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New Rules, Cheap Energy Heighten Battle Between Coal and Gas

ENLARGE A coal-fired power plant in Wyoming. The dispute over whether coal is a clean fuel isn’t merely semantic. Photo: JIM URQUHART/REUTERS HOUSTON—Tough new environmental rules and cheap energy prices are heightening the battle between coal miners and natural-gas pumpers over which fuel will dominate the U.S. power market. At the IHS CERAWeek global energy conference here, there were some heated words on both sides of the debate. “Cleaner coal, there’s no such thing,” Eldar Saetre, chief executive of the Norwegian oil giant Statoil ASA, told an audience of hundreds of people, most of them employed in the fossil-fuel industry. He added climate-conscious electric companies should burn natural gas instead. “The only thing that gets tense is when somebody like the head of Statoil makes a comment like there is no such thing as clean coal,” said Gregory Boyce, CEO of Peabody Energy Corp., one of the largest coal […]

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Upper East Coast US Senate, House members oppose Atlantic leasing

Observing both Earth Day and the fifth anniversary of the Macondo deepwater well accident and crude oil spill , US Senate and House members—largely Democrats from Northeastern and Mid-Atlantic states—introduced bills to stop federal offshore oil and gas leasing off the Atlantic coast. The measures were responses to the US Bureau of Ocean Management’s draft proposed 2017-22 Outer Continental Shelf management program, which would include a single Mid-Atlantic lease sale in 2021 ( OGJ Online, Jan. 27, 2015 ). “Imagine the devastation an oil spill in the Atlantic would cause—not just to my home state of New Jersey, but to states up and down the East Coast,” said Sen. Robert Menendez (D-NJ), primary sponsor of S. 1042, the Clean Ocean and Safe Tourism (COAST) Anti-Drilling Act. “The Jersey Shore’s tourism industry alone generates $38 billion/year and directly supports almost half a million jobs,” he said in an Apr. 22 […]

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US Shale Fracklog Triples As Drillers Keep Oil From Market

Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows. (Bloomberg) — Think the U.S. is awash in crude now? Thank the fracklog that it’s not worse. Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows. That’s almost as much as OPEC member Libya has been pumping this year. The number of wells waiting to be hydraulically fractured, known as the fracklog, has tripled in the past year as companies delay work in order to avoid pumping more oil while prices are low. It’s kept crude off the market with storage tanks the fullest since 1930. The fracklog may slow a recovery […]

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Lavrov: Charges against Gazprom are baseless

Russian Foreign Minister Sergei Lavrov says charges that Russian energy company Gazprom abused its market position in Eastern and Central Europe are without merit. File Photo by UPI/Maryam Rahmanian. MOSCOW, April 23 (UPI) — Charges from the European Commission that energy company Gazprom abused its market position are "absolutely inadmissible," Russia’s foreign minister said. Markets rules in the Europe discourage energy companies from controlling both transit arteries and the reserves they carry. Margrethe Vestager, the European commissioner in charge of competition policy, said Gazprom was "abusing its dominant position" in the European market. Gazprom in a Wednesday statement said the charges are baseless , adding it "strictly" follows the rules of the countries in which it operates. Russian Foreign Minister Sergei Lavrov said the Kremlin was confident both sides could resolve the issue, but noted the government would work in defense of Gazprom’s interests . "The argument is simple: […]

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Europe’s Oil Companies Eyed for Takeover

ENLARGE LONDON—Europe’s biggest independent oil companies are flush with energy assets, but battered by the collapse of crude prices . Investors are now betting on which one could be the next big acquisition target, following Royal Dutch Shell PLC’s deal earlier this month to buy BG Group PLC for $70 billion. Many analysts have been predicting a wave of deals in the wake of that blockbuster and after last year’s sharp fall in the price of oil . Europe’s bevy of exploration and production companies sits at the top of the list of potential targets. Those include Tullow Oil PLC, the U.K.’s largest independent oil explorer; Genel Energy PLC, which produces crude in Kurdistan; and Sweden’s Lundin Petroleum AB, which has a stake in a huge new North Sea development. Investors are expecting deals in the U.S. as well. Possible prey include some of the relatively small but highly […]

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Opinion: Oil Price War May Benefit both US Shale and Saudi Arabia

« GM provides technical details of the Gen 2 Voltec propulsion system used in the 2016 Volt | Main | Aventine sends first unit-train shipment of ethanol from Nebraska to Alabama » Even as financial commentators on CNBC are starting to come around to the idea of a bottom in oil prices, the key question for US oil producers remains one of timing. How long will the oil price slump last? Is this a relatively short term event like 2008, or a longer term slump like the one in the mid 1980’s? After the oil price crash in 1985, it took almost twenty years for prices to revert to previous levels. If oil does not return to $100 a barrel until 2035, there will be a lot less shale companies around. Some market commentators have cited hedging as a potential source of safety for oil producers, but the truth […]

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Musings: Oil Patch Unemployment Is Challenge For Industry’s Future

