fires that were spurred by dry and windy conditions, officials said. In Ventura County, the Thomas Fire burned more than 50,000 acres, and on the outskirts of Los Angeles County, the Creek Fire enveloped more than 11,000 acres north of the city’s downtown. Another fire in the county, dubbed the Rye Fire, had cut through 5,000 acres near the city of Santa Clarita by Tuesday evening. Authorities issued ominous warnings of more dangers to come during a “multiday event” across […]

GoM Production: August and September Update

6 Dec 2017   Offshore, USA

This briefly covers the production side as the hurricane outages are dominating the trends at the moment, but there’s a section at the end on discoveries and reserves that may give some pointers to future expectations. The tables below show the production numbers for September, and their relation with previous months from BOEM and EIA, which are pretty close, but for some reason never the same and have actually diverged quite significantly at the moment. Both sets of data get revised, possibly up to a year later, usually those from EIA more than those from BOEM, and they end up with much closer, with EIA usually slightly lower BOEM C&C Production (kbpd) m-o-m (%) y-o-y (%) Average Annual (kbpd) July 1756 August 1722 -2.0% September 1706 -1.0% 12.2% 1707 EIA C&C Production (kbpd) m-o-m (%) y-o-y (%) Average Annual (kbpd) July 1732 August […]

Is The EIA Overestimating The U.S. Shale Boom?

6 Dec 2017   Shale Oil, USA

The American shale boom may be overstated by the U.S. Energy Department, according to a new MIT study that suggests the agency may be over-attributing a rise in shale drilling to technological advances. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” MIT researcher Justin B. Montgomery told World Oil . “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” Instead, lukewarm oil prices have forced oil majors to drill only in easy-to-access areas, located mostly in the Eagle Ford and Permian basins in Texas, and the Bakken formation in North Dakota. This has led to an exaggerated increase in the number of active wells, and a hyperbolized narrative of growth in the shale industry, the study says. “The same forecasting methods […]

Tax Bill Supports Oil And Gas Industry, API President Says

5 Dec 2017   USA

The U.S. Senate passing the tax reform bill is pro-growth legislation that would help the domestic oil and gas industry, Jack Gerard, President and CEO of the American Petroleum Institute (API), said after the Senators passed the sweeping tax reform on Saturday. “Proposals to lower the corporate tax rate and strengthen cost-recovery provisions can allow the oil and natural gas industry to continue investing billions of dollars in the U.S. economy and add to the 10 million U.S. jobs our industry currently supports,” said Gerard, as carried by The Maritime Executive. “Pro-growth tax reform can support forward-looking energy policies to ensure our nation continues its global energy leadership. We encourage the House and Senate to move forward without delay to bring tax reform legislation to the president’s desk and implement a tax system that is smart, fair, and pro-growth for American consumers, businesses, and the economy,” Gerard said. At […]

Energy and conservation groups split over U.S. tax overhaul

5 Dec 2017   USA

A measure inserted in a bill meant to overhaul the U.S. tax code includes a provision to open up parts of a wilderness refuge area in Alaska to oil and gas drillers. File photo by Kathryn Hansen/NASA Dec. 4 (UPI) — As with the partisan divide, the stance on the U.S. tax overhaul was split evenly between oil and gas support and opposition from renewable and climate groups. A $1.4 trillion, 479-page, tax reform bill passed along partisan lines early Saturday morning with Republican leaders in the Senate pushing the measure through with a 51-49 margin. No Democrats voted for the bill and Sen. Bob Corker , R-Tenn., was the lone “no” vote among the GOP. He said he voted against it because of deficit concerns after the non-partisan Congressional Budget Office estimated it would increase the deficit by about $1.4 trillion over the next 10 years. Among other […]

US tight oil: Too light, too sweet

4 Dec 2017   Shale Oil, USA

International buyers’ appetite may start to wane in 2018 US light tight oil output is transforming world oil markets. After falling during the 2015 oil price crash, total American production – of which shale is now a major source – surged back onto markets, and the Energy Information Administration (EIA) expects output to rise another 0.5m barrels a day in 2018, to a record 9.9m b/d. Much of this new production is finding its way onto global markets, and exports now regularly run over 1m b/d. But can there be too much of a good thing? Specifically, with Opec ‘s light sweet crude exporters Libya and Nigeria staggering back from extended production outages, and big Persian Gulf producers tightening availabilities of middle-gravity sour crudes, is there a “demand limit” to the volumes of very light sweet crude now produced in the US? Several factors suggest that there is, and […]

