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Bakken, Let’s Do The Math

There has been considerable dispute over how many new wells required to keep production flat in the Bakken and Eagle Ford. One college professor posted, over on Seeking Alpha , figures that it would take 114 rigs in the Bakken and 175 in Eagle Ford to keep production flat. He bases his analysis on David Hughes’ estimate that the legacy decline rate fir Bakken wells is 45% and 35% for Eagle Ford wells. And he says a rig can drill 18 wells a year, or about one well every 20.3 days. The EIA has comes up with different numbers. The data for the chart below was taken from the EIA’s Drilling Productivity Report . Legacy Decline The EIA has current legacy decline at about 6.3% per month for Bakken wells and about 7.7% per month for Eagle Ford wells. That works out to be about 54% per year for […]

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Baker Hughes: US Oil Drillers Cut Rigs For 4th Straight Week

URL: http://www.rigzone.com/news/oil_gas/a/136609/Baker_Hughes_US_Oil_Drillers_Cut_Rigs_For_4th_Straight_Week The number of rigs drilling for oil in the US fell by 17 this week, as energy companies facing lower crude prices reduced the rig count for the fourth straight week, data from Baker Hughes shows. Jan 5 (Reuters) – The number of rigs drilling for oil in the United States fell by 17 this week, as energy companies facing lower crude prices reduced the rig count for the fourth straight week, data from oil services firm Baker Hughes showed on Monday. The oil rig count dropped to 1,482 in the week to Jan. 2, its lowest level since March, the data showed. The number of oil rigs has declined in nine of the last 12 weeks since hitting a record high of 1,609 in mid-October. The number of rigs remains up more than 100 from the same time last year, when there were 1,378 rigs seeking […]

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Big Trouble in Store for Oil

ENLARGE If you want to know what 2015 has in store for oil prices, just look at where stores of oil ended last year. U.S. commercial stocks of crude oil and refined products—excluding the roughly 700 million barrels held in the Strategic Petroleum Reserve—were just shy of 1.14 billion barrels at the end of December, according to Energy Department data. More important than the absolute level is what happened to commercial stocks last month: They went up. Refiners tend to run down their tanks as year-end approaches to help minimize tax bills. That stocks rose regardless is a bad sign for those banking on an oil-price rebound. Looking back to 1980, U.S. commercial inventories of oil have risen in December in only two years: in 2014 and the financial crisis year of 2008. Even back then, as the global economy was seizing, stocks rose by just 4.7 million barrels, […]

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Biggest Oil-Rig Drop Since 2009 Spells Tough Year Ahead

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse. The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. (BHI) data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp. Drillers are already running the fewest rigs in nine months after a 46 percent drop in U.S. benchmark West Texas Intermediate oil in 2014, the steepest decline in six years and the second-worst since the commodity began trading in 1983. The price slipped below $50 a barrel yesterday as U.S. producers and the Organization of Petroleum Exporting Countries remain in a standoff over market share. Meanwhile, production from Russia and Iraq last month reached the highest […]

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Oilfield Writedowns Loom as Crude Slump Guts Drilling Values

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration. With crude prices down more than 50 percent from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup Inc. (C) analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50-a-barrel market include international titans such as Royal Dutch Shell Plc and small wildcatters like Sanchez Energy Corp. The impending writedowns represent the latest blow to an industry rocked by a combination of faltering demand growth and booming supplies from North American shale fields. The downturn threatens to wipe out more than $1.6 trillion in earnings for producing companies and nations this year. Oil explorers already are canceling drilling plans […]

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Oil Below $55 May Force Norway to Cut Rates Again

As oil drops below $55 a barrel, speculation is growing that the central bank of western Europe ’s biggest crude producer will need to cut rates again. A 54 percent slump in Brent crude since a June high has pummeled the offshore industry in Norway , where oil and gas make up 22 percent of gross domestic product. Over the same period the krone has lost about 20 percent against the dollar and 8 percent against the euro. The OBX benchmark stock index is down about 12 percent. The central bank delivered a surprise rate cut last month it said was triggered by plunging crude prices. Since then the oil price development has proven even worse than the central bank anticipated. In an interview yesterday, Governor Oeystein Olsen said $55 oil is “clearly lower” than expected in December. At Norway’s biggest bank, DNB ASA (DNB) , economists say Olsen […]

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Will Oil Continue to Fuel the Jobs Market?