Oil patch layoffs continue to grow, and the shale oil states represent the epicenter. G. Allen Brooks takes a look at the latest oil industry unemployment statistics. This opinion piece presents the opinions of the author. It does not necessarily reflect the views of Rigzone. Several recent media stories have focused on rising petroleum industry layoffs in response to the decline in global oil prices and the resulting fall in activity. Just how many people have already lost their jobs is difficult to accurately determine. Job loss estimates are being provided to the media by various personnel recruiting firms, although there are also data points available from the Bureau of Labor Statistics (BLS). Since oil prices began dropping last December, energy companies have announced layoffs in excess of 100,000 jobs, according to The Wall Street Journal. It references an estimate of at least 91,000 layoffs having already occurred according […]

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Overview of Our Energy Modeling Problem

We live in a world with limits, yet our economy needs growth. How can we expect this scenario to play out? My view is that this problem will play out as a fairly near-term financial problem, with low oil prices leading to a fall in oil production. But not everyone comes to this conclusion. What were the views of early researchers? How do my views differ? In my post today, I plan to discuss the first lecture I gave to a group of college students in Beijing. A PDF of it can be found here:  1. Overview of Energy Modeling Problem . A MP4 video is available as well on my  Presentations/Podcasts Page . Many Limits in a Finite World We live in a world with limits. These limits are not just energy limits; they come in many different forms: All these limits work together. We can work around […]

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How OPEC could lose the oil wars

But American drillers could ultimately benefit from the pressure to become more competitive. And OPEC, the oil cartel led by Saudi Arabia, may end up regretting its effort to push down oil prices and destabilize American drillers. “We’re wounded but we’re not dead, for sure,” Gary Evans, CEO of Texas-based driller Magnum Hunter Resources ( MHR ), tells me in the video above. “If their goal was to crush the US oil and gas industry, that isn’t going to happen. We are a very resilient industry.” Oil prices, currently around $57 per barrel, are about 45% below peak prices from last June. Normally, when oil prices fall, Saudi Arabia and other OPEC nations cut back production, to help support prices. But they haven’t done that this time, with aggressive levels of production largely viewed as an effort to force some U.S. drillers out of the market and make sure […]

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The Biggest Problem Remains Over-Population

The Biggest Problem Remains Over-Population thumbnail Today, Earth Day, behooves all of us to give serious consideration on alleviating the horrific problems that plague our world, and threaten to make it uninhabitable in a very short term. At the root of all the problems, including fouled water, polluted air and soil, melting glaciers, severe crowding – not to mention mass panic migrations (such as claimed over 850 lives this week) is overpopulation . Already multiple lines of research are questioning the UN estimates that project a global population of 10.9 billion by 2100. If, however, women – mainly in the poorest nations and without access to contraceptives, have even 0.5 more offspring each  (than projected)  that 2100 estimate could turn into 12.3 billion or even 15.8 billion. The latter pointing to a certain ‘Soylent Green’ world. Meanwhile, Adrian Rafferty of the University of Washington, publishing in a recent issue of Science, computed there’s […]

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U.S. Oil Prices Drop After Inventory Data

Used oil barrels are stacked at a storage facility in Seattle. ENLARGE Photo: Reuters U.S. oil prices fell Wednesday as domestic crude stockpiles grew to a record, while lower-than-expected refinery activity boosted gasoline prices. Light, sweet crude for June delivery settled down 45 cents, or 0.8%, at $56.16 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 65 cents, or 1%, to $62.73 a barrel on ICE Futures Europe. U.S. crude-oil stockpiles last week rose by 5.3 million barrels to 489 million barrels, the highest in weekly data going back to 1982, the U.S. Energy Information Administration said Wednesday. In monthly data, which don’t exactly correspond with weekly data, inventories haven’t been this high since 1930. The amount of domestic crude oil in storage has increased for 15 straight weeks. “Everyone knows there’s a lot of crude around,” said Elaine Levin, president of energy brokerage […]

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Oil Trims Gains After China’s Manufacturing Activity Slows

By Eric Yep Crude-oil futures trimmed early gains in Asian trade Thursday after data showed slower manufacturing activity in China and another weekly uptick in U.S. oil stockpiles. On the New York Mercantile Exchange, light, sweet crude futures for delivery in June traded at $56.25 a barrel at 0322 GMT, up $0.09 in the Globex electronic session. June Brent crude on London’s ICE Futures exchange fell $0.01 to $62.72 a barrel. The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to a one-year low of 49.2 in April, compared with a final reading of 49.6 in March, HSBC said. "China’s flash PMI remains subdued, but not substantially weaker than over the past six months," Julian Evans-Pritchard, China Economist at Capital Economics said. But Mr. Evans-Pritchard also said underlying momentum has softened slightly going into the second quarter, and measures by China’s central bank […]

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Oil prices edge lower on rising U.S. inventories

SINGAPORE (Reuters) – Oil prices fell slightly on Thursday as rising U.S. crude inventories due to robust shale production outweighed concerns over renewed air strikes in Yemen. Saudi-led coalition warplanes continued bombing Yemen on Wednesday despite an announcement by Riyadh a day earlier that it was ending its campaign of air strikes. While Yemen is not among the biggest producers in the Middle East, others in the region ship crude bound for Europe along the Gulf of Aden on Yemen’s southern coast and through the narrow straits of Bab el-Mandeb, between Yemen and Djibouti. Oil prices have risen as much as $10 this month due to concerns over potential supply disruption as well as signs of stronger global demand. Brent crude for June delivery was down 40 cents at $62.33 a barrel by 0724 GMT, after settling 65 cents higher. U.S. crude for June delivery was trading 30 cents […]

