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Bakken Natural Gas – Too Much of a Good Thing?

Bakken Oil Well Bakken Oil Well | Click to Enlarge The oil & gas renaissance in the U.S. has nearly catapulted the country to the top spot for oil production in the world, and most experts believe the U.S. will hit this target by next year. But is it possible that the country and the Bakken has too much of a good thing? When it comes to natural gas that may be the case. According to the BP 2014 statistical world energy review, the U.S. is currently the top natural gas producing country in the world at 328 Bcf/d. Over the past five years, natural gas production has grown over 20% in the U.S., thanks in large part to the shale revolution. But the price of natural gas has struggled to break $4/mmbtu, and oil companies in North Dakota’s and Montana’s Bakken Shale and the Eagle Ford Shale in […]

Posted On : Published By : Tom Whipple
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BP Plans Deeper Drilling for Offshore Oil Despite Ruling

Even as it faces $50 billion in potential liabilities from the worst U.S. offshore oil spill, BP Plc (BP/) is leading the effort to extract crude from deep below the sea, a place as extreme and inhospitable as the surface of Mars. BP, Chevron Corp. and Royal Dutch Shell Plc (RDSA) are among companies developing a new generation of oilfield technology to reach through more than seven miles of water and rock, where temperatures can reach 400 degrees Fahrenheit (200 degrees Celsius) and the pressure hits 20,000 pounds per square inch — and to do it safely. The conditions are more challenging than BP’s Macondo well in the Gulf of Mexico , where a 2010 rig explosion killed 11 people and caused a spill that fouled hundreds of miles of coastline. The companies are seeking to tap into $1 trillion in reserves offshore, where a major discovery can produce […]

Posted On : Published By : Tom Whipple
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$3 gas could make a comeback

WASHINGTON, Sept. 17 (UPI) — AAA reports a national retail average price for a gallon of regular unleaded of $3.37, down 6 cents from one week ago and 14 cents less than this date in 2013. Gasoline prices typically slide after the Labor Day holiday in the United States as demand subsides with the summer vacation season ending. Prices drop even further after Sept. 15, when national refineries shift to a winter blend of gasoline, which is less expensive to make Oil prices have stayed below $100 per barrel in recent trading, which AAA said suggests the global market is shrugging off geopolitical tensions in Eastern Europe and the Middle East. AAA said Tuesday the recent rate of decline for prices at the pump is the steepest in more than four months and prices at the pump, relatively speaking, are the cheapest they’ve been since 2010. Tom Kloza , […]

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US shale oil growth covers up production drop in rest-of-world

 We use the period starting with January 2010 when crude production had come back to 2005 levels after the exceptional year of 2009. Fig 1: US crude oil vs crude oil in rest-of-world While US shale oil production is growing, there was a drop in crude production in the rest of world since February 2012 of almost 2 million barrels/d. How did this come about? As usual, there is decline and growth and then we have geopolitics. The following graphs show how much is contributed by whom. Incremental oil production is calculated as monthly oil production minus the minimum monthly production in a given period: Fig 2: Incremental Saudi crude production (yellow area) in relation to total production This is an example how incremental production is defined. The drop in Saudi production in the last quarter of 2012 and 1st half of 2013 has not been explained. There is usually […]

Posted On : Published By : Tom Whipple
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Wood Mac: All energy eyes on Scottish vote

EDINBURGH, Scotland, Sept. 17 (UPI) — Energy companies working in the North Sea need a sense of fiscal confidence no matter how the Scottish referendum turns out, Wood Mackenzie said Wednesday. Scotland holds a one-sentence referendum Thursday for independence from the United Kingdom. The government in Edinburgh said it could support itself with oil and gas revenue while powering an independent Scotland with renewable resources . Energy consultant group Wood Mackenzie said fiscal uncertainty is a primary concern for oil and gas companies working in the region. "Regardless of which government is in charge of the industry, companies will seek stability and simplicity around existing fiscal terms as well as tax incentives for harder to produce reserves," it said. "Industry engagement will be paramount to maximizing value for both government and companies." Wood Mackenzie, which has headquarters in the Scottish capital, said much of the oil and gas remaining […]

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Pay up, Gazprom tells Ukraine