ByJeffrey Sparshott The U.S. energy boom fueled jobs such as construction work on this pipeline outside Waford City, N.D. Getty Images Friday’s jobs report may offer some early hints about the impact of falling oil prices on jobs in the oil and gas industry. The U.S. energy boom has been an engine of growth through a lackluster economic recovery, creating thousands of jobs that pay above-average wages, spawning demand for a broad array of services and supporting local economic booms from North Dakota to Texas. But with oil prices dipping below $50 a barrel , exploration and production companies are slashing budgets and squeezing suppliers . Among recent examples: Houston-based Civeo Corp. , a lodging company for oilfield workers , at the end of December said it reduced U.S. payrolls by 45% from the level at the beginning of 2014 in response to falling demand, prompting its largest stakeholder […]

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Sharp declines in well production typical in Ohio’s Utica Shale

In the world of shale gas in Ohio, the top-producing wells aren’t king of the hill for long. Take the Tippens 6HS well, for example. Located in Monroe County in southeastern Ohio, it produced more natural gas in the first quarter of 2014 than any other Utica Shale well in the state — some 1.117 billion cubic feet of the resource in 80 days, according to Ohio Department of Natural Resources records. That’s enough natural gas to fuel 12,000 houses for a year. But the well that gushed 13,972 thousand cubic feet of natural gas per day in the first three months of 2014 saw daily production drop 41 percent in the second quarter to 8,180 thousand cubic feet per day and another 26 percent in the third quarter to 6,015 thousand cubic feet per day. By autumn, the Tippens well was producing less than half the natural gas […]

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The Next Decade Will Decide Peak Oil Outcome

The most attention-grabbing attempts to predict oil futures have come from geologists and environmental activists, who tend to look solely at production. An overlooked doctoral thesis by Christophe McGlade, Uncertainties in the outlook for oil and gas , in contrast, focuses on how both supply and demand might be constrained in the coming decades. Peak oil researchers should take note of McGlade’s thesis because he predicted, in November 2013, that oil prices would sink, and that they will stay low throughout the second half of this decade. I found this paper on Google Scholar and have no connection with the author, but I appreciate his careful consideration of peak oil arguments, and his ability to distance himself from the more narrow-minded aspects of both economic and geological thinking. Here’s a representative quote from the middle of the thesis, p. 216: The focus of much of the discussion of peak […]

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Oil’s Doomsayer Says Doom … Again

Eddie Seal for The Wall Street Journal Citigroup Inc.’s Ed Morse was the analyst who prominently called $75-a-barrel global oil prices last March, back when it was trading above $100 a barrel and prevailing wisdom had prices rising rather than falling. He was right, of course – Brent crude plummeted through that threshold in late November and has continued to fall, to $53 and change Monday . As such, oil-market watchers tend to listen to what he has to say. And what is his outlook for the foreseeable future? Look out below. Mr. Morse and his team at Citigroup have cut their estimate for global oil prices to average $63 a barrel in 2015, down from $80, and for the U.S. benchmark to average $55 a barrel this year (just FYI, Nymex prices briefly traded below $50 a barrel earlier Monday). They see a confluence of factors — including […]

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The Real Cause Of Low Oil Prices: Interview With Arthur Berman

With all the conspiracy theories surrounding OPEC’s November decision not cut production, is it really not just a case of simple economics? The U.S. shale boom has seen huge hype but the numbers speak for themselves and such overflowing optimism may have been unwarranted. When discussing harsh truths in energy, no sector is in greater need of a reality check than renewable energy. In a third exclusive interview with James Stafford of Oilprice.com , energy expert Arthur Berman explores: • How the oil price situation came about and what was really behind OPEC’s decision • What the future really holds in store for U.S. shale • Why the U.S. oil exports debate is nonsensical for many reasons • What lessons can be learnt from the U.S. shale boom • Why technology doesn’t have as much of an influence on oil prices as you might think • How the global […]

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Why water is not the new oil

“Water is the new oil.”Nowhere is this platitude more recited than here in Texas, where homegrown oil-and-gas money — and now even global capital — is flowing into the next resource boom: groundwater. T. Boone Pickens’ Mesa Water, which was the first to acquire groundwater rights from landowners for export to thirsty communities, is just the best-known name in the state’s burgeoning groundwater market. It also includes BlueWater Systems, the Val Verde Water Co., Heritage Commodity and Forestar. In October, Abengoa and BlueWater won approval for a $3.4 billion project to pipe groundwater 140 miles from Burleson and Milam counties to San Antonio. We Texans are by no means alone in commoditizing water. The share price of Cadiz, the sponsor of a project that aims to mine and bank groundwater beneath the Mojave Desert and sell it to parts of drought-stricken California, has more than doubled in the past […]

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Oil Extends Decline From 5 1/2-Year Low as Glut Persists

Oil fell for a third day, extending its drop from the lowest close since 2009, as record supplies from Iraq and Russia bolstered speculation that a global glut that drove crude into a bear market may persist this year. Futures slid as much as 2.1 percent in London , after losing 5.1 percent last week. Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, plans to boost crude exports to a record this month, the Oil Ministry said. Russia’s output rose to a post-Soviet high in December, according to preliminary Energy Ministry data. Saudi Arabia will probably offer narrower discounts for crude to Asia for February, according to a Bloomberg survey. Brent slumped 48 percent last year, the most since the 2008 financial crisis, as OPEC resisted calls to cut output amid a battle with U.S. shale producers for market share. The 12-member group, which supplies about […]

