AuthorTopic: Oil Glut: IT'S THE DEMAND, STUPID!  (Read 10649 times)

Offline Palloy2

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 6097
    • View Profile
    • Palloy's Blog
Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #30 on: June 23, 2017, 04:33:02 PM »
WTI Crude at $43.01. In a band $44 - $52 in last 2 months.

http://www.zerohedge.com/news/2017-06-23/demand-oil-pipeline-capacity-hits-6-year-low
Largest East Coast Pipeline Reveals Demand For Gasoline Is Crashing
Tyler Durden
Jun 23, 2017

There's a reason this week's EIA survey showing gasoline and oil supplies declining has failed to stop RBOB prices from collapsing to 7-month lows: The start of the summer has done nothing to revive sluggish demand. That's because despite what the EIA survey said, little has been done to reduce record fuel inventories.

The squeeze has gotten so bad, Northeast Colonial Pipeline Co., the operator of the biggest US fuel pipeline system, said that demand to transport gasoline to the country's populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply. It’s notable that this peak has arrived despite the advent of the summer driving season, which has seen gasoline demand pull back from last year's record highs, according to Reuters.

Because of the oversupply in the northeast, “line space”… the cost of renting “space” on the pipeline to assure one’s ability to get supplies of gasoline when necessary… has gone negative, according to Reuters. What can be more exemplary of excess inventories and of reduced demand for gasoline than this?

Refiners are in part to blame for the problem - they have continued to pump motor fuel at record levels for the second year in a row, worsening the oversupply problem, for fear of losing access to pipeline capacity.

More broadly, attempts by large producers to reduce global supplies have failed to meaningfully raise the price of oil.  And with good reason: Traders have been skeptical of an agreement between OPEC and non-OPEC producers, including Russia, to extend last year's supply cut, and already they're concerns are being validated: Iraq has said it plans to increase production later this year despite the agreement.

The existence of negative capacity is a reversal of the typical dynamic, where refiners are forced to supplement their deliveries with tanker shipments or imports.

    "The only reason [the pipelines] wouldn't be full is clearly that inventory levels are high enough that there is no incentive to move product to New York," said Sandy Fielder, director of oil and products research, Morningstar in Austin, Texas.

     

    "The situation is quite unusual," he said.

Even when high inventories make it unprofitable to do so, refiners typically keep pumping full volumes just to ensure they keep their rights to the line space, said Fielden.

But it appears as if refiners have finally reached the point where the financial pain outweighs the necessity of keeping their lease on some pipeline space - after all, Colonial has capacity to spare right now.

    "It's purely economic - why ship into a negative arb(itrage) for that long," one trader said.

Colonial connects Gulf Coast refineries with markets across the southern and eastern United States through more than 5,500 miles (8,850 km) of pipelines, delivering gasoline, diesel, jet fuel and other refined products. Colonial indicated it did not expect demand to exceed capacity for the next five-day cycle through the line, and informed shippers it would therefore not follow the typical process for rationing space.

Oil traders who insist on staying long can hold out hope that production shutdowns related to Tropical Storm Cindy could lift the price of oil for a short period. It's also worth noting that  Dennis Gartman, who recently said oil wouldn't rise above $44 a barrel again in his lifetime, just turned bullish folllowing a wave of downgrades from energy analyst. That could be good news...or maybe not.

While the cause of the supply is obvious, whatever has caused demand to fall off is less clear. Barclays has suggested that President Donald Trump's immigrant crackdown has made millions of illegal immigrants living in the US afraid to get behind the wheel for fear of being detained and deported. If this is true, that means Trump is to thank for gasoline prices falling to their lowest levels since February, despite the start of the summer driving season?
"The State is a body of armed men."

Offline Palloy2

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 6097
    • View Profile
    • Palloy's Blog
Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #31 on: July 08, 2017, 08:48:13 PM »
Very long, but important stuff - where has the "driving season" demand gone? (RE notwithstanding  ::) )

http://www.zerohedge.com/news/2017-07-08/when-facts-change-oils-biggest-cheerleader-capitulates-andy-halls-full-bearish-lette
"When The Facts Change"- Oil's Biggest Cheerleader Capitulates: Andy Hall's Full Bearish Letter
Tyler Durden
Jul 8, 2017