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Yergin: Why the oil-price collapse changes everything

General Ideas It was not long ago that $100 per barrel oil was accepted as the new normal. China’s strong economic growth (and energy demand) would continue apace, and OPEC and Saudi Arabia would continue to play the traditional role as swing producer in support of oil prices. Events have proved otherwise. Oil markets have entered a new period. Now it is supply, not demand, which is the key the factor, making not-so-distant discussions of “peak oil” seem very far gone. China’s economy, while still growing, has slowed. And by leaving oil prices to the market, OPEC has effectively ceded the role of de facto swing producer to a country that hardly expected it—the United States. Markets never cease in their ability to upend current expectations and confound established thinking. That is certainly the case for the world of energy in a year that has seen the rapid creation […]

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Crude oil markets in limbo

Supply and demand dynamics may be shifting, leaving crude oil markets hanging in limbo for much of the trading week. File photo by Gary C. Caskey/UPI NEW YORK, April 22 (UPI) — Crude oil prices held their ground in the early stages of Wednesday’s trading session as markets tried to make sense of fluctuating supply and demand dynamics. Brent crude oil for May delivery gained a fraction of a percent from the previous close to trade at $62.61 per barrel. Brent for the week is relatively unchanged, but up more than 10 percent since the start of April. Recent market reports from the Organization of Petroleum Exporting Countries and the International Energy Agency said global demand for oil may be on the rise. Oil markets in late 2014 faltered as supply far outweighed demand as U.S. crude oil production soared. The weak market for crude oil, however, has forced […]

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Could The Oil Market Be In For A Quick Rebound?

An RV park in Texas sits empty due to the downturn in oil jobs in the Eagle Ford shale area Associated Press A global oil glut led to the slump in oil prices over the last year. Yet some in the industry believe the turnaround could come much quicker than markets expect. Glencore chairman and Genel CEO Tony Hayward is particularly bullish. Though he thinks the oversupply in the market would likely take a year or two to work off, he predicts  that cuts to oil companies’ capital spending are laying the seeds for the next oil price bull market. “The supply chain in the U.S. is being decimated,” Mr. Hayward said. U.S. shale oil production, the source of the current battle among producers for market share, is expected to be flat this month and will decline next month for the first time in 4.5 years, he told the […]

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Big Oil’s Latest Fear: A Price Shock After $114 Billion of Cuts

(Bloomberg) — As the oil patch grows accustomed to a new world of $50 to $60 crude, it’s now looking ahead to a different but equally daunting sort of cliff. Oil companies are warning there will be a price to pay — a much higher price — for all the cost cutting being done today to cope with the collapse in the crude market. Big projects intended to start pumping oil and natural gas 5 to 10 years from now are being canceled or put on hold as the price crash forced $114 billion in spending cuts on the industry. Energy giants from Exxon Mobil Corp. to Royal Dutch Shell say they’re taking a much more cautious approach to approving projects that cost billions and take years to complete. That’s setting the table for a future oil-price shock when a growing world population drives higher demand, said oil executives […]

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OPEC, Tight Oil and Russia

The OPEC Monthly Oil Market Report  is out with OPEC crude only production numbers for March 2015. OPEC production was up 812,000 barrels per day. The increase came primarily from three countries: Saudi Arabia Saudi Arabia was up 347,000 barrels per day to 10,010,000 bpd. Iraq was up 319,000 bpd to 3,625,000 barrels per day. And Libya was up 165,000 bpd to 473,000 bpd. Iran Zero This is Iran zero based in order to show exactly how much sanctions have affected them. Iran was producing about 3.75 million bpd before sanctions. Then when sanctions the UN resolution for sanctions was passed in 2010, but before they were enforced, production began to drop, but very slightly. It was not until late 2011 and early 2012 before production began to fall rather steeply. Iranian crude only production is now around 2.75 million bpd, down about 1 million bpd, or 27 percent […]

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Baiji refinery still threatened

Iraqi pro-government forces fire a rocket during an operation to retake the Baiji oil refinery from Islamic State (IS) group on April 16, 2015. (MOHAMMED SAWAF/AFP/Getty Images) Recommend 7 people recommend this. Sign Up to see what your friends recommend. The Islamic State (IS) militant group still poses an immediate threat to the Baiji oil refinery, three days after Iraqi military leaders declared the facility had been secured.Several security officials in Baghdad and northern Iraq have given conflicting accounts of the extent to which the 36-square-kilometer refinery compound is under government control: some say it is secure; some say IS fighters are still inside; and others say there was another attack Wednesday.Even the most optimist…

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Iraq Oil Output Growth Seen Slow by BP, Lukoil on Low Prices

