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Annual US coal production set to drop to 18-year low: EIA

US coal production this year could drop to a low not seen in almost 20 years, the US Energy Information Administration said Tuesday in its Short-Term Energy Outlook for April. EIA predicts US coal production will now total 926 million st in 2015, down 17 million st from its estimate last month, as both domestic demand and exports continue to decline. If the EIA’s estimate holds, it would be the lowest annual total for US coal production since 1987, when 918.8 million st was produced. In 2016, the agency predicts US coal production will rise to 941.4 million st, down 10 million st from its last estimate, made in March. In 2014, US coal production totaled 996.7 million st. A rise in the use of natural gas in electricity generation during the first few months of the year will lead to less coal consumption by utilities in 2015, the […]

Posted On : Published By : Tom Whipple
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Buying BG Gives Shell Solution to Stranded Australian Gas Assets

Royal Dutch Shell Plc is seeking an outlet for its natural gas reserves in Australia’s Queensland state. Its $70 billion purchase of BG Group Plc provides a solution. Shell and its partner PetroChina Co. have been looking at alternatives for their Arrow gas project after shelving plans to build an export terminal this year due to cost blowouts and slumping energy prices. Arrow is in the same state as plants run by Santos Ltd. and ConocoPhillips — as well as BG’s $20 billion Queensland Curtis LNG development. “The Arrow assets are stranded at the moment, so it’s highly probable that if Shell’s purchase of BG went through, that gas would be monetized through QCLNG,” Neil Beveridge, an analyst at Sanford C. Bernstein in Hong Kong, said Wednesday before the agreement was announced. “That’s definitely a source of value for this deal.” The combined company will have double the market […]

Posted On : Published By : Tom Whipple
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The Bakken bust continues

In North Dakota’s Bakken shale oil play, the drilling boom has gone bust. It may only be a temporary bust—but aren’t all booms, and all busts? Here I show a compilation of the latest data from North Dakota, assembled in advance of the state’s monthly release. Production was down 1.5 percent from January to February, that’s in addition to a 3.1 percent decline the month before. North Dakota’s oil production fell 3.1 percent from December to January, and another 1.5 percent from January to February, according to statistics I compiled from the state, ahead of their monthly “Director’s Cut” report. Bakken is mostly in North Dakota—and North Dakota’s oil production is overwhelmingly from the Bakken. So Bakken and North Dakota are, for most intents and purposes, the same thing. So this means Bakken oil production has declined for two months in a row, and was running at a rate […]

Posted On : Published By : Tom Whipple
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Oil production to decline 0.7 to 8 percent

The Federal Reserve Bank of Kansas City today forecasted that domestic oil production could fall by as much as 8 percent in 2015. The central bank said oil and gas production has increased by more than 50 percent since 2005, but things could be sliding backward with low prices. “With oil prices at about half their summer 2014 level, will the investment continue to be profitable and boost production?” asked Nida Çakır Melek, an economist in the Regional Affairs Department for the Kansas City Fed. The answer, she said, probably lies in the rig count. “Despite highly productive new wells and an increase in the number of wells drilled per rig, U.S. oil production could decline from 0.7 to 8 percent in 2015, due in part to the significant decline in rig counts and depletion in existing wells,” she said. The rig count is faltering, too. According to Baker-Hughes […]

Posted On : Published By : Tom Whipple
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Halliburton Plans Sale of Three Drilling Businesses

Halliburton Co., which is seeking regulatory approval for its roughly $35 billion purchase of Baker Hughes Inc., plans to sell three drilling business. The three businesses are drill bits, directional drilling and its LWD/MWD businesses, which are logging while drilling and measurement while drilling. The divisions will be marketed separately, the oilfield-service company said Tuesday. “Although we would prefer to retain these assets, we will be required to divest some of our overlapping businesses to obtain competition authorities’ approvals as anticipated when we announced the Halliburton-Baker Hughes transaction,” Halliburton said. Halliburton expects to complete the sale of the businesses in the same time frame as the closing of the Baker Hughes deal late in the second half of 2015. In February, the companies said they received an expected second request for additional information from antitrust regulators. Halliburton and others in the industry have cut jobs following a sharp decline […]