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Oil prices hits fresh five-and-a-half-year lows; Brent below $56

SINGAPORE (Reuters) – U.S. crude and Brent futures dropped to fresh 5-1/2-year lows on Monday as worries about a surplus of global supplies amid weak demand continued to drag on oil markets. OPEC’s decision in November to maintain output had accelerated oil’s losses earlier, while record-high Russian production and the highest Iraqi exports since 1980 added to the concerns about oversupply. The two oil benchmarks, Brent and West Texas Intermediate, have now lost more than half of their value from peaks hit in the middle of last year. U.S. crude slid as low as $51.40 a barrel, its lowest since May 2009, and at 0312 GMT was just a tick above that at $51.59 a barrel, still down $1.10. February Brent crude dropped as low as $55.36 a barrel, also its lowest since May 2009, before edging back to $55.42, still down a dollar. "Trying to pick a bottom […]

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Iran Leader Suggests Direct Votes on Issues

TEHRAN — Iran ’s president said Sunday that he might invoke a powerful but neglected tool in his fight with hard-liners, suggesting the possibility of organizing direct referendums that would bypass the institutions the conservatives control and give more of a voice to Iranian voters. President Hassan Rouhani, speaking during a conference on the country’s economic problems, said that Iranians were entitled to have major issues put to a nationwide vote, as described in the 1979 Constitution. “It will be good to, after 36 years, even for once, or even every 10 years if we implement this principle of the Constitution, and put important economic, social and cultural issues to a direct referendum instead of to the Parliament,” Mr. Rouhani said. In the opaque world of Iranian politics his remarks are a clear warning to hard-liners, who control the Parliament, key decision-making councils, the state-run media, the security forces […]

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Rouhani threatens to hold referendum

Iranian President Hassan Rouhani President Hassan Rouhani has threatened to hold an unprecedented referendum in Iran as he warned hardline opponents of a nuclear deal with the west that the country must end its international isolation. The Iranian leader said he was looking at the possibility of using his constitutional rights to give power to the people in comments that some analysts took as a warning that he may try to put any nuclear agreement to a public vote. More On this topic Interview transcript Hassan Rouhani IN Iran “Our political experience shows that the country cannot have sustainable growth when it is isolated,” he told a conference on Iran’s economy in Tehran on Sunday. He added that this did not mean Iran’s negotiations with six world powers — the US, UK, France, China, Russia and Germany — were compromising the Islamic regime’s ideals of the 1979 revolution. “Our […]

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Falling Oil Spells Boon for Most of Asia’s Economies

ENLARGE A Shenzhen auto factory. Low oil prices should help China’s economy. Bloomberg News Tumbling oil prices could prove to be a boon for the many Asian economies that depend on crude imports. With oil at its lowest price in more than five years, governments in countries such as India and Indonesia can spend money on much-needed infrastructure and other growth projects without stoking inflation. Falling crude prices also give China’s flagging economy a boost, allowing its central bank—and others in the region—to ease rates even as a recovering U.S. looks to do the reverse, economists say. Combined with loose monetary policy and a gradual recovery in global demand for goods and services, falling oil prices should help lift emerging Asia’s gross-domestic-product growth this year to 4.7% from an estimated 4.3% in 2014, according to Capital Economics, a consulting firm. “The decline in oil prices really took people by […]

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2 dead as unknown aircraft bombs Greek tanker in Libyan port

ATHENS, Greece (AP) — Greek authorities say an unidentified warplane has bombed a Greek-owned tanker ship in the eastern Libyan port of Darna, killing two crew members and injuring two more. Citing a briefing by the ship’s managers, the Merchant Marine Ministry says the Liberian-flagged Araevo was attacked Sunday while it was anchored in the harbor. Darna is a base for Islamic extremists, who have pledged allegiance to the Islamic State group. Widespread militia violence has plunged Libya into chaos less than four years after a NATO-backed uprising toppled and killed longtime dictator Moammar Gadhafi. The Araevo’s crew of 26 consisted of 21 Filipinos, three Greeks and two Romanians. The ministry said Monday the vessel had 12,600 metric tons of fuel on board. Damage is still being assessed.

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Libya: Islamic State Militants Behead 14 Soldiers At Checkpoint

Islamic State and Libya Dawn militants beheaded 17 people, 14 of them soldiers, at a checkpoint in southern Libya on Jan. 2, army sources said, Libyan website Al-Wasat reported Jan. 3. The website also said the attack was carried out on members of Battalion 168, which guard the checkpoint on the Sawknah crossroads in the Bu-Shuwayrif municipality. The attack comes as the Islamic State seeks to establish new footholds throughout the region.

