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How OPEC Weaponized the Price of Oil Against U.S. Drillers

If there ever was doubt about the strategy of the Organization of Petroleum Exporting Countries, its wealthiest members are putting that issue to rest. Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG. Crude fell 48 percent last year and has declined 35 percent since OPEC affirmed its output target on Nov. 27. That decision, while squeezing revenues for OPEC members in 2015, aims at preserving their market share for years to come. “The faster you bring the price […]

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Egypt drawing in big energy players

Italian energy company Eni said it signed an agreement to work in the Western Desert of Egypt. UPI/Shutterstock/ekina MILAN, Italy, Jan. 9 (UPI) — With payments surfacing for its counterparts, Italian energy company Eni said Friday it signed an deal to operate in a license area in Egypt’s Western Desert. Eni said it was strengthening its position in Egypt by signing a concession agreement for work in the Western Desert. The deal follows an international auction held in 2013 by the Egyptian General Petroleum Corp. "This new acquisition adds to the list of exploration successes achieved in the area over the past two years and further strengthen Eni’s position in Egypt, an area of historic and strategic importance for the company," it said in a statement. Eni is one of the main oil producers in the country. Operating there since 1954, the company said it had an equity production […]

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Presalt oil and natural gas provide an increasing share of Brazil’s production

Source: U.S. Energy Information Administration, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis In 2013, Brazil produced 2.0 million barrels per day (bbl/d) of crude oil and nearly one trillion cubic feet (Tcf) of gross natural gas. Within these figures, the share of production from presalt resources found under thick layers of salt thousands of feet below the ocean’s surface remains small but continues to increase. Crude oil production from the presalt layer was 15% of total production in 2013, a significant increase from 0.4% of total production in 2008 when oil from the presalt was first produced. Similarly, Brazil’s presalt natural gas production represents 14% of total production, up from 0.5% of total production in 2008. Exploration and development of Brazil’s presalt layer began in and around the Tupi field almost a decade ago, with first production in 2008. Further exploration showed hydrocarbon deposits in the presalt layer […]

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Venezuela: Cuban Military Personnel Return Home

Hundreds of Cuban military personnel have reportedly left Venezuela for Cuba, according to unconfirmed reports from former Monagas state Governor Jose Briceno, Diario de Cuba reported Jan. 9. The reason for the movement is unknown. Meanwhile, a group assembled in Caracas’ La Candelaria neighborhood to protest food and goods shortages , El Universal reported. Long waiting lines for basic goods — including corn flour, cooking oil, milk, diapers and deodorant — have become the norm in Venezuela.

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Nebraska court clears path of Keystone XL

Nebraska court, in default ruling, says law used to sanction state route of Keystone XL oil pipeline is valid. (courtesy TransCanada) OMAHA, Jan. 9 (UPI) — In a mixed decision, the Nebraska Supreme Court ruled Friday the legal premise used to sanction the route for Keystone XL was permissible. In a long awaited case on the route of the Keystone XL pipeline, the Nebraska Supreme Court cleared one of the remaining hurdles in a battle that began when TransCanada first applied to build the project more than six years ago. Lancaster County District Court Judge Stephanie Stacy in February ruled a state law granting power of eminent domain to former Gov. Dave Heineman was unconstitutional. State law LB 1161, passed in 2012, gave the governor authority over the Keystone XL route from Canada through the state instead of the Nebraska Public Service Commission. Environmental campaigners pressured pipeline planner TransCanada […]

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Baker Hughes: U.S. oil and gas work steady

Oil services company Baker Hughes sees few signs of a long-term slowdown on onshore operations in the United States. UPI/Shutterstock/Calin Tatu The oil services company said there were 9,544 wells in service onshore in the United States, relatively unchanged from the third quarter of 2014. Oil prices are at the point where some operators in U.S. shale basins are cutting back on their exploration and production budgets. Oil prices on July 1, the start of the third quarter, were around $105 per barrel, but fell 13 percent by the Oct. 1 start of the fourth quarter. Year-on-year, Baker Hughes said the fourth quarter well count was 5 percent higher during fourth quarter 2014. Oil was priced at about $102 at the start of fourth quarter 2014. Baker Hughes said the well count increased the most in the emerging Cana Woodford shale in Oklahoma and the Marcellus and associated Utica […]

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GOP leadership pushes natural gas developments

Republican leadership on Capitol Hill advance bills to facilitate natural gas deliveries. UPI/Hamid Forotan WASHINGTON, Jan. 9 (UPI) — Republican leaders in the House of Representatives say the federal government needs to pick up the pace with reviewing permits for natural gas pipelines. "Ongoing delays because of a complex permitting process must not prohibit families in Kansas, and across the country, from obtaining reliable and economical heating for their homes in the winter and cooling for them in the summer," Rep. Mike Pompeo, R-Kan., said in a statement after introducing a pipeline bill Thursday. If approved, Pompeo’s measure would require the Federal Energy Regulatory Commission to approve or deny applications for new projects no later than one year after receiving an application. House leaders argue gas pipeline infrastructure additions aren’t keeping pace with increasing production. Republican leaders taking control of the 114th Congress are putting energy at the top […]