MOSCOW, Sept. 17 (UPI) — The future relationship between Ukraine and natural gas company Gazprom depends on resolving lingering debt issues, the Russian company said. Gazprom says it’s owed $5.3 billion from Ukrainian energy company Naftogaz. Similar debt issues in 2006 and 2009 resulted in suspension of gas deliveries, and Gazprom said it’s time to pay up . "The future relationships between the companies are fully dependent on settling the debt payout issue," the company’s board said in a statement Tuesday. Political upheaval in November saddled an already struggling Ukrainian economy with significant debt. In August, the International Monetary Fund distributed $1.4 billion in assistance to Kiev, but said Naftogaz debt was one of the factors contributing to deeper recession in Ukraine. Members of the Ukrainian parliament met Wednesday in Moscow with their Russian counterparts to discuss ongoing tensions between both sides. A former Soviet republic, Ukraine this week […]

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Russian Billionaires Stung by Ukraine Bristle Over Arrest

The arrest of one of Russia ’s oldest billionaires is sending shivers down the backs of business owners already reeling from U.S. and European sanctions over President Vladimir Putin ’s policies in Ukraine. A decade after Mikhail Khodorkovsky ’s imprisonment led to Russia’s largest nationalization since the Soviet era, the prosecution of Vladimir Evtushenkov, 65, may prod businesses to pull even more money out of an economy on the verge of recession and relocate abroad, Alexander Shokhin , who lobbies on behalf of the country’s largest companies as head of the Russian Union of Industrialists & Entrepreneurs, said yesterday. Evtushenkov was charged with money-laundering and placed under house arrest two days ago, triggering a sell-off in shares of his companies, including AFK Sistema, and slicing his net worth by a third, to $4.5 billion, according to the Bloomberg Billionaires Index. Evtushenkov denies the charges. “This event could set a […]

Posted On : Published By : Tom Whipple
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WTI Crude Trades Near Two-Week High on OPEC; Brent Steady

West Texas Intermediate traded near the highest price in almost two weeks after OPEC’s secretary general said the group may cut crude-output targets next year. Brent was steady in London . Futures were little changed in New York after advancing 2.1 percent yesterday. The Organization of Petroleum Exporting Countries’ daily output target may fall by 500,000 barrels to 29.5 million barrels in 2015, Abdalla El-Badri said yesterday at OPEC’s secretariat in Vienna. U.S. crude inventories probably declined last week, according to a Bloomberg survey before data today. WTI for October delivery was at $94.61 a barrel in electronic trading on the New York Mercantile Exchange , down 27 cents at 8:59 a.m. London time. The contract gained $1.96 to $94.88 yesterday, the highest close since Sept. 3. The volume of all futures traded was about 25 percent more than the 100-day average for the time of day. Prices have […]

Posted On : Published By : Tom Whipple
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Natural Gas Prices Strengthen on Pre-Winter Worries

By Nicole Friedman NEW YORK–Natural-gas prices gained for a third straight session on Tuesday but held below $4 a million British thermal units, as traders began looking ahead to expected winter demand. Natural gas for October delivery settled up 6.4 cents, or 1.6%, at $3.995/mmBtu on the New York Mercantile Exchange, the highest settlement since Aug. 29. Futures traded down earlier in the session on expectations that demand for natural gas would be muted in the next two weeks due to moderate temperatures. Natural-gas demand is most active during extreme temperatures, when people use gas-powered air-conditioning or turn on natural-gas indoor heating. Temperatures are expected to be cooler than normal in the eastern U.S. and hotter than average in the West in the next two weeks. However, traders who had bet on lower prices likely closed out those positions once prices fell near $3.86/mmBtu in intraday trading, allowing buyers […]

Posted On : Published By : Tom Whipple
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World Oil Production According to the EIA

A few days ago the EIA published the latest update to its International Energy Statistics . The data is updated through May 2014. The data on all charts below is through May unless otherwise stated and is in thousand barrels per day. Also, all data is Crude + Condensate. World C+C production was down 72,000 barrels per day in May to 76,540,000 bpd. It was down 708,000 barrels per day since reaching a new all time peak in February of 77,247,000 bpd. Matt, on his blog Crude Oil Peak , is saying the same thing I have been saying for months. That is US shale oil growth covers up production drop in rest-of-world. The trend is clearly down and is going to get worse. Below is my graph using the same data. World Less US & N-O Less US World C+C production, less USA, is down about 2 million barrels […]

Posted On : Published By : Tom Whipple