U.S. Vastly Overstates Oil Output Forecasts, MIT Study Suggests

2 Dec 2017   Shale Oil, USA

Estimates from EIA exaggerate impact of fracking technology New well output could undershoot EIA forecasts by 10% in 2020 Turns out, America’s decade-long shale boom might just end up being a little too good to be true. There’s no denying that fracking has turned the U.S. into a force in the global oil and gas markets, which has more than a few people abuzz about the prospect of energy independence. But now, researchers at MIT have uncovered one potentially game-changing detail: a flaw in the Energy Department’s official forecast, which may vastly overstate oil and gas production in the years to come. The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to […]

U.S. drillers add oil rigs for second week in a row: Baker Hughes

2 Dec 2017   USA

U.S. energy companies this week added oil rigs for a second week in a row as crude prices traded near their highest levels since the summer of 2015 as major oil producing countries extended a global deal to limit supply. Drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. U.S. producers applauded Thursday’s decision by the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia to extend oil output cuts of about 1.8 million barrels per day beyond March until the end of 2018 as they try to finish clearing a global glut of crude. Sponsored Rising U.S. production, however, has been a thorn in OPEC’s side, undermining the impact of its output curbs. U.S. […]

Alaska Drilling Dividend

2 Dec 2017   Arctic, USA

Republicans aren’t advertising it, but a pro-growth bonus in the Senate tax cut bill is that it finally opens up a small part of the Arctic National Wildlife Refuge (ANWR) for oil and gas drilling. Like the rest of the tax bill, Republicans can pass it with a GOP-only majority of 50. Or put to it another way, Lisa Murkowski’s ship has come in. The Alaska Senator chairs the Energy and Natural Resources Committee, which in early November passed legislation 13-10 (with West Virginia Democrat Joe Manchin joining Republicans) requiring the Interior Department to offer drilling rights leases in ANWR’s coastal plain within 10 years. The Budget Committee wrapped this into the broader tax reform that the Senate is expected to pass as soon as Friday. Whether or not this accounts for Ms. Murkowski’s […]

Oil Rig Count Rises After OPEC Deal Extension

2 Dec 2017   Shale Oil, USA

A day after OPEC extended the already-extended production cut deal to end-2018, oil and gas rigs in the US climbed by 6 . The boost to the number of oil and gas rigs in the US is likely just a taste of what’s to come if oil prices continue to climb as a result of OPEC’s prolonging of the deal that is designed to ease the glut. And at current prices of WTI, US drillers are bound to find sufficient funds to add rigs, pressuring the prices that OPEC is attempting to hold fast. This week, the number of active oil rigs increased by 2, with gas rigs climbing by 4. The WTI and Brent benchmarks slipped shortly after the agreement was signed on Thursday, but rebounded on Friday, with WTI up $1.23 (+2.14%) to $58.63 and Brent up $1.36 (+2.17%) to $63.99 around 11:00am EST. The total oil […]

U.S. set to be net gas exporter for second year in a row

1 Dec 2017   exports, USA

For the second year in a row, the United States is on pace to become a net gas exporter once the year is over, the federal government reported. The federal U.S. Energy Information Administration said last year was the first year that exports were higher than imports, with net gasoline exports averaging 56,000 barrels per day. Through September, the average has been around 55,000 barrels per day. “Despite record high gasoline consumption, the United States is on pace to export more gasoline than it imports for the second year in a row,” the agency said in a weekly report. Most U.S. gasoline exports head to markets in Mexico and Central and South America. Mexico is by […]

Hey OPEC, the World’s Largest Oil Consumer Needs a Lot Less Oil

30 Nov 2017   USA
Hey OPEC, the World’s Largest Oil Consumer Needs a Lot Less Oil

The U.S. has a message for oil producers poised to make a key decision on crude output on Thursday: The world’s biggest oil consumer doesn’t really need you that much anymore. U.S. net oil imports, including crude and refined products, last week dropped to just 1.77 million barrels a day, the lowest level in data going back to 1990, the U.S. Energy Information Administration reported Wednesday. That puts the country on track toward its lowest monthly imports since before the Arab oil embargo of 1973. Weekly net imports peaked in November 2005 at more than 14 million barrels a day.

Sure, the Keystone Pipeline outage has something to do with the shortfall in Canadian crude exports to the Midwest. But gasoline exports — a stunning 1.21 million barrels a day — eclipsed the prior record set last December.