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Oil Drillers Pull Most U.S. Rigs in More Than Two Decades

In what is the strongest sign yet of the damage that plunging crude prices are doing to the U.S. oil industry, drillers idled more rigs last week than they have at any point since 1991. Oil rigs fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website today, extending the five-week decline to 154. The 2014 peak was 1,609. It was the largest drop since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War . The price of U.S. benchmark West Texas Intermediate oil has plunged by more than half since June, imperiling a shale boom that has brought the nation closer to energy independence than it has been in almost three decades. U.S. drillers laid down the most rigs last quarter since 2009 as the Organization of Petroleum Exporting Countries and the rest of the world’s suppliers […]

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Keystone Pipeline’s Nebraska Path Cleared as Congress Votes

TransCanada Corp. (TRP) ’s Keystone XL pipeline faces one less hurdle after Nebraska ’s highest court cleared its path through the state, sending the matter back to Washington. The pipeline would funnel crude from Alberta’s oil sands to a network junction in southeast Nebraska, for transport to Gulf Coast refineries. While the ruling is a victory for energy independence proponents, the project’s fate remains uncertain. It now returns to President Barack Obama , who had put off a decision citing the pending lawsuit. Today, the House of Representatives passed a bill that would force approval of the pipeline. While four of the seven Nebraska Supreme Court judges held that they would block Keystone XL, five were needed to declare unconstitutional a law that allowed the governor to dictate its path. As a result, the route survived by default. Justice William Connolly, writing for the judges who wanted to block […]

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Oil-Price Crash Is Slow to Hit U.S. Energy Jobs

ByJosh Mitchell and Kathleen Madigan Oil and gas jobs rose nearly 12,000 last year. Ray Gerish, a floor hand for Raven Drilling, works on an oil rig at the Bakken shale formation outside Watford City, N.D. Getty Images (2013) The energy sector may be starting to strain under the steep drop in oil prices, but industry employment hasn’t taken a hit thus far. Jobs in oil and gas extraction actually rose last month, climbing by 400 positions to 216,100, Friday’s jobs report showed. Over the past year, oil and gas jobs rose nearly 12,000. Some energy firms are starting to lay off workers as the drop in global oil prices—tied to a buildup in supplies and weak world demand—hits profits. One possible explanation for why the overall industry continues to add jobs is that employers often delay cutting positions when business turns south. Job cuts can lag other signs pointing […]

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Shell’s Canadian Oil-Sands Operations to Cut Jobs Amid Crude Oil Price Swoon

By Chester Dawson CALGARY-Royal Dutch Shell PLC said Friday it plans to cut jobs at its Canadian oil-sands operations, becoming the first major energy company to shed workers in Canada’s oil patch amid a recent swoon in global crude oil prices. Shell, which produces 250,000 barrels of oil a day from its oil-sands mines, will trim about 2% of its 3,000 workers, or about 60 positions, some of whom will be reassigned to other jobs, said company spokesman Cameron Yost. "We’re continuing to review our business to make sure that we remain competitive," Mr. Yost said. "When prices are low the importance of that is underlined," he said. The president of Shell Canada, Lorraine Mitchelmore, said in August that the company’s oil-sands business met internal yardsticks for profitability when Brent crude trades above $70 per barrel. Prices for Brent, the global oil benchmark, have spiraled lower in recent weeks, […]

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New drilling affected by oil price fall

Floor hands Jose Garza, left, Jose Salinas, center, and Omar Cano make a pipe connection on Orion Drilling Co.’s Perseus drilling rig near Encinal in Webb County, Texas, U.S., on Monday, March 26, 2012. The Perseus is drilling for oil and gas in the Eagle Ford Shale, a sedimentary rock formation underlying an area of South and East Texas. Photographer: Eddie Seal/Bloomberg *** Local Caption *** Jose garza; Jose Salinas; Omar Cano Crude lost another 11 per cent this week amid continuing worries about a supply surplus as demand slows, with the Brent benchmark falling below $50 a barrel. ICE February Brent, the global benchmark, was trading at $50 a barrel at the end of the week while US crude fell 8 per cent to $48.37. More On this topic IN Commodities Analysts said the fall in oil prices was filtering through to US shale ventures, with new drilling […]

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Are Mountrail’s Sweet Spots Past Their Prime?