Growth in Iraq’s oil production capacity may slow as lower crude prices hurt the ability of OPEC’s number two producer to pay international oil companies for work there, officials from BP Plc and OAO Lukoil said. Lukoil sees a “significant reduction” in the growth rate of Iraqi output capacity in 2016 and 2017 due to the decline in crude price, Gati Al-Jebouri, senior vice president at Lukoil Overseas, said in Abu Dhabi on Tuesday. BP’s ability to meet its production targets depends on the government approving the company’s proposed investment plans, said Michael Townshend, the company’s regional president for the Middle East. The slump in global crude prices over the past year has cut the Iraqi government’s income even as it battles Islamic extremists that have seized parts of the country. That risks sidetracking Iraq’s efforts, after decades of conflict and sanctions that choked investment, to boost crude production […]

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Uganda not yet ready for oil prime time

Bank of Uganda says oil prices are too low to realize nation’s full oil potential and production targets. Photo courtesy Tullow Oil KAMPALA, Uganda, April 22 (UPI) — A weakened crude oil market means investments might not materialize in time to finance Uganda’s fledgling oil sector, the Bank of Uganda said. The Bank of Uganda said in a monetary policy report for April there are lingering questions over the nation’s oil development given the low price of oil and the investments needed to exploit the type of crude oil found in the country. "Whereas oil production had been projected to start in 2018, this date could now be pushed out even further, given that the profitability of oil investments could remain depressed in the foreseeable future," the report said. Crude oil prices are trading at around 40 percent below their June 2014 highs, forcing energy companies to spend less […]

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Brazil’s Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges

ENLARGE Petrobras’s disclosures Wednesday were part of the first audited financial statements released by the oil company in more than eight months. Photo: VANDERLEI ALMEIDA/AGENCE FRANCE-PRESSE/GETTY IMAGES RIO DE JANEIRO—Brazil’s state oil company Petróleo Brasileiro SA put a price tag on a corruption scandal that has thrown the country into political and economic turmoil, writing off $17 billion due to losses from graft and overvalued assets. The disclosures were part of the first audited financial statements released by Petrobras in more than eight months. Brazilian federal prosecutors since last year have been investigating allegations that the company’s suppliers conspired to overcharge Petrobras for major projects, funneling some of the illicit profit to former Petrobras executives and politicians in the form of bribes and illegal political donations. Petrobras Chief Executive Aldemir Bendine said in a news conference that additional revisions to the corruption-related write-downs are possible if prosecutors uncover more […]

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China imports over 230,000 T diesel for March, biggest in nearly 3 years

SINGAPORE (Reuters) – China imported more than 230,000 tonnes of diesel in March, volumes not seen in almost three years, according to latest customs data. But the move is likely related to trading rather than an improvement in domestic demand, traders said. China imported 233,055 tonnes of diesel in March, the highest monthly figure in nearly three years, the data showed. <O/CHINA2> China last regularly imported more than 200,000 tonnes of diesel in June 2012, due to firm domestic demand, traders said. The majority of the barrels in March were shipped from South Korea, with some coming from Singapore and Thailand, the data showed. <O/CHINA3> China’s last substantial imports were in December 2014 when it imported 133,603 tonnes of diesel, though the volumes were nearly half of March’s figure. Still, China remains a net exporter of diesel, shipping out 300,231 tonnes of the industrial and transport fuel in March, […]

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What Happens To US Shale When The Easy Money Runs Out?

Today we will take a look at both Whiting Petroleum (WLL) and Continental Resources (CLR) as far as their Bakken economics. Overall the numbers will show that, despite claims of low cash costs per MBOE ($16 or so for CLR) and high IRRs on $60 WTI, the facts say otherwise. In addition, the analysis will show how very high depletion rates combined with falling rig counts spells trouble for Bakken production growth despite better efficiencies per well. The analysis will be based on April presentations of both companies from which the graphs below are taken. I should note these economics are not much different from Eagle Ford, the second most prolific addition to US production growth in past years. Firstly one must understand that the easy money via QE from the Fed and zero interest rates allowed many shale players to burn free cash flow while showing operationally net […]

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CERA 2015: Resilient Marcellus gas drillers are the ‘problem’: E&P executive

Major improvements by natural gas exploration-and-production companies have allowed them to continue to drill profitably in a period of depressed prices, adding to the glut of gas and putting further pressure on prices, an E&P executive said Wednesday at the IHS CERAWeek conference in Houston. "What’s happening is that we continue to get better and get more production per rig," Kyle Mork, president of Energy Corporation of America, said in reference to the seeming paradox of growing US natural gas production despite a record low level of rigs. "We’re the problem," he said. It is common knowledge in the industry that the main reason why natural gas prices — both Henry Hub and prompt-month futures — are trading at levels not seen since 2012 is because of the phenomenal growth in US natural gas production led by the Marcellus Shale. Article continues below… Gas Daily offers the most detailed […]

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NRC report recommends ways to overcome barriers hindering purchases of PEVs; vehicle cost, battery tech and consumer knowledge among others

