Category:

The Connection Between Oil Prices, Debt Levels, and Interest Rates

If oil is “just another commodity,” then there shouldn’t be any connection between oil prices, debt levels, interest rates, and total rates of return. But there clearly is a connection. On one hand,  spikes in oil prices are connected with recessions . According to economist James Hamilton,  ten out of eleven post-World War II recessions have been associated with spikes in oil prices . There also is a logical reason for oil price spikes to be associated with recession: oil is used in making and transporting food, and in commuting to work. These are necessities for most people. If these costs rise, there is a need to cut back on non-essential goods, leading to layoffs in discretionary sectors, and thus recession. On the other hand, the manipulation of interest rates and the addition of governmental debt (by spending more than is collected in tax dollars) are the primary ways […]

Posted On : Published By : Tom Whipple
Category:

WTI Oil Falls From One-Month High on U.S. Data

West Texas Intermediate crude dropped from a one-month high as more Americans than projected filed applications for unemployment benefits last week. Brent slid. WTI fell 0.3 percent after the Labor Department reported jobless claims increased to 326,000 in the week ended May 17, more than the 310,000 median forecast by economists surveyed by Bloomberg. It advanced $1.63 yesterday on a government report that U.S. supplies tumbled as imports dropped. Brent decreased less than WTI on stronger Chinese manufacturing. “The rally is looking a little overextended, and unless we continue to see good economic data, the market is going to meet greater and greater resistance,” Gene McGillian , an analyst and broker at Tradition Energy in Stamford , Connecticut , said by phone. “Does the market have enough momentum to go up without another week of sizable drawdowns? I am not convinced.” WTI for July delivery slid 33 cents to […]

Posted On : Published By : Tom Whipple
Category:

Oil Futures Dip, Gasoline Climbs Ahead of Holiday Weekend

Oil futures slipped Thursday as traders who had bet on higher prices locked in profits after Wednesday’s rally, while gasoline futures hit a three-week high on expectations of rising demand. Light, sweet crude for July delivery settled down 33 cents, or 0.3%, at $103.74 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 19 cents, or 0.2%, to $110.36 a barrel. Oil prices rose to a one-month high Wednesday after weekly government data showed that U.S. oil supplies unexpectedly fell by 7.2 million barrels last week. The decline was largely due to a drop in imports to the lowest weekly level since 1997. However, domestic oil supplies are just 2% below the record high reached April 25. "We had a pretty incredible run this week," said Phil Flynn, analyst at Price Futures Group in Chicago. "We’re really catching […]

Posted On : Published By : Tom Whipple
Category:

Natural-Gas Futures Near a 7-Week Low

Natural-gas futures sank to near a seven-week low Thursday on news of the year’s largest stockpile addition. Natural gas for June delivery lost 11.4 cents, or 2.6%, to close at $4.359 a million British thermal units on the New York Mercantile Exchange. Two days of losses have pushed down futures to within 0.1 cent of the seven-week low closing price they hit May 13. Prices have been falling as surplus natural gas has steadily increased from an 11-year low, a trend that is still strengthening, federal analysts said Thursday. Producers added 106 billion cubic feet of gas to storage for the week ended May 16, the U.S. Energy Information Administration said. That is 3 bcf more than what 21 traders, brokers and analysts forecasted in a Wall Street Journal survey. It was also about 16 bcf more than what usually gets added to storage at […]

Posted On : Published By : Tom Whipple
Category:

Despite Bloody Conflict, Iraq's Leader Looks Likely To Keep Power

Iraq’s election didn’t make a huge splash in the U.S., but the results of the April 30 vote were released this week, and the outcome has important ramifications for Iraq and the wider region. Prime Minister Nouri al-Maliki’s party came out way ahead. Iraq has faded from the American radar, but it saw nearly a decade of U.S. military operations. And it’s sandwiched between Syria, where a civil war is raging, and Iran, where nuclear negotiations are at a critical juncture. The international community has repeatedly warned that if Iraq can’t reconcile its ethnic and sectarian differences, the country could fracture and exacerbate these regional tensions. Maliki, who continues to have U.S. support, seems poised to hold onto the job he’s had for the past eight years, even though there are many who doubt that he can bring about reconciliation. He is a Shiite Islamist politician, and in recent […]

Posted On : Published By : Tom Whipple
Category:

Despite Bloody Conflict, Iraq’s Leader Looks Likely To Keep Power

Iraq’s election didn’t make a huge splash in the U.S., but the results of the April 30 vote were released this week, and the outcome has important ramifications for Iraq and the wider region. Prime Minister Nouri al-Maliki’s party came out way ahead. Iraq has faded from the American radar, but it saw nearly a decade of U.S. military operations. And it’s sandwiched between Syria, where a civil war is raging, and Iran, where nuclear negotiations are at a critical juncture. The international community has repeatedly warned that if Iraq can’t reconcile its ethnic and sectarian differences, the country could fracture and exacerbate these regional tensions. Maliki, who continues to have U.S. support, seems poised to hold onto the job he’s had for the past eight years, even though there are many who doubt that he can bring about reconciliation. He is a Shiite Islamist politician, and in recent […]

Posted On : Published By : Tom Whipple
Category:

