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Oil Rigs Left Idling Turn Caribbean Into Expensive Parking Lot

Imagine parking your $300 million boat for months out in the open sea, with well-paid mechanics hovering around it and the engine running. The Gulf of Mexico and the Caribbean Sea have become a garage for deepwater drillships — at a cost of about $70,000 a day each. It’s either that or send your precious rig to a scrapyard. The dilemma underscores how an offshore industry that geared up for an oil boom is grappling with a bust. Rig owners are putting equipment aside at unprecedented numbers as customers including ConocoPhillips pull back from higher-cost deepwater exploration. That’s helped make Transocean Ltd. and Ensco Plc two of the three worst performers in the Standard & Poor’s 500 Index over the past year. “Most contractors have never seen an environment like this, where demand is falling as quickly as it is,” David Smith, an analyst at Heikkinen Energy Advisors in […]

Posted On : Published By : Tom Whipple
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Jobs Machine From Canada Oil Slows as Robots Add to Price Slump

Truck driver Craig Huzulak is unemployed after losing his job four times since December — the new normal in a Canadian oil patch still reeling from a downturn. Huzulak, 49, was working at a mine last year near Fort McMurray, Alberta, when crude prices plunged and work dried up. He lost two more positions in the following months and then had a job offer yanked at the end of June before he could even start. In addition to the market rout, the father of two now worries about the self-driving trucks Suncor Energy Inc. is rolling out in its oil-sands mining operations that will replace workers like him to save companies money. “It’s really, really hard for heavy-equipment operators,” said Huzulak, who has driven trucks and worked on drilling rigs in Western Canada for 15 years. “There’s a lot more fear now that this might last longer.” The burgeoning […]

Posted On : Published By : Tom Whipple
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Murkowski breaks rank on oil tie to highway funding

Measure aimed at keeping highway trust fund afloat with oil sales draws criticism from Sen. Lisa Murkowski, vocal supporter of the industry. File photo by Jim Ruymen/UPI WASHINGTON, July 22 (UPI) — Sen. Lisa Murkowski , a vocal supporter of the oil industry, said selling oil from strategic national reserves to fund highway projects was bad policy. Murkowski, R-Alaska, chairperson of the Senate Energy Committee, criticized the so-called bipartisan DRIVE Act, a measure aimed at generating $9 billion for the federal highway trust fund, by suggesting it puts national security interests at risk . "The Strategic Petroleum Reserve is a vital national security asset that must be maintained in case of serious future supply disruptions," Murkowski said. "While I recognize that a long-term highway bill is a priority, a shortsighted sale that undermines our emergency preparedness could have real and lasting impacts on our security." Senate Majority Leader Mitch […]

Posted On : Published By : Tom Whipple
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How a Chinese Company Slipped on Canada’s Oil Sands

Weeks after the state-controlled oil company bought Nexen for $15 billion, its executives were in Calgary with a blunt message for the Canadian company, which had struggled for years to extract crude from the oil sands in the Alberta wilderness. Cnooc Chief Executive Li Fanrong told staffers Nexen provided just 2% of Cnooc’s profits, say attendees, warning that “2% is not enough.” Two years later, Cnooc is still trying to fix Nexen, its troubles compounded by low crude prices. And now Cnooc must explain an oil spill: This month, a pipeline Nexen installed last year ruptured, spilling nearly 31,500 barrels of a mixture of crude oil, wastewater and sand in northern Alberta. Nexen’s chief executive, Fang Zhi, on Wednesday stood by the oil-spill site near the hamlet of Anzac. “It is very disappointing that this has happened,” he said, the scent of petroleum wafting. “I therefore personally apologize.” Buying […]

Posted On : Published By : Tom Whipple
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Congress Eyes Sales From Nation’s Oil Stockpile for Highway Funding

By Amy Harder And Nicole Friedman WASHINGTON–Lawmakers are eyeing the Strategic Petroleum Reserve as a piggy bank, but not without controversy. The Senate is considering legislation that would partly replenish the U.S. highway trust fund with $9 billion worth of sales from the reserve, which at 695.1 million barrels of oil is close to its 713.5-million-barrel capacity. This month, the House passed a bill to sell 80 million barrels from the reserve to raise $7 billion to help pay for legislation to boost government drug approvals and research funding. But proposals to tap the nation’s oil stockpile as a way to pay for unrelated government programs have drawn opposition. The Senate Energy Committee chairman, the U.S. energy secretary and oil industry analysts all criticize the move as shortsighted. The sale of crude from the reserve is one of about 15 new funding sources that Senate leaders want to use […]

