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Yuan Devaluation, Slow China Economy Won’t Hurt Cathay, Chu Says

Cathay Pacific Airways Ltd. Chief Executive Officer Ivan Chu said the devaluation of the yuan and an economic slowdown won’t hurt demand in Greater China, where the airline gets half its revenue. Traffic growth in the region in the first half was in “double digits,” a reflection of a strong yuan against world currencies, Chu said in an interview Wednesday with Bloomberg Television’s Francine Lacqua from Hong Kong, where Cathay is based. The airline is still filling most of its seats, but Chu said he is concerned about cargo, especially fewer goods coming out of China for exports. “The renminbi has been rising for the last five years, it has been a one-way bet,” said Chu, 53. “Some adjustments, some growth slowing down from 10 percent to 7 percent is not a huge deal. So any economy when it’s growing so fast, you have some correction. So I do […]

Posted On : Published By : Tom Whipple
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Oil Companies Sit on Hands at Auction for Leases

Photo Oil pumping jacks and drilling pads at the Kern River Oil Field in Bakersfield, Calif. Credit Mark Ralston/Agence France-Presse — Getty Images HOUSTON — With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986. It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future. The auction, for drilling leases, attracted a scant $22.7 million in sales from five companies, but energy analysts said that came as no surprise on a day when the American oil benchmark price plummeted by more than 4 percent. For the first time since the recession, it is approaching the symbolic $40-a-barrel level. Last summer, it was above $100 a barrel. A glut on American and world […]

Posted On : Published By : Tom Whipple
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Energy Slowdown Hits One Town Hard

WAYNESBURG, Pa.—As fracking took off here over the past eight years, so did Gary Bowers’s business supplying everything from Gatorade to replacement valves to crews drilling into natural-gas reserves a mile underground. This year, however, the good times at his firm, Producers Supply Co., came to a screeching halt. Since January, the company’s monthly sales have declined by more than half, as the number of drilling rigs operating in the Marcellus Shale has plummeted to 70 from 131 at the end of last year. “This thing is spiraling down, and we don’t know how long it’s going to last,” said Mr. Bowers, who expects the rig count to keep falling. “It’s new territory for Appalachia.” The economic pain from lower oil and gas prices is spreading to small towns and businesses across Pennsylvania and parts of Ohio and West Virginia that had been riding a wave of prosperity from […]

Posted On : Published By : Tom Whipple
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Auto Industry’s Ranks of Electric-Car Battery Suppliers Narrow

Failed technology gambles and a half-decade of jockeying among suppliers have top auto makers increasing choosing LG, Samsung Electronics Co. SSNHZ 0.00 % ’s SDI unit and Panasonic Corp. PCRFY -0.79 % The three are emerging as the early winners amid a shift by car companies away from in-house efforts, traditional battery makers and startup ventures. Their quick rise as key suppliers to European, Asian and U.S. car makers is remarkable for an industry that typically insists on reducing risks by building key components such as engines in-house—or using lots of suppliers for less-critical parts. In part, experts say few companies so far have shown they can meet the challenge of building advanced batteries with the quality, weight and cost expectations that auto makers demand. And the technology is moving so fast that few auto makers have tried to master the exotic chemistry required. Of course, electric cars remain […]

Posted On : Published By : Tom Whipple
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Canadian Oil-Sands Producers Struggle

CALGARY, Alberta—Canada’s high-cost oil-sands producers are struggling as oil prices sink to fresh six-year lows, and even the most efficient drillers are losing money on every barrel they produce at current prices, according to a report published Wednesday. Canadian oil-sands production has grown 30% in the past five years but the recent price slump has hit producers’ bottom lines and forced them to suspend development of new projects. Western Canadian heavy crude costs more to extract than other oil sources because it must be separated from deposits of sand. It also trades at a discount to other crudes, in part because of the distance it must be transported from remote boreal forests in Alberta. Benchmark West Texas Intermediate oil cost less than $41 a barrel in Wednesday trading, which although at multiyear lows was still well above the Western Canadian Select average of around $24 a barrel. More than […]

Posted On : Published By : Tom Whipple
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Marcellus Shale Gas Revolution Deals Blow to Rockies’ Producers