This post is an update on total Light Tight Oil (LTO) extraction from Bakken in North Dakota based upon actual data as of October 2014 from North Dakota Industrial Commission (NDIC). It further presents a statistical analysis on developments of well productivity with a detailed look at developments in Parshall, Reunion Bay and Sanish. There were general improvements in LTO well productivity in Bakken during 2013. Present trends in LTO well productivity for Mountrail’s sweet spots (Alger, Parshall, Reunion Bay, Sanish and Van Hook) suggests these are past their prime. Figure 29 in this post show development in well productivity for Alger and Van Hook and figures 06, 08 and 10 for Parshall, Reunion Bay and Sanish. A common feature for Parshall, Reunion Bay, Sanish, and Van Hook is that these reached new highs in well productivity for wells started in 2013. Alger has been in general decline since […]

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Moniz: Low crude prices unlikely to change US energy policies

WASHINGTON, DC, Jan. 8 01/08/2015 Crude oil prices below $50/bbl could force some producers to reduce capital expenditures if they go on for long, but are not likely to change US energy policies, according to US Sec. of Energy Ernest G. Moniz. “We will still see increases in our oil production in 2015. It has been tempered, but should reach 9.3 million b/d,” Moniz said during a Jan. 7 discussion at the Woodrow Wilson International Center for Scholars . “If low prices persist for a long time, reductions in capex will appear down the road.” The Obama administration is trying to put together a comprehensive picture of what low oil prices mean beyond consumers driving more and buying new motor vehicles, Moniz said. “One of the obvious global issues is whether this can help get Europe’s rather sluggish economy going,” he said. “There also obviously are several countries which […]

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Mounting debt for energy firms as oil prices plummet

Mounting debt for energy firms as oil prices plummet thumbnail Energy firms have been financing new oil production by taking on large amounts of debt. When oil prices averaged over $100, that strategy made sense. But with oil at $50, most indebted firms are suddenly in crisis. In recent years oil exploration companies have taken on more debt in order to finance their operations. The level of debt in the upstream sector – excluding integrated oil companies like ExxonMobil – hit $199 billion at the end of 2014, a 55 percent increase since 2010, according to the  Wall Street Journal . Loading up on debt made sense when oil prices were high. Fracking new shale wells can be an expensive process, but when oil was averaging over $100 per barrel, the debt load for many firms didn’t seem so burdensome. Now with oil prices falling by more than half […]

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Russia likely to demand early repayment of Ukraine’s $3 billion debt: RIA Novosti

MOSCOW (Reuters) – It is "highly likely" that Russia will demand early repayment of $3 billion in debt owed by Ukraine, Russia’s RIA Novosti agency reported on Saturday, citing an anonymous government source. The source told the agency that Ukraine was in violation of a "whole series" of conditions for Russia’s loan. "In these circumstances it is highly likely that Russia will be forced in the near future to demand from Ukraine the early repayment of the $3 billion debt," the source was quoted as saying. The comments appear to contradict remarks in November by President Vladimir Putin, who told German media that Russia did not intend to demand early repayment of Ukraine’s debt as this would cause a financial collapse. The finance ministry did not answer calls for comment on Saturday. Russia lent the money in December 2013 by buying Ukrainian Eurobonds, before the overthrow of Ukraine’s pro-Moscow […]

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Statoil tightens focus on North Sea

Norwegian energy company Statoil said there’s still a long life left in North Sea field. (UPI/Shutterstock/James Jones Jr.) STAVANGER, Norway, Jan. 9 (UPI) — Producing 700 million barrels of oil equivalent since 1997, Norwegian energy company Statoil said Friday it was extending the life of a North Sea field to 2030. Statoil said it was confident life for the Norne field development in the North Sea could be extended beyond the initial closure date in 2014. The field’s operational vice president, Kristin Westvik, said 17 years of systematic maintenance left infrastructure there in good shape. "In light of this we are now considering extending Norne’s life to 2030," she said in a statement. Statoil last year said it was forced to slash costs by more than $1 billion because of the low price for crude oil. Brent, the global benchmark derived from North Sea oils, is selling for around […]

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Scotland calls for North Sea reforms

Scottish government accuses British rivals of mismanaging North Sea oil and gas sector. (UPI/Shutterstock/James Jones Jr.) EDINBURGH, Scotland, Jan. 9 (UPI) — The Scottish government wants reforms in the tax regime of the North Sea oil and gas sector to ensure long-term sustainability, the energy minister said. Scotland pegged its future during a bid for independence on revenue from oil and gas reserves in the North Sea. The bid failed last year, though Scottish Energy Minister Fergus Ewing said frustration endured in the sector. "The oil and gas industry is a strong success story for Scotland and will continue to be," he said in a late Thursday statement. "However, because of the mismanagement of oil and gas fiscal policy by the U.K. government, challenges remain and we must tackle the on-going cost pressures and the fall in oil prices head on." Ewing said the region’s energy sector needs a […]

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Oil: The Panic That Refreshes

The cure for low oil prices is low oil prices. But an important twist to that pearl of Houston wisdom is that the real cure is prices way lower than anyone expected. It is when oil drops far below levels budgeted by exploration and production companies that rigs get idled, curbing supply growth and supporting prices. Yet the U.S. oil rig count has fallen by only 8% since early October. On that front, the latest outlook for E&P spending from Evercore ISI offers some hope to a sector with precious little right now. Since 2000, they have tracked the industry’s oil-price expectations. Last year was the first time that the sector overestimated the average oil price, guessing around $90 a barrel versus the outcome of about $76. Usually, the price has come in above expectations. The sector kicked off 2015 expecting oil to average $77.55 a barrel, ISI says. […]

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What Will 2015 do for Peak Oil?