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Saudi Arabia: Riyadh To Reopen Embassy In Baghdad After 25 Years

A Saudi delegation will travel to Baghdad in the coming week to start preparations to reopen an embassy in the Iraqi capital for the first time in 25 years, the Saudi Press Agency said Jan. 3, Reuters reported. The Saudi Press Agency also said Riyadh planned to set up a general consulate in Arbil. Saudi Arabia closed its Baghdad embassy in 1990 after former Iraqi dictator Saddam Hussein invaded Kuwait. The diplomatic effort comes as Saudi Arabia continues to compete with Iran for influence in the region .

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Plunging Oil Prices Test Texas’ Economic Boom

ENLARGE Oil tankers are loaded with crude in Corpus Christi, Texas, in December. The area has prospered in recent years due to the energy boom in the Eagle Ford shale formation, but falling prices could test that. Eddie Seal for The Wall Street Journal Retired Southwest Airlines co-founder Herb Kelleher remembers a Texas bumper sticker from the late 1980s, when falling energy prices triggered an ugly regional downturn: “Dear Lord, give me another boom and I promise I won’t screw it up.” Texas got its wish with another energy-driven boom, and now plunging oil prices are testing whether the state has held up its end of the bargain. The Lone Star State’s economy has been a national growth engine since the recession ended, expanding at a rate of 4.4% annually between 2009 and 2013, twice the pace of the U.S. as a whole. The downturn in energy prices now […]

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Democrats to Push Clean Energy, Export Limits in Keystone XL Pipeline Bill

ByAmy Harder Senate Democrats will introduce a series of amendments countering the GOP push to pass legislation approving the Keystone XL pipeline, Sen. Charles Schumer (D., N.Y.) said Sunday. The amendments are unlikely to change the ultimate outcome of the bill, which is expected to pass and face a potential veto from President Barack Obama . But the Democratic strategy will add more political tension to what’s expected to be a partisan showdown between Mr. Obama and Republicans pushing to approve the pipeline as their first item of business this upcoming Congress. Democrats will introduce at least three amendments that would make the Keystone measure “more of a jobs bill,” Mr. Schumer, the fourth-most-senior Democrat in the upper chamber, said Sunday on CBS ‘s “Face The Nation.” The amendments will require the steel used in the pipeline to be made in the U.S., ban exports of oil shipped through […]

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Railroad Operators’ Fixes To Be Tested Again — Corporate Outlook

By Laura Stevens and Jesse Newman Rail congestion that caused headaches for shippers of everything from corn to coal may start to ease in 2015 as operators spend more to increase capacity. The entire transportation industry experienced capacity strains in 2014 as the U.S. economy continued to recover. Rail was one of the hardest hit areas, with unexpectedly strong demand and bad weather taking their toll on service. Severe delays for shipments of corn, soybeans and other crops in the upper Midwest began in early 2014, with bitterly cold temperatures forcing operators to run shorter, slower trains even as a record harvests produced more grain needing transport. The snarls returned after another bumper harvest in the autumn. The coal industry also has complained of significant delays, particularly in the western U.S. To fix this, railroads including BNSF Railway Co., owned by Warren Buffett’s Berkshire Hathaway Inc., are collectively spending […]

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U.S. Diesel Prices Fall for Ninth Straight Week

ENLARGE Trucks are parked during the Great American Trucking Show in Dallas last August. Prices of diesel fuel are down 29% over the past nine weeks. Bloomberg News Diesel prices in the U.S. declined for a ninth straight week, their longest losing streak on record, as continued moderate weather in the Northeast kept heating-oil demand subdued. Front-month futures for ultralow-sulfur diesel, which are also used as a proxy for heating oil, have dropped in recent months alongside plummeting crude-oil prices. Crude oil is refined into diesel, among other fuels. While diesel is mostly used as a transportation fuel, cold-weather demand for heating oil can cause diesel futures to spike in the winter. Prices rose 6.6% in January 2014 as frigid temperatures spread across much of the nation. This year, temperatures have been mild and refinery production is high. Consumers in the Northeast, where heating-oil use is most common, are […]

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Oil price drop expected to hurt fringe areas in Bakken the most

OGA, N.D. – Ben Chorn had a good vacation in Minnesota last month, making it to a Vikings game, a hockey game in Duluth and getting engaged. But while he was gone, the price of oil hit him personally. “While on vacation, I got a call from someone who’s covering for me and said, ‘Hey your rig’s being laid down,’” said Chorn, who does geology work on rigs for Sunburst Consulting. He’s had a slow six weeks since then. The oil price drop will impact fringe regions in the Bakken the most, experts said, because the oil there costs more to extract. “I think those areas will slow down, but we’ll come back and we’ll get them again,” said Kathy Neset, a geologist with Neset Consulting in Tioga. Chorn said the rig he was meant to work on was pulled by a smaller operator and was on the fringe […]

