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Natural Gas Weekly Update

Alaskan LNG export project resumes operations The existing liquefied natural gas (LNG) plant at Nikiski on the Kenai Peninsula in Alaska and a project to build a new liquefaction plant, also at Nikiski, both achieved major milestones recently. , the first tanker since late 2012 arrived at ConocoPhillips’s existing Kenai LNG plant, which is on Cook Inlet. Also, late last month, the Alaska Legislature passed a bill that paved the way for the state to take an equity interest in the new Alaska LNG project, which includes pipelines, alongside other partners, including ConocoPhillips, ExxonMobil, BP, and TransCanada. The project is expected to cost $45-$65 billion and is slated to begin operations in the mid-2020s. Kenai LNG originally opened in 1969 and was the largest LNG export facility in the world at the time, and the first facility to serve the Asia-Pacific market. Annual exports from the plant peaked in […]

Posted On : Published By : Tom Whipple
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High value of liquids drives U.S. producers to target wet natural gas resources

In recent years, high levels of natural gas production have pushed prices down. The Henry Hub spot price averaged $3.73 per million British thermal units (MMBtu) in 2013. In 2012, the average annual Henry Hub price was $2.75/MMBtu, which reduced profit margins for many natural gas producers . The relatively high value of natural gas liquids (NGL) has led producers to target wet gas. NGL prices have traditionally been linked to crude oil, resulting in a significant price premium over pipeline-quality dry natural gas. More recently, the natural gas plant liquids composite spot price (which approximates a value of NGL produced at natural gas processing plants) has hovered roughly halfway between West Texas Intermediate (WTI) crude oil and natural gas spot prices. The result of this liquids price premium is that wet natural gas production is increasing at a faster rate than dry natural gas production. Liquids extracted from […]

Posted On : Published By : Tom Whipple
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A Warning For Oil Investors: Is Carbon Riskier Than You Think?

For oil executives there are few things more exciting than expensive, large-scale projects aimed at pumping more of the black gold. That doesn’t mean investors in oil majors should approve. Large oil companies are betting up to $1.1 trillion on “high-risk” oil projects over the next decade, according to London-based think tank The Carbon Tracker Initiative . Investors, it says, should question the assumptions underpinning that spending. “Many oil companies are betting on a high demand and price scenario,” said James Leaton, research director at the CTI, a group that lobbies to change the evaluation of carbon-intensive projects. “Investors need get ahead of the carbon supply cost curve to ensure capital is not being wasted.” The CTI said it was especially concerned about projects which need oil prices to stay above $95 per barrel in order to remain profitable. Among the companies with the highest exposure […]

Posted On : Published By : Tom Whipple
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Oil Producer Pleas Snubbed by Norway as Offshore Costs Surge

Oil and gas companies can expect little help from Norway on tackling surging costs as the government of western Europe ’s biggest crude producer tones down plans for measures that producers hope will boost earnings. “I don’t really expect us to present a package of measures,” Petroleum and Energy Minister Tord Lien said in a May 7 interview in Oslo. Cost increases challenging offshore projects are “partly due to the fact that we’re not smart enough in the way we work. The responsibility for that lies first and foremost with the operators and suppliers.” Lien, a member of junior coalition partner the Progress Party, said in December his administration could by the end of the year present measures, including tax incentives, aimed at cutting costs that have doubled during the past 10 years. Expenses have jumped amid increasing complexity, higher raw-materials costs and rising demand. Coupled with stagnating energy […]

Posted On : Published By : Tom Whipple
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Russia Orders Ukraine to Prepay for Gas

Russia will demand that Ukraine prepay for June natural gas imports, and the first bill will be delivered to Kiev on May 16, Russian Energy Minister Alexander Novak said Thursday. Mr. Novak said the deadline that Ukraine had to settle its gas bill for earlier deliveries expired Wednesday and, according to the contract between Russian gas monopoly Gazprom and its Ukraine counterpart Naftogaz, Ukraine will have to pay for future deliveries in advance. The minister said starting in June Ukraine will receive only the volume of gas it had paid for by the end of May. Ukraine has run up a bill for Russian gas, which Gazprom said has reached $3.5 billion. Naftogaz confirmed earlier Thursday that no payment has been made to cover the debt. On Tuesday, Ukraine received a first installment, $3.19 billion, from a rescue package approved by the International Monetary Fund. Part of the money […]