Iraqi Kurdistan defies Baghdad to load first pipeline oil sale

Iraqi Kurdistan startedloading oil from its new pipeline for shipment from a Turkishport on Thursday, defying the Baghdad government, which claimssole authority over Iraqi crude and declares any independentlysold oil as ‘smuggled’. The cargo of 1 million barrels of crude oil was being loadedon a tanker in the Mediterranean port of Ceyhan, Turkish EnergyMinister Taner Yildiz told Reuters on Thursday. "Loading will be completed today," Yildiz said, declining toname the buyer. The sale is likely to infuriate Baghdad, which has been atloggerheads with the autonomous Kurdish region over the sharingof oil revenues, and denounced Turkey’s courtship of the Kurds,warning that steps towards Kurdish economic independence […]

Posted On : Published By : Tom Whipple
Category:

Sinopec Advances Iran Oil-Field Plans Despite Canceled China Deal

Sinopec, is pushing to start a new phase in an Iranian oil-field development, a plan Iran says it is likely to approve, according to people familiar with the project. The push is part of a broader attempt by China and Iran to mend fences after the cancellation of a separate project. Chinese state-owned company Sinopec is taking steps to start development activities in the second phase of the Yadavaran oil field, which is set to start next year. Delegates from Sinopec are due to travel to Tehran next month to discuss the plans, according to two people familiar with the company’s Iran operations. The topics will include ordering equipment such as pipes. Sinopec didn’t return a request for comment. In late April, Iran with state-owned China National Petroleum Corp. following repeated delays at a giant oil-field project. The cancellation triggered speculation among Iran oil experts […]

Posted On : Published By : Tom Whipple
Category:

Deadly attacks strike Shia religious pilgrims in Baghdad

Blasts are the latest in a surge of nationwide bloodshed that has left more than 3,600 people dead this year in Iraq Three separate attacks targeting Shia Muslim pilgrims in Baghdad on Thursday left at least 31 people dead and 61 others injured ahead of a major religious holiday, police sources told Al Jazeera.  The attackers defied a shutdown of major roadways for Shia religious faithful, who were heading to the Imam Kadhim shrine in Kadimiyah in western Baghdad to commemorate the death of the Shia saint in 799 AD. The two-day rituals are due to climax on Saturday and Sunday. Among the attacks, police said a suicide bomber targeted Shia pilgrims at a bus stop as they gathered to head toward a religious shrine in the Kadimiyah neighborhood. In the Mansour area, a parked car exploded as pilgrims stopped to rest before making their way on a highway […]

Posted On : Published By : Tom Whipple
Category:

Iraqi Oil Sector Dependent On Negotiations With Kurds, Turkey; Al-Maliki Electorial Win Not As Critical To Energy Sector

Iraqi Prime Minister Nouri al-Maliki’s apparent success in gaining a third term in office is a move that could escalate tensions with Sunni militant groups in the country but will have little effect on the country’s massive oil sector — provided al-Maliki handles Iraq’s Kurdish leaders carefully. The Iraqi electoral commission announced Monday that al-Maliki’s State of Law bloc had won the most seats in the April 30 parliamentary elections, falling short of a majority. This week Iraqi officials have struggled to confront how the country will move forward politically. While the country braces for what is expected to be a tumultuous future in forming a new government, experts say the country will most likely not suffer from investment shortfalls in the oil sector — its main source of revenue. Rather, it is the sector’s internal ability to increase capacity and technical expertise that will determine its fate, experts say. […]

Posted On : Published By : Tom Whipple
Category:

Security Message to U.S. Citizens

Security Message to U.S. Citizens The U.S. Embassy reminds U.S. citizens that Iraq remains at high risk for kidnapping and terrorist violence. Recent reports indicate that militant groups may be surveilling U.S. citizens for possible kidnapping operations, particularly oil company employees working in Basrah Province, Iraq. The groups may be focused on U.S. citizens at hotels in the Basrah area. We encourage all U.S. citizens to review the existing travel warning for Iraq and take appropriate measures to ensure their safety if travel to Iraq is necessary. U.S. citizens traveling and residing abroad should enroll in the Smart Traveler Enrollment Program (STEP). U.S. citizens without internet access may enroll directly at the U.S. Embassy or U.S. Consulate General Erbil. By enrolling, U.S. citizens make it easier for the Embassy to contact them in case of emergency. U.S. citizens may contact the U.S. Embassy, located in the IZ, via e-mail […]

Posted On : Published By : Tom Whipple
Category:

Exxon finds oil, gas in Argentina's shale

BUENOS AIRES, May 22 (UPI) –U.S. energy company Exxon Mobil said its affiliate in Argentina discovered oil and natural gas in the Vaca Muerta shale play in the country’s Neuquen province. ExxonMobil Exploration Argentina, alongside its regional partner, said it was carrying out additional analysis at the Bajo del Choique X-2 well after confirming an oil and gas discovery. Appraisal wells will need to be drilled before Exxon makes a commercial decision on the area, but the company expressed optimism about the potential. "Not all shales are alike, so our first Exxon Mobil-operated discovery in the Vaca Muerta play is a very positive sign that the shale in this area of Neuquen province holds great promise as a liquids-rich unconventional resource for Argentina," Stephen Greenlee, president of Exxon Mobil Exploration Co. said in a statement Wednesday. The U.S. Energy Department’s Energy Information Administration estimates Argentina has 774 trillion cubic […]