Posted On : Published By : Tom Whipple
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Falling Crude Prices Upend Canada’s Oil Sands Projects

Two years ago Canadian oil sands producer Cenovus Energy Inc., CVE -2.54 % buoyed by success at its flagship project and eager to cut operating expenses, halved the amount of instrumentation used to measure finicky temperature and pressure at its wells. But that turned out to be a costly mistake that cut into its Foster Creek site’s production volumes, which only have recently recovered after the company reversed course. “We started to cut our operating costs, but in hindsight that’s a lesson learned,” Harbir Chhina, Cenovus’ executive vice president in charge of oil sands, said in an interview. “If I compare the oil sands to a baseball game, I think we just finished the first inning,” he said. Of the roughly two million barrels a day that Canada currently produces from its oil sands, about half is mined from the surface using giant excavators and the world’s tallest dump […]

Posted On : Published By : Tom Whipple
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Rail Tank Car Orders Fall Sharply

Orders for railroad tank cars fell sharply in second quarter, reflecting lower shipments of crude oil amid falling prices. Orders for 3,155 tank cars were placed in the quarter, down 29% from first quarter and off 70% from the second quarter of 2014, the Railway Supply Institute reported. The order backlog dropped 11% from the first quarter to 46,375 tank cars. The decline comes amid a broad decline in energy shipments at railroads. Carload volume for oil and petroleum products for the week ended July 18 was down 20% from last year and were off 2.7% in the first 28 weeks of 2015 from the same period in 2014, according to the Association of American Railroads. Meanwhile, orders for boxcars surged in the second quarter as shippers—led by the paper industry—complained of car shortages caused by railroads culling older boxcars from their fleets. Boxcar orders were 2,940 against none […]

Posted On : Published By : Tom Whipple
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Texas RRC Oil & Gas Production

The Texas RRC Data is out. All RRC data below is through May. The EIA data is through April. Texas C+C There appears to be an increase in Texas May crude oil production. You will notice that the EIA has departed from their usual practice of just estimating Texas C+C production up about 50,000 bpd for every month for the last six months or so. They have a new method or estimating Texas production which is explained in the first link below the charts. That new method has Texas C+C production down 64,000 barrels per day in April. The May Texas production data will be out on July 31, in the Petroleum Supply Monthly . Dean C+C Dr. Dean Fantazzini has calculated what the data wil eventually look like and given us the 95% confidence bounds. He has Texas C+C basically flat since December. Texas crude only appears to […]

Posted On : Published By : Tom Whipple
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US Senate energy bill to speed LNG exports, clarify SPR sales limits

Key US senators have reached a deal on a broad package of energy sector reforms that if enacted would speed decision-making on liquefied natural gas exports, focus the intent of the Strategic Petroleum Reserve and require reviews of how federal rules impact electric system reliability. The agreement on the bipartisan legislative package follows a number of Senate hearings in recent months and lawmakers’ consideration of more than 100 bills offered for inclusion in the wider package. The bill unveiled Wednesday is also the result of negotiations between the two leaders of the Senate Energy and Natural Resources Committee — Chairman Lisa Murkowski of Alaska and Ranking Member Maria Cantwell of Washington — and their staffs, and debate and voting — a markup — of the bill is scheduled to begin in the week starting July 27. A major provision in the bill will speed decision-making on LNG exports by […]

Posted On : Published By : Tom Whipple
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US coal carload volumes rise to highest total in 11 weeks: AAR

Coal carload volumes originated on US railroads reached to an 11-week high, according to data released Wednesday by the Association of American Railroads. For the week ending July 18, the AAR reported 99,975 coal carloads, up 4.9% from 95,318 carloads the previous week. It was the second straight week of coal shipment gains since a year-low 82,924 carloads were reported for the week ending July 4. It was the highest volume of coal carloads since 101,495 carloads for the week ending May 2. Despite the increase, the latest total marked the 15th week this year coal volumes were below 100,000 carloads. It is the most times in a year weekly volumes have remained that low since the AAR began such record keeping in 1988, more than doubling the previous high of seven weeks in 1989. Article continues below… Platts Coal Trader provides the latest prices for key benchmark coals, […]

Posted On : Published By : Tom Whipple