After years of being oil's biggest cheerleader, "oil god" Andy Hall, who starting with the OPEC Thanksgiving massacre in 2014 has had several abysmal years, in the process losing the bulk of his AUM, finally threw in the towel last week when in a July 3 letter to investors, he admitted that "the facts have changed" and that "fundamentals have deteriorated significantly" adding that "demand growth seems to be somewhat less than anticipated while supply keeps surprising to the upside... the expected acceleration in inventory drawdowns has not materialized... disappointed expectations for accelerating stock draws following the arrival of peak seasonal demand. Meanwhile, U.S. shale operators have continued to add rigs at a surprisingly fast rate thus raising the odds for significant oversupply in 2018, even if OPEC maintains its production cuts beyond Q1. Over the past month, the market has in effect priced in two negatives, one long-term, the other short-term."

More importantly, Hall confirms what we have said for the past two years and what most so-called experts have missed: namely that "shale is now the marginal barrel" and adds that "if the marginal cost of oil for the next 3 or 4 years really is headed to the mid-$40 range then OPEC’s attempts to push prices to $60 seem futile" adding that "It is unlikely that OPEC will find the cohesion necessary to keep prices at an artificially elevated level if all it does is accommodate rampant growth in shale oil production."

    That line of thinking raises the possibility of yet another reversal in OPEC policy – abandoning supply management and letting market forces balance supply and demand. This would obviously result in significantly lower prices, at least in the short term. On the other hand, with many OPEC countries needing much higher prices for fiscal sustainability (for Saudi Arabia the level is over $80), there is an inherent instability which adds to the geopolitical risks to supply. But for now, it seems likely that OPEC, led by Saudi Arabia, will stay the course with its current policy of production restraint. Oil at $45-50 is preferable to it being at $40 or below, even if the loftier target of $60 has proven elusive.

As a result, the swashbuckling, permabullish Andy Hall we have all grown to love and mock for the past 3 years is dead and buried, replaced with the latest reformed oil skeptic.

    These developments call for a more opportunistic approach to the oil market than hitherto. Whereas it once seemed positions could be held with an eye to a longer-term secular appreciation, that is no longer the case. Indeed, the evidence is now in plain sight. Over the past year, the front month WTI futures contract has moved by double digits in percentage terms 10 times within a $40 - $55 band. This volatility has been accentuated by large financial flows into and out of the market by non-traditional investors and algorithmic trading systems. Attempting to capture just a percentage of those moves makes more sense than trying to ride what has turned out to be a non-existent trend, especially when contango inflicts a negative roll return on investors. The extreme volatility within a rangebound environment also argues for a more tactical and conservative approach to portfolio management.

Still, for oil bulls who despair that their god has abandoned them there is some hope. As Hall concludes, "for now, the market is heavily oversold with a record speculative short position. Q3 should still see decent stock draws even if they are insufficient to eliminate excess stocks. Also, increases in the rig count appear to be ending and could decline in the coming weeks and months. It also remains to be seen how quickly the increased drilling activity will translate into a commensurate increase in the number of completed wells and whether cyclical cost pressures will accelerate or bottlenecks develop. Already, the number of drilled uncompleted wells (DUCs) has been rising quite rapidly. There is also a non-zero chance that OPEC might surprise the market with a further “shock and awe” production cut. Taken together these considerations mean there is a good chance for a price recovery from current levels."

But before you bet the ranch (on margin) read this, "this recovery will be limited for the reasons set out earlier and because of the overhang of potential selling from oil producers who are significantly underhedged for 2018."

Finally, for all those contrarian oil bears who were patiently waiting for that immaculate sign when both Gartman and Hall turn bearish, now is the time to buy.

* * *

Below is Hall's latest letter to investors:

July 3, 2017

Dear Investor,

The oil rout continued in June with prices entering bear market territory. Not only did sentiment plumb new depths but fundamentals appear to have materially worsened. Demand growth seems to be somewhat less than anticipated while supply keeps surprising to the upside. The expected acceleration in inventory drawdowns has not materialized – at least as evidenced by available high frequency data. Several weeks of lackluster inventory data from the EIA, along with reports of increasing amounts of oil in transit and in floating storage, disappointed expectations for accelerating stock draws following the arrival of peak seasonal demand.

Meanwhile, U.S. shale operators have continued to add rigs at a surprisingly fast rate thus raising the odds for significant oversupply in 2018, even if OPEC maintains its production cuts beyond Q1. Over the past month, the market has in effect priced in two negatives, one long-term, the other short-term.

