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Millions of Barrels of Oil Are About to Vanish

Millions of barrels of untapped oil that U.S. shale drillers discovered during the boom years are about to disappear from their inventories. Six years ago, the industry pushed the Securities and Exchange Commission to make it easier for companies to claim proved reserves for wells that wouldn’t be drilled for years. Some prospects considered sure-things when crude was $95 a barrel are money losers at today’s $60. When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels from their books. Now the stakes are higher. Of all the proved reserves of oil and natural gas liquids found by the 44 companies since 2008, more than half — 5.4 billion barrels out of the 9.7 billion — is attributed to wells that don’t exist yet, according to data compiled by Bloomberg. “We’re going to see a lot of proved undeveloped reserves get vaporized,” said Ed Hirs, a managing […]

Posted On : Published By : Tom Whipple
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Coal’s Worst Fears Affirmed in Analysis of Obama Climate Plan

Emissions rise as a U.S. flag flies at a coal-fired power plant in Winfield, West Virginia. Photographer: Luke Sharrett/Bloomberg A new government analysis of President Barack Obama’s signature effort to fight climate change affirms what critics suspected: the proposal could further weaken an already battered coal industry. Electricity generation from the carbon-intensive fossil fuel would fall by 90 gigawatts, more than twice the decline government analysts had predicted as recently as April, according to a report released Friday by the Energy Information Administration. Most of the coal-plant closures would come by 2020, when the Environmental Protection Agency’s proposal to cut carbon dioxide emissions would kick in. Consumers may also take a hit as electricity prices would increase as much as 7 percent on average by 2025, partly because of the costs of building new power plants. “In short, EIA confirms EPA’s rule is all pain, no gain — a […]

Posted On : Published By : Tom Whipple
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Federal data: As oil production soars, so do pipeline leaks

AP Photo/Mark J. Terrill Buy AP Photo Reprints Multimedia A year after the Gulf oil spill, problems remain Interactives Producers Tap Old Wells in Search of Oil The oil pipeline leak that fouled a stretch of California coastline this week reflects a troubling trend in the nation’s infrastructure: As U.S. oil production has soared, so has the number of pipeline accidents. Since 2009, the annual number of significant accidents on oil and petroleum pipelines has shot up by almost 60 percent, roughly matching the rise in U.S. crude oil production, according an analysis of federal data by The Associated Press. Nearly two-thirds of the leaks during that time have been linked to corrosion or material, welding and equipment failures, problems often associated with older pipelines, although they also can occur in newer ones, too. Other leaks were blamed on natural disasters or human error, such as a backhoe striking […]

Posted On : Published By : Tom Whipple
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New York snubs Albany port bitumen project

ALBANY, N.Y., May 22 (UPI) — New York’s state government found there would be "at least one" environmental issue with a proposal to build a tar sands storage facility at a rail terminal. The state Department of Environmental Conservation rescinded a 2013 notice to Global Partners, which has headquarters in Massachusetts, that a proposed project to warm rail cars filled with the heavier form of crude oil called bitumen would not present environmental threats. Global wanted to install boilers at its Albany terminal to offload to vessels headed for coastal refineries. DEC rescinded its 2013 notice after reviewing thousands of comments and documents, including those submitted by environmental groups. Its review found "little experience" with heating bitumen in major oil storage facilities. "This new information suggests that the proposed project has the potential for at least one significant adverse environmental impact that was not considered in the negative declaration," […]

Posted On : Published By : Tom Whipple
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Oil-Rig Count Decline Continues Moderating

The U.S. oil-rig count has declined for 24 straight weeks. ENLARGE Photo: Pioneer Natural Resources/Bloomberg News The U.S. oil-rig count fell by one to 659 in the latest week, according to Baker Hughes Inc., marking the 24th straight week of declines. The number of U.S. oil drilling rigs—a proxy for activity in the oil industry—has fallen sharply since prices headed south last year. There are now about 59% fewer rigs working since a peak of 1,609 in October. But the rate of decline has slowed in recent weeks, and some shale oil companies are expecting to add rigs in the coming months if prices stabilize near the current levels. U.S. crude oil futures were recently down 1.9% to $59.58 a barrel. According to Baker Hughes, gas rigs were down one to 222 this week. The U.S. offshore rig count is at 29, down five last week and off 23 […]

