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EY: Delayed Impact of Price Downturn Seen in Oil, Gas Production, Reserves

Oil and gas industry spending, production and revenue grew in 2014 despite the oil price downturn seen late last year. But industry will feel more of the impact of that downturn in 2015. Lower oil prices seen late last year did not thwart growth in the oil and gas industry’s capital expenditures (CAPEX), revenues and reserves for 2014, and are comparable to growth levels seen in 2013, according to the results EY’s eighth annual US oil and gas reserves study. The study results came from analysis of the Top 50 public U.S. oil and gas companies’ supplement reserve disclosures and annual financial statements. The study of all 50 companies found that all categories of CAPEX spending rose to $200.2 billion in 2014 from $173.1 billion in 2013, an increase of 16 percent. Proved and unproven property acquisition costs accounted for a large portion for this growth — each rose […]

Posted On : Published By : Tom Whipple
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Bloated oil market fed more crude from unwinding sea storage plays

LONDON Physical oil is coming under pressure as trade houses unwind a profitable storage play after several months that saw them holding millions of barrels on tankers at sea. A drop in the volume of crude stored for speculative profit is putting more supply into an already saturated market, elbowing out new loadings leading to a build-up of unsold West African, North Sea and Mediterranean oil. "When the contango started, it created a demand," said Tamas Varga of PVM oil brokerage. Now "they are creating additional supply". "The structure of the market should weaken significantly," Varga added. "There is just lots of oil around in the U.S. and globally." Oil prices collapsed by 60 percent between June last year and January 2015, pushing the cost of oil for immediate delivery to a big discount below future prices and making it profitable to buy oil and store it for sale […]

Posted On : Published By : Tom Whipple
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Warming Pause Cited by Climate Skeptics Countered in New Report

The pace of global warming hasn’t slowed since 1998, a finding that contradicts a major United Nations study and challenges a key argument of skeptics of manmade climate change. Temperatures since 2000 have risen at a pace that is “virtually indistinguishable” from the rate of the five preceding decades, researchers led by Thomas Karl at the U.S. National Oceanic and Atmospheric Administration said Thursday in the journal Science. That challenges the biggest-ever UN study on warming published in September 2013, which found that the rate of temperature gains had fallen by more than half since 1998. Doubters of man’s influence on the climate have cited the reported slowdown as proof that the scientific understanding of climate change isn’t robust and steps to cut greenhouse gases aren’t worth the cost. “A whole cottage industry has been built by climate skeptics on the false premise that there is currently a hiatus […]

Posted On : Published By : Tom Whipple
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OPEC moots $80 as new ‘fair’ oil price – but will it stick?

VIENNA Nearly a year after oil markets entered a deep downward spiral, unmoored from the $100-a-barrel mark that had anchored them for years, some OPEC members are publicly talking for the first time about a new "fair" price for their crude. Oil ministers from Iraq, Venezuela and Angola said in Vienna this week that a price of $75 or $80 a barrel – barely $10 above the going rate – could be just fine. Iraq’s Adel Abdel Mahdi said it would be "equitable". Privately, one Gulf OPEC delegate also told Reuters he reckons crude may be trading around this level next year, once markets rebalance. It remains to be seen whether this new range becomes a common refrain for the group, which has effectively given up efforts to maintain prices in order to defend its share of the world market. Importantly, Saudi Arabia – which for years had pointed […]

Posted On : Published By : Tom Whipple
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Iran Pushes to Be Heard at OPEC Meeting

VIENNA—The Organization of the Petroleum Exporting Countries is under pressure to prepare for Iran’s full return to the oil market if western sanctions are lifted, but the group is unlikely to take action on the issue at its meeting Friday, the group’s delegates said. Instead, OPEC is expected Friday to reaffirm its decision last year to keep current production levels despite low oil prices , delegates said. It is also expected to consider a request from Indonesia, which is a producer that is a net importer of oil, to rejoin the cartel after a six-year absence. The prospect of Iran returning in full force to the world oil market has been an undercurrent in both public and private meetings this week in Vienna, where OPEC ministers have been holed up for several days. But an Iran freed from sanctions could add to a global oversupply of crude that has […]

