Category:

Shell to Cease Oil Exploration in Alaskan Arctic After Disappointing Drilling Season

The oil and gas company pressed ahead with its multibillion-dollar exploration program offshore Alaska this summer despite tumbling oil prices and strident opposition from environmental groups concerned that drilling in the region could cause an ecological disaster. The Arctic—one of the few remaining unexplored oil frontiers—was a prize too great to simply walk away from, but the company has changed its mind after the Burger J well it drilled in the Chukchi Sea this summer only showed traces of oil and gas. “This is a clearly disappointing exploration outcome for this part of the basin,” said Marvin Odum, Shell’s upstream head in the Americas. And though in the longer term, Shell sees important exploration potential in the basin, it said it would cease further exploration offshore Alaska for the foreseeable future. The Anglo-Dutch company expects to book charges in its accounts as a result of this decision, and will […]

Posted On : Published By : Tom Whipple
Category:

Shell Halts Alaska Oil Drilling After Disappointing Well Result

Royal Dutch Shell Plc will stop exploring offshore Alaska, citing high costs and “challenging” regulation, six weeks after it got approval to fully drill a well in the Arctic waters off the U.S. state. Shell forecast it will take related financial charges, according to a company statement on Monday. The balance sheet carrying value of its Alaska position is about $3 billion, with additional future contractual commitments of about $1.1 billion, The Hague, Netherlands-based energy explorer said. Shell is abandoning exploration after winning approval in August to drill the Burger J well in Alaska’s Chukchi Sea. Success would have brought the company back to an area it left three years ago after a rig ran aground. That incident helped prompt the Obama administration to revisit U.S. rules for exploration in the region, while environmental groups have long-protested Shell’s plans, saying a spill could cause an ecological disaster. Indications of […]

Posted On : Published By : Tom Whipple
Category:

After calamitous year for coal, U.S. consumers hold key for rails

A shovel is placed over coal briquettes during a protest in front of the chancellery in Berlin December 3, 2014. Investors in U.S. railroad stocks, who have been punished in 2015 by an accelerating decline in high-margin coal shipments, now are pinning their long-term hopes on a resurgence in consumer spending. Their bet is that a strengthening economy will produce enough demand that railroads will be able to replace the income lost to years of declining coal use with so-called intermodal shipping – the movement of containers stuffed with clothing, furniture and other consumer goods. Thanks to environmental rules regulating power plant emissions, coal use has declined steadily since peaking in 2008. So far this year, freight volumes have tumbled 9.2 percent as low energy prices encouraged utilities to switch to burning cheaper natural gas, while the strong U.S. dollar has hurt exports. The accelerated decline this year has […]

Posted On : Published By : Tom Whipple
Category:

Junk-Debt Investors Fight for Scraps as U.S. Shale Rout Deepens

Photographer: Brittany Sowacke/Bloomberg It’s every U.S. shale investor for himself as the worst oil rout in almost 30 years drags down its latest victims. Investors in $158.2 million of Goodrich Petroleum Corp.’s debt agreed to take 47 cents on the dollar in exchange for stock warrants for some note holders and a lien on Goodrich’s oil acreage, according to a company statement today. That puts them second in line if the Houston-based company liquidates its assets in bankruptcy and pushes the remaining holders of $116.8 million in original bonds to the back of the pack. "In the industry it’s called ‘getting primed,’" said Spencer Cutter, a credit analyst with Bloomberg Intelligence. "It’s every man for himself. They’re trying to get in and get exchanged, and if you can’t you’re getting left out in the cold." Wildcatters attracted billions of dollars during the boom after years of near-zero interest rates […]

Posted On : Published By : Tom Whipple
Category:

Average U.S. gasoline price drops 9 cents in two weeks: Lundberg

A car is filled with gasoline at a gas station pump in Carlsbad, California August 4, 2015. The average price of a gallon of gasoline in the United States fell 9 cents in the past two weeks as refiners and retailers reduced their profit margins to sell more fuel, according to a Lundberg survey released on Sunday. Regular grade gasoline fell to $2.35 per gallon in the Sept. 25 survey from $2.44 on Sept. 11, when the previous survey was taken. It has tumbled 36 cents over the past five weeks to the lowest level since late February. Compared with one year ago, the $2.35 average price was $1.03 a gallon lower. The latest decline came despite crude oil prices having strengthened in the last five weeks, survey publisher Trilby Lundberg said. "The main reason for this is that both refiners and retailers have reduced their own profit margins […]