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Separatists Defy Kiev and Putin on Referendum

Pro-Russian militants in eastern Ukraine vowed on Thursday to press ahead with a referendum seeking autonomy, a risky move that seemed to defy their political patron, President Vladimir V. Putin of Russia, whose motives in urging a delay in the vote came under furious attack by officials in Kiev. A day after Mr. Putin scrambled the political landscape by suggesting the vote be put off, militant leaders in Donetsk, Luhansk and Slovyansk said they would go ahead on Sunday as scheduled. Far from mollified by Mr. Putin’s new stance, Ukrainian officials expressed deep suspicions, accusing him of trying to replay events preceding Russia’s annexation of Crimea. Although the ability of separatists to stage a legitimate ballot is highly in doubt, the mere possibility that Russia would use the vote as a pretext for another territorial grab had officials in Kiev calling the referendum illegal and insisting that action […]

Posted On : Published By : Tom Whipple
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Moscow ups stakes in gas dispute

Gazprom will only supply Ukraine with gas that has been paid for in advance from the start of June, Moscow said on Thursday, after Kiev missed another deadline to pay its mounting energy debt to the Russian company. Alexander Novak, Russia’s energy minister, said the state-controlled enterprise would move to a system of pre-payment for supplies to Ukraine from next month, bringing the simmering gas dispute between the countries a step closer to crisis. The move to pre-payment raises the prospect of a disruption in gas supplies through Ukraine – a key transit point for about 15 per cent of European gas supplies. Cash-strapped Ukraine, which this week received the first $3.2bn tranche from a $17bn International Monetary Fund bailout , has refused to accept Gazprom’s move in April to increase gas prices from a first quarter rate of $268.50 per thousand cubic metres to $485.50. Oleksandr Todiichuk, deputy […]

Posted On : Published By : Tom Whipple
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Petrofac Plunges After Cutting Earnings Forecast on Delays

Petrofac Ltd. (PFC) fell by the most in more than five years in London trading after saying earnings will be lower than expected because of project delays. The U.K.’s largest oil and gas engineer will cut capital spending at its Integrated Energy Services division, which takes direct stakes in fields, after reviewing the future of the business. The stock fell as much as 18 percent to 1,142 pence, the largest drop since October 2008. It traded at 1,165 pence at 9:55 a.m. London time, making it the biggest decliner in the benchmark FTSE 100 index. Today is the second time in six months Petrofac shares have plunged because of a profit warning. The stock fell by a record in November after the company forecast flat to modest profit growth in 2014. Profit for the year is now expected from $580 million to $600 million, London-based Petrofac said today in […]

Posted On : Published By : Tom Whipple
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Oil & Gas Boom 2014: No End In Sight

In February, oil production in Texas hit a 34-year high , with combined oil and condensate volumes exceeding 2.9 million barrels of oil per day.  For the first time in memory, Texas now produces more than 36% of all the oil produced in the United States, and if it were a separate country, Texas would now rank as the 8th largest oil producing nation on earth.  Wow. We see endless speculation about how long we should expect the current boom in shale oil and natural gas that is happening in Texas and throughout much of the United States to last. Prophets of doom like proponents of “Peak Oil” theory and radical anti-economic growth activists like Bill McKibben say it’s all a “bubble” that will burst at any moment. Others actually involved in the development of shale resources tend to believe the correct answer today will be some variation on […]

Posted On : Published By : Tom Whipple
Category:

Oil & Gas Boom 2014: No End In Sight

In February, oil production in Texas hit a 34-year high , with combined oil and condensate volumes exceeding 2.9 million barrels of oil per day.  For the first time in memory, Texas now produces more than 36% of all the oil produced in the United States, and if it were a separate country, Texas would now rank as the 8th largest oil producing nation on earth.  Wow. We see endless speculation about how long we should expect the current boom in shale oil and natural gas that is happening in Texas and throughout much of the United States to last. Prophets of doom like proponents of “Peak Oil” theory and radical anti-economic growth activists like Bill McKibben say it’s all a “bubble” that will burst at any moment. Others actually involved in the development of shale resources tend to believe the correct answer today will be some variation on […]

Posted On : Published By : Tom Whipple