The longer-term negative is that it is becoming increasingly evident that, under most reasonable scenarios, U.S. shale oil will be the marginal source of supply, at least until 2020. There are enough non+OPEC, non-shale production projects already in the pipeline (and which were sanctioned when prices were much higher than today) that incremental U.S. shale oil production alone can balance the market for the next two or three years. Moreover, and more importantly, it is now becoming apparent that the cost of this oil is significantly lower than was believed to be the case even a few months ago. That means the long-term price anchor for oil has moved lower. At the start of the year, the anchor was thought to be about $60 (Brent) and rising over time. Today, it appears to be closer to $50 (and possibly still falling). Prices for long-dated futures have therefore moved down to reflect this new perception.

The short-term negative is an apparent deterioration in the supply and demand balances for 2017. Until recently it looked like demand would exceed supply by as much as 1.5 million bpd if OPEC maintained its production cuts through 2017. This would have eliminated the global inventory surplus sometime in Q3 and resulted in a backwardated market. It now seems, however, that the supply deficit will be considerably smaller than originally expected – probably only around 0.5 million bpd. There will therefore still be sizeable excess stocks at the end of the year. This realization has resulted in the market moving into a steeper and uninterrupted contango with spot prices falling relative to deferred prices which, as just noted, have themselves ratcheted lower.

We discuss both these developments in more detail below. However, absent some geopolitically induced supply curtailment or a further cut by OPEC, oil prices are likely to be range bound around a level that limits the growth in shale oil production. That would mean the forward WTI strip ought to be somewhere below $50.

Shale is now the marginal barrel

Technological advances have continued to drive down well breakevens as well as expand the shale oil resource base in the U.S. In a recent report, PIRA estimated that there are now 80 billion barrels, or half of the recoverable U.S. shale oil resource base, that is economic at $50 Brent (say $48 WTI) or less. This represents some 215,000 well locations. Each of these on average can produce around 300 bpd in its first year on stream. The current horizontal oil rig count is 650 and has been growing at a rate that would bring the count to close to 800 by the end of the year. 800 rigs can drill about 15,000 wells per annum which means potentially 4.5 million bpd of gross new production. After deducting legacy decline this would translate into net production growth of more than a million bpd per annum, which exceeds the expected “call on shale” (demand growth less non-shale crude supply growth from non-OPEC, OPEC crude and other non-crude liquids). Today’s rig count or lower would be necessary to constrain shale oil growth to the 0.7- 0.8 million bpd of year/year growth in shale oil production that is probably required to balance supply and demand.

The market is therefore trying to find a price level that curtails rig additions (and/or well completion activity) to a level commensurate with the call on shale. Exactly what that price is can be debated and the truth is no one really knows. It depends on current and future rig productivity, how drilling and completion costs respond to rising oil field activity levels, the willingness of shale operators to outspend their cash flows and the availability and cost of capital to the industry.

Notwithstanding uncertainties surrounding all these variables, it does seem that the price needed for a given rate of growth in shale oil production has been falling over time. Well breakevens have dropped because of steep rig productivity gains and cyclical cost declines. They could fall further if continued secular gains in rig productivity outstrip the cyclical cost increases now resulting from higher oil field activity.

Over the past two years, average rig productivity in the U.S. Lower 48 states has grown by more than 20 percent per annum. In the Permian basin productivity grew by around 30 percent last year. These gains have been achieved through reduced drilling times from the use of pad drilling and increased well productivity from longer laterals, more intense fracking and higher proppant loadings.

Whilst the rate of rig productivity growth appears to now be moderating, it is unlikely to stop altogether. A recent Goldman Sachs analysis posits continued productivity growth for years ahead. This will be driven by higher rates of recovery of initial oil in place through the application of artificial intelligence and big data analytics. Goldman argues that this could eventually reduce breakevens to $45 and below. The best operators in the Permian like EOG already have well breakevens at, or even below, $40 WTI. As the rest of the pack catches up with the leaders, average breakevens are likely to fall further if Goldman is correct.

If the marginal cost of oil for the next 3 or 4 years really is headed to the mid-$40 range then OPEC’s attempts to push prices to $60 seem futile. It is unlikely that OPEC will find the cohesion necessary to keep prices at an artificially elevated level if all it does is accommodate rampant growth in shale oil production.