Posted On : Published By : Tom Whipple
Category:

Anticosti Island: Environmental groups call for BAPE review of shale-gas drilling

Quebec environmental groups are calling on the government to publish the results of 2015 drilling for shale gas on Anticosti Island and to hold an environmental review. (Radio-Canada) The Quebec government is not being straightforward about the data it has on shale-gas exploration on Anticosti Island, a coalition of environmental and citizens’ groups said Friday. The coalition is asking the Liberal government to order environmental review hearings through its provincial assessment agency, known as the BAPE, and to publish the results of its drilling activities on Anticosti. The director of Nature-Québec, Christian Simard, said there are eleven sites where drilling has been completed over the past two years. Simard said in 2014, the findings were published on the government’s website, however, this year’s findings have yet to be made public. "It is time to have an assessment, and to make it public — to open a debate," he said. […]

Posted On : Published By : ASPO-USA
Category:

Bank of America Seeing Life Signs in Russia’s Foundering Economy

Bank of America Corp. is starting to see faint signs of an economic recovery in Russia. The magnitude of a slowdown in capital investment is easing, while corporate profits have been increasing, a combination that Vladimir Osakovskiy, the bank’s chief economist in Moscow, said could mark a turning point. The country’s recession may have bottomed when gross domestic product shrank 4.6 percent in the second quarter, and considering that company spending will probably drive the recovery, that stabilization is likely to be more important for the broader economy than persistent weakness in consumer demand, he wrote in a report last week. “Corporate profits in Russia are quite good year-to-date, and we look at robust growth in corporate profits as the main potential driver of stabilization and recovery in the near future,” Osakovskiy said by phone from Moscow last week. “We might see that the main macroeconomic indicators will start […]

Posted On : Published By : Tom Whipple
Category:

Kremlin Said to Urge Basel III Delay as Economic Crisis Deepens

Kremlin aides are urging Russia’s central bank to delay introducing tougher capital rules for lenders known as Basel III, arguing they may deepen the worst economic crisis in six years, three people familiar with the matter said. The requirements, due to take effect Jan. 1, may force banks to cut corporate lending, prolonging a recession that was triggered by plunging oil revenue and sanctions over Ukraine, one of the people said. Noncompliance will also hurt because lenders in breach won’t be allowed to pay dividends to shareholders, including the government, so a delay may help the budget, the person said. An Economy Ministry official proposed the Basel III delay at a meeting with Bank of Russia Governor Elvira Nabiullina and Prime Minister Dmitry Medvedev this month, one of the people said. Nabiullina, who’s tasked with safeguarding the entire financial system, rejected the initiative, according to the person. “The central […]

Posted On : Published By : Tom Whipple
Category:

Russian Oil Producers Head for Tax Showdown Amid Output Warnings

Oil workers pass a pumping unit near Almetyevsk, Russia. Photographer: Andrey Rudakov Russia’s oil industry begins a critical battle over taxes this week. Losing may result in the first decline in crude production at the world’s largest energy exporter since 2008. Oil producers are due to meet with Russian Prime Minister Dmitry Medvedev Monday to present their joint view on Finance Ministry proposals to increase crude oil extraction taxes, said two company representatives who asked not be be identified because the meeting isn’t public. The ministry wants to boost revenue by about 600 billion rubles ($9.1 billion) in 2016 alone to mitigate the biggest budget deficit in years. The price of crude plunged by about 50 percent over the past year because of a global oversupply. While Russia’s government finances have deteriorated, its oil companies have proved more resilient to the slump as some tax rates automatically adjusted lower […]

Posted On : Published By : Tom Whipple
Category:

Zero Inflation Looms Again for ECB as Oil Drop Counters Stimulus

European Central Bank President Mario Draghi If the euro area is about to run out of inflation — again — it won’t shock Mario Draghi. The European Central Bank president said more than three weeks ago that the inflation rate could turn negative this year because of the renewed decline in oil prices. The 19-nation region is set to take a step in that direction on Wednesday, when data will show consumer prices stagnated in September for the first time in five months, according to a Bloomberg survey of economists. Stalled prices would mark a setback for policy makers who have been trying to steer inflation back toward 2 percent for the better part of two years, and may spark a new debate about deflation risks. Yet while officials have repeatedly stressed that they’re prepared to add stimulus if needed, they’ve also said they want more evidence before making […]

Posted On : Published By : Tom Whipple