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Wind and Solar Energy: Transforming the Grid with Clean Energy, Reliably, Every Day

Despite years of successful experience, dozens of studies, and increasing utility support for clean energy, urban myth holds that electricity from renewable energy is unreliable. Yet over 75,000 megawatts (MW) of wind and solar power have been integrated, reliably, into the nation’s electric grid to date. That’s enough electricity to supply 17.9 million homes. And, as a new NRDC fact sheet published today illustrates, the electric grid can handle much higher levels of zero-carbon wind and solar power, far more than what’s necessary to achieve the relatively modest carbon emission reductions in the U.S. Environmental Protection Agency’s plan to limit pollution from existing power plants. But first, a little background on how our nation’s electric system works. Grid basics The nation’s high-power transmission system is made up of three largely separate grids: one on either side of the Continental Divide (roughly) and the third in Texas. The two largest […]

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Euro Tumbles to Nine-Year Low

ENLARGE The euro fell amid concerns about Greece. Agence France-Presse/Getty Images The euro tumbled to a nine-year low on Monday, struck by a fresh dose of nerves over Greek politics, a backdrop of steadily building expectations that the European Central Bank will soon beef up its stimulus program, and a persistently robust dollar. The single currency sank as low as $1.1861 against the dollar in Asian trading hours on Monday, before picking up slightly to trade at $1.1950 early in Europe. The move came amid growing fears over the election in Greece in late January that some fear could pave the way for the country’s exit from the eurozone. Traders and analysts said the latest jitters stemmed from a report in Saturday’s edition of German news magazine Der Spiegel which cited unnamed sources saying the German government is confident the eurozone would cope with a Greece exit if it […]

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Is Peak Oil Dead?

Longtime readers of the site and listeners to the show will know that the founder of Financial Sense, Jim Puplava, has been a regular proponent of peak oil since 2002, when oil prices were trading around $20/barrel. Now that oil has fallen in half from its $100+ range in place over the past few years, many have written us wondering if Jim has changed his views. That is, is peak oil now dead? In last Saturday’s Big Picture, Jim goes “on the record” by saying no, he doesn’t think peak oil is dead, though it has clearly been pushed out further with the massive increase in US shale production and deceleration of global economic growth. This, and the unwinding of massive long positions in the crude oil market, have likely exacerbated the downtrend and led to momentum selling. Though oil could move lower and possibly reach the low end […]

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Oil’s future hangs between the emirates and the shales of Eagle Ford

The decision by president Barack Obama to open the door to US oil exports seeped out of Washington in a low-key manner last week, but the impact could be as explosive as a New Year’s Eve firework display. The ban – imposed after the Middle East oil embargoes in the 1970s – has made it close to impossible to ship abroad the fruits of America’s shale bonanza. It also long looked wrong-headed in the home of free trade. The US department of commerce quietly overturned the four-decade-old policy by saying it had started to approve a backlog of requests to sell processed light oil to foreign buyers. The issue is tremendously sensitive, which is possibly why the announcement came out at a time of year when most policymakers were still at home enjoying the Christmas holidays with their families. Many manufacturers and many domestic consumers are totally opposed to […]

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The plunge in oil will hurt these people most

Getty Images Slide 1 ofOil prices plunged around 50% from their June peak by the end of 2014, the fastest collapse since the dark days of 2008. This time around, supply is seen as the biggest culprit as the world deals with a glut of oil. Overall, the drop is seen as a boon for the U.S. economy and consumers as it translates into a virtual “tax cut.” But, clearly, not everyone will benefit. The energy sector has, unsurprisingly, taken a big hit, as reflected by the 10.6% drop in 2014 posted by the Energy Sector Select SPDR ETF XLE,+0.47% XLE, +0.47% not to mention the 22.4% drop by the fracking-orientated Market Vectors Unconventional Oil & Gas ETF FRAK, +0.78% Here’s a look at others who stand to lose out from the oil rout. Tougher times ahead for the oil patch Getty Images Slide 2 of Oil workers While […]

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Oil Prices Start Year on Volatile Note

ENLARGE A gas price of $1.94 a gallon for regular gas is shown at a gas station in Cleveland on Wednesday. The average cost of gas in Ohio has dipped below $2 a gallon for the first time in more than five years. Associated Press LONDON—Oil prices began the New Year on a volatile note on Friday as Brent whipsawed between gains and losses after closing 2014 at more-than five-year lows. The price of Brent, the global benchmark, nearly halved in 2014, the steepest fall since the recession of 2008, as fears of global oversupply coupled with lackluster demand engulfed the market. In thin holiday trade on Friday, front-month Brent futures were up 0.5% at $57.63 a barrel on London’s ICE exchange, after dropping to an intraday low of $57. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $53.65 a barrel, […]