Posted On : Published By : Tom Whipple
Category:

Exxon finds oil, gas in Argentina’s shale

BUENOS AIRES, May 22 (UPI) –U.S. energy company Exxon Mobil said its affiliate in Argentina discovered oil and natural gas in the Vaca Muerta shale play in the country’s Neuquen province. ExxonMobil Exploration Argentina, alongside its regional partner, said it was carrying out additional analysis at the Bajo del Choique X-2 well after confirming an oil and gas discovery. Appraisal wells will need to be drilled before Exxon makes a commercial decision on the area, but the company expressed optimism about the potential. "Not all shales are alike, so our first Exxon Mobil-operated discovery in the Vaca Muerta play is a very positive sign that the shale in this area of Neuquen province holds great promise as a liquids-rich unconventional resource for Argentina," Stephen Greenlee, president of Exxon Mobil Exploration Co. said in a statement Wednesday. The U.S. Energy Department’s Energy Information Administration estimates Argentina has 774 trillion cubic […]

Posted On : Published By : Tom Whipple
Category:

TransCanada Explores Oil by Rail on Keystone Permit Wait

TransCanada Corp. (TRP) is considering ways to deliver Canadian crude oil by rail to the U.S. as customers of its proposed Keystone XL seek an alternative to the delayed pipeline, Chief Executive Officer Russ Girling said. The pipeline company is exploring how to modify existing contracts with Keystone XL customers to allow for rail shipments as it awaits U.S. permits for the pipe, Girling said in an interview yesterday at Bloomberg headquarters in New York . A rail option, which may cost twice as much as sending the crude via Keystone, would be an inefficient way of transporting the oil, he said. The trigger for pushing ahead with rail was the Obama administration’s April 18 announcement that it was delaying a decision on the $5.4 billion project because of a court battle in , Girling said. A rail option would have much lower upfront costs than the pipeline — […]

Posted On : Published By : Tom Whipple
Category:

Weekly Natural Gas Storage Report

Historical Comparisons Stocks billion cubic feet (Bcf) Year ago (05/16/13) 5-Year average (2009-2013) Region 05/16/14 05/09/14 net change implied flow (Bcf) % change (Bcf) % change East -38.6 -46.2 West -36.9 -33.2 Producing -37.7 892 -42.5     Salt 140 126 237 -40.9 188 -25.5     Nonsalt 373 358 586 -36.3 704 -47.0 Working gas in storage was 1,266 Bcf as of Friday, May 16, 2014, according to EIA estimates. This represents a net increase of 106 Bcf from the previous week. Stocks were 774 Bcf less than last year at this time and 943 Bcf below the 5-year average of 2,209 Bcf. In the East Region, stocks were 449 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 379 Bcf below the 5-year average of 892 Bcf after a net injection of 29 Bcf. Stocks in the West Region were 115 […]

Posted On : Published By : Tom Whipple
Category:

Forecasters predict slow Atlantic hurricane season

NEW YORK (AP) — A slower-than-usual hurricane season is expected this year because of an expected El Nino, federal forecasters said Thursday, but they warned that it takes only one storm to wreak havoc and urged Americans to be prepared. The El Nino, which warms part of the Pacific every few years and changes rain and temperature patterns around the world, will likely reduce the number and intensity of tropical storms and hurricanes, the National Oceanic and Atmospheric Administration said in New York City. Cooler temperatures on the surface of the Atlantic Ocean compared with recent years will also lower the probability of hurricane formation. "El Nino helps to reduce the ability of storm systems coming off Africa to strengthen into tropical storms and hurricanes," said Dr. Gerry Bell, NOAA’s top hurricane season forecaster. Bell cautioned that El Nino has not yet developed and officials have not yet issued […]

Posted On : Published By : Tom Whipple
Category:

U.S. taking on less foreign crude oil, EIA says

WASHINGTON, May 22 (UPI) –U.S. crude oil imports from African producers are declining because of domestic production and China is taking up the slack, the Energy Department said. The rapid increase in the amount of crude oil produced in the United States is squeezing African producers out of the market. The Energy Information Administration, the statistical arm of the Energy Department, said crude oil imports in general for the week ending May 16 were 6.4 million barrels per day, down nearly 10 percent from the previous report. In its weekly report , published Wednesday, EIA said African crude oil exports to the United States were declining. "African crude that until recently flowed to the United States has been diverted to serve European markets that have historically been served by Libya and to supply increased demand in Asian markets where, despite Libyan disruptions, deliveries of African crude have increased Libyan […]

Posted On : Published By : Tom Whipple
Category:

Canadian crude oil exports increased in March

Total crude oil exports from Canada in March were 5 percent higher than the previous month, the National Energy Board said. NEB, the nation’s energy regulator, published data Wednesday for March showing total crude exports of 2.85 million barrels was a monthly record for the year and 5 percent more than February figures. NEB provided no data on export destination. Typically, nearly all of Canada’s oil exports head to the United States. More of that crude oil is headed across the border by rail as increased production strains existing pipeline capacity. In January, the Transportation Safety Board of Canada said 500 railcars delivered oil in 2009, but increased to 160,000 in 2013. Canadian Prime Minister Stephen Harper has sought to add a layer of diversity to an energy export economy that depends almost exclusively on the United States. Canada and Saudi Arabia were the […]