« China Steel Corporation making $46M investment in LanzaTech commercial waste-gas-to-ethanol project | Main | Toyota embraces the “Bullsh*t” about hydrogen » Vehicle cost, current battery technology, and inadequate consumer knowledge are some of the barriers preventing widespread adoption of plug-in electric vehicles, according to a new congressionally mandated report from the National Research Council. Developing less expensive, better performing batteries is essential to reducing overall vehicle cost, and a market strategy is needed to create awareness and overcome customer uncertainty, the report finds. The report recommends a range of incentives that the federal government can offer to address these and other barriers. The premise of the report—“ Overcoming Barriers to Deployment of Plug-in Electric Vehicles ”—is that there is a benefit to the United States if a higher fraction of vehicle miles traveled is fueled by electricity rather than by petroleum due to the resulting reduction in dependence […]

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Study: North Texas quakes likely linked to gas drilling

HOUSTON, Apr. 22 A seismology team in a study led by Southern Methodist University found high volumes of wastewater injection combined with brine extraction from natural gas wells was “the most likely” cause of earthquakes near Azle, Tex., during 2013-14. In an area where the seismology team identified two intersecting faults, they developed a 3D model to assess the changing fluid pressure within a rock formation in the affected area. They used the model to estimate stress changes induced in the area by two wastewater injection wells and more than 70 gas wells. “The model shows that a pressure differential develops along one of the faults as a combined result of high fluid injection rates to the west and high water removal rates to the east,” said Matthew Hornbach, SMU associate professor of geophysics. “When we ran the model over a 10-year period through a wide range of parameters, […]

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CERAWeek: Regulatory hurdles still threaten US shale, CEOs say

HOUSTON, Apr. 22 OGJ Staff Writer Leaders of prominent US shale producers came together on Apr. 21 to drive home a point that’s emerged as a primary theme during this year’s IHS CERAWeek in Houston: The urgent need to lift the export ban on US crude oil. “It’s time to give the green light to US oil exports,” stated John Hess, chief executive officer of Hess Corp. , during an upstream panel discussion alongside two other prominent US-based chief executives. Hess emphasized that the US already exports high quantities of petroleum products—3.8 million b/d in 2014 according to the US Energy Information Administration—so why not crude? “Mexico and Canada export crude,” he said. “Why not the US?” Harold Hamm, chief executive officer of Continental Resources Inc. , echoed those sentiments, but thinks “it’s going to take a while to change the mindset of Americans to one of scarcity to […]

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IHS CERAWeek: US Fracking Costs Falling Fast, May Keep Fields In Play

US oil and natural gas companies have pushed down costs of fracking a shale well faster than expected, and if the trend holds up it could allow producers to keep working in oilfields. HOUSTON, April 22 (Reuters) – U.S. oil and natural gas companies have pushed down costs of fracking a shale well faster than expected, and if the trend holds up it could allow producers to keep working in oilfields that just months ago looked uncompetitive after the oil price crash. A more than 50 percent fall in the price of crude oil since June has left oil and gas producers insisting on steep price cuts from oilfield service companies that provide everything from drilling rigs to hydraulic fracturing. Oil is trading around $55 a barrel, and most U.S. shale fields are seen as having break-even costs of $40-$70 a barrel. In fourth-quarter earnings calls, operators initially were […]

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IHS CERAWeek: Statoil Won’t Add North American Drilling Rigs This Year

HOUSTON, April 22 (Reuters) – Norwegian oil and natural gas producer Statoil ASA has no plans to add North American drilling rigs this year, an executive told Reuters on Wednesday. "I don’t see us adding rigs this year," William Maloney, Statoil’s head of North American exploration, said in an interview on the sidelines of the IHS CERAWeek conference in Houston, the world’s largest gathering of oil producers. "You don’t need as many rigs if you can drill them quicker, better, faster and safely." Pioneer Natural Resources Co Chief Executive Officer Scott Sheffield told Reuters on Tuesday his company may soon start adding rigs, a step that would mark the start of a reversal of a trend that has seen the U.S. oil rig rate halve since last September. (Reporting by Ernest Scheyder) Copyright 2015 Thomson Reuters. Click for Restrictions. WHAT DO YOU THINK?

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EU charges Russia’s Gazprom, alleging price gouging

BRUSSELS (Reuters) – The European Union launched a legal attack on Gazprom on Wednesday, stoking tension with Moscow as it accused the Russian gas giant of overcharging buyers in Eastern Europe and hindering competition. The Kremlin appeared to take a conciliatory tone, saying it hoped for compromise and an impartial stance from EU regulators. The EU’s new antitrust chief, Margrethe Vestager, who a week ago announced a similar market abuse prosecution against U.S. tech giant Google, said state-controlled Gazprom was using its continued dominance in Moscow’s old Soviet client states to hike prices by as much as 40 percent over the norm. It could do so, she said, by insisting on contracts that bar customers selling on gas to others, notably across borders, which she described as a hindrance of free markets that broke EU law. It has also been an obstacle to EU efforts to supply Ukraine. Another […]

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Russian oil company irked by arctic rules