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Iran says no deal with U.S. to ship enriched uranium to Russia

DUBAI (Reuters) – Iran denied on Saturday that it had reached an agreement with the United States to ship its surplus enriched uranium to Russia under new concessions aimed at clinching a comprehensive nuclear deal with six world powers. The Associated Press, citing diplomats, said on Friday Tehran and Washington had tentatively agreed on a formula to ship to Russia much of the material that could potentially lead to manufacture of atomic arms by the Islamic republic. It said negotiators had drawn up a catalogue for the first time at their December meeting in Geneva outlining areas of potential accord and differences in their 12-year nuclear dispute. Iran’s foreign ministry spokeswoman Marzieh Afkham said "no agreement on any nuclear topic" had been reached. "Such news is spread out of political motives and its goal is to tarnish the climate of the talks and make it more complicated to reach […]

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Crude Oil Trades Near 5 1/2-Year Low Amid Manufacturing Weakness

Oil traded near its lowest closing price since mid-2009 amid signs of manufacturing weakness in Europe and China . Futures headed for a sixth weekly loss in New York and London. Euro-area manufacturing expanded less than initially estimated in December as growth rates for output, new orders and employment remained near stagnation. The bloc’s currency weakened to a 4 1/2-year low against the dollar. A manufacturing gauge in China, the world’s second-largest oil consumer, fell to the weakest level in 18 months, government data showed yesterday. “China PMI was more of the same while we are seeing weaker than expected PMI in Europe,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by e-mail. “This adds to the support for the dollar. So we are kicking off 2015 with a strong dollar and weak oil theme.” Oil slumped 46 percent in New York in 2014, the […]

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Brent turns lower, heads towards $57 as supply glut fears prevail

LONDON (Reuters) – Brent crude LCOc1 slipped towards $57 after an early rise above $58 on Friday, as the glut of oil that has halved prices since June overshadowed investors repositioning at the start of the year for an eventual recovery. Brent has fallen to its lowest since 2009 as top exporter Saudi Arabia has declined to cut production in the face of fast-growing U.S. shale oil output, despite pleas from other members in the Organization of the Petroleum Exporting Countries (OPEC). "Nothing has changed on the supply side. Unless there are some supply cuts, oil markets can’t be strong at the moment," said Ken Hasegawa, commodity sales manager at Tokyo’s Newedge Japan. Brent crude LCOc1 for February delivery was down 24 cents at $57.09 at 0843 GMT (0343 ET), almost $1.50 below the day’s high at $58.54, which was hit within 30 minutes of the open of trading. […]

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Global factory growth ends 2014 on low note: PMI

LONDON (Reuters) – Global manufacturing activity expanded at its weakest pace in more than a year at the end of 2014, even though factories cut their prices at the steepest rate for nine months, a business survey showed on Friday. JPMorgan’s Global Manufacturing Purchasing Managers’ Index (PMI), produced with Markit, fell to 51.6 in December from November’s 51.8. That was its lowest reading since August 2013. Even so, it has now been above the 50 mark that separates growth from contraction for two years. However, a PMI covering output prices slid below the break-even mark, coming in at 49.3 compared with November’s 50.1. The PMI combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia. (Reporting by Jonathan Cable ; Editing by Larry King)

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Year in Review: Record Production

2014 Was a Record Year for Bakken 2014 was one for the record books as exploding production elevated the Bakken region to major-player status amongst the world’s energy leaders. January began as North Dakota set several all-time highs including having over 10,000 producing wells averaging 973,045 b/d and natural gas at 1,086,571 MCF/day. By June, the NDIC announced it had hit the 1 million b/d in production. This long anticipated goal was slowed a bit by difficult weather in the winter but by the time it happened, the U/S. was positioned as the  worlds largest oil producer . Even as oil prices began to decline throughout the fall, production continued to break records and by September, production averaged 1.2 million b/d . The latest numbers from the NDIC show that at the end of the year, the Bakken and Three Forks regions alone averaged 1,118,010 barrels per day and boasted two more all time high […]

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Iran’s non-oil exports on the rise

Iran says economy under President Hassan Rouhani expanding beyond its traditional oil base. UPI /Monika Graff TEHRAN, Jan. 2 (UPI) — Non-oil exports from Iran have increased by around 20 percent since March as the economy broadens its diversity, a customs official said. Masoud Karbasian, director of the Iranian Customs Administration, said non-oil exports from the beginning of the Iranian year, which starts in March, increased to $35 billion, or about 20 percent year-on-year. The director said construction materials, as well as petrochemicals and produce, were among the major non-oil products exported from the Islamic republic. Non-oil exports from a border crossing to Iraq are valued at $777 million per day, he added. Traditionally, Iran relies heavily on oil for revenue. With sanctions restricting oil exports, the government has worked to advance other parts of the economy. Ali Taieb Nia, Iran’s minister of economic affairs and finance, told a […]

