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IEA report implies US crude production may start to peak 2016

The Medium Term Oil Market Report of the International Energy Agency (IEA, Paris),  published in June 2014,  contains a graph which implies that US crude production will start to peak in 2016. Few took notice although the world is continuously occupied with oil and energy related conflicts and wars in Ukraine, Libya and Iraq. So far, oil prices increased only shortly when fights flared up. Apparently oil markets are at ease while the US tight oil “revolution” is underway. But for how long? Global situation Fig 1: US tight oil and crude oil in rest of world vs oil prices The graph shows that US tight (shale) oil sits on top of a bumpy crude production plateau in the rest of the world which clearly started in 2005 (average of  73.4 mb/d since Jan 2005).  Despite increasing tight oil production oil prices did not go down but stayed at […]

Posted On : Published By : Tom Whipple
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Antarctica May Lift Sea Level Faster in Threat to Megacities

Antarctica glaciers melting because of global warming may push up sea levels faster than previously believed, potentially threatening megacities including New York and Shanghai, researchers in Germany said. Antarctica’s ice discharge may raise sea levels as much as 37 centimeters (14.6 inches) this century if the output of greenhouse gases continues to grow, according to a study led by the Potsdam Institute for Climate Impact Research. The increase may be as little as 1 centimeter, they said. “This is a big range, which is exactly why we call it a risk,” Anders Levermann, the study’s lead author, said in a statement. “Science needs to be clear about the uncertainty so that decision-makers at the coast and in coastal megacities can consider the implications in their planning processes.” Related: Bet Against the Seven Horsemen of the Apocalypse The Antarctic ice sheet contains enough water to raise sea levels by over […]

Posted On : Published By : Tom Whipple
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Oil Sands are Biggest Losers From Low Crude Prices: Study

ConocoPhillips (COP) and Royal Dutch Shell Plc (RDSA) are among global oil companies needing crude prices as high as $150 a barrel to turn a profit from Canada’s oil sands, the costliest petroleum projects in the world, according to a study. The next most-expensive crude projects are in the deep waters off the coasts of Africa and Brazil, with each venture needing prices between $115 and $127 a barrel, said Carbon Tracker Initiative, a London-based think tank and environmental advocacy group, in a report today. As the U.S. shale drilling boom floods the world’s biggest crude market with supply, explorers are at greater risk of a price collapse that would turn some investments into money losers. “In order to sustain shareholder returns, companies should focus on low-cost projects, deferring or cancelling projects with high breakeven costs,” the report’s authors wrote. “Capital should be redeployed to share buybacks or increased […]

Posted On : Published By : Tom Whipple
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Gas prices 101 in the era of shale

| License Photo The rise in U.S. crude oil production hasn’t translated to cheap gasoline because output isn’t universal and energy markets are global, a market analyst said. Motor club AAA reports a national average price for a gallon of regular unleaded gasoline Thursday at $3.47, down 14 cents from last month and 6 cents less than this date in 2013. Michael Green, a spokesman for AAA, said in an interview most people in the United States still think that’s too high. "According to our research, about half of Americans consider the cost of gas to be too high when the price reaches $3.30 per gallon," he said. While on the presidential campaign trail in 2012, former House Speaker Newt Gingrich said gasoline prices could fall to as low as $2 per gallon if more emphasis were placed on domestic energy production. The U.S. Energy Information Administration, part of […]

Posted On : Published By : Tom Whipple
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Shell exits Pinedale, Haynesville gas plays, adds acreage in Marcellus, Utica shales

Royal Dutch Shell on Thursday said it plans to exit the Pinedale and Haynesville dry gas plays while adding acreage in the Marcellus and Utica shales in Pennsylvania, continuing its strategy of divesting large US natural gas assets in some plays, while adding assets in other plays to its portfolio. Shell announced two separate transactions in a statement Thursday. In one deal with Ultra Petroleum, Shell will acquire 155,000 net acres in the Marcellus and Utica shales in Pennsylvania and receive a cash payment of $925 million from Ultra in exchange for 100% of Shell’s Pinedale Anticline field assets in western Wyoming, including producing leases and associated gathering and processing contracts. In a separate agreement with Dallas-based Vine Oil & Gas and its partner Blackstone, Shell agreed to sell 100% of its Haynesville assets in northern Louisiana — including gas-producing properties and associated field facilities and infrastructure — for […]