Posted On : Published By : Tom Whipple
Category:

Natural Gas Weekly Update

Industrial natural gas consumption growth continues rising Providing another sign of continued growth in industrial demand for natural gas, two European companies announced earlier this month that they would form a joint venture to build an ammonia plant on the Gulf Coast. BASF, a German chemicals company, and Yara, a Norwegian agricultural company, plan to build the plant on an existing BASF site in Freeport, Texas. The plant would have a capacity to produce 750,000 metric tons of ammonia per year and could use up to 77 million cubic feet per day (MMcf/d) of natural gas as a feedstock. BASF and Yara announced in October that they were planning an ammonia plant, and cited relatively low natural gas prices over the past several years as a reason for locating the plant in the United States. After industrial natural gas consumption bottomed out in 2009 at 16.9 Bcf/d, it has […]

Posted On : Published By : Tom Whipple
Category:

BP to appeal Deepwater Horizon claims to Supreme Court

No reasonable judgment would force a company to pay for damages it didn’t cause, BP said as it takes its Deepwater Horizon claims case to the Supreme Court . The British energy company said it would ask the Supreme Court to review a decision from the U.S. 5th Circuit Court, which ruled a "compromise" deal means the company may have to write checks to businesses for claims BP says have nothing to do with the 2010 oil spill off the coast of Louisiana. "No company would agree to pay for losses that it did not cause, and BP certainly did not when it entered into this settlement," the company said in a Wednesday statement . "BP will continue to fight to return the settlement to its original, explicit, and lawful purpose — the compensation of claimants who suffered actual losses due to the spill." If […]

Posted On : Published By : Tom Whipple
Category:

U.S. Gasoline Output Surged to Record in April, API Says

U.S. gasoline production climbed to an all-time high in April as fuel exports surged, the American Petroleum Institute said in a monthly report. Production of gasoline jumped 9.2 percent from a year earlier to a record 9.79 million barrels a day last month, the industry-funded group said today. Output of distillate fuel, a category that includes diesel and heating oil, rose 12 percent to 4.95 million, a record for the month. “Demand is up for both gasoline and distillate, and refiners are meeting it,” John Felmy, chief economist at the API in Washington , said by phone. Gasoline consumption jumped 2.7 percent to 9 million barrels a day. Demand for distillates increased 8.8 percent to 4.21 million, the most for April since 2007. Total deliveries of petroleum products, a measure of demand, advanced 2.3 percent to 19 million barrels a day. Refineries processed 16.1 million barrels a day, a […]

Posted On : Published By : Tom Whipple
Category:

U.S. Slashes Estimate of Technically Recoverable Crude From Monterey Shale by 96%

The U.S. government slashed its estimate of how much crude oil could be extracted from California’s Monterey Shale, confirming widespread industry suspicion that developing the massive resource would be difficult. The Energy Information Administration said there are 600 million barrels of technically recoverable oil, down 96% from its of 13.7 billion barrels. Officials said that while they still believed that there is an enormous oil deposit in the shale, which is beneath a 1,750-square-mile portion of central and southern California, the crude can’t be tapped with existing technology and at existing prices. "The rocks are still there," EIA Administrator Adam Sieminski said Wednesday. "The technology’s not there yet." The agency, the statistical arm of the Energy Department, said it lowered its estimate based on new geologic information and the lack of production growth. The oil industry nevertheless will likely continue trying to develop new techniques and technology to tap […]

Posted On : Published By : Tom Whipple
Category:

API: US petroleum demand hits 4-year high in April

Total US petroleum deliveries, a measure of demand, increased 2.3% from April 2013 to average 19 million b/d this April, the highest April deliveries in 4 years, the American Petroleum Institute said in its monthly statistical report. “April brought strong year-over-year growth in both the production and refining sectors,” said John Felmy, API chief economist. “The oil and natural gas industry continues to provide a solid base for growth in the larger economy.” At nearly 8.3 million b/d, US crude oil production increased 12.6% from April 2013 to the highest level for the month since 1988. According to the latest reports from Baker Hughes Inc., the number of oil and gas rigs in the US in April was 1,835, up 32 units from March and was up 80 units from April 2013. This was the highest count since September 2012. Total imports in April averaged 10.1 million b/d, 0.6% […]

Posted On : Published By : Tom Whipple
Category:

US rail regulators see 'pockets of concern' with misclassifying of Bakken crude

US rail regulators are finding that most shippers are properly classifying Bakken crude cargoes in accordance with hazardous materials rules, the head of the Federal Railroad Administration said. Still, "there are pockets of concern," FRA Administrator Joseph Szabo said in an interview set to air Sunday on "Platts Energy Week," and the agency intends to continue its "Bakken Blitz" surprise inspection campaign to ensure crude-by-rail shipments are delivered safely. "Obviously, any time you’re doing audits or inspections, you’re going to find things," Szabo said. "This is just part of our comprehensive approach to making sure that we’re talking about the safe delivery of this product." The FRA and the Pipelines and Hazardous Materials Safety Administration launched the "Bakken Blitz" last summer, making unannounced inspections on crude shipments to ascertain whether highly volatile shale oil is properly labeled on rail manifests and other required documents. The agencies have said shippers […]