 

U.S. Makes It To China’s Top Ten Crude Oil Supplier List

30 Nov 2017   China, USA

Chinese crude oil purchases from the United States jumped by 77.3 percent from September to average 208,000 bpd in October, helping the U.S. to become China’s ninth largest crude oil supplier, according to data by China’s General Administration of Customs. The U.S. had not exported crude oil to China in October last year. This year, China has been a consistent buyer of U.S. oil, and it even outranked Canada as America’s biggest buyer in April, according to the latest available monthly EIA data through August. According to an S&P Global Platts survey, the increased U.S. oil exports to China in October were likely the result of more purchases from state-held oil refiners, because imports by independent refiners—the so-called teapots—dropped by 42 percent compared to September. Sinopec’s international trading arm Unipec was actively offered U.S. oil, and the Sinopec Qilu refinery received its first U.S. crude oil cargo—a Mars crude […]

Italian oil company given drilling permit in Alaska

30 Nov 2017   Arctic, Italy, USA

Letting a foreign energy company drill into the Arctic areas of Alaska is a twin insult from the Trump administration, an advocacy group said. The U.S. Bureau of Safety and Environmental Enforcement said “achieving American energy dominance” moved a step closer with the approval of a permit for a U.S. subsidiary of Italian energy company Eni to drill for oil from an artificial island in the Beaufort Sea starting next month. Kristen Monsell, a legal director at the Center for Biological Diversity, said the decision from U.S. President Donald Trump ‘s administration was “totally boneheaded.” “Drilling for oil in the Arctic is an accident waiting to happen,” the group said in a statement emailed to UPI. “The Trump […]

Summary of Weekly Petroleum Data for the Week Ending November 24, 2017

30 Nov 2017   Oil Supply, USA

U.S. crude oil refinery inputs averaged 17.0 million barrels per day during the week ending November 24, 2017, 165,000 barrels per day more than the previous week’s average. Refineries operated at 92.6% of their operable capacity last week. Gasoline production decreased last week, averaging over 10.2 million barrels per day. Distillate fuel production decreased last week, averaging 5.3 million barrels per day. U.S. crude oil imports averaged over 7.3 million barrels per day last week, down by 544,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 1.7% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 526,000 barrels per day. Distillate fuel imports averaged 120,000 barrels per day last week. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum […]

Panel Rejects Washington Oil Terminal

30 Nov 2017   exports, USA

A panel has rejected a project for the construction of an oil terminal at the port of Vancouver in the state of Washington on the grounds that the companies behind the project had failed to convince them that the site was acceptable. The panel’s chairwoman told media the members of the Energy Facility Evaluation Council had gone through more than a quarter of a million public comments on the proposed terminal, including notable opponents to the project such as environmental groups, tribes, and municipalities from the area. The project was conceived by Tesoro Corp. and Savage Cos. as a storage hub for oil transported by rail from North Dakota to the Washington coast, from where it will be loaded onto vessels that will take it to West Coast refineries. The facility was supposed to have a capacity of 360,000 bpd of crude. The opponents of the project argued that […]

U.S. crude stocks fall, but gasoline, distillates up: EIA

30 Nov 2017   Oil Supply, USA

U.S. crude oil stocks fell last week, led by the biggest fall in inventories at the Cushing, Oklahoma storage hub in eight years, while gasoline and distillate stockpiles rose, the Energy Information Administration said on Wednesday.  Crude inventories fell 3.4 million barrels in the week to Nov. 24, compared with analysts’ expectations in a Reuters poll for a decrease of 2.3 million barrels. Most of the drop can be attributed to a fall in stocks at the Cushing, Oklahoma, delivery hub, which was down by 2.9 million barrels, EIA said. Sponsored This was the largest weekly draw at Cushing since September 2009, and analysts attributed the decline to the shutdown of the Keystone crude pipeline on Nov. 16 after a leak of 5,000 barrels […]

Automakers struggle with the future in Los Angeles

27 Nov 2017   Climate, USA

 Car manufacturers’ attempts to square what U.S. consumers want against the clean vehicles regulators and investors demand will be on display in Los Angeles this week at an auto show that has moved away from calling itself just an auto show.Automakers on Monday will begin previewing new models for the media at an event called AutoMobility LA, reflecting an emphasis on digital technology and new ways to get around, such as self-driving cars. On Friday, the Los Angeles Auto Show will open to the public for 10 days, attracting visitors from one of the world’s most affluent and culturally influential metropolitan markets. Sponsored, For now, self-driving cars are not ready for […]

U.S. Energy To See Huge Investments From China

27 Nov 2017   China, USA

During President Trump’s visit to China, the U.S. signed US$250 billion worth of potential trade and investment deals that would boost American exports to China and Chinese investment in the United States. The two single largest potential deals were signed in the energy sector at the official U.S.-China Business Exchange, which took place on November 8th and 9th during President Trump’s visit. The agreements are just memorandums of understanding (MoU), not final contracts, but they set the stage for a stronger energy relationship between the two powerhouses of the global energy production and consumption. There is some concern that Chinese investment in U.S. energy could undermine free market principles. On the Chinese side, it’s unclear if Beijing is convinced that the U.S. will not use energy to retaliate against China by cutting supplies if disputes or disagreements escalate, Forbes contributor Sara Hsu writes. The White House described the potential […]