The Cornucopians are exuberant, they believe that collapsing of oil prices dealt the death knell for peak oil. An oil glut, they say, is what we have, not peak oil. But an oil glut is exactly what we would expect at the very peak. After all, that is what peak oil is, that is the the point in time when the world produces more oil than ever in history… and the most it ever will produce. I am of the firm conviction that the world is at the peak of world oil production right now, or was at that point three or four months ago. I think history will show that the 12 months of September 2014 through August 2015 will be the one year peak. Whether the calendar year peak is 2014 or 2015 is the only thing still in question, or that is my opinion anyway. The […]

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Oil and the Economy: Where Are We Headed in 2015-16?

Resilience Published on Resilience (http://www.resilience.org) The price of oil is down. How should we expect the economy to perform in 2015 and 2016? Newspapers in the United States seem to emphasize the positive aspects of the drop in prices. I have written Ten Reasons Why High Oil Prices are a Problem . If our only problem were high oil prices, then low oil prices would seem to be a solution. Unfortunately, the problem we are encountering now is extremely low prices. If prices continue at this low level, or go even lower, we are in deep trouble with respect to future oil extraction. It seems to me that the situation is much more worrisome than most people would expect. Even if there are some temporary good effects, they will be more than offset by bad effects, some of which could be very bad indeed. We may be reaching limits […]

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Oil Turnaround: Timing The US Production Peak

Summary Analysis points to US production peaking in late April. Oil rig reduction is accelerating. Current two week decline in EIA estimates not too unusual. Canadian rig count down 66% year over year. Current oil rig count 1482. Estimated production breakeven rigs required: 1267. Shale oil wells deplete much faster than traditional wells. This article attempts to determine the number of rigs that need to be deployed in order to neither increase nor decrease the US production of oil. To estimate a ballpark peak date and ballpark breakeven number of rigs in this cycle, one needs to: 1. Estimate the number of barrels that are produced in a given week, given a known number of oil rigs in operation. 2. Estimate the rate of depletion (that is, to estimate the amount of additional depletion expressed as a percentage of peak production as a function of time that occurs as […]

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Oil heads for seventh weekly loss as supply glut drags

LONDON (Reuters) – Oil prices headed for a seventh straight weekly loss on Friday, with key producers showing no sign of cutting output in the face of a global supply glut. Global oil benchmarks hit their lowest since 2009 this week and are down more than 50 percent from June levels, with Brent crude futures LCOc1 extending declines on Friday, dropping 50 cents a barrel to $50.46 by 0427 ET. U.S. crude futures for February delivery CLc1 were down 12 cents at $48.67 a barrel despite robust U.S. economic data that brightened the outlook for demand. Brent’s premium to U.S. crude CL-LCO1=R fell near $1.80 a barrel, the narrowest since October as international seaborne oil markets appear to be under even more pressure than the U.S. domestic market. "It is another negative week and a reflection of the focus on negative arguments," said Hans Van Cleef, senior energy economist […]

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Don’t Bank on Oil Rebound Says Fund That Foresaw Collapse

A hedge fund that returned almost 60 percent last year by betting on oil’s collapse says the slump may have further to run. Crude may drop below $40 a barrel in the next few months without a substantial slowdown of production growth in the U.S. and Canada , said Doug King , London-based chief investment officer of Merchant Commodity Fund. Bearish oil wagers in the second half of 2014 helped the $260 million fund gain 59.3 percent, the best performance since its June 2004 start. Brent futures lost 48 percent last year, the most since 2008, as the Organization of Petroleum Exporting Countries resisted calls to cut output. The U.S. is pumping the most crude in more than three decades as horizontal drilling and hydraulic fracturing unlock shale reserves, adding to a global supply glut that Qatar estimates at 2 million barrels a day. “Unless we see real slowdown […]

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Renowned Trader Hall Sees $40 Oil ‘Absolute Price Floor’

Oil prices have almost bottomed out and “some recovery” is likely by the second half of the year as demand picks up, commodity hedge fund manager Andrew J. Hall told investors. Crude could trade in the $40-a-barrel range in 2015, close to “an absolute price floor,” the head of Astenbeck Capital Management wrote in a Jan. 2 letter obtained by Bloomberg News . A significant amount of U.S. and Canadian production can’t cover the cash costs of operating at that price, he said. “Oil prices will stay under pressure in 2015,” he wrote. “However, current prices are not sustainable in the longer term. The interplay between extreme weakness in the short term and the potential for supply shortfalls in the medium term should create attractive trading opportunities over the course of the coming 12 months.” Hall gained notoriety in 2009 after receiving a pay package of about $100 million […]

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Natural Gas Prices Climb on Larger-Than-Expected Stockpile Drain

