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Low oil price domino effect to shut more North Sea fields early

A section of the BP Eastern Trough Area Project (ETAP) oil platform is seen in the North Sea, around 100 miles east of Aberdeen in Scotland February 24, 2014. Low oil prices have tightened the screws on some of the most depleted and costly oilfields in Britain’s North Sea, forcing operators to cease production earlier than planned and adding to fears of a domino effect in mature areas. For years North Sea producers have delayed expensive decommissioning projects, supported by high oil prices that have helped paper over soaring operating costs. But with oil prices halving over the last 12 months, some companies are faced with the unenviable choice of operating at a loss during a field’s twilight years, or limiting losses by bringing decommissioning forwards. Unsurprisingly, the industry is looking at the second option very closely. "It’s a sign that many of the meetings I’m going to, the […]

Posted On : Published By : Tom Whipple
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BHP says will take $2bln charge on U.S. onshore energy business

A promotional sign adorns a stage at a BHP Billiton function in central Sydney August 20, 2013. BHP Billiton on Wednesday said it will take a $2 billion impairment on its U.S. shale operations – the third writedown in three years. The charge on fiscal 2015 financial results, pushed BHP’s Australian shares to their biggest fall in a week — down 1.7 percent to $26.64. The gas-focused Hawkville field in Texas accounts for the substantial majority of the charge to be included in results for the fiscal year that ended on June 30, which BHP estimates will be around $2.8 billion on a pre-tax basis. BHP announced a $328 million write-down on the Permian field in February and a $2.84 billion impairment on the gas component of the shale division in 2012. The latest charge comes as BHP, the world’s biggest diversified mining company, faces a sharp fall in […]

Posted On : Published By : Tom Whipple
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Shale Gas Supply Held Hostage by Oil to Drop by Most in a Year

(Bloomberg) — After four years of record supply, America’s natural gas output is showing signs of weakness as producers retreat amid tumbling oil prices. Gas production from the seven largest U.S. shale basins will fall 0.6 percent to 45.1 billion cubic feet a day in August from a month earlier, the biggest drop since March 2014, the U.S. Energy Information Administration said Monday in its monthly Drilling Productivity report. EIA estimates have shown supply declines since June. The government’s forecasts signal the collapse in crude oil prices, which have plunged by about half over the past year, is reverberating in the natural gas market. As drillers shut wells in liquids-rich deposits from North Dakota to Texas, they’re also curtailing gas output from those reservoirs. That may prevent further price declines for gas, which has slid almost a third over the same period. “Gas is being held captive by oil,” […]

Posted On : Published By : Tom Whipple
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Suncor Oil Sands Project Aims to Replace Steam with Radio Waves

CALGARY, Alberta, July 14 (Reuters) – Suncor Energy Inc has launched a pilot project to replace the high-pressure steam used to extract bitumen from oil sands with radio frequency technology developed by U.S. defence contractor Harris Corporation. Canada’s largest oil and gas company, which produces 440,000 barrels per day from Alberta’s oil sands, said on Tuesday that the technology could significantly reduce costs, greenhouse gas emissions and water usage. Alberta’s oil sands are the world’s third-largest crude reserves after Saudi Arabia and Venezuela and a leading source of U.S. crude imports. However, breakeven costs for new projects are some of the highest globally. And the carbon-intensive process of using steam to liquefy the tar-like bitumen trapped in the sand has attracted fierce opposition from environmental groups. "Anytime you can develop a resource that is more environmentally benign and economically advantageous is going to be a strategic advantage. I would […]

Posted On : Published By : Tom Whipple
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Summer gasoline prices are lowest in years

graph of monthly average regular grade motor gasoline retail price, as explained in the article text The average retail price for motor gasoline this summer (April through September) is expected to be $2.67 per gallon, the lowest price (in real dollars, meaning adjusted for inflation) since 2009, based on projections in EIA’s July Short-Term Energy Outlook (STEO). This decline is mainly the result of the projected 41% year-over-year decline in the average price of North Sea Brent crude oil. Travel and gasoline consumption are expected to be higher this summer compared to levels in 2014. Motor gasoline consumption is expected to increase by 194,000 barrels per day (b/d), up 2.1% from last summer, reflecting higher real disposable income, substantially lower retail motor gasoline prices, and higher employment and consumer confidence. graph of monthly U.S. motor gasoline product supplied, as explained in the article text Source: U.S. Energy Information Administration, […]