That line of thinking raises the possibility of yet another reversal in OPEC policy – abandoning supply management and letting market forces balance supply and demand. This would obviously result in significantly lower prices, at least in the short term. On the other hand, with many OPEC countries needing much higher prices for fiscal sustainability (for Saudi Arabia the level is over $80), there is an inherent instability which adds to the geopolitical risks to supply. But for now, it seems likely that OPEC, led by Saudi Arabia, will stay the course with its current policy of production restraint. Oil at $45-50 is preferable to it being at $40 or below, even if the loftier target of $60 has proven elusive.

With hindsight, OPEC’s attempts to manage supply were poorly conceived. Given the short response time of shale oil to changing prices, OPEC should have acted more quickly and more decisively. The production cuts should have been deeper and implemented immediately. As it was, OPEC talked up the market ahead of the actual production cuts thus helping to unleash a fresh wave of future shale oil production as emboldened operators upped their capex budgets and raised capital on the back of the higher prices. Additionally, OPEC ramped up production in Q4 2016 ahead of its mandated cuts, thus adding to the very stock excess they were hoping to eliminate. OPEC members also then inexplicably offset the impact of their cuts by drawing down their own inventories to maintain exports during Q1 2017. This made no sense given OPEC’s stated goal of reducing OECD inventories to their five-year average.

Fundamentals have deteriorated significantly

In implementing its production cuts at the start of the year, OPEC and its allies were aiming to eliminate the inventory excess. This would have allowed spot prices to rise relative to deferred ones, pushing the market into backwardation. A backwardated market would eliminate the “subsidy” shale operators have been realizing by selling forward to hedge production. This would therefore help curtail shale oil supply growth by removing this windfall hedging profit. But it clearly hasn’t happened. The spread between Dec 2017 and Dec 2018 futures contracts moved $3, from a $1 backwardation to a $2 contango, over the past month as it became increasingly likely that there would still be substantial excess inventories at the end of the year.

There are several explanations for why the expected supply deficit has not materialized.

    Firstly, demand growth has been somewhat disappointing. Based on indicators of economic activity, demand in 2017 should be growing by around 1.7 million bpd, if not more. Actual growth, however, seems to be closer to 1.4 to 1.5 million bpd for reasons that are not yet clear.
    Secondly, non-OPEC supply growth has been exceeding initial expectations – largely because of faster shale growth in the U.S. Forecast growth in non-OPEC supply for 2017 has been revised progressively higher by 0.3 million bpd. OPEC production is also now expected to be greater than seemed the case just a month ago because of the earlier than anticipated return of shut-in production in Libya and Nigeria. This will add around 0.2 million bpd of additional supply on average in 2017.
    Finally, revisions to data for 2016 now show a small flow surplus of 0.1 million bpd whereas previously there had been a small flow deficit.

Together these changes amount to a 0.9 million bpd deterioration in the supply and demand balance for 2017 and an initially expected supply shortfall for the year of 1.4 million bpd now looks like it will be closer to 0.5 million bpd. Because of lower SPR purchases in India and China, as well as stock reductions in the OPEC countries, the drop in observed commercial inventories will be even lower – perhaps as little as 0.3 million bpd. This is much less than the rate needed to mop up the stock surplus – some 450 million bbls at the start of 2017 - and the market will almost certainly enter 2018 with a still substantial inventory overhang.

Moreover, at the rate at which oil drilling rigs have been added in the U.S., non-OPEC production has been on a path to grow by as much as 2 million bpd in 2018. With demand growth of, say, 1.5 million bpd and a 2017 flow deficit of only 0.5 million bpd, and with higher year/year production from Libya and Nigeria, that would imply an annual average stock build next year, even if the current OPEC production cuts remained unchanged for the whole of 2018, something which is by no means a given. It is this specter of renewed stock builds in 2018 adding to still inflated inventories that has panicked the market and caused the forward curve to move into contango. This reversal of the time spreads, combined with the drop in deferred prices to match a lower perceived marginal cost, has resulted in nearby prices collapsing, even though seasonal factors are becoming their most favorable.

In short, OPEC, the market and oil bulls have run out of runway. There are just 10 weeks before fall turnarounds kick in and crude stocks in the U.S. start to build again. Excess crude inventories in the U.S. are around 80 million barrels, up sharply since the beginning of June, reversing the trajectory seen in April and May when sequential crude oil draws were rapidly eliminating excess crude oil inventories.