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Parts of Libya in the dark

Libyan fighting spills over to ensnare electric grid, leaving parts of the country in the dark.. UPI/Amru Taha TRIPOLI, Libya, Jan. 2 (UPI) — Power shortages that came as a result of fighting in and around the Libyan port city of Ras Lanuf are expected to continue, an electric company said. Two power plants that combine to produce about 500 megawatts of power are down because of fighting in the region, the General Electric Company of Libya said. The restive city of Benghazi this week suffered a full-scale power outage because of poor weather conditions and the electric company said much of western Libya can expect power outages to endure. Power shortages have been chronic since civil war ended in late 2011. Lingering fighting, which has escalated in recent weeks, has pushed the country to the brink of full-scale war, the U.N. Support Mission in Libya warned. In the […]

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Libyan oil tanker struck off Singapore’s coast

Singapore released oil spill response resources after two tankers collided near busy port. UPI/A.J. Sisco.. SINGAPORE, Jan. 2 (UPI) — Maritime authorities in Singapore said Friday they deployed air surveillance teams to investigate oil spilled after two tankers collided off its coast. The Maritime and Port Authority of Singapore said the Libyan-registered Alyarmouk collided with the Singapore carrier Sinar Kapuas in its territorial waters. "Alyarmouk reported that one of her cargo tanks sustained damage, resulting in spillage of crude oil," the port authority said in a statement. "Upon notification, MPA deployed a helicopter to assess the situation." Latest maritime traffic data show the Libyan crude oil tanker was slated to arrive in China to unload its cargo by early next week. No information was immediately available regarding the amount of oil loaded on the tanker. Maritime authorities said resources designated to respond to an oil spill have been deployed […]

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BG Group keeps Egyptian energy sector on radar

Liquefied natural gas giant BG Group says that, while operations are dwindling, it remains committed to exploring its options in Egypt. (Photo: BG Group) LONDON, Jan. 2 (UPI) — While operations there are fading, British energy company BG Group said Friday it would continue investigating options in Egypt after receiving a debt payment. BG Group said it received $350 million in debt payments from the Egyptian government, reducing its balances to around $920 million. "While the group has been impacted by the reduction of LNG exports from Egypt, the company continues to investigate options for increasing the supply of gas and is working with the government on resolving the outstanding receivable balance," the company said in a statement. A similar payment was disclosed by the company in October. In January 2014, the company said the Egyptian government wasn’t honoring agreements regarding its share of natural gas from Egyptian fields, […]

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King Abdullah of Saudi Arabia Is Hospitalized With Pneumonia

King Abdullah of Saudi Arabia has pneumonia and needs temporary help from a breathing tube, the royal court said Friday. The king, who is 90, has a history of medical problems, and his health is scrutinized for any hint of a leadership change in Saudi Arabia , an absolute monarchy and regional American ally that is one of the world’s most important oil producers. In a statement quoted by news agencies, the royal court said the king was in stable condition at a military hospital. He was transferred there on Thursday after having been admitted to King Abdulaziz Medical City Hospital in Riyadh, the capital, on Wednesday for unspecified tests. The statement said an examination “revealed pneumonia, which required the provisional insertion of a tube on Friday evening.” It added that “that step was crowned with stability and success,” but it left unclear how long the king would remain […]

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Pemex Bondholders Bemoan $3.4 Billion Cash Grab

The Mexican government’s surprise decision to strip state-owned oil producer Petroleos Mexicanos of $3.4 billion is raising alarms for bondholders LM Capital Group LLC and Investment Placement Group. The Finance Ministry said Dec. 26 that it took the money, reducing cash holdings at the company known as Pemex to a 12-year low of 48 billion pesos ($3.3 billion). Returns on Pemex’s benchmark bonds due 2022 beat the emerging-market average last year, delivering 6.6 percent to investors on speculation that the country’s effort to lure private investment to the energy industry will reduce the company’s tax burden. To LM Capital and Investment Placement Group, the move is a cash grab by the government to offset a drop in revenue from the company amid a plunge in oil prices and the 10th straight year of declining output. During the first 11 months of 2014, taxes paid by Mexico City-based Pemex declined […]

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Failure to stop Petrobras scandal could haunt Brazil’s Rousseff