Russian state oil company Rosneft said private companies are getting more support from the government when considering frontier arctic territory. File Photo by Denis Larkin/Shutterstock. MOSCOW, April 22 (UPI) — Private company interests are favored over those of state entities when considering access to frontier arctic territory, Russian oil company Rosneft said. State-owned Rosneft said it was frustrated that private companies were getting more government support for developing arctic reserves than those controlled by the government itself. "The existing system protects the interests of the state when developing the Arctic shelf and set clear rules of providing access to private partners both Russia and foreign ones," the company said Wednesday. U.S. energy company Exxon Mobil has a partnership with Russian oil company Rosneft for work in the arctic waters of Russia . With Western sanctions impeding developments, the Russian government has placed a greater emphasis on domestic exploitation of […]

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EU Files Formal Charges Against Gazprom for Abuse of Dominant Position

ENLARGE BRUSSELS—The European Union accused Russia’s state-controlled gas company OAO Gazprom of hindering competition and charging unfair prices in Central and Eastern Europe, a move that could constrain Moscow’s ability to wield power in its former backyard. The charges, which escalate a 2½-year investigation , come only a week after the EU waded into another politically sensitive antitrust battle with the U.S. search engine Google Inc. Margrethe Vestager, the European Commissioner in charge of competition policy. They open up the possibility of multibillion-dollar fines for Gazprom and injunctions that could have far-reaching consequences for a company already struggling with low oil prices and EU moves to diversify the bloc’s gas supply. The accusations also attack the way the company has tied its gas deals to broader strategic goals defined by Moscow. “From now on it will be more difficult for the Kremlin to use Gazprom as a tool of […]

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Gazprom Faces Effects of Politics on Its Bottom Line

Photo The Gaz-System distribution station in Gustorzyn, Poland. Poland and some other European countries are largely dependent on Russian gas. Credit Agencja Gazeta/Reuters MOSCOW — European antitrust regulators are striking at Gazprom ’s core, going after the Russian energy giant’s pricing policies and its politically hued control over natural gas pipelines. But market forces, more than regulatory pressures, are stacking up against the company, as it struggles to maintain its earnings power and geopolitical heft. Long used by President Vladimir V. Putin to further Russia’s economic and political interests, Gazprom has used its muscle to dictate prices and set terms for natural gas supplies across Europe. This worked for years because customers had few other options. But politics, Gazprom is quickly realizing, are not always good for profits. Those same policies are making it difficult to maneuver, as Gazprom finds itself competing against a wide array of ever more […]

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What Happens To US Shale When The Easy Money Runs Out?

Today we will take a look at both Whiting Petroleum (WLL) and Continental Resources (CLR) as far as their Bakken economics. Overall the numbers will show that, despite claims of low cash costs per MBOE ($16 or so for CLR) and high IRRs on $60 WTI, the facts say otherwise. In addition, the analysis will show how very high depletion rates combined with falling rig counts spells trouble for Bakken production growth despite better efficiencies per well. The analysis will be based on April presentations of both companies from which the graphs below are taken. I should note these economics are not much different from Eagle Ford, the second most prolific addition to US production growth in past years. Firstly one must understand that the easy money via QE from the Fed and zero interest rates allowed many shale players to burn free cash flow while showing operationally net […]

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Heinberg: Afterburn

Heinberg: Afterburn thumbnail We live in a time of what might be called The Great Burning. However, we tend to ignore the tremendous inferno blazing around us. Most of the combustion occurs out of sight and out of mind, in hundreds of millions of automobile, truck, aircraft, and ship engines; in tens of thousands of coal or gas-fired power plants that provide the electricity that runs our computers, smart phones, refrigerators, air conditioners, and televisions; in furnaces that warm us in the winter; in factories that spew out products we are constantly urged to buy. Add all this burning together and it amounts to the energy equivalent of torching a quarter of the Amazon rainforest every year. In the United States, the energy from annual fossil fuel combustion roughly equates to the solar energy taken up by all biomass in the nation. It’s a conflagration unlike anything that has […]

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Saudis end air campaign in Yemen, seek political solution

DUBAI (Reuters) – Saudi Arabia announced on Tuesday it was ending a month-long campaign of air strikes against the Houthi rebels who seized large areas of Yemen and said it would back a political solution to bring peace to its war-ravaged neighbor. Iran, which has supported the fellow Shi’ite Houthis, welcomed the ceasefire, which followed months of factional fighting between the militant group and forces loyal to the government, which was driven out of the capital Sanaa. "Operation Decisive Storm has achieved its goals…(including) removing the threat to Saudi Arabia and neighboring countries, especially in terms of heavy weapons," said a statement carried by Saudi state news agency SPA. It said a new phase called "Operation Restoring Hope" was beginning. It would combine political, diplomatic and military action but would focus on "the political process that will lead to a stable and secure future for Yemen." Saudi spokesman Brigadier […]

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Oil Prices Fall as Middle East Tensions Ease

