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Activists fear dangers of oil trains remain unaddressed by new rule

Connor Lake/AP/The Star Tribune An oil train south of St. Paul, Minnesota, in July 2014. After almost two years of deliberation, Barack Obama’s administration is expected to enact regulations next month that will attempt to protect trackside communities from exploding oil trains . However, the new rule won’t take the one step that could decrease the risk almost immediately — requiring North Dakota oil producers to either reduce their product’s explosiveness or ship it in pressurized cars. Officials say they can’t take that step because nobody really knows how to reduce or properly measure the oil’s volatility. Roughly a dozen oil trains have exploded in the United States and Canada in the past 21 months, including one in Quebec that left 47 people dead. The U.S. Department of Transportation has repeatedly warned of the unusual volatility of North Dakota’s oil. But the draft of the new rule that was […]

Posted On : Published By : Tom Whipple
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Exxon rejects Beaumont refinery union proposal; offers six-year pact

HOUSTON (Reuters) – Exxon Mobil Corp ( XOM.N ) has rejected a contract offer from the United Steelworkers (USW) local chapter representing hourly workers at the company’s Beaumont, Texas, refinery and renewed its offer of a six-year contract, a union official said on Wednesday. Exxon has been campaigning for a longer agreement with the Beaumont workforce, offering first a five-year agreement and then a six-year pact. Sources have told Reuters Exxon wants a longer pact to avoid work stoppages if it expands the 344,600-barrel-per-day-capacity Beaumont refinery into the nation’s largest, possibly reaching 850,000 bpd by the end of the decade. On March 17, USW local 13-243 had offered the current four-year national refinery and chemical plant workers contract plus the next contract to be negotiated in 2019 without a work stoppage. The agreement would cover at least seven years. Exxon put the six-year proposal on the negotiating table again […]

Posted On : Published By : Tom Whipple
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The Oil Industry’s $26 Billion Life Raft

U.S. shale oil operations. For U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much they stand to get paid on insurance they bought to protect themselves against a bear market — as long as prices stay low. The flipside is that those who sold the price hedges now have to make good. At the top of the list are the same Wall Street banks that financed the biggest energy boom in U.S. history, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. While it’s standard practice for them to sell some of that risk to third parties, it’s nearly impossible to identify who exactly is on the hook because there are no rules requiring disclosure of all transactions. The buyers come from groups like hedge funds, airlines, refiners and utilities. “The folks who […]

Posted On : Published By : Tom Whipple
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Russia mulls credit autonomy

The Central Bank of Russia in Moscow. Banking officials said it may be time to embrace domestic credit rating options. File Photo by DyMax/Shutterstock. MOSCOW, April 8 (UPI) — As low oil prices and Western-backed economic sanctions hammer Russia, the head of the central bank said it was time to embrace domestic rating agencies. A draft law regulating Russian credit rating agencies was introduced in February as economic problems became more evident. Central Bank Chairwoman Elvira Nabiullina said at a banking conference in Moscow it was time to develop more credit autonomy . "We are thinking about gradually moving away from international ratings and developing our own ratings industry with Russian agencies," she said Wednesday. Ratings agency Moody’s in February lowered its assessment of seven Russian financial institutions, including the banking arm of Gazprom, because of the expectation of a "prolonged recessionary environment," in the Russian economy. The downgrade […]

Posted On : Published By : Tom Whipple
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Oil find near Gatwick airport much larger than thought

LONDON (Reuters) – A small oil find near London’s Gatwick airport contains much more oil than first estimated, an independent report commissioned by the field’s developers said on Thursday. London-listed UK Oil & Gas Investments said the report estimated 158 million barrels per square mile could be lying below the site just north of Britain’s second-largest airport, much more than first thought. UKOG, the main investor in the project with a 30 percent interest, said the field could produce significant daily amounts of oil if retrieving it proves commercially viable. "The operator …is now focused on flow testing the Portland Sandstone and Kimmeridge Limestone sections of the well, to establish producibility and thereby seeking to quantify an overall net discovered resource," UKOG Chief Executive Stephen Sanderson said in a statement. The oil find is located in Britain’s resource-rich southern Weald Basin, adjacent to an area where one of Europe’s […]

Posted On : Published By : Tom Whipple
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Shell’s megamerger deal is no reason to panic

History has not judged megamergers kindly. Of the 10 biggest, five took place shortly before the bursting of the dotcom bubble, including Vodafone ’s notorious acquisition of Mannesmann. Another three were in the late stages of the pre-Lehman boom, notably the purchase of ABN Amro by a Royal Bank of Scotland -led consortium — perhaps the dumbest deal of all time. Shell ’s £55bn deal for BG Group on Wednesday ranks as the ninth-biggest in that list, according to Dealogic. So, should shareholders be concerned that the return of the titanic takeover means equities are toppy? Start with the past. It is no coincidence that the really big deals happen when the market is frothy. The logic is the same as that behind the world’s tallest towers : investors and lenders are willing to countenance such financial nonsense as the Burj Khalifa, or London’s Shard, or AOL – Time […]

Posted On : Published By : Tom Whipple
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If History Is Any Guide, Big Deals Signal the Oil Market Is Bottoming

Oil companies have a knack for picking the bottom in crude prices, and history may be about to repeat itself. Traders and analysts are speculating that Royal Dutch Shell Plc’s takeover of BG Group Plc for $70 billion announced Wednesday may be the first in a wave of acquisitions as Big Oil seeks to drive out costs following the rout in oil. That happening would resemble the massive deals of the late 1990s that restructured the industry. As oil slid then, BP Plc bought Amoco Corp. for $56 billion in August 1998 and Exxon took over Mobil Corp. for $80 billion in December. Both were announced just weeks before Brent crude reached its trough of $9.55 a barrel. As the market began to recover, Spain’s Repsol SA acquired YPF of Argentina for some $15 billion and Total SA of France bought Elf Aquitaine for $52 billion. Chevron later scooped […]

Posted On : Published By : Tom Whipple
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Peaked Oil?

Peak Oil is back at least for now! U.S. oil futures soared after he Energy Information Administration (EIA) acknowledged that U.S. oil output will fall despite earlier predictions to the contrary only to fall back after the American Petroleum Institute reported a 12.2 million barrel increase in crude oil supply. The market seemed to ignore a prediction by the EIA that oil might fall $15 a barrel if Iranian oil came back onto the market. This comes against a back drop of a mega energy deal that may signal more deals to come and a consolidated market bottom. Let us start with EIA’s “Short Term Energy Outlook” that sent oil on a tear. “The reason was that the EIA said that U.S. crude oil production  is expected to peak this year in the second quarter and then decline in the third quarter, before picking up again toward the end […]

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Oil falls on U.S. stock build, record Saudi output

LONDON (Reuters) – Oil prices fell towards $58 a barrel on Wednesday as industry data showed a larger-than-expected weekly increase in U.S. stockpiles and as Saudi Arabia reported record output in March. The decline in prices followed a rally on Tuesday, when U.S. crude approached 2015 highs following strong jobs data and government forecasts for lower U.S. crude production growth and higher global demand for oil. "We’re going to need to see a very big uptick in demand to offset that supply," Ben Le Brun, analyst at OptionsXpress in Sydney, said. "There is a glut of supply in oil at the moment." Brent May crude LCOc1 was down $1.03 at $58.07 a barrel by 0816 GMT and U.S. May crude CLc1 dropped $1.33 to $52.65 a barrel. Both benchmarks posted strong gains in the past two sessions but are still down about 50 percent since June last year, when […]

Posted On : Published By : Tom Whipple