By Timothy Puko Natural gas futures closed higher Thursday, after data showed U.S. storage levels fell further than expected last week. The front-month February contract settled up 5.6 cents, or 2%, at $2.927 a million British thermal units on the New York Mercantile Exchange. It was only the sixth session of gains in the past 17. Storage levels shrank by 131 billion cubic feet in the week ended Jan. 2, the U.S. Energy Information Administration said. The drain was 12 bcf greater than the 119-bcf consensus average of 20 forecasters surveyed by The Wall Street Journal. John Kilduff, founding partner of Again Capital in New York, said he is going to buy, but that his move would be limited. Frigid weather around the country this week should push prices above $3/mmBtu soon, but production is so strong and the risk of a collapsing market is still so great that […]

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Natural Gas Market is Ice Cold

ENLARGE Natural-gas prices hit a more-than two-year low this week. Above, pedestrians on Thursday brace themselves against a cold wind in New York. European Pressphoto Agency Heaters from Minnesota to Maine are running full blast to ward off Arctic temperatures. But the natural-gas market is still ice cold. Prices for the fuel, used to heat half of U.S. homes, hit a more-than two-year low this week and are down 35% since mid-November. The arrival of freezing weather across most of the country hasn’t revived the market. Normally, plunging temperatures are a cue for traders to make bullish bets because the resulting spike in demand can deplete natural-gas supplies. Last February, prices jumped by more than 30% in a matter of days during one particularly severe cold snap. This time, natural gas isn’t getting its usual seasonal rally because many analysts believe supplies are high enough to get through even […]

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Natural Gas Peak Season ‘Becoming a Dud’ as Prices Keep Falling

By Timothy Puko Natural gas prices are inching downward again Thursday with mild forecasts for later this month offsetting the day’s frigid temperatures. Natural gas for February delivery is down 1.6 cents, or 0.6%, at $2.855 a million British thermal units on the New York Mercantile Exchange. The move puts gas on pace to finish lower in 12 of the past 17 sessions, a period that would usually be the peak season for gas prices. This winter has been too mild to encourage enough heating demand to offset record supply. Even with temperatures of more than 15-degrees-Fahernheit-below normal in several of the largest markets for gas heating, traders are thinking about warmer weather forecast for next week and even unseasonably warm weather that helped build up healthy supplies throughout December, said John Woods, president of JJ Woods Associates and a Nymex trader. "It’s becoming a dud, this winter season," […]

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Study: World must leave most fossil fuels underground to avert warming

Much of the world’s fossil fuels — coal, oil and gas — need to stay underground if humans want to keep Earth from warming to extremely dangerous levels, according  to a new report published  Thursday in the journal Nature. As prices plummet at gas pumps worldwide, the report from University College London’s Institute for Sustainable Resources found that if countries want meet the goal of capping warming at 2 degrees Celsius above the average before the industrial revolution, some of the world’s richest countries will have to resist the temptation to pump or dig such resources from the ground. Burning fossil fuels expels greenhouse gases, which keep the sun’s infrared radiation from bouncing back into space and trap it on Earth. The widespread burning of fossil, which began about 200 years ago with the invention of the steam engine, started adding carbon dioxide, a major greenhouse gas, into the atmosphere at a rapid rate. Governments are now […]

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Oil Plunge Seen Eroding Emissions Ambition: Carbon & Climate

While the falling price of crude oil is giving consumers cheaper energy, it’s threatening long-term global pollution-control efforts. Reduced national income from energy taxes and “a low-growth economic environment” might spur countries to curtail their emissions-curbing pledges for after 2020, leading to more emissions of carbon for a longer time, said Zoe Knight, head of the HSBC Holdings Inc.’s climate change center in London . These proposals will be submitted under a United Nations climate-protection process starting in March. Public money “for funding low-carbon energy scale-up and energy-efficiency retrofits could be scarcer,” Knight said yesterday in an e-mailed note. Reduced government funds “leads to difficult choices on capital resource allocation, which in turn could mean high carbon lock-in over the long run,” she said. The International Energy Agency said in November that the world would probably reach by 2040 an emissions ceiling recommended by a panel of scientists formed […]

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Oil Production Vital Statistics – January 2015

This is the first in a monthly series of posts chronicling the action in the global oil market in 12 key charts. The oil price crash of 2014 / 15 is following the same pace of the 2008 crash. The 2008 crash was demand driven and began 2 months ahead of the broader market crash. The US oil rig count peaked in October 2014, is down 127 rigs from peak and is falling fast. Production in OPEC, Russia and FSU, China and SE Asia and in the North Sea are all stable to falling slowly. The bogey in the pack is the USA where a production rise of 4 Mbpd in 4 years has upset the global supply dynamic. It is unreasonable for the OECD IEA to expect Saudi Arabia to cut production of cheap oil in order to create market capacity for expensive US oil [1]. There are likely […]

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U.S. court takes on Iraq oil disputes