In the past month, however, excess crude stocks in the U.S. are back to the levels seen this time last year and there now appears to be little chance that they can be eliminated before the fall – especially if the rate of inventory change seen in the data for the past three weeks is maintained. Moreover, Q4 2017 will see an acceleration in U.S. oil production as the impact of higher rig counts is increasingly reflected in higher production.

The main culprit for the disappointing stock draws in the U.S. is a stubbornly elevated level of net imports. While imports from Saudi Arabia have finally turned lower, those from other OPEC producers (notably Iraq) have risen. Crude exports have also fallen in recent weeks, at least if the preliminary data are to be believed.

Backwardation was meant to take care of excessive shale production in 2018 and beyond by driving deferred prices to levels that would constrain its growth. But stocks have not fallen fast enough to sustain backwardation so the whole futures curve has downshifted instead.

When the facts change…

For all the above reasons, it looks increasingly like oil prices will be rangebound for some time to come. Hitherto, it had been our view that oil would trend higher as prices would need to rise to a level that would justify investment in more costly sources of supply than just the core areas of U.S. shale. However, not only has the core shale oil resource grown significantly – above all in the prolific Permian basin – but breakevens have dropped because of secular productivity gains outpacing cyclical cost increases, at least for now. Furthermore, there has been no shortage of capital to fuel the growth in shale oil production and this has allowed operators to significantly outspend their cash flows. The marginal economics of the typical shale oil producer have proven to be no impediment to the industry’s resilience. The breakevens referred to earlier are based on half-cycle economics. Full-cycle costs that cover land acquisition, infrastructure and overhead are probably almost $10 higher. But companies base their drilling decisions on half-cycle costs even if this leads them on the path to eventual bankruptcy (to which the shale oil industry is no stranger) so long as they have access to capital. It’s quite possible that shale oil production growth can only be reined in by the capital markets rationing the supply of funds as industry management seems to be more focused on growth than generating free cash flow or even paper profits [ZH: this is something we have been pounding the table on since 2014, most recently in mid-June].

It also appears that the cost of developing other supply sources, such as deep water offshore, has been falling dramatically making them competitive with shale in many cases. Because of these developments, the cost curve for oil has become much flatter. There is now an abundance of potential supply at around $50 Brent. Prices will tend to oscillate around this long-term price anchor in response to changing inventory levels as the market tries to determine the right price to satisfy the call on shale. With the current inventory surplus and what looks to be its slow dissipation, markets are also likely to stay in contango, barring some sort of supply shock.

These developments call for a more opportunistic approach to the oil market than hitherto. Whereas it once seemed positions could be held with an eye to a longer-term secular appreciation, that is no longer the case. Indeed, the evidence is now in plain sight. Over the past year, the front month WTI futures contract has moved by double digits in percentage terms 10 times within a $40 - $55 band. This volatility has been accentuated by large financial flows into and out of the market by non-traditional investors and algorithmic trading systems. Attempting to capture just a percentage of those moves makes more sense than trying to ride what has turned out to be a non-existent trend, especially when contango inflicts a negative roll return on investors. The extreme volatility within a rangebound environment also argues for a more tactical and conservative approach to portfolio management.

For now, the market is heavily oversold with a record speculative short position. Q3 should still see decent stock draws even if they are insufficient to eliminate excess stocks. Also, increases in the rig count appear to be ending and could decline in the coming weeks and months. It also remains to be seen how quickly the increased drilling activity will translate into a commensurate increase in the number of completed wells and whether cyclical cost pressures will accelerate or bottlenecks develop. Already, the number of drilled uncompleted wells (DUCs) has been rising quite rapidly. There is also a non-zero chance that OPEC might surprise the market with a further “shock and awe” production cut. Taken together these considerations mean there is a good chance for a price recovery from current levels. However, this recovery will be limited for the reasons set out earlier and because of the overhang of potential selling from oil producers who are significantly underhedged for 2018.

Best regards

Andrew J. Hall

Chairman and CEO
"The State is a body of armed men."

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
Texas Shale Hit Hard By Hurricane Harvey
« Reply #32 on: August 30, 2017, 10:12:02 AM »
http://oilprice.com/Energy/Crude-Oil/Texas-Shale-Hit-Hard-By-Hurricane-Harvey.html

Texas Shale Hit Hard By Hurricane Harvey
By Nick Cunningham - Aug 29, 2017, 6:00 PM CDT Texas


Crude oil prices are taking a serious hit from Hurricane Harvey, slammed on multiple fronts at a time when benchmark prices were already showing some signs of strain.

