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Ukraine Suspects Terrorism in Pipeline Explosion

A major natural gas pipeline exploded in central Ukraine on Tuesday, a day after the Russian energy behemoth Gazprom said that it was cutting off supplies to Ukraine in a dispute over pricing, and officials immediately labeled it a possible act of sabotage. Utility officials said that natural gas deliveries were not interrupted and that supplies to Ukrainian customers and other European countries were flowing through alternative pipes. The blast occurred in a sparsely populated area of the Poltava region, which lies between Kiev, the capital, and the embattled regions of eastern Ukraine where a civil war is effectively underway between pro-Russian separatists and the Ukrainian military. Video from the scene showed a huge plume of fire shooting hundreds of feet into the sky. The explosion destroyed a section of the Urengoy-Pomary-Uzhgorod pipeline, which runs more than 1,800 miles from Russia’s Arctic north through Ukraine to the […]

Posted On : Published By : Tom Whipple
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Looking past the death of Peak Oil

Production has not peaked, but prices could be volatile Peak Oil is dead. The news that US output of liquid petroleum has regained its previous peak , reached in 1970, is enough to read the last rites over the idea that a region’s oil production will follow a shape like a bell curve, rising to a peak and then inexorably falling away. Much of the theorising about Peak Oil failed to anticipate technological progress, or understand the power of economic incentives. The US boom in production from previously uncommercial shale reserves has been made possible by advances in horizontal drilling and hydraulic fracturing, and made a reality by oil prices that 15 years ago barely seemed possible. More On this topic Editorial Yet while the strong form of the Peakists’ argument can be consigned to the dustbin of history, they were not entirely wrong. Producing oil has become harder, […]

Posted On : Published By : ASPO-USA
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BP Statistical Review of World Energy 2014

BP has released its Statistical Review of World Energy 2014 . There are a lot of things in this report but I am only posting charts on liquid petroleum only. The BP report includes crude oil and NGLs. Their data does not include ethanol or any type of biofuels or process gain. The report actually has data from 1965 but I started all charts from 1990 in order to highlight more recent production. All data is in kb/d. BP World BP has World liquids output up 557 kb/d in 3013. BP United States BP World Less USA World liquids less USA were down 554 kb/d in 2013. BP North America North America is USA, Canada and Mexico. The increase is USA plus Canada minus Mexico and was up 1,283 kb/d  in 2012. BP S. and Cent. America Central and South America was up 19 kb/d but is down 181 […]

Posted On : Published By : Tom Whipple
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Conventional Oil Production

The United States is awash in shale oil. Iran, once OPEC’s second-largest producer, is slowly ramping up production. Oil consumption in the Western world has been flat since the 2008 financial crisis. The “peak oil” theory has pretty much vanished, along with The Oil Drum, the bible of peak oil believers. Rest in peace. Or turn in your grave – because the price of oil tell a different story. On the New York Mercantile Exchange, crude oil futures are up 13 percent over one year. Since 2009, they have climbed every year except 2012. In Europe, the Brent crude futures are flat for the year after rising three years in a row. Brent, the de facto global benchmark, trades at about $113 (U.S.) a barrel. West Texas Intermediate, the North American benchmark, is at $106. For the sake of argument, let’s say the world is valuing oil at $110. […]

Posted On : Published By : Tom Whipple
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Oil Up On Iraq Unrest, Seasonal Demand

Crude-oil futures continued to rally in Asian trading hours Monday after last week’s surge on escalating Iraqi violence. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $107.45 a barrel at 0513 GMT, up $0.54 in the Globex electronic session. August Brent crude on London’s ICE Futures exchange rose $0.62 to $113.08 a barrel. Nymex crude for July delivery gained over 4% last week, its largest weekly gain since the week ended Dec. 6, while Brent crude gained 4.4% last week, snapping a two-week losing streak on Iraqi violence. Over the weekend, radical Sunni militia advancing through Iraq bragged about the execution of hundreds of Shiite Iraqi soldiers. Oil markets are concerned that oil fields in Kuwait, another key oil producer in the region, could also be at risk as it borders Iraq. Meanwhile, the Obama administration is expected to open talks […]

Posted On : Published By : Tom Whipple
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Oil Topping $116 Possible as Iraq Conflict Widens