Posted On : Published By : Tom Whipple
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EIA Short-Term Energy Outlook + Texas

The EIA has released their latest Short-Term Energy Outlook . Below I compare the EIA’s ever changing outlook for future oil production. The STEO charts below are total liquids and are in million barrels per day. STEO April The EIA increased their December 2014 all liquids estimate but dramatically decreased their January 2015 estimate. The EIA now says US total liquids production declined by 480,000 barrels per day in January.  STEO April NO The EIA still believes non-OPEC total liquids production will take off but not until 2016. They have non-OPEC liquids reaching a new high in December but dropping almost one million barrels per day in January and not reaching that December high again until July of 2016. STEO April NO Less US The EIA’s optimism depends entirely on US production increase returning to the levels it reached in the last three years. Without any US increase they […]

Posted On : Published By : Tom Whipple
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Get serious on oil trains, NTSB tells industry

Federal regulators say industry not acting quick enough to ensure safety of rail cars carrying crude oil. Photo by Steven Frame/Shutterstock WASHINGTON, April 7 (UPI) — The National Transportation Safety Board called on the rail industry to act quickly to replace or retrofit cars designated to carry crude oil. The NTSB said it can’t "wait a decade" for safer rail cars while crude oil delivery by rail increases at an exponential rate. "That is why this issue is on our Most Wanted List of safety improvements," NTSB Chairman Christopher Hart said in a statement. "The industry needs to make this issue a priority and expedite the safety enhancements, otherwise, we continue to put our communities at risk." The increase in U.S. crude oil production is more than the existing network of pipelines can handle, leaving the energy industry to rely on rail as an alternate shipping method. Federal data […]

Posted On : Published By : Tom Whipple
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U.S. gas prices continue to drop

Gasoline prices in the United States continue their steady decline as a series of refinery issues are resolved, motor club AAA said. UPI/Bill Greenblatt WASHINGTON, April 7 (UPI) — The average U.S. price for a gallon of regular unleaded gasoline continues its steady decline as most refineries return to status quo operations, AAA said. The motor club reports a national average retail price for a gallon of regular unleaded at $2.38, more than a full percent less than last week. The average price on this date in 2014 was $3.58. Crude oil prices are off about 50 percent from their June highs above $100 per barrel, leading in part to a steady decline in gasoline prices. "While prices could still rise again this spring if global crude prices rise or domestic refineries experience production issues, the timing of this seasonal peak would be within the range of recent years […]

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EU to Host Russia, Ukraine Gas Talks April 14

BRUSSELS–The European Union will host the next round of gas talks between Ukraine and Russia on April 14 in Berlin, the European Commission said on Tuesday. Ukraine and Russia said last month that they would seek to negotiate a deal that would ensure natural-gas deliveries to Ukraine and the European Union until a dispute over unpaid bills has been settled. The first round of those talks took place in Brussels on March 20. The talks would be about the price of Russia’s gas exports, the amount Ukraine needs to import for gas storage as well as financial support to Ukraine, said a spokeswoman for the commission, the EU’s executive arm. Last week, Russia and Ukraine extended an interim gas deal through the end of the second quarter, the largest Ukrainian energy company Naftogaz said, giving the sides time to negotiate a longer-term deal.

Posted On : Published By : Tom Whipple
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Shell offers 50 percent premium to buy BG for $70 billion

(Reuters) – Royal Dutch Shell ( RDSa.L ) agreed to buy smaller rival BG Group ( BG.L ) for $70 billion in the first oil super-merger in more than a decade to close the gap with the world’s largest oil firm U.S. ExxonMobil ( XOM.N ). In a joint statement, the two firms said Shell would pay a mix of cash and shares that would value each BG share at around 1,350 pence ($20). It said this represented a premium of around 52 percent to the 90-day trading average. Britain’s BG had a market capitalisation of $46 billion as of Tuesday close, Shell was worth $202 billion while Exxon, the world’s largest oil company by market value, was worth $360 billion. "We have two very strong portfolios combining globally in deep water and integrated gas," Shell’s CEO Ben van Beurden told a news conference. The deal would give Anglo-Dutch […]

Posted On : Published By : Tom Whipple