As has already been widely noted, Hurricane Harvey has knocked out major refineries along the Gulf Coast. Goldman Sachs said in a research note that an estimated 3 million barrels per day of refining capacity was offline, as of Monday. On Tuesday, ExxonMobil began winding down some operations at its Beaumont, TX refinery as the storm headed east towards eastern Texas and Louisiana. The outage at the 362,000 bpd facility would add to the region’s woes. Also, the U.S.’ largest refinery, Motiva’s Port Arthur facility, which produces over 600,000 bpd, has already curtailed its operations and was considering deeper reductions at the time of this writing.

Obviously, the outage of such a large volume of refining capacity is sending gasoline prices sharply up. But the effect on crude oil is the opposite – refinery outages mean a steep drop in demand. WTI is down nearly 5 percent since last week.

All of the damage from the hurricane not only means that refineries will be purchasing a lot less crude, but the millions of people along the Gulf Coast will also be consuming a lot less gasoline. That could blunt the impact in the refined products market, but it represents a double whammy for crude oil – less refining runs and demand destruction on the consumer end.

To make matters worse, some midstream operations are also affected. The closure of some key pipelines could halt shipments from Texas oil fields. That alone could disrupt operations at Gulf Coast refineries. For example, Reuters reported that Motiva was weighing cuts at its refinery not only because of the risk of floods, but also because it was having trouble obtaining enough crude from all the service interruptions elsewhere. Also, Marathon Petroleum Corp. said it could shut down its 451,000 bpd refinery in Texas City because of a shortage of oil, Bloomberg reports.
Related: Texas Oil Production Remains Strong…But For How Long?

Ultimately, that could cause a huge problem upstream. "If there’s no place for it to go, you can’t keep jamming more crude into the line," Libby Toudouze, a partner at Cushing Asset Management, told Bloomberg in a telephone interview.

"While it is premature to speculate on the ultimate impact to our production, we anticipate volumes will be restrained until Gulf Coast and Houston refineries are back online," Gordon Pennoyer, a spokesman for Chesapeake Energy Corp., told Bloomberg.
           

As a result, the oil will be backed up in the shale fields of the Eagle Ford and even the Permian. That could force production cutbacks if there is no place to store the crude.

A lot of Eagle Ford producers were cutting back anyway as the storm hit, but the refinery and pipeline outages could hit the sector as a whole. "Given the enormous level of rainfall along the Texas Gulf Coast the past 3-4 days, we expect most operators in this area will experience near-term field level and/or takeaway issues," Capital One Securities wrote in a research note on Monday. The WSJ, citing industry analysts, says as much as 400,000 to 500,000 bpd of Eagle Ford shale production could be offline, although some think the figure is much higher. Worse, once offline, shale wells could lose pressure, meaning that when brought back online, they could be less productive.

To recap, the problems for Texas shale drillers are multiple: refineries aren’t buying their crude, pipelines are shipping their crude, and regional consumers aren’t burning their crude. Plus the hurricane is forcing them to shut down wells, which could inflict permanent damage. Needless to say, Eagle Ford shale drillers are being hit hard. The share price of Carrizo Oil & Gas, an Eagle Ford-focused shale driller, has plunged by as much as 15 percent over the past week. And it isn’t alone. A lot of other shale E&Ps in South Texas are also seeing similar declines in their share prices, as CNBC notes.

The refinery outages could rise as the hurricane swings towards Louisiana. According to Tudor Pickering Holt & Co., as much as 30 percent of the nation’s refining capacity could be knocked offline if Louisiana facilities are forced to close, up from 15 percent over the weekend.

“This is a significant headwind for WTI,” Helima Croft of RBC Capital Markets told CNBC. “Undoubtedly, to have this much crude backing up, right before maintenance season, right before an SPR release, I mean, that is not good in any way for WTI.” It could ensure WTI doesn’t move back to $50 for the foreseeable future.

In a global context, however, the impact will be more muted on crude markets. Amrita Sen of Energy Aspects says global demand growth “is absolutely soaring right now,” which should ultimately push prices up. However, the disruptions in the U.S. Gulf Coast could lead to a much wider disparity between Brent and WTI, a gap that is now approaching $6 per barrel.

A lot of these effects could dissipate if the outages are short-lived, but if the disruptions persist, the effects will grow much worse.

