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Railcar Shortage in U.S. Pushes Up Lease Rates

Safety regulations on tank cars will likely keep demand strong. Monthly rates for tank cars have increased. Bloomberg News A shortage of railcars bedeviling farmers, auto makers and oil drillers has become a windfall for some railcar manufacturers, lessors and finance companies. "There’s strong demand for a broad base of car types and there’s not enough inventory," said David Nahass, senior vice president at Railroad Financial Corp., a Chicago-based investment adviser. "As an operator or lessor in this environment, this is what you pray for." Monthly rates for tank cars, which transport liquids such as crude oil, have increased to $1,500 to $2,000 a car from about $500 in early 2011, before hydraulic fracturing ramped up in North Dakota’s Bakken Shale oil field. Cars that haul sand for fracking are leasing for about $650 a month, up nearly 50% from the end of last year, according to leasing-industry analysts. […]

Posted On : Published By : Tom Whipple
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EPA's Carbon Rule to Spark Lawsuits

The expected legal battle over the Obama administration’s coming limits on carbon emissions from existing power plants could provide a rarity for environmental litigation: a case for which there is scant court precedent. The Environmental Protection Agency is turning to a little-used provision of the Clean Air Act for its new rules, because carbon dioxide isn’t regulated under major programs that address air pollutants. The EPA says it has only used the section, called 111(d), to regulate five sources of pollutants since it was enacted in 1970—and none on the scale of CO2, a major greenhouse gas. Because the provision has been invoked so rarely, courts have had little opportunity to weigh in on it, creating the unusual circumstance in which potential challengers to the carbon rules would be litigating largely on a blank slate against the EPA. The Clean Air Act provision gives the agency authority to regulate […]

Posted On : Published By : Tom Whipple
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EPA’s Carbon Rule to Spark Lawsuits

The expected legal battle over the Obama administration’s coming limits on carbon emissions from existing power plants could provide a rarity for environmental litigation: a case for which there is scant court precedent. The Environmental Protection Agency is turning to a little-used provision of the Clean Air Act for its new rules, because carbon dioxide isn’t regulated under major programs that address air pollutants. The EPA says it has only used the section, called 111(d), to regulate five sources of pollutants since it was enacted in 1970—and none on the scale of CO2, a major greenhouse gas. Because the provision has been invoked so rarely, courts have had little opportunity to weigh in on it, creating the unusual circumstance in which potential challengers to the carbon rules would be litigating largely on a blank slate against the EPA. The Clean Air Act provision gives the agency authority to regulate […]

Posted On : Published By : Tom Whipple
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Total Unit to Halt Work on Alberta Oil-Sands Project

The Canadian unit of France’s Total SA said Thursday it will halt its nearly decadelong development of a major oil sands project and lay off at least 100 local staff, a move that highlights the challenges of multibillion-dollar investments in unconventional sources of crude oil. A final investment decision on the roughly nine billion Canadian dollar (US$8.3 billion) project in northern Alberta, known as Joslyn North, has been pushed back indefinitely, the company said. Total received approval from the provincial government in 2011 and had envisioned starting production at the 157,000-barrel-a-day open-pit surface mine by 2020, according to recent filings. "Joslyn is facing the same challenge that most of the industry world-wide [faces]," Total E&P Canada President André Goffart told reporters on a conference call. ""The costs are continuing to inflate when the oil price—and specifically the netbacks for the oil sands—are remaining stable at best, thus squeezing […]

Posted On : Published By : Tom Whipple
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U.S. Crude Oil Production Forecast-Analysis of Crude Types

U.S. oil production has grown rapidly in recent years. U.S. Energy Information Administration (EIA) data, which reflect combined production of crude oil and lease condensate, show a rise from 5.7 million barrels per day (bbl/d) in 2011 to 7.4 million bbl/d in 2013. EIA’s Short-Term Energy Outlook (STEO) projects continuing rapid production growth in 2014 and 2015, with forecast production in 2015 reaching 9.2 million bbl/d. Beyond 2015, EIA’s Annual Energy Outlook (AEO) projects further production growth, although its pace and duration remain uncertain. Domestic production plateaus near 9.6 million bbl/d between 2017 and 2020, close to its historical high of 9.6 million bbl/d in 1970, in the AEO2014 Reference case. In the AEO2014 High Oil and Gas Resource case, growth continues through the 2020s and into the 2030s, with production reaching 13.3 million barrels per day in 2036. Recent and forecast increases in domestic crude […]

