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Why Natural Gas Should Stay Cheap — For a Long Time

Natural gas prices are likely to stay low for at least the next 20 years, with a long term annual average price of $4 to $5 per million Btu, a new study says. Even with new demand, the quantity of U.S. gas resources is so vast thanks to unconventional drilling techniques that average Henry Hub prices should not rise dramatically from the $4 to $5 range, though they could fluctuate. (Henry Hub, based in Louisiana, is the delivery point for physical natural gas traded in the Nymex futures market.) Henry Hub prices averaged $4.24 per million British thermal units in December, and hit a high above $13 per million Btu in October 2005. “We now have knowledge and comfort that we have an incredible resource base-technically recoverable resources of 3,000 trillion cubic feet,” said Rita Beale, IHS senior director of power, gas, coal […]

Posted On : Published By : Tom Whipple
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Royal Society: Theme issue on peak oil

Philosophical Transactions of the Royal Society has the prestige of being the world’s first scientific journal and also published the work of Charles Darwin, Michael Faraday, William Herschel and many more celebrated names in science. Recently, this journal published a theme issue, edited by Richard G. Miller and Steve R. Sorell, on peak oil. This volume presents the best scientific evidence on why a decline in oil supply may, or may not, be in sight. It considers the production and resources of conventional oil and the potential for developing alternative liquid fuels from tar sands, shales, biomass, coal and gas. It describes how economies might react and adapt to rising oil prices and how the transport sector could be transformed. It provides comprehensive and interdisciplinary perspective on the ‘peak oil’ debate and reflects a range of views. Ultimately, it reminds us that the […]

Posted On : Published By : Tom Whipple
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WTI Crude Advances to Two-Week High on U.S. Economy

West Texas Intermediate crude rose to a two-week high on signs that economic growth is accelerating in the U.S., the world’s biggest oil-consuming nation. Futures gained 0.4 percent. The pace of U.S. home construction dropped less than forecast in December, capping the best year for the sector since 2007, the Commerce Department reported. Industrial production grew for a fifth month in December, according to the Federal Reserve in Washington . U.S. crude supplies slid to the lowest level since March 2012. “The rise in prices is a reflection of the better economic picture,” said Michael Lynch , president of Strategic Energy & Economic Research in Winchester, Massachusetts . “An improving economy translates into more fuel demand.” WTI for February delivery increased 41 cents to $94.37 a barrel on the New York Mercantile Exchange . It was the highest settlement since Jan. 2. Futures climbed 1.8 percent this week. The […]

Posted On : Published By : Tom Whipple
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Natural-Gas Futures Slide, But Post Gain for the Week

Natural-gas futures slid Friday but ended higher for the week as traders closed out their bets on higher prices following a record-high storage withdrawal. Natural gas for February delivery settled down 5.6 cents, or 1.3%, at $4.326 a million British thermal units on the New York Mercantile Exchange. Prices rose 6.7% this week. Futures surged to a two-and-a-half-week high Thursday after the U.S. Energy Information Administration reported that natural-gas inventories fell by 287 billion cubic feet in the week ended Jan. 10, the largest storage withdrawal on record. Demand for natural gas has been consistently strong this winter as colder-than-average temperatures have prompted people to turn up the heat in homes and offices. About half of all […]

Posted On : Published By : Tom Whipple
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Suez Canal, energy lifeline, seen vulnerable to jihadist attack

Egypt’s military has stepped up security along the Suez Canal, a vital oil shipping artery that’s one of the world’s most strategically important waterways, to protect it from attack amid a swelling jihadist insurgency in the Sinai Peninsula. There were at least two jihadist operations in 2013 on the canal — 120 miles long and 900 yards wide, most of which is vulnerable to attack. No serious attacks have been reported since then but a study by the Combating Terrorism Center at the U.S. Military Academy warns the military-led government "appears increasingly incapable" of curbing such strikes and that "ships in the canal risk future attacks." "There is concern that militants could successfully disrupt shipments through the Suez Canal, such as sinking a large vessel and blocking the canal for a period of time," the report, written by Middle East analyst Stephen Starr, concluded. […]

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IAEA team arrives in Tehran for nuclear visits