RIO DE JANEIRO/BRASILIA (Reuters) – When federal investigators first identified signs of corruption at Petrobras in 2009, Dilma Rousseff insisted Brazil’s state-run oil company had nothing to hide. "Petrobras has one of the most accurate accounting standards in the world," said Rousseff, who was then chairwoman of its board and is now Brazil’s president. "If it wasn’t the case, investors would not be seeking out the company as one of the great investment targets." Today, it’s clear her confidence was misplaced. Petrobras now acknowledges it overpaid on contracts for years. Prosecutors say engineering firms paid bribes to win Petrobras contracts, systematically overcharged it to the tune of billions of dollars and funneled a cut of the money to corrupt executives, vendors and political parties, including Rousseff’s ruling Workers’ Party. A Reuters review of a 2009 federal investigation of Petrobras, and interviews with those who conducted it, indicates Rousseff missed […]

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Chinese data leaves oil markets bruised

Short-term decline in Chinese manufacturing activity pushed oil prices lower in the first full trading day of 2015. UPI/Stephen Shaver NEW YORK, Jan. 2 (UPI) — Crude oil prices opened 2015 down on word Chinese factory activity was slowing, while U.S. data show few signs of a slowdown in the shale oil boom. The price for West Texas Intermediate, the U.S. benchmark, was down more than 1.4 percent in early trading Friday, the first full trading day of 2015. Oil has been trading in a bear market since June as markets swing to the supply side because of a weak global economy. WTI prices are at the point where some companies working in the shale oil sector of the United States may have trouble generating a profit. In a New Year’s Eve report, the U.S. Energy Information Administration found production declined only in Alaska for the week ending Dec. […]

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China utilizing coal mine emissions for power

Chinese coal mine utilizing emitted methane gas as a source of electricity. UPI/Stephen Shaver BEIJING, Jan. 2 (UPI) — The world’s largest facility meant to turn methane gas from coal mines into electricity is running in China’s Shanxi province, the project leader said Friday. China’s Lu’an Group, owner of the Gaohe coal mine in the eastern province, said a 30-megawatt generator was now working to utilize 99 percent of the methane gas emitted from the mine . China gets more than half of its energy needs met by coal power, though the country has started an ambitious effort to advance a low-carbon economy. Coal mines in China emit more than 350 billion cubic feet of methane gas, a harmful greenhouse gas, every year. Mines are under pressure to curb their emissions as part of government reforms. Chinese President Xi Jinping joined U.S. President Barack Obama in late 2014 to […]

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US Expected To Increase Oil Production In 2015 Despite Declining Oil Prices

US Expected To Increase Oil Production In 2015 Despite Declining Oil Prices thumbnail Oil prices continue to fall, but don’t expect the U.S. to curtail its production in 2015. In fact, a recent report from the U.S. Energy Information Administration suggests that U.S. oil production will grow in 2015. Through an analysis of oil permits, rig movement and the groundbreaking of new drilling projects, known as spudding, in North Dakota, a state that is home to some of the most active production fields in the country, the EIA’s “Drilling Productivity Report” found that U.S. oil production should continue to increase in 2015. The agency is expecting U.S. crude oil production to average 9.3 million barrels per day (bbl/d) in 2015, which would be an increase of 0.7 million bbl/d from 2014, but down from expected growth of 0.9 million bbl/d in last month’s Short-Term Energy Outlook . The survey […]

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Falling Crude Prices Force Ethanol Makers to Take It on the Chin

ENLARGE Falling profit margins for the $40 billion U.S. ethanol industry may cause some companies to scale back production in 2015. Bloomberg News Tumbling oil prices are bringing unwelcome tidings to one of the U.S. Farm Belt’s hottest industries. Ethanol makers are bracing for a drop in earnings as cheap crude pushes down the prices they fetch from refiners to blend the corn-based fuel additive into gasoline. Ethanol producers also face a recent jump in the price of corn, their main raw material. Falling profit margins for the $40 billion U.S. ethanol industry may cause some companies to scale back production in 2015, analysts and industry executives say. Still, many observers think ethanol demand may remain steady or even rise if cheap gasoline spurs U.S. motorists to drive more, tempering the hit to ethanol earnings. Crude-oil prices slid 20% in December to about $53 a barrel and fell 46% […]

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Why Gas Feels Cheap—and Why It’s Not, Historically Speaking

ENLARGE U.S. gasoline prices are the lowest they’ve been in five years. And they feel even cheaper because they come on the heels of the highest gas prices consumers have paid in three decades. In 2012, the national annual average for a gallon of regular unleaded gas—the yardstick for gauging prices—hit a high of $3.77, capping a series of years in which the average exceeded $3 a gallon. Before that, the last time the average was so high was in the early 1980s when, adjusted for inflation, it topped $3.60. That’s why today’s prices feel so affordable. On New Year’s Day, the national daily average was $2.23 a gallon, according to Gas Buddy , a website that publishes real-time prices, and in many places the cost was substantially lower. Nearly 30% of the 130,000 vendors tracked by Gas Buddy across the country, or about 38,200 stations, were selling gas […]

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