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U.S. Gulf cornerstone of energy policy, secretary says

The U.S. energy portfolio continues to count on the Gulf of Mexico as a "critical component," visiting U.S. Deputy Interior Secretary Mike Connor said. Connor spent two days in New Orleans visiting oil and gas production facilities in the region as part of the government’s quadrennial energy review. The energy review, established in January, is aimed at developing a multiyear roadmap for federal energy policy. "The Gulf of Mexico is a critical component of our nation’s domestic energy portfolio, and we are committed to working with industry, state officials and local communities to improve and safeguard the infrastructure that supports the region’s production and distribution systems," Connor said in a statement Wednesday. Last month, the Bureau of Ocean Energy Management announced plans to sell more than 21 million acres off the coast of Texas to energy exploration companies in August. The blocks up for auction are […]

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U.S. gas imports declining steadily

The amount of natural gas imported into the U.S. market dropped 14 percent last year in part because of abundant domestic resources, the Energy Department said. The Energy Information Administration, the statistical arm of the Energy Department, said natural gas production in 2013 hit 24.2 trillion cubic feet, which would be a new record if preliminary data are correct. EIA said in its report net imports declined in part as a response to increases in domestic production. The level of natural gas imports have declined every year since 2007, the report said, and is at its lowest level since 1989. In a separate monthly report , EIA said the United States imported 542 billion cubic feet of natural gas for the first two months of 2014, which is actually 5 percent more than the same period last year. Total natural gas exports for the two-month period […]

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Conventional wisdom on U.S. oil exports wrong, report says

| License Photo A report Thursday from global consulting group IHS finds U.S. gasoline prices could decline if a 1970s era ban on crude oil exports is lifted. IHS said reversing legislation enacted after the Arab oil embargo in the 1970s would lead to an increase in oil production from the current level of 8.2 million barrels per day to 11.2 million barrels per day, which it says would translate to lower domestic retail gasoline prices. The report said more crude oil on the international market would lower global prices, which would be to the benefit of U.S. consumers. "The assumption that allowing crude oil exports would result in higher gasoline prices for consumers is not accurate," the report said. The report from IHS mirrors a March report prepared for the American Petroleum Institute, the industry’s lobbying group. In January, Graeme Burnett, a senior vice president from Delta Air […]

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Lifting of Crude Export Ban Will Spur U.S. Economy, IHS Says

The U.S. will benefit from increased oil production and lower gasoline prices if the government lifts restrictions on crude exports, according to IHS Inc. (IHS) The world’s largest oil consumer may save an average of $67 billion a year from its import bill as domestic output may rise as much as 949,000 barrels a day in 2016 with the removal of the export ban, the Colorado-based consultant said in a report today. Such a scenario would support 964,000 additional jobs in 2018, it predicted. “Making U.S. oil available to global markets would unlock the current supply and refining gridlock,” IHS said. “It would lead to a total of $746 billion in additional investment during the study period of 2016 to 2030 and an average of 1.2 million barrels per day more oil production per year.” A 1975 U.S. federal law bans most oil exports, with only shipments of refined […]

Posted On : Published By : Tom Whipple
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Are Shales A Bubble?

Hype works. Particularly when monetary and economic benefits are promised. Hype has been the primary tool used by the oil and gas industry with regard to shales and it has worked brilliantly. There is just one problem. When considering shale economic viability, hype was the only aspect that actually existed. Interestingly, the past year has brought massive write downs in shale assets and a frenzy of asset sales. Some companies, such as Shell, admitted that their divestment of North American shale properties was to stem the financial hemorrhaging and to distance themselves from disappointing well results. Others, like Exxon Mobil, claim to still be true believers in spite of their losses. According to a Bloomberg article dated May, 2014: “The recent battering of Forest Oil (FST) shows how the borrow-drill strategy can backfire. Forest generated $1.3 billion by selling assets in […]

Posted On : Published By : Tom Whipple