Eight years ago, a group of companies led by Kinder Morgan Energy Partners began building a $6.8 billion pipeline to carry natural gas from America’s Rocky Mountains to fuel-hungry markets in the East. Then came the shale gas revolution. The eastern U.S. is now home to the country’s most productive formation, the Marcellus, and the 1,698-mile Rockies Express is carrying lower-cost gas in the opposite direction. On Aug. 1, the pipeline was partially reversed, shrinking the market for Colorado and Wyoming drillers who’ve seen their share prices fall as much as 93 percent from 2008 highs. The burgeoning supply from Pennsylvania and West Virginia has transformed the U.S. gas market, redirecting pipeline flows and sending prices plummeting. Output from the Niobrara shale formation in Colorado and Wyoming has dropped 12 percent from an all-time high in 2012 as production from the region competes with the Marcellus, where output is […]

Posted On : Published By : Tom Whipple
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Strong jobs, weak inflation data muddy Fed rate debate: minutes

U.S. Federal Reserve officials widely agreed last month the economy was nearing the point where interest rates should move higher, but worried lagging inflation and a weak global economy posed too big a risk to commit to "liftoff." Only one Fed policymaker was ready to vote for a rate hike at the central bank’s July 28-29 policy meeting, while some others "viewed the economic conditions for beginning to increase the target range for the federal funds rate as having been met or were confident that they would be met shortly," according to minutes from the meeting released on Wednesday. "Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point," the minutes said. That sentiment, combined with a broader recognition among "many members" that full employment was close, led the Fed to say in its post-meeting statement that […]

Posted On : Published By : Tom Whipple
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Athabasca oilsands operations hit by water shortages

Alberta’s first oilsands operation, Bitumont, on the shore of Athabasca River near Fort McMurray, Alta. Many oilsands operators are facing water restrictions due to low water levels. (Jeff McIntosh/Canadian Press) It’s wreaked havoc on crops and shut down fisheries across Alberta, but now the hot dry weather and ensuing stresses on our rivers have hit the oilsands. This week the Alberta Energy Regulator reined in oil companies by imposing restrictions on how much water they can draw from the North Athabasca basin. Those in the lower Athabasca region — including heavy hitters Suncor, Syncrude and CNRL — are not affected by the restrictions. ‘Preview of the future’ Simon Donner says a University of British Columbia study he helped to write predicted this would happen. He says this year’s low flows are the result of both climate change and a strong El Nino event that’s developing. "With regulators this week […]

Posted On : Published By : Tom Whipple
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As Canada’s Oil Debt Soars to Record, an Industry Shakeout Looms

Canadian energy companies’ debt loads are the heaviest in at least a decade, boosting concern that some won’t survive the collapse in crude prices. (Bloomberg) — Canadian energy companies’ debt loads are the heaviest in at least a decade, boosting concern that some won’t survive the collapse in crude prices. Trican Well Service Ltd., Canada’s largest fracking service provider, said last week it may be unable to continue because it’s in danger of breaching the terms of its debt. It’s the latest firm to see crude’s descent to a six-year low sap the cash flow needed to meet financial obligations. Oil’s plunge has pushed a measure of the average debt burden among Canadian energy firms to the highest since at least 2002, and another measure of their ability to make interest payments to the third-lowest level in a decade, according to data compiled by Bloomberg. Facing some of the […]

Posted On : Published By : Tom Whipple
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Texas RRC June Production Data

The Texas RRC Oil & Gas Production Estimates are in. By now everyone should know that the Texas oil and gas data is incomplete and the drooping data lines will eventually look more like the EIA lines as the more and more data comes. The EIA data is only through May but all Texas Railroad Commission data is through June. Texas C+C It appears that Texas C+C was flat to slightly up in June. Dean C+C Dr. Dean Fantazzini has a program that attempts to correct for the incomplete data and give a pretty good estimate of what the final data will look like. He has April C+C down, May down also but only slightly so and has June Texas Crude+Condensate up slightly. Texas crude only appears to have increased slightly. Dean Oil Dean has crude only pretty much the same as C+C for April, May and June except […]

Posted On : Published By : Tom Whipple