Posted On : Published By : Tom Whipple
Category:

US rail regulators see ‘pockets of concern’ with misclassifying of Bakken crude

US rail regulators are finding that most shippers are properly classifying Bakken crude cargoes in accordance with hazardous materials rules, the head of the Federal Railroad Administration said. Still, "there are pockets of concern," FRA Administrator Joseph Szabo said in an interview set to air Sunday on "Platts Energy Week," and the agency intends to continue its "Bakken Blitz" surprise inspection campaign to ensure crude-by-rail shipments are delivered safely. "Obviously, any time you’re doing audits or inspections, you’re going to find things," Szabo said. "This is just part of our comprehensive approach to making sure that we’re talking about the safe delivery of this product." The FRA and the Pipelines and Hazardous Materials Safety Administration launched the "Bakken Blitz" last summer, making unannounced inspections on crude shipments to ascertain whether highly volatile shale oil is properly labeled on rail manifests and other required documents. The agencies have said shippers […]

Posted On : Published By : Tom Whipple
Category:

EC cites US shale gas boom as chief culprit of EU refining margin losses

The European Commission has identified the ongoing shale gas boom in the US as one of the primary reasons for profit margin losses in the EU refining industry in recent years, it said in preliminary conclusions presented at a refining forum in Brussels on Thursday. "The biggest effect [on refining profitability] comes from the relative deterioration of energy costs in Europe with respect to other regions," said Robert Marschinski of the EC’s Joint Research Center and one of the authors of the ongoing study. From 2008-2012, the EU has seen its average net cash margins drop from within the top third globally to the bottom third compared with 2000-2008. Article continues below… European Gas Daily is a flagship Platts publication that delivers crucial competitive intelligence across the entire European gas marketplace. It keeps you ahead of critical price changes and their effects on the industry — to help you […]

Posted On : Published By : Tom Whipple
Category:

North Carolina Senate Outlaws Disclosure Of Fracking Fluid Secrets

The North Carolina Senate on Thursday voted to make it a crime to disclose the chemicals used in hydraulic fracturing, or fracking, even as big U.S. oil companies elsewhere consider releasing more information about the fluids to address public concerns about the environment. The legislation, proposed by three Republican state senators and passed by a vote of 35-12, aims to protect trade secrets about fluids used to extract oil or gas from wells using fracking, which blasts sand, water and chemicals deep beneath the earth’s surface. Environmentalists concerned about groundwater contamination and health risks want more information made public. Under the "Energy Modernization Act," a state geologist would be the custodian of confidential information about fracking fluids. The information can be given to healthcare providers, the public safety department or the fire chief in case of an emergency. The bill, which now goes to the […]

Posted On : Published By : Tom Whipple
Category:

Horizontal Drilling Is On the Rise in Permian As Producers Chase Tight Oil

For the past several years, the Permian Basin remained an area where vertical drilling was still the principle method of extraction, even as horizontal drilling and hydraulic fracturing become ubiquitous in the Eagle Ford Shale, the Bakken, and other shale plays in the United States. However, horizontal drilling is on the rise in the Permian Basin, as well, according to new data by the Energy Information Administration (EIA). Horizontal drilling began to increase in the Permian Basin early in 2013, the EIA said. By the end of 2013, oil extraction in the Permian accounted for half of the total increase in horizontal drilling in the United States. The rise in horizontal drilling in the Permian has seen that method of extraction overtake vertical drilling for some of the primary producers there. Apache Corp., perhaps the most active player in the Permian Basis, told Rigzone that as of early spring, […]

Posted On : Published By : Tom Whipple
Category:

As Elections Loom, Fighting Turns Deadly in Ukraine

Four days before a watershed presidential election in Ukraine, a new round of deadly fighting flared in the east of the country on Thursday. At least 13 government soldiers were reported killed in an abrupt escalation of violence as pro-Russian separatists struck back against government efforts to subdue them. The clashes could represent a risk for the interim authorities in Kiev, the capital, who have claimed to be getting the upper hand against the rebels, encouraged by rifts among separatist groups occupying public buildings in numerous cities in the southeast. In a posting on Facebook, Ukraine’s acting prime minister, Arseniy P. Yatsenyuk, accused Russia of escalating the conflict in eastern Ukraine and of trying to disrupt Sunday’s election. He called for an emergency meeting of the United Nations Security Council and said he would provide “evidence” to support his claim. News reports quoted acting President Oleksandr […]

Posted On : Published By : Tom Whipple
Category:

Billions of shale barrels under Home Counties

The government is expected to announce on Friday that the Weald Basin in southern England contains billions of barrels of shale oil, delivering a potentially huge boost to an embryonic industry in the UK. The announcement will set the scene for a stand-off between Britain’s small band of domestic shale explorers and the well-heeled residents of one of the Tories’ traditional heartlands . The government will unveil the results of a study by the British Geological Survey, the latest in its reports on unconventional oil and gas potential. It will focus on the Weald, an area spanning Sussex, Hampshire, Kent and Surrey. Last year, the BGS published a study of the Bowland Shale in northern England, which, it said, contained about 1,300tn cubic feet of gas. Even if only a tenth of that is extracted, it would be the equivalent of 40 years’ gas supply for the UK. The […]

Posted On : Published By : Tom Whipple
Category:

Thorium: the wonder fuel that wasn't

“ Thorium-Fueled Automobile Engine Needs Refueling Once a Century ,” reads the headline of an October 2013 story in an online trade publication. This fantastic promise is just one part of a modern boomlet in enthusiasm about the energy potential of thorium, a radioactive element that is far more abundant than uranium. Thorium promoters consistently extol its supposed advantages over uranium. News outlets periodically foresee the possibility of " a cheaper, more efficient, and safer form of nuclear power that produces less nuclear waste than today’s uranium-based technology."  Actually, though, the United States has tried to develop thorium as an energy source for some 50 years and is still struggling to deal with the legacy of those attempts. In addition to the billions of dollars it spent, mostly fruitlessly, to develop thorium fuels, the US government will have to spend billions more, at numerous federal nuclear sites, to deal […]

Posted On : Published By : Tom Whipple
Category:

Thorium: the wonder fuel that wasn’t

“ Thorium-Fueled Automobile Engine Needs Refueling Once a Century ,” reads the headline of an October 2013 story in an online trade publication. This fantastic promise is just one part of a modern boomlet in enthusiasm about the energy potential of thorium, a radioactive element that is far more abundant than uranium. Thorium promoters consistently extol its supposed advantages over uranium. News outlets periodically foresee the possibility of " a cheaper, more efficient, and safer form of nuclear power that produces less nuclear waste than today’s uranium-based technology."  Actually, though, the United States has tried to develop thorium as an energy source for some 50 years and is still struggling to deal with the legacy of those attempts. In addition to the billions of dollars it spent, mostly fruitlessly, to develop thorium fuels, the US government will have to spend billions more, at numerous federal nuclear sites, to deal […]

Posted On : Published By : Tom Whipple
Category:

What Happened to My 13 Billion Barrels?

In 2011, the Energy Information Administration (EIA) of the US Department of Energy commissioned INTEK Inc., a Virginia-based consulting firm, to estimate how much oil might be recoverable from California’s vast Monterey Shale formation. Production of tight oil was soaring in North Dakota and Texas, and small, risk-friendly drilling companies were making salivating noises (within earshot of potential investors) about the potential for an even bigger bonanza in the Golden State. INTEK obliged with a somewhat opaque report (apparently based on oil company investor presentations) suggesting that the Monterey might yield 15.4 billion barrels—64 percent of the total estimated tight oil reserves of the lower 48 states. The EIA published this number as its own, and the University of Southern California then went on to use the 15.4 billion barrel figure as the basis for an economic study, claiming that California could look forward to 2.8 million additional jobs […]

Posted On : Published By : Tom Whipple
Category:

The US Shale Oil Miracle Disappears

The US shale oil “miracle” has about as much believability left as Jimmy Swaggart. Just today, we learned that the EIA has placed a hefty downward revision on its estimate of the amount of recoverable oil in the #1 shale reserve in the US, the Monterey in California. As recently as yesterday, the much-publicized Monterey formation accounted for nearly two-thirds of all technically-recoverable US shale oil resources. But by this morning? The EIA now estimates these reserves to be 96% lower than it previously claimed. Yes, you read that right: 96% lower. As in only 4% of the original estimate is now thought to be technically-recoverable at today’s prices: EIA Cuts Monterey Shale Estimates on Extraction Challenges The Energy Information Administration slashed its estimate of recoverable reserves from California’s Monterey Shale by 96 percent , saying oil from the largest U.S. formation will be harder to extract than previously anticipated. “Not […]

Posted On : Published By : Tom Whipple
Category:

Oil Choppy Amid Ukraine Tensions, China Data

Crude-oil futures drifted between gains and losses in Asian trading hours Thursday as markets assessed positive Chinese manufacturing data and geopolitical tensions in Ukraine. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $103.94 a barrel at 0544 GMT, down $0.13 in the Globex electronic session. July Brent crude on London’s ICE Futures exchange fell $0.12 to $110.43 a barrel. The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to 49.7 in May, compared with a final reading of 48.1 in April. The data suggest that downward pressure on the manufacturing sector has eased markedly, Capital Economics said in a report. "It provides further evidence that stronger external demand, along with the rebound in infrastructure investment, is helping to moderate the pace of China’s economic slowdown," it added. Meanwhile, investors are becoming cautious with the Ukrainian […]

Posted On : Published By : Tom Whipple
Category:

Brent Trades Near 11-Week High on China Factory Data

Brent crude traded near an 11-week high after a Chinese manufacturing gauge rose, signaling the economy of the world’s second-biggest oil consumer is stabilizing. West Texas Intermediate was near a four-week high after stockpiles fell. Brent was little changed in London after advancing 0.8 percent yesterday. China’s preliminary Purchasing Managers’ Index was 49.7 for May, up from 48.1 the previous month and the highest reading this year, according to HSBC Holdings Plc and Markit Economics. Crude stockpiles in the U.S., the largest oil user, fell by 7.23 million barrels, or 1.8 percent, last week, the Energy Information Administration reported yesterday. “China’s manufacturing is now only barely contracting” and today’s data are a welcome improvement, Harry Tchilinguirian , head of commodity markets strategy at BNP Paribas in London, said by e-mail. “We remain cautious as to whether this is enough to give a significant boost to industrial commodities like oil.” […]

Posted On : Published By : Tom Whipple
Category:

Is this the end of Sykes-Picot?