By Georgi Kantchev LONDON–Oil prices fell on Wednesday with investors bracing for key data on the U.S. oil supply and tensions in the Middle East eased after Saudi Arabia halted its military operation in Yemen. Brent crude for delivery in June fell 0.8% to $61.58 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, June-dated light, sweet crude futures fell 1.2% to $55.93. Late Tuesday, the American Petroleum Institute, an industry group, said its data showed a 5.5 million barrel increase in U.S. crude stockpiles last week. The U.S. Energy Information Administrations will release its official data later Wednesday and analysts surveyed by The Wall Street Journal expect the report to show that oil stockpiles rose by 2.8 million barrels. Last week’s data showed an increase of 1.3 million barrels. "Today’s report would likely either make or break the recent bullish momentum," said Daniel Ang, […]

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Natural Gas Inches Up on Abnormally Cool Weather

By Timothy Puko and Nicole Friedman Natural gas prices strengthened Tuesday on abnormally cool spring weather forecasts, which could increase demand for the heating fuel. Futures for May delivery settled up 3.9 cents, or 1.5%, at $2.575 a million British thermal units on the New York Mercantile Exchange. Now that the peak of winter demand season is past, the gas market is dominated by low volatility and traders who buy and sell based on charts, analysts and a broker said. That has led to small seesaw moves and only a gradual and grinding descent in prices since late December. "Short-term temperature forecasts still tilt bullish, but not enough to sustain price advances much above this week’s highs," energy-advisory firm Ritterbusch & Associates said in a note. The market is likely to remain steady, said Frank Clements, co-owner of Meridian Energy Brokers Inc. Below-normal temperatures in the Midwest in the […]

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Oil Prices Fall as Saudi-Led Military Operation Ends in Yemen

Oil prices fell as a Saudi-led coalition ended its nearly monthlong military operation in Yemen, easing concerns that violence in the Middle East could affect oil production in the region. Though Yemen has little oil production, the military campaign had sparked fears that the violence could spread to other oil-exporting countries in the region and interrupt output. “I don’t think anybody expected the military operation to end so quickly,” said Phil Flynn , analyst at the Price Futures Group in Chicago. In the oil market, “it definitely accelerated the selling.” On Tuesday, light, sweet crude for May delivery fell $1.12, or 2%, to settle at $55.26 a barrel on the New York Mercantile Exchange, a one-week low. The May contract expired at settlement Tuesday. Brent, the global benchmark, dropped $1.37, or 2.2%, to $62.08 a barrel on ICE Futures Europe. Market participants are waiting for the latest U.S. energy […]

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Yemen conflict keeps Brent crude oil around $63

LONDON (Reuters) – Brent crude oil steadied around $63 a barrel on Tuesday, not far below the 2015 high, supported by worries that a civil war in Yemen could destabilize the Middle East, affecting oil supplies. Oil has climbed around 15 percent this month due to concern over the conflict in Yemen, Saudi Arabia’s southern neighbor. The seaways around Yemen are some of the most important for the international oil trade with access points to the Red Sea and Suez Canal as well as the Middle East Gulf. The U.S. navy said on Monday it had sent an aircraft carrier and a guided-missile cruiser into nearby waters. Brent hit a 2015 high of almost $65 a barrel on April 16, up more than 40 percent from a January low just above $45. Prices have also been supported by speculation over falling U.S. output after data showing the number of […]

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Big Oil’s Latest Fear: A Price Shock After $114 Billion of Cuts

(Bloomberg) — As the oil patch grows accustomed to a new world of $50 to $60 crude, it’s now looking ahead to a different but equally daunting sort of cliff. Oil companies are warning there will be a price to pay — a much higher price — for all the cost cutting being done today to cope with the collapse in the crude market. Big projects intended to start pumping oil and natural gas 5 to 10 years from now are being canceled or put on hold as the price crash forced $114 billion in spending cuts on the industry. Energy giants from Exxon Mobil Corp. to Royal Dutch Shell say they’re taking a much more cautious approach to approving projects that cost billions and take years to complete. That’s setting the table for a future oil-price shock when a growing world population drives higher demand, said oil executives […]

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Oil Firms’ Capex Cuts Pave Way for Next Oil-Price Bull Run

By Sarah Kent and Ese Erheriene LAUSANNE, Switzerland–Oil companies’ spending cuts in response to the massive slump in prices since June are paving the way for the next bull run, Glencore PLC Chairman and Genel Energy PLC Chief Executive Tony Hayward said Tuesday. "The supply chain in the U.S. is being decimated," Mr. Hayward told the FT Commodities Global Summit in Lausanne. "Even if prices recover, the ability of the supply chain to respond will be severely impaired and it will take several years to get back to where we were," the former BP PLC CEO said. He added that oil production in the U.S. has already peaked, in the face of a clear challenge from the Organization of the Pertroleum Exporting Countries for market share. "OPEC has demonstrated it is the most effective cartel in history," Mr. Hayward said. In the meantime, the energy sector is likely to […]

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Cheaper fuel to boost container shipping: Kemp

LONDON (Reuters) – Lower oil prices are sharply reducing the cost of shipping merchandise from Asia to the United States and Europe as the cost of bunker fuel tumbles. Container shipping companies deal with the volatility in fuel prices by adding a separate bunker adjustment factor or fuel surcharge to their freight rates. Fuel can account for more than 60 percent of the total operating costs of moving freight across the oceans so the surcharges are one of the most important elements of total transportation costs. Surcharges are recalculated quarterly based on the average cost of fuel over a previous 13-week period. So the charge for April-June 2015 is based on fuel costs between December 2014 and February 2015. Other adjustments are made periodically to reflect changes in average fuel consumption, sailing time, vessel capacity and fuel quality changes. In September 2008, shortly after oil prices had peaked, shipping […]