Posted On : Published By : Tom Whipple
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Weak U.S. retail sales hint at slower economic growth

A woman pulls shopping carts through the aisle of a Target store, Connecticut November 25, 2011. U.S. retail sales unexpectedly fell in June as households cut back on purchases of automobiles and a range of other goods, which could raise concerns the economy was slowing again and temper expectations of a September rate hike. The Commerce Department said on Tuesday retail sales slipped 0.3 percent, the weakest reading since February, after May’s downwardly revised 1.0 percent increase. Retail sales excluding automobiles, gasoline, building materials and food services dipped 0.1 percent following a 0.7 percent gain in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Coming on the heels of June’s disappointing employment report and sharp drop in small business confidence, the weak retail sales data suggests the economy might have lost some momentum at the end of the second […]

Posted On : Published By : Tom Whipple
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Shale Gas Bulldozer Runs Over Pessimists

“…why do operators keep drilling while their own over-production has depressed the price of natural gas by half of its value?” Art Berman, 2010 Thirty years ago, at an energy conference at M.I.T., I made a presentation about our research on natural gas supply, and opened with a joke. (That is, intentional humor.) The gas industry, I noted, kept saying that prices were too low to cover their costs, while continuing to drill. What could explain this? Management psychology? Animal spirits? Finance theory (option valuations)? No, the explanation was found in “The Journal of Abnormal Psychology.” The joke was much appreciated, except by the natural gas producers in the audience. Now, the same question could be raised. After all, for most of a decade, predictions of a production collapse have floated around the punditsphere, while estimates of the breakeven price have tended to be well above those which have […]

Posted On : Published By : ASPO-USA
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Russian Oil Production Hits Post-Soviet Record

Russian oil and condensate production reached a new post-soviet record of 10.7 million barrels a day in 2015, according to the latest analysis from Wood Mackenzie. The research firm claims that condensate production will increase by 50 percent by 2018, compared to 2014 levels, although Wood Mackenzie warns that Russia could face a sizeable production gap after 2020, when the impact of Western sanctions kick in. Mr Christian Boermel, Russia upstream analyst for Wood Mackenzie, commented: “We see Russia defying expectations in terms of 2015 liquid production levels achieving a new post-soviet record of 10.7 million barrels per day. The steady increase seen in the first half of this year is contrary to many pessimistic predictions, due to the turbulent geopolitical situation for the country as a result of the Ukraine crisis and subsequent Western sanctions. We see actual growth in liquids being driven by condensate, but given the […]

Posted On : Published By : Tom Whipple
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IMF Warns Eurozone That Greece Needs Far More Debt Relief

WASHINGTON—The International Monetary Fund questioned the ability of Greece to deliver on promised bailout overhauls and warned in its starkest language yet that the eurozone must commit to debt restructuring to ensure the program will work. The IMF’s warning—made in a three-page paper circulated to eurozone officials over the weekend and published more broadly Tuesday—is a reality check for Europe and Greece about the political and economic commitments needed from both sides. “The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by” eurozone authorities, the IMF said in its latest assessment of Greece’s economy. The IMF’s dour debt assessment is a clear warning that the fragile bailout accord hasn’t removed the risk of a Greek exit from the eurozone and that the IMF needs […]

Posted On : Published By : Tom Whipple
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Renewables outpace nuclear in economies making up 45 percent of world population: report

Solar, wind and other forms of renewable energy besides hydro-electric dams now supply more electricity than nuclear in Japan, China, India and five other major economies accounting for about half the world’s population, an atomic industry report shows. While nuclear stations on average produce about twice as much electricity as renewables annually for every kilowatt installed, the high growth of solar, wind and other renewables means atomic power is fast being eclipsed as nations turn away from the energy source after the Fukushima disaster in Japan. This is one of the main observations of the World Nuclear Industry Status Report 2015, a draft copy of which was given to Reuters before the release of the document at 0900 GMT in the House of Commons in London. Nuclear power generation increased by 2.2 percent globally in 2014, even with the first extended shutdown of Japan’s atomic industry for 45 years, […]

Posted On : Published By : Tom Whipple