Posted On : Published By : Tom Whipple
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Colorado Fracking Task Force Faces Big Task, Mixed Reception

Having avoided an election filled with competing initiatives that were guaranteed to displease about half of the electorate, regardless of the outcome, Colorado Governor John Hickenlooper recently created a task force to forge a path that both accommodates activist concerns, while ensuring that the state’s strong energy history continues. And while the task force likely faces some difficult days ahead, Hickenlooper used the right approach, according to two groups interesting in seeing the state maintain a balance between business and the environment and quality of life issues. “We certainly see the task force as a genuine effort on our part to get thoughtful people to the table who are willing to downplay personal preferences and think about the best approach for the state of Colorado,” Todd Hartman, communications director at Colorado Department of Natural Resources, told Rigzone. “We know the task force has a tall order, and we’re confident […]

Posted On : Published By : Tom Whipple
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Putin’s Pipeline Bypassing Ukraine Is at Risk Amid Conflict

Vladimir Putin ’s dream of a new pipeline to deliver Russian natural gas to the European Union without passing through Ukraine is fading amid escalating tit-for-tat economic sanctions. The $46 billion South Stream project, spearheaded by OAO Gazprom, is on hold and will probably remain in limbo for years as Russia continues to foment armed conflict in eastern Ukraine and the EU retaliates with bans, Eurasia Group said. That means the war-torn country will remain a key transit point for about half of Gazprom’s shipments to Europe, according to the New York-based risk research group. The EU previously had mixed positions on South Stream. With Russian troops massing near the Ukraine border, the bloc now has little choice but to stand united in opposition. “There’s no way Europe is going to put South Stream negotiations back on the table now, given the larger geopolitical context of the Ukraine crisis,” […]

Posted On : Published By : Tom Whipple
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Norway's oil production up 8 percent

The National Petroleum Directorate, a government regulator, said preliminary production figures for July show an average daily production of 1.93 million barrels of oil, natural gas liquids and condensate, about 8 percent more than was produced in June. Around 80 percent of that production volume was crude oil. The NPD said oil production was 2 percent higher than what it expected for July, but 3.5 percent lower year-on-year. Technical problems at three fields — Draugen, Skuld and Valhall — were blamed for the decline, though NPD said oil production was still about 1 percent higher for the year than anticipated. Norway has more oil reserves than any other European country. Last year, it exported 1.19 million bpd worth of oil, with most of that headed to the British and Dutch economies. Total gas sales from Norway were about 282 billion cubic feet in July, around 7 percent more than […]

Posted On : Published By : Tom Whipple
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Norway’s oil production up 8 percent

The National Petroleum Directorate, a government regulator, said preliminary production figures for July show an average daily production of 1.93 million barrels of oil, natural gas liquids and condensate, about 8 percent more than was produced in June. Around 80 percent of that production volume was crude oil. The NPD said oil production was 2 percent higher than what it expected for July, but 3.5 percent lower year-on-year. Technical problems at three fields — Draugen, Skuld and Valhall — were blamed for the decline, though NPD said oil production was still about 1 percent higher for the year than anticipated. Norway has more oil reserves than any other European country. Last year, it exported 1.19 million bpd worth of oil, with most of that headed to the British and Dutch economies. Total gas sales from Norway were about 282 billion cubic feet in July, around 7 percent more than […]

Posted On : Published By : Tom Whipple
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Global and Russian Energy Outlook to 2040

Like BP, OPEC, the EIA and the IEA Russia also publishes an annual energy outlook. It is called the   Global and Russian Energy Outlook to 2040 . It is published by The Energy Research Institute of The Russian Academy of Sciences and The Analytical Center for The Government of The Russian Federation. I have no idea who these guys are but their titles sound impressive and they seem to be Russian think tanks funded by the Russian Government. But that is just an assumption of mine. It is a very large 175 page PDF file that appears to be very scholarly and well researched. However they appear to be very optimistic in their prediction of the future oil supply out to 2040.  In one scenario they are not optimistic at all for coal production however. The report has three scenarios, the Baseline Scenario where business as usual continues until […]

Posted On : Published By : Tom Whipple