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Libya’s official government has no luck selling oil bypassing Tripoli: sources

CAIRO/BENGHAZI (Reuters) – Libya’s official government has so far failed to sell oil on its own via an account and middlemen in Dubai, as customers continue to buy crude directly from a state oil firm under the control of a rival government, oil sources said. Libya’s internationally recognised Prime Minister Abdullah al-Thinni said this month that oil sales would be routed though a Dubai bank account belonging to a new state oil company reporting to his government in the east. His government wants to get hold of vital oil revenue as it fights the rival government controlling the capital Tripoli, in the west, for power and territory four years after the ousting of Muammar Gaddafi. The United Arab Emirates is one of the biggest political allies of Thinni. Several oil shipments from the eastern Hariga and Zueitina ports controlled by forces loyal to Thinni have left since his announcement, […]

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Saudis end air campaign in Yemen, seek political solution

DUBAI (Reuters) – Saudi Arabia announced on Tuesday it was ending a month-long campaign of air strikes against the Houthi rebels who seized large areas of Yemen and said it would back a political solution to bring peace to its war-ravaged neighbor. Iran, which has supported the fellow Shi’ite Houthis, welcomed the ceasefire, which followed months of factional fighting between the militant group and forces loyal to the government, which was driven out of the capital Sanaa. "Operation Decisive Storm has achieved its goals…(including) removing the threat to Saudi Arabia and neighboring countries, especially in terms of heavy weapons," said a statement carried by Saudi state news agency SPA. It said a new phase called "Operation Restoring Hope" was beginning. It would combine political, diplomatic and military action but would focus on "the political process that will lead to a stable and secure future for Yemen." Saudi spokesman Brigadier […]

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Japan nuclear ruling expected to cool Kyushu Electric’s summer LNG demand

Japanese utility Kyushu Electric’s late summer LNG demand is expected to be lower than last year after a court on Wednesday rejected a lawsuit attempting to stop the company from restarting its Sendai nuclear reactors, market sources said. The ruling paves the way for Kyushu Electric to restart its two 890-MW reactors at its Sendai nuclear power plant in Kagoshima prefecture by this summer. Platts research unit Eclipse Energy expects the restart to replace around 2 GW of capacity currently met by Kyushu Electric’s oil-fired power plants but will have no impact on the company’s gas-fired plants. However, market sources said that having nuclear as baseload power would give Kyushu Electric more room to cut down on LNG purchases. Article continues below… Oilgram News brings you fast-breaking global petroleum and gas news on and including: Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports Supply and […]

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Pemex prepares to expand oil production

Oil production at Pemex has touched bottom after a decade of decline, according to the head of exploration and production at Mexico’s state-controlled energy group, and a new era of deals with private companies should fuel its recovery. “Things are looking good,” Gustavo Hernández told the Financial Times in an interview, just weeks before the first contracts with private operators are due to be unveiled on May 13. The statement may sound rash — output at what has been Mexico’s sole hydrocarbons producer for nearly 80 years has been sinking inexorably since 2004, when the giant shallow-water Cantarell field was at its height, and the company has already cut its 2015 production forecast once this year. Furthermore, Pemex, the main contributor to the federal budget, is shouldering the brunt of public sector cuts in a government austerity drive as it seeks savings of some $4bn this year. The latest […]

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Asia can copy U.S. coal-to-natural gas switching: Russell

LAUNCESTON, Australia, April 21 (Reuters) – –Clyde Russell is a Reuters columnist. The views expressed are his own.– Can Asia replicate the coal to natural gas switching that has revolutionized power generation in the United States? Up to now the conventional thinking has been not really, given that coal remains cheap and abundant in the region, while natural gas is more scarce, expensive and difficult to transport. But factors are at work that suggest several Asian countries may be able to use more natural gas for power generation, and at prices that are still competitive, albeit higher than sticking with coal. The main reason is that natural gas is in the process of becoming significantly cheaper in Asia, which used to pay more than double what buyers did in Europe and almost five times more than consumers in the United States. U.S. natural gas prices have plummeted in the […]

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Why Did These Oil Workers Die?

ENLARGE A worker checks water levels and temperatures at an Encana Oil & Gas hydraulic fracturing operation outside Rifle, Colo. Photo: Brennan Linsley/Associated Press The deaths of Trent Vigus and at least nine other oil-field workers over the past five years had haunting similarities. Each worker was doing a job that involved climbing on top of a catwalk strung between rows of storage tanks and opening a hatch. There were no known witnesses to any of the men’s deaths. Their bodies were all found lying on top of or near the tanks. Medical examiners generally attributed the workers’ deaths primarily or entirely to natural causes, often heart failure. But in the past few months, there has been a shift. Though still unsure of the exact cause of the deaths, government agencies and some industry-safety executives are now acknowledging a pattern and are focusing on the possible role played in […]

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