A still image from video taken by a U.S. Coast Guard HC-144 Ocean Sentry aircraft shows the oil tanker United Kalavyrta approaching Galveston, Texas July 25, 2014. It carries around 1 million barrels of crude loaded by the KRG, which Baghdad has sued for possession of in U.S. court. (REUTERS/US Coast Guard handout) The Iraqi Oil Ministry has won a procedural legal victory in its long-standing disputes with the autonomous Kurdistan Regional Government (KRG) over oil export rights.The Southern District Court in Texas on Wednesday denied the KRG’s motion to dismiss a case that is preventing the delivery of 1 million barrels of oil to customers in the U.S. The decision forestalls Kurdistan’s attempt to establish a high-profile precedent that might enhance its ability to export oil independently, and keeps…

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Iraq Oil Deal Evokes Churchill in Islamic State Battle

Winston Churchill understood the significance of the black stuff seeping to the surface in the Kurdish plains of Mesopotamia when he included the region within Iraq as the British forged the nation in the 1920s. In doing so, Churchill, the colonial secretary at the time, set in train almost a century of bickering between the Iraqi government and its Kurdish enclave over the area’s estimated 45 billion barrels of crude. While their latest dispute was temporarily resolved last month to help finance the struggle against Islamic State, the accord has not addressed differences between administrations in Baghdad and Erbil that include the future of Kirkuk, northern Iraq’s main oil hub. The Iraqi government started pumping crude from Kirkuk via Kurdish pipes that bypass militant-held territory to Turkey , Al-Mada Press reported Jan. 1. “The need to finance military operations has brought together the Iraqi government and the Kurds,” said […]

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Add Natural Gas Prices to Putin’s Long List of Problems

Employees walk between valve controls near the Ekaterina drilling rig at OAO Gazprom’s… Read More After last year’s plunges in oil and the ruble, Russian President Vladimir Putin now has another thing to worry about: the price of natural gas. While the fuel held up better than oil last year, weakening just about half as much, the average cost on Europe ’s biggest open market will fall 13 percent this year to the lowest since 2010, according to the median of 13 traders, brokers and analyst estimates compiled by Bloomberg. Part of the reason for the drop is that global production capacity of liquefied natural gas will jump the most in four years, boosting competition for Russian pipeline flows that meet almost a third of Europe’s demand. Brent crude , used to help price state-owned OAO Gazprom’s gas sales to Europe, slumped 48 percent last year on global oversupply. […]

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Pemex Asks U.S. for Light Crude Imports to Boost Refining

Petroleos Mexicanos is in talks with the U.S. Department of Commerce to import 100,000 barrels a day of light crude to increase gasoline production and improve refining by Mexico ’s state-owned oil producer. Pemex, as the world’s ninth-largest oil producer is known, would mix the imports with its heavy oil, the Mexico City-based company said today in an e-mailed statement. Negotiations with the U.S. about the proposal, which was presented last year, are continuing, Pemex said. Some companies have called for the U.S. to end its 40-year prohibition on oil exports, saying booming domestic output reduces the need to keep supplies at home. U.S. oil production has increased by 66 percent in the past five years, and a majority of that growth is in light oil from shale rock. The U.S. bans most exports of unrefined crude, with exceptions such as shipments to Canada. The U.S. exported a record […]

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Mexico’s Pemex Files Request to Import Light U.S. Crude

MEXICO CITY—Mexican state-run oil giant Petroleos Mexicanos said Thursday it has requested permission from the U.S. Commerce Department to import light crude to Mexico from the U.S., with the aim of improving output at its Mexican refineries. The significant increase of light crude production in the U.S. presents an opportunity to mix that oil with Mexican heavy crude, and thus boost refining efficiency in Mexico, the company known as Pemex said. Pemex anticipates that it could import up to 100,000 barrels a day of light crude and condensates under the proposal, which it calls a “swap.” America has a long-standing ban on exporting crude-oil pumped in the U.S., but the Commerce Department recently issued new rules clarifying that some ultralight oil can freely flow out of the country to foreign buyers. Dubbed condensate by the energy industry, this light oil no longer needs to be fully processed at a […]

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U.S. Oil Export Ban Poised to Loosen With Mexico Request

The 40-year old ban on most U.S. crude exports is set to be loosened after Mexico’s state-owned oil company asked for an exception. Petroleos Mexicanos is in talks with the U.S. Commerce Department to import 100,000 barrels a day of light crude to increase Mexico’s gasoline production and improve refining. Pemex, as the world’s ninth-largest oil producer is known, would send its heavy oil to U.S. Gulf Coast refineries in exchange. Oil producers including Exxon Mobil Corp. (XOM) and Continental Resources Inc. (CLR) have called for the U.S. to end the restrictions, saying booming domestic output reduces the need to keep supplies at home. U.S. oil supply has increased by 66 percent in the past five years, and a majority of that growth is in light oil from shale rock. It would be another incremental allowed export “that will help relieve the pressure on pricing of domestic light oil, […]

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LNG demand not materializing in Asia