The US Oil Situation

27 Nov 2017   Oil Supply, USA

The price of oil is finally rising….it can go significantly higher The US Oil Situation reports from the EIA (US Energy Information Administration) routinely result in sharp shifts in energy prices based on the rise/fall of crude or gasoline inventories versus week-ago levels. For many, this appears a simple relationship, easy to understand and certainly short-term. The US Oil Situation is far less simple when one expands the time horizon to decades, comparing other economic data and adding human behavioral responses to the mix. It is very messy and clearly not so simple, or is it! The long-term perspective invalidates any short-term interpretations. The data tells a complex story of market psychology, adjustments to wide swings in WTI , technological discovery/implementation and a pattern of demand driven consumption. A simple connection to oil prices is not found in supply/demand. First, as extracted from the World Bank data, US Energy […]

A BP North Sea field to test U.S. policy on Iran

27 Nov 2017   Iran, USA

 A small gas field on the edge of the British North Sea could become a litmus test for U.S. policy towards Iran. London-based BP this week agreed to sell to North Sea producer Serica Energy three fields in the aging offshore basin, including the Rhum field which is co-owned by a subsidiary of Iran’s national oil company. Sponsored For Serica, the $400 million deal will increase its production sevenfold. It nevertheless hinges on the British company receiving a license from U.S. sanctions enforcement authorities at a time when President Donald Trump is flexing his muscles against Tehran. For BP and its American Chief Executive Bob Dudley, selling Rhum, which BP discovered in the 1970s, removes a potential source of friction as it mends its ties with the U.S. government following the deadly 2010 Deepwater Horizon spill in the Gulf of Mexico. Rhum was shut down for […]

Big gas exporter countries blast unilateral sanctions in dig at U.S

25 Nov 2017   LNG, USA

 Representatives from a group of major energy-exporting nations on Friday said they oppose the use of unilateral sanctions on any of their members – an apparent dig at the United States for its moves against Russia, Iran and Venezuela.  The Gas Exporting Countries Forum, which also includes members like Libya, Equatorial Guinea and Nigeria, expressed their “profound concern” about sanctions affecting the gas sector that are not authorized by the United Nations, according to a communique signed by GECF’s 12 members after the group’s summit in Bolivia this week. Sponsored The U.S. Congress has imposed economic sanctions on a number of GECF’s members, including recent measures against Russia that – among other things – seek to prevent companies from participating in Russian pipeline […]

U.S. Oil Rig Count Rises Amid Record Breaking Production

23 Nov 2017   Oil Supply, USA

The number of oil and gas rigs in the United States rose again this week. The boost in the number of active oil rigs this week brings the total gained in November to 10—the first monthly gain since July. Oil and gas rigs combined were up by 14 in November—also the biggest increase seen since July, in a sign that drillers are once again eager to add rigs after scaling back in August. This week, the number of active oil rigs increased by 9, with gas rigs falling by 1. The Permian basin, after gaining two rigs this week, now boasts 165 more rigs than this time last year, a staggering 72-percent increase. The WTI and Brent benchmarks rose earlier today on a small crude oil inventory decline as reported by the EIA, further supported by the Keystone pipeline shutdown that took 600,000 bpd offline. WTI and Brent are […]

U.S. crude inventories fall; big draw at Cushing hub

23 Nov 2017   Oil Supply, USA

U.S. crude oil stockpiles fell last week, with most of the decline coming out of the Cushing, Oklahoma storage hub, while gasoline and distillate inventories rose slightly, the Energy Information Administration said on Wednesday.  Crude inventories fell 1.9 million barrels in the week to Nov. 17, slightly more than analysts’ forecasts in a Reuters poll for a decrease of 1.5 million barrels, but much less than 6.4 million-barrel draw reported by industry group the American Petroleum Institute late Tuesday. Sponsored Crude stocks in Cushing fell by 1.8 million barrels, EIA said. The key U.S. storage hub and delivery point for U.S. crude futures could see additional draws in coming weeks, depending on how long the U.S.-Canada Keystone pipeline, which delivers to Cushing, is shut. That […]

U.S. Oil-Rig Count Rises in Latest Week

23 Nov 2017   USA

The number of rigs drilling for oil in the U.S. rose by nine to 747 this week. The number of rigs drilling for oil in the U.S. rose by nine to 747 this week, Baker Hughes, a GE company, reported. The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the rig count fell sharply. The oil-rig count has generally been rising over the past year. The nation’s gas-rig count fell by one to 176 in the past week, according to Baker Hughes. The U.S. offshore-rig count is up by one from last week to 22, which is one fewer than a year ago. Oil prices were up 1.7% at $57.78 a barrel in afternoon trading Friday. Write to Austen Hufford at austen.hufford@wsj.com