The intensity of the civil war in Syria, combined with the continued upheavals in Iraq and the endemic instability of Lebanese politics, has naturally led to speculation that the famously “artificial” borders in the eastern Arab world, drawn by Britain and France in the aftermath of the collapse of the Ottoman Empire, are on their last legs. Are the state entities created by European colonialism in the 1920s about to collapse? Are we about to see a grand redrawing of the borders in the Middle East? The short answer to this question is no. While none of these three states will be able to claim effective governance within their borders anytime soon, the borders themselves are not going to change. They are devolving into what the political scientist Robert Jackson perceptively referred to as “ quasi-states ,” internationally recognized de jure as sovereign even though they cannot implement de […]

Posted On : Published By : Tom Whipple
Category:

Jihadists seek Islamic state on Syria-Iraq border

Jihadists have launched a fresh bid to take over the Syria- border area and set up a so-called Islamic state they can control, rebels, activists and a monitoring group say. "Their name is the Islamic State of Iraq and Greater (ISIS). Their goal is to link together the two areas (Syria, Iraq) to set up their state and then to continue spreading," said activist and citizen journalist Abdel Salam Hussein. Speaking from Albu Kamal on the Iraq border, Hussein said ISIS seeks to crush Al-Nusra Front, Al-Qaeda’s Syria affiliate, and control the eastern, energy-rich province of Deir Ezzor bordering Iraq. "ISIS is trying to end Al-Nusra Front’s power in the area, and if they do they will take over" the whole province, he said. ISIS’s long-time ambition of creating an area under its control stretching across Syria and Iraq was undermined by a massive January offensive against it […]

Posted On : Published By : Tom Whipple
Category:

Oil Companies Pull Some Staff From Libya on Security Concerns

Repsol SA and SA are among the western oil companies pulling out some expatriate employees from Libya amid escalating violence there, posing the latest challenge to the Libyan oil industry’s fragile recovery. "We have reduced our presence in Tripoli, which was already limited, to the minimum," a Total spokesman said Wednesday, adding the French company isn’t pulling out of Libya. Spain’s Repsol is also withdrawing some expatriate staff, according to people at the company. Repsol wouldn’t discuss the details of personnel movements for security reasons. Last week, renegade Libyan general Khalifa Hifter launched an armed campaign against Islamist-backed militia in Libya. Mr. Hifter says the offensive is aimed at imposing stability after three years of chaos since the ouster and death of Libyan dictator Moammar Gadhafi in 2011. Strikes and armed occupation of oil terminals have already reduced the Libya’s oil output to less than a fifth of […]

Posted On : Published By : Tom Whipple
Category:

Prominent Libyans Vow Support for General

A Libyan general who has led a violent campaign against Islamist militias and lawmakers drew prominent new supporters to his cause on Wednesday, including the country’s air force commander and its ambassador to the United Nations. Libya’s largest non-Islamist political alliance also said in a statement that it was supporting the general, Khalifa Hifter, who began his campaign on Friday by leading an assault on Islamist militias in Benghazi. What began as a fairly isolated attack against Islamist bases in one corner of the country appears to be growing into a national political movement. General Hifter has won support from a disparate band of allies, including some Libyans angered by the outsize influence of militias, which have been accused of assassinations and other political violence. The fledgling government has been powerless to exert its authority over the militias or other influential figures, including regional leaders and […]

Posted On : Published By : Tom Whipple
Category:

Haftar Vows to Crush Libyan Islamists, Seeks GNC Shutdown

Libyan ex-general Khalifa Haftar vowed to pursue his campaign against Islamist militias, emboldened by growing support for the offensive, and said the country’s parliament should be suspended until new elections. In a statement broadcast on national television late yesterday, Haftar promised to “to eradicate terrorism and extremist groups,” which he blames for the growing chaos in the oil-rich North African country three years after the overthrow of Muammar Qaddafi . The ex-general’s military initiative against Islamist forces, which he launched without approval from Libya’s chain of command, is broadening its support. Air Force chief Colonel Gomaa al-Abbani has pledged to back Haftar’s self-proclaimed Libyan National Army, and it also won the loyalty of at least one other senior military official, some soldiers and militias in cities including Zintan in the west, and others who have controlled eastern ports and blocked oil exports since July. Haftar’s forces have mostly attacked […]

Posted On : Published By : Tom Whipple
Category:

Algeria authorizes shale gas exploitation

Algeria’s Cabinet has announced it will move forward with the exploitation of the country’s large shale gas reserves. The statement carried by the state news agency Wednesday night gave the green light to finding foreign partners to exploit the reserves. According to a 2013 report by the U.S. Energy Information Administration, Algeria is third globally after China and Argentina in technically recoverable shale gas reserves with 707 trillion cubic feet (20 trillion cubic meters) of reserves. It has yet to be determined if the reserves are commercially viable. The state said 11 wells will be drilled over the next seven to 13 years. Algeria’s once rich oil and natural gas reserves have been declining in recent years.