Brent crude was projected by Wall Street analysts to average as much as $116 a barrel by the end of the year. Now, with violence escalating in Iraq , how far the price will rise has become anyone’s guess. The international benchmark surged above $114 on June 13 for the first time in nine months as militants routed the Iraqi army in the north and advanced toward Baghdad, threatening to ignite a civil war. The Islamic State in Iraq and the Levant, known as ISIL, has halted repairs to the pipeline from the Kirkuk oil field to the Mediterranean port of Ceyhan in Turkey . The conflict threatens output in OPEC’s second-biggest crude producer. The Persian Gulf country is forecast to provide 60 percent of the group’s growth for the rest of this decade, the International Energy Agency said June 13. Global consumption will “increase sharply” in the last […]

Posted On : Published By : Tom Whipple
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Brent-WTI Crude Futures Spread Widens on Violence in Iraq

Brent crude climbed, extending its premium over West Texas Intermediate to the highest this month, as the crisis in Iraq showed no signs of abating. The August Brent contract gained 0.4 percent. Iraq Prime Minister Nouri al-Maliki is fighting to reverse the advance of militants, who captured Iraq’s largest northern city and other towns last week. The fighting hasn’t spread to the south, which the U.S. Energy Information Administration says is home to three-quarters of Iraq’s crude output. “The oil market is reacting positively to the unrest,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis , which oversees $1.4 billion. “If Baghdad really starts to run into trouble, it’s going to be very difficult to maintain production.” Brent for August settlement gained 48 cents to end at $112.94 a barrel on the London-based ICE Futures Europe exchange. The July contract closed at $113.41 on […]

Posted On : Published By : Tom Whipple
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Building Up To Another Oil Shock?

Will Iraq derail the global economic recovery? The latest iteration of the country’s seemingly endless conflict has already started to squeeze oil prices higher. The question now facing investors is how much of an oil shock would it take to stall what looks to be a widespread–if still very subdued–recovery from the financial crisis of 2008. The price of West Texas Intermediate crude oil has risen 17% over the past six months to $107.12 a barrel–with a 5.4% gain coming just in the past week. That’s well short of a shock. But in the past, strong prices rises have proved a hazard to economies, which would make yet further increases alarming. “The correlation between oil shocks and economic recessions appears to be too strong to be just a coincidence,” wrote James Hamilton , an economics professor at the University of Southern California, San Diego, in […]

Posted On : Published By : Tom Whipple
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Natural-Gas Futures Edge Higher as Weather Heats Up

Natural-gas prices inched higher Monday as forecasts turned hotter for the Midwest and Mid-Atlantic regions this week, raising expectations for gas-fired cooling demand that could divert supplies from storage needed for next winter. Natural gas for July delivery was up two cents, or 0.4%, at $4.7590 a million British thermal units on the New York Mercantile Exchange. Prices were trading around the highest levels in a month despite a series of larger-than-average additions to storage, as some traders bet supplies won’t be enough to replenish depleted inventories. Gas stockpiles are 35% below average for this time of year, based on the most recent data from the U.S. Energy Information Administration. Analysts say the U.S. will need at least 3.4 trillion cubic feet in storage at the start of heating season, but they also question whether inventories will reach that level despite robust production and the […]

Posted On : Published By : Tom Whipple
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World’s untested assumption on 6 mb/d Iraqi oil by 2020

Given the ethnic turmoil in Iraq triggered by ISIL’s recent seizure of towns in Iraq’s North and West it is uncertain how this will impact on oil production in the Shia controlled South, from where the bulk of Iraq’s oil exports come from. At present oil exports from Basrah’s new oil terminals do not seem to be affected by the unrest but this can change. We don’t know what is going to happen, especially if this conflict widens the proxy war between Saudi Arabia and Iran which was hitherto limited to Syria (where oil production had peaked). It would be prudent for governments which are still planning new oil dependent infrastructure like motorways and airports to shelve these plans and prepare for oil shortages instead. Almost a year ago I wrote this article: 9/8/2013   Iraq crude oil exports stall amid pipeline attacks http://crudeoilpeak.info/iraq-crude-oil-exports-stall-amid-pipeline-attacks This post is an update. 12/6/2014 […]

Posted On : Published By : Tom Whipple