Asian demand for liquefied natural gas not matching output, analysis from Wood Mackenzie finds. UPI/Stephen Shaver SINGAPORE, Jan. 8 (UPI) — Demand for liquefied natural gas in the Asian market hasn’t materialized as expected, analysis published Thursday by Wood Mackenzie finds. Giles Farrer, principal analyst for the global LNG market at Wood Mackenzie, said production of LNG was on the rise , but the demand wasn’t matching the increase as the industry moves past its 50th anniversary. "The big surprise was that Asian LNG demand was much lower than expected. Demand in emerging markets, like China, failed to grow to the extent anticipated and demand in the established South Korean market fell considerably," he said in the report. The International Energy Agency said LNG, a super-cooled and denser product with more deliverability options, represents "a golden opportunity" for Asian economies. Asian demand for natural gas is expected to grow […]

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China PPI suffers biggest fall in 2 years

A construction site is seen in Beijing on December 16, 2014. Foreign investment into China accelerated in November, government data showed December 16, despite a worsening slowdown in the world’s second-largest economy and concerns over business risks. AFP PHOTO / Greg BAKER Chinese factory gate prices recorded their biggest annual fall in more than two years in December, adding to fears that deflation beckons in the world’s second-largest economy. China’s producer price index, which measures wholesale prices, has fallen for 34 consecutive months. December’s 3.3 per cent year-on-year decline, reported by the National Bureau of Statistics on Friday morning, was the largest since September 2012. It was also far sharper than November’s 2.7 per cent fall. Consumer prices, conversely, rose 1.5 per cent year on year in December, up slightly from 1.4 per cent in November. China’s central bank lowered interest rates for the first time in two years […]

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Crude Ambition Crashes as Price Slump Exposes Risk Takers

Dangerous and difficult oil fields that looked like goldmines when crude fetched more than $100 a barrel have turned into money pits as oil crashes to multiyear lows. Collapsing oil prices not only shrink profits for producers and imperil dividend payouts prized by investors, they can cripple a company’s future growth by starving it of cash needed to find, drill, assess and equip discoveries. A spending halt in deep-water fields and Canada ’s oil sands could disrupt the chain of new projects needed to keep the world supplied as older wells dry up. For the biggest explorers, the impacts of slumping prices are dramatic. Every $10 price drop erases $2.8 billion in annual cash flow for Exxon Mobil Corp., according to analysts at Barclays Plc. (BARC) For Chevron Corp. (CVX) , which is more crude-dependent than its bigger rival, a $10 change translates to $3.85 billion in cash flow. […]

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Shale Producers in U.S. Cutting Rigs Loose Early Amid Oil Slump

U.S. oil producers are bailing out of long-term contracts for drilling rigs as crude prices sink below $50, another signal that the nation’s shale boom is slowing. Yesterday, Helmerich & Payne Inc. (HP) , the biggest rig operator in the U.S., said it had received early termination notices for four contracts. Today, a second contract driller, Pioneer Energy Services Corp. (PES) , said four rigs had been canceled early. Producers may cut short another 50 to 60 agreements, according to Bloomberg Intelligence analyst Andrew Cosgrove. Companies are paying to cancel rigs rather than keep drilling in the face of a 55 percent plunge in prices. Mounting rig cutbacks imperil the unprecedented boom in U.S. output that’s contributed to a global glut of oil and helped sustain a price war among the world’s largest suppliers. “This is just the beginning,” R.T. Dukes, an upstream analyst at Wood Mackenzie Ltd., said […]

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U.S. oil production holding steady

Government data show U.S. oil production holding steady despite slump in oil prices. UPI/Gary C. Caskey WASHINGTON, Jan. 8 (UPI) — U.S. crude oil production increased slightly for the week ending Jan. 2 despite a decline in rig activity and slumping prices, government data show. The U.S. Energy Information Administration said in a weekly petroleum status report total U.S. oil production was 9.13 million barrels per day for the week ending Jan. 2, up about 11,000 bpd from the previous week. Production from the Lower 48 was behind the entire gain as output from Alaska was unchanged from the previous week. Oil prices are at the point where some companies working in U.S. shale basins and elsewhere in North America are cutting back on spending programs. Oil services company Baker Hughes in its latest assessment of the exploration and production sector in the United States found rig activity was […]

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Oil price slump hits Canadian producer

Canadian oil company Arc Resources to unload shares to help fund operations during low oil price conditions. (UPI Photo/Roger L. Wollenberg) CALGARY, Alberta, Jan. 8 (UPI) — Canadian energy company ARC Resources Ltd. said it plans to sell more than 15 million shares to raise capital to fund operations in the slumping oil market. ARC in mid-2014 rolled out an $875 million capital program for this year that envisioned oil priced at around $80 per barrel, about 35 percent higher than the current market price. In a statement Wednesday, the company said it plans to sell 15.5 million shares to raise around $350 million to fund developments in 2015 . "ARC plans to execute a $750 million capital program in 2015, reduced from the previously announced $875 million capital budget, due to the continued deterioration in commodity prices," it said. The company last year set a production target of […]

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Shale explorer Sanchez Energy cuts spending