A team of inspectors from the International Atomic Energy Agency (IAEA) arrived in Tehran on Saturday, another step towards implementing a landmark nuclear deal between Iran and six world powers which was finalized last week, according to the semi-official Fars News agency. The team, led by nuclear engineer Massimo Aparo, will begin reporting to the IAEA on Monday, marking the official start of the deal, according to the Islamic Republic News Agency. Under the terms of the agreement with the United States, Russia, China, France, Britain and Germany, Iran will stop work on some portions of its nuclear program in exchange for relief from some international sanctions which have damaged the country’s economy. The IAEA team will visit the Natanz and Fordow nuclear facilities to ensure that Iran will stop enriching uranium to 20 percent and that its stockpile of enriched uranium is diluted, according to […]

Posted On : Published By : Tom Whipple
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Middle East Faces Oil Challenges From Shale And Within – BP

Middle Eastern oil producers face a mountain of challenges in the next two decades as Russia and South America strive to replicate the U.S. shale oil boom, while demand jumps in the region’s domestic markets. Oil company BP said in its influential annual outlook issued on Wednesday that Middle East energy use will grow by 77 per cent by 2035, double the increase in production, meaning as little as 65 per cent of oil output will be available for export, down from 72 per cent. This could put additional pressure on government budgets of countries such as Saudi Arabia that depend on oil export revenue, at the same time as supply from shale oil and other non-conventional sources meets the bulk of global demand growth. BP expects Russia and South America to join the United States in tapping shale oil over the next two […]

Posted On : Published By : ASPO-USA
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Kashagan Operators Weigh Way to Restart Oil Output While Fixing Pipe

Operators of Kazakhstan’s huge Kashagan oil field are considering a temporary solution to resume output, halted indefinitely since mid-October after a series of dangerous gas leaks, people with direct knowledge of the plan said. Before the stoppage, sour and toxic gas coming off the offshore field in the Caspian Sea was separated from crude oil, and sent to an onshore processing plant via a 56-mile pipeline. But the pipe is plagued by leaks and the North Caspian Operating Co. running the $50 billion project has yet to determine how to fix it. Releasing the potentially lethal gas into the air or flaring it isn’t an option because of safety and environmental regulations. Exxon Mobil Corp. , Royal Dutch Shell PLC, and other members of the NCOC consortium are now looking into a makeshift solution that would involve re-injecting the gas into the ground, the people familiar with the matter […]

Posted On : Published By : Tom Whipple
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Pakistani official says Iranian gas line slowed by funding issues

Slow development of a gas pipeline from Iran to Pakistan is caused by funding issues, not pressure from the United States, a Pakistani official said. "The gas pipeline is a bilateral issue between Pakistan and Iran," Foreign Ministry spokeswoman Tasnim Aslam said during a Thursday news briefing. Pakistan says a pipeline from Iran could help offset an energy shortage brought on by aging infrastructure and a crumbling energy sector. Envisioned more than a decade ago as a pipeline that could reach to India, the project has come up against pressure from Western powers concerned about its benefits to Iran. Aslam said the development was plagued more by the lack of funding than by pressure from any foreign government. "The progress on pipeline has been slow because of the funding issues and not because of the United States," she said. Pakistan could get 21 million […]

Posted On : Published By : Tom Whipple
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Iraq to sue Turkey, blacklist traders over Kurdish crude sales

Iraq’s oil minister said Friday that the country has started legal action against Turkey as part of the ongoing dispute over the semi-autonomous Iraqi Kurdistan region’s independent oil exports. "The Oil Ministry has taken the necessary procedures by asking the legal parties in Baghdad and Ankara to start the legal process to conduct a lawsuit against the Turkish government because it allows the [Kurdistan] region to pump oil through the export pipeline without the approval of the central government," Abdul Karim Luaibi said Friday, according to a statement given to Platts by the Oil Ministry. Over the past year, the Kurdistan Regional Government has built a 300,000 b/d pipeline within its northern Iraq territory and connected it to the 40-inch-diameter leg of the Iraq-Turkey Pipeline. Under a series of oil and gas export agreements signed between Erbil and Ankara late November, crude exports have […]

Posted On : Published By : Tom Whipple