Posted On : Published By : Tom Whipple
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Pipeline in California Oil Spill Ordered Shut Down, Tested

ENLARGE Workers clean oil Friday from the shoreline of Refugio State Beach in Goleta, Calif. On Friday, federal regulators ordered Plains All American Pipeline LP, the operator of the pipeline responsible for the spill, to determine the causes of the pipeline’s failure. Photo: Justin Sullivan/Getty Images Officials at the U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration, the agency responsible for oversight of the line, said Friday the company must fulfill all of the requirements of the corrective order, issued Thursday, before the line can restart pumping oil. The order requires the company to determine the cause of the spill, and test the entire line for any conditions similar to the cause of the rupture. To do so, Plains All American must empty and purge the pipeline, and conduct a physical and analytical review that includes inspections of various engineering records and company data, among other materials. The […]

Posted On : Published By : Tom Whipple
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Alpha Natural to Lay Off 439 at West Virginia Coal Mine

By John W. Miller Coal miner Alpha Natural Resources Inc. on Friday said it plans to lay off 439 miners at a mine in south-central West Virginia. Murray Energy Corp., another big Appalachian miner, is planning to lay off around 1,800 workers, mostly in Ohio and West Virginia, the Wall Street Journal reported Thursday. Like Murray, Bristol, Va.-based Alpha is reeling from competition from the natural gas industry and its less expensive energy for power plants, and from a global coal glut and tougher environmental regulations in the U.S. The layoffs will affect workers at the Camp Creek underground coal mine and processing plant in Camp Creek, W.Va. In addition, the company said it had downsized its workforce at three other Alpha-affiliated mines in Kentucky and Virginia, affecting 71 workers. Alpha Chairman and Chief Executive Kevin Crutchfield called current market conditions "an unprecedented time in the coal industry." His […]

Posted On : Published By : Tom Whipple
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US drivers to see lowest gasoline prices since 2009 this holiday weekend: EIA

US drivers hitting the roads this Memorial Day weekend can expect to find the lowest prices at the pump since 2009, federal data showed Friday. "On May 18, the US average retail price for gasoline was $2.74/gal, or 92 cents per gallon lower than at the same time last year," the US Energy Information Administration said in a report published Friday. "This is the lowest average price heading into the Memorial Day weekend — the traditional start of the summer driving season — since 2009," the report said. After a lag, pump prices began following global oil prices down last summer, reflecting a glut of oil followed by gasoline pressing on the market. Wholesale gasoline values hit bottom in December and began to rebound early this year, and this trend has also been seen in pump prices. This spring, gasoline values have been on the rise, reflecting recovered demand […]

Posted On : Published By : Tom Whipple
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Oil Holds on to Recent Gains, WTI Trades Above $60/Bbl

By Eric Yep Crude-oil futures softened marginally in Asian trade Friday but retained the bulk of strong overnight gains that helped push U.S. oil prices over the $60 a barrel mark. On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $60.56 a barrel at 0316 GMT, down $0.16 in the Globex electronic session. July Brent crude on London’s ICE Futures exchange fell $0.20 to $66.34 a barrel. West Texas Intermediate crude on Nymex had gained nearly 3% in the previous trading session, while Brent crude had gained around 2.3%. "Oil market sentiment remains buoyant, reflecting a considerable confidence that the market will rebalance as demand grows and U.S. shale oil production declines," analyst Tim Evans at Citi Futures said in a report. But stronger demand and weaker U.S. oil production are not enough to tighten the market fast enough, and materially stronger […]

Posted On : Published By : Tom Whipple
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Brent crude oil steadies near $66 before long weekend

LONDON Oil prices steadied on Friday as worries over the impact on crude supplies of war in the Middle East were balanced by reports of profit-taking ahead of a long weekend. Monday, May 25 is Memorial Day in the United States and a public holiday in much of Europe, closing many markets. "No one wants to hold open positions ahead of a long weekend so books are being squared, bringing some consolidation," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. July Brent crude LCOc1 was down 25 cents at $66.29 a barrel by 0800 GMT after closing up 2.3 percent on Thursday. U.S. crude futures are experiencing their longest winning streak since records began in 1983, helped by a drop in U.S. crude and product stockpiles last week, reflecting better demand in the world’s largest oil consumer. [EIA/S] U.S. crude for July CLc1 was down […]

Posted On : Published By : Tom Whipple