Sanchez Energy keeps tight focus on Eagle Ford shale in Texas, but trims capital plans in response to low oil prices. Photo by Calin Tatu/Shutterstock HOUSTON, Jan. 8 (UPI) — U.S. shale explorer Sanchez Energy said it’s the latest to cut its capital plans for 2015 because of slumping oil prices. "In response to the deteriorating commodity price environment, Sanchez Energy has elected to further reduce its 2015 capital plan to a range of $600 million to $650 million," President and Chief Executive Officer Tony Sanchez said in a statement. The range is nearly 30 percent less than the capital plan announced in November, which the CEO said itself was less than the $1.15 billion envisioned before oil prices started their decline in June. Several international energy companies have reduced their spending plans for the year in response to the bear market for crude oil. Oil prices have lost […]

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In Low Gasoline Prices, an Opening Emerges for Higher Taxes

ENLARGE The sharp drop in gasoline prices over the past few months is providing a rare political opening for state and federal officials who want to raise gasoline taxes to repair highways and boost construction jobs. In Iowa, Republican Gov. Terry Branstad is gauging lawmakers’ support for the first state gas-tax increase since 1989, among other options to raise transportation funds. In Michigan, the GOP-controlled legislature approved a plan last month for a ballot initiative to boost the gas tax for road repairs. In Utah, Republican leaders in the state House signaled this week they are moving to raise the gas tax to cover a transportation-funding shortfall. In the nation’s capital, several top Senate Republicans—supported by some Democrats—are signaling an openness to raising the federal levy from the 18.4 cents a gallon it’s been at since 1993. The backers include business groups and corporate leaders who want to see […]

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Oil-Price Drop Takes Shine Off Steel Town

ENLARGE Lorain, Ohio, is starting to feel pressure from the sharp drop in oil prices. Above, Republic Steel’s plant along Black River in Lorain supplies metal used to make oil pipes and tubing. Steve Manheim/The Chronicle-Telegram LORAIN, Ohio—The collapse of oil prices in the last six months is threatening to end a recent industrial revival in manufacturing centers like this town of 64,000 on the banks of Lake Erie. The U.S. shale drilling boom lifted Midwest manufacturing economies, enriched property owners with mineral rights and even brought back the fat blue-collar paychecks that once were harder to find. But as drilling and exploration for new oil and gas slow with the drop in energy prices, cutbacks at heavy-industry companies are cropping up. The U.S. Steel Corp. plant here, which depends heavily on oil and gas companies to buy its steel pipe and tubes, warned on Monday it might have […]

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Power generation to be biggest demand driver for natural gas: API

Houston (Platts)–8Jan2015/245 pm EST/1945 GMT A continued increase in demand for natural gas for use in power generation is expected to be the biggest driver for US gas demand in the coming year, the chief economist of the American Petroleum Institute said. "The biggest trend is probably what we’ve seen in previous years and that’s more natural gas in power generation, as we see more coal plants shut down, primarily for environmental regulations," John Felmy said in an interview Wednesday. "You may see some increases in industry use as the economy improves and perhaps some commercial [demand], but I think electric power is going to be the biggest growth." According to the "The State of American Energy Report 2015," API’s annual outlook on US energy trends for the new year released earlier this week, "The United States has vaulted past Russia to become the world’s largest natural gas producer […]

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Canada PM: Resilient Oil Industry Will Survive Low Prices Shock

Canadian Prime Minister Stephen Harper says the country’s energy industry was resilient and could survive the stresses caused by plunging crude oil prices. DELTA, British Columbia, Jan 8 (Reuters) – Canadian Prime Minister Stephen Harper on Thursday said the country’s energy industry was resilient and would survive the stresses caused by plunging crude oil prices. Harper also told reporters that while lower prices would have a significant impact on oil-producing provinces, consumers would enjoy the benefit. Benchmark prices for crude have halved over the past six months, posing a particular challenge for oil producers. "As rapid a negative a change that this is for the industry, the industry, even in my lifetime, has lived through changes this extreme and more on many occasions," Harper told reporters during an event in British Columbia. "This not without precedent. It’s a resilient industry and it will see its way clear to a […]

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Shale Producers in U.S. Cutting Rigs Loose Early Amid Oil Slump

U.S. oil producers are bailing out of long-term contracts for drilling rigs as crude prices sink below $50, another signal that the nation’s shale boom is slowing. Yesterday, Helmerich & Payne Inc. (HP) , the biggest rig operator in the U.S., said it had received early termination notices for four contracts. Today, a second contract driller, Pioneer Energy Services Corp. (PES) , said four rigs had been canceled early. Producers may cut short another 50 to 60 agreements, according to Bloomberg Intelligence analyst Andrew Cosgrove. Companies are paying to cancel rigs rather than keep drilling in the face of a 55 percent plunge in prices. Mounting rig cutbacks imperil the unprecedented boom in U.S. output that’s contributed to a global glut of oil and helped sustain a price war among the world’s largest suppliers. “This is just the beginning,” R.T. Dukes, an upstream analyst at Wood Mackenzie Ltd., said […]

Posted On : Published By : Tom Whipple