Posted On : Published By : Tom Whipple
Category:

China and Russia Sign Natural Gas Deal

Beijing and Moscow said they signed a much-anticipated contract to supply China with hundreds of billions of dollars worth of Russian natural gas following a decade of difficult talks. Neither side released details about the price, long the major sticking point of a deal. The two sides but said a final price would be negotiated later. Gazprom CEO Alexei Miller told Russian media that the two sides had signed a contract worth a total of $400 billion over its 30-year life. "This is Gazprom’s biggest contract. We don’t have a contract like this with any other company," Mr. Miller told reporters in Shanghai, the Interfax news agency reported. Russian news agencies said the contract called for supplies of 38 billion cubic meters of gas a year, which would imply a price of about $350 per thousand cubic meters, at the low end of what Gazprom currently charges export clients. […]

Posted On : Published By : Tom Whipple
Category:

Vietnam Lashes Out at China, Tries to Coax Firms to Stay

Vietnam’s prime minister charged that China "seriously threatened peace" by parking its oil rig in disputed waters, as Hanoi tried to coax foreign businesses to stay in the country after a destructive spate of anti-Chinese riots. Taiwan rejected a compensation plan sketched out by Vietnamese Prime Minister Nguyen Tan Dung for factories burned and looted in the unrest last week, and a Taiwanese steel company threatened not to resume building what would be Southeast Asia’s largest steel mill, underscoring the challenge for Vietnam in restoring its allure as a manufacturing center. "The Vietnamese government must give us a firm and clear assurance that our staff, including our contractors, and our assets will be fully protected in the future," said Lin Hsin-I, chairman of Formosa Ha Tinh Steel, whose site was one of the worst hit. "Otherwise we won’t continue to build the plant." Formosa Ha Tinh Steel is a […]

Posted On : Published By : Tom Whipple
Category:

Japan Court Blocks Reactor Restarts

A court ruled Wednesday that Kansai Electric Power Co. can’t restart two of its reactors due to safety concerns, dealing a setback to Prime Minister Shinzo Abe’s efforts to jump-start Japan’s idled nuclear power plants. The ruling marks the first time since the Fukushima nuclear crisis erupted in March 2011 that a court has ordered a power supplier not to bring a nuclear plant online. The Fukui District Court prohibited a restart of the Oi Nos. 3-4 reactors in western Japan. Judge Hideaki Higuchi cited uncertainty surrounding the plant’s ability to withstand earthquakes, local media reported. "If there is any real risk, it is natural to ban operations," Mr. Higuchi was quoted as saying. Kansai Electric, Japan’s second-largest utility after Tokyo Electric Power Co. , will appeal to the region’s high court, a spokesman said, although the decision probably won’t come this year. "It is deplorable that we couldn’t […]

Posted On : Published By : Tom Whipple
Category:

China and Russia Reach 30-Year Gas Deal

China and Russia signed a $400 billion gas deal on Wednesday, giving Moscow a megamarket for its leading export and linking two major powers that, despite a rocky history of alliances and rivalries, have drawn closer to counter the clout of the United States and Europe. The impetus to complete the gas deal, which has been talked about as a game-changing accord for more than a decade, finally came together after the Ukrainian crisis forced Russia’s president, Vladimir V. Putin, to urgently seek an alternative to Europe, Moscow’s main energy market. Europe has slapped sanctions on Russia and sought ways to reduce its dependence on Russian energy. Mr. Putin, on a two-day visit to Shanghai, and the Chinese leader, Xi Jinping, oversaw the signing of the contract between Gazprom and the China National Petroleum Corporation, the biggest natural gas deal Russia has sealed since the collapse of […]

Posted On : Published By : Tom Whipple
Category:

China’s Global Search for Energy

Whether by diplomacy, investment or in extreme cases, force, China is going to great lengths to satisfy its growing hunger for energy to fuel its expanding car fleet and electrify its swelling cities. The Chinese government showed that desire on Wednesday when it reached a 30-year natural gas deal with Russia , even as China was locked in a tense standoff with Vietnam over a Chinese oil rig drilling in the contested South China Sea. The two events involve different political dynamics. The agreement with Russia reflects closer economic ties between the two nations, while the other underscores the growing tension of two on-again, off-again Cold War allies. But both developments demonstrate China’s expansive approach to energy, a political and economic strategy with significant implications for the rest of the world. As its economy has rapidly expanded over the last decade, China’s energy efforts have come to dominate the […]

Posted On : Published By : Tom Whipple
Category:

China to boost water conservation

BEIJING, May 21 (Xinhua) — China will accelerate the construction of water conservation projects, according to an executive meeting of the State Council chaired by Premier Li Keqiang on Wednesday. The meeting urged faster construction of water transfer, reservoir and irrigation schemes, especially in central and western regions suffering water shortages. The move is to improve water use and attract investment, to guarantee water security, help agriculture and alleviate poverty. The meeting decided that 172 water conservation projects will be launched before 2020, increasing water supply by 80 billion cubic meters every year. The projects will also save 26 billion cubic meters of water in agricultural production annually and expand irrigation areas of over 78 million mu (5.2 million hectares).

Posted On : Published By : Tom Whipple
Category:

U.S. officials cut estimate of recoverable Monterey Shale oil by 96%

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum. Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said. The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually. The Monterey Shale formation contains about two-thirds of the nation’s shale oil reserves. It had been seen as an enormous bonanza, reducing the nation’s need for foreign oil imports through the use of the […]

Posted On : Published By : Tom Whipple