Posted On : Published By : Tom Whipple
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Will Saudi boost oil capacity? Naimi’s retort: Show me 10 percent return

VIENNA When it comes to whether Saudi Arabia will invest billions of dollars to increase its ability to pump more oil, boosting the world’s only large stand-by reserve, minister Ali al-Naimi has a quick answer: show me the return. Naimi, speaking informally to reporters in Vienna on Thursday, was asked whether the kingdom needs to lift its capacity now that it is pumping crude at its fastest rate in over three decades to meet a resurgence in demand. The country last embarked on a $100 billion push to raise its capacity a decade ago amid a price boom fueled by China’s growth. It can now pump as much as 12.5 million barrels per day (bpd), scarcely 2 million bpd above current output. With casual banter, Naimi responded: "Is there demand for Saudi crude? Can you guarantee it? If I go and put a dollar, will you guarantee that I […]

Posted On : Published By : Tom Whipple
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Indian Oil, Hindustan Petroleum to Buy Crude from Iraq

Hindustan Petroleum Corp. said it a statement it has been in touch with Somo, the oil-marketing company of the Iraq government, to seek an allocation of 2 million barrels of crude oil in the coming month. The procurement comes after India’s oil ministry asked Hindustan Petroleum and Indian Oil to purchase 4 million barrels of Basra light crude oil on behalf of Indian Strategic Petroleum Reserves, Hindustan Petroleum Corp. said in a filing to stock exchanges Thursday. Indian Oil Corp. separately said it acted as a facilitator for the import of crude from Iraq on behalf of the Indian government. The crude is meant for the strategic reserves, the company said in a filing to stock exchanges. India, the world’s fourth-largest petroleum consumer, is setting up three centers at Vishakhapatnam, Mangalore, and Padur, in the southern part of India, to store crude to meet its needs in times of […]

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China is hoarding cheap oil in a fleet of supertankers

China is hoarding oil As Middle East oil producers drive prices lower and make life difficult for the U.S. fracking industry, one clear winner is emerging: China The world’s second-largest economy become the top oil importer in April. The key reason? China is taking advantage of cheap oil to boost its strategic reserves. “They’ve been building out strategic storage. The goal is to build out to about 500 million barrels, compared to the U.S. capacity of 700 million to 800 million barrels,” said Jeff Brown of Singapore-based energy consultants FGE. Brown said that while the numbers are a little murky, China has already built out about 150 million barrels of extra storage, with more capacity planned through the end of the year. “They take a lot of pride in buying oil when it’s cheap,” he said. Despite the massive capacity boom, China is still buying more oil than it […]

Posted On : Published By : Tom Whipple
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In Kentucky, talk of a ‘war on coal’ gives way to hope for new economy

HARLAN COUNTY, KY When Dan Mosley became head of Kentucky’s Harlan County government this year, he promised – like those elected before him – to defend the state’s beleaguered coal industry. But Mosley also vowed to do something else for his county: help build a new economy based on something other than coal. "The best business I’ve seen in town lately has been the U-Haul business because people are moving out," said Mosley, a boyish-looking father of two, speaking after a community meeting in the century-old coal town of Benham. "The time has come to wipe away our tears," he says. "We have no choice but to diversify.” Talk of an economic transition remains difficult in eastern Kentucky, where you can still spot bumper stickers that read "Mine Every Lump" and statues honor coal miners. These are the people Kentucky Republican Senator Mitch McConnell says are victims of an […]

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Bakken gets federal crime strike force

Federal task force created to tackle organized crime in the Bakken oil fields of Montana and North Dakota. Photo by photostock77/Shutterstock WASHINGTON, June 4 (UPI) — State and federal authorities announced the creation of a "strike force" aimed at addressing organized crime in and around the Bakken oil field. "The strike force will have the capability of not only dismantling local criminal organizations in the Bakken, but also to take out the national and international components of these organizations wherever they may be located," acting U.S. Attorney for the District of North Dakota Chris Myers said in a statement. North Dakota last year received a $3 million federal grant to help address crime in the western part of the state, where much of the Bakken and Three Forks oil reserves are situated. State lawmakers complained, however, that FBI and Drug Enforcement Agency officials aren’t stationed permanently in Williston, the […]

Posted On : Published By : Tom Whipple