By Nick Cunningham, Oilprice.com
Save As Many As You Can

Offline ralfy

  • Cannot be Saved
  • Bussing Staff
  • *
  • Posts: 118
    • View Profile
Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #33 on: September 06, 2017, 10:26:57 AM »
There's a chart for world petroleum and natural gas consumption here:

https://seekingalpha.com/article/4104138-harvards-exxon-mobil-study-bad-look-little

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
Is U.S. Gasoline Consumption Set To Collapse?
« Reply #34 on: December 18, 2017, 01:24:02 PM »
https://oilprice.com/Energy/Crude-Oil/Is-US-Gasoline-Consumption-Set-To-Collapse.html

Is U.S. Gasoline Consumption Set To Collapse?
By Tsvetana Paraskova - Dec 18, 2017, 12:00 PM CST Gas


U.S. individual vehicle miles traveled (VMT) growth has been flat since June 2017, and the potential end of the VMT growth that started in early 2014 may be an indicator of slowing oil consumption, according to government data compiled by Labyrinth Consulting Services, Inc.


Gasoline is the most consumed petroleum product in the U.S. Last year, motor gasoline consumption averaged about 9.3 million bpd, or 391 million gallons per day—the largest amount recorded and equal to about 47 percent of total U.S. petroleum consumption, data by the EIA shows.

Some 29 percent of all U.S. energy consumption in 2016 was for transporting people and goods from one place to another, the EIA says. Petroleum products provided around 92 percent of the total energy the U.S. transportation sector used last year.

The latest available data by the U.S. Department of Transportation shows that the seasonally adjusted vehicle miles traveled for October 2017 stood at 268 billion miles, a 0.8-percent increase over October 2016, and 0.2-percent growth as compared to September 2017. The cumulative estimate for this year is 2,685 billion vehicle miles of travel.

In its latest Short-Term Energy Outlook (STEO), the EIA said that in November, U.S. regular gasoline retail prices averaged $2.56/gallon, an increase of nearly 6 cents/gal from the average in October, primarily reflecting rising crude oil prices. EIA forecasts the U.S. regular gasoline retail price will average $2.59/gal this month, 34 cents/gal higher than at the same time in 2016. For 2018, EIA expects U.S. regular gasoline retail prices to average $2.51/gal.
Related: This OPEC Member Aims To Boost Oil Output By 40 percent

Gasoline prices and increases in fuel efficiency are important factors in U.S. gasoline sales that are also highly seasonal, but according to Jill Mislinski at Advisor Perspectives, there are also some significant demographic and cultural dynamics affecting the U.S. gasoline consumption trends.

In a post from November 2017, Advisor Perspectives said that apart from fuel efficiency improvements, declines in gasoline consumption can be attributable in large part to factors such as an aging population leaving the workforce; growing trend toward working from home; social media providing alternatives to face-to-face interaction requiring transportation; a general trend in young adults to drive less; and accelerating urban population growth, which reduces the per-capita dependence on gasoline.   

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
There Aren’t Enough Truckers In Texas
« Reply #35 on: January 02, 2018, 02:00:50 AM »
If they start offering 6 figure salaries, this problem will disappear quickly.

RE

https://oilprice.com/Energy/Energy-General/There-Arent-Enough-Truckers-In-Texas.html

There Aren’t Enough Truckers In Texas
By Tsvetana Paraskova - Dec 28, 2017, 5:00 PM CST oil rig Texas


Permian’s production growth—the main driver of the second shale revolution as oil prices crept higher this year—may be limited not by geological or technological constraints, but by a shortage of truck drivers to transport the increasing volumes of oil pumped out of the most prolific areas to pipelines and storage hubs.

With the recovery of oil prices and booming Permian production, companies are looking to re-hire truckers after having dismissed a lot of them in the aftermath of the 2014 oil price crash.

The truckers, however, are in short supply. First, because some of them are not returning to the boom-and-bust cycle industry of oil production, and second, because truck drivers are concerned that companies will not be paying them as much as they did three years ago, as the new mantra of careful spending is sweeping across the U.S. shale patch.

At the pace at which the Permian is increasing oil production, companies will need to hire more than 3,000 truck drivers on top of the some 3,000 drivers they currently have to haul oil barrels in the fastest-growing U.S. shale patch, Willie Taylor, CEO for Permian Basin Workforce Board in Midland, Texas, tells Bloomberg.

The Permian this year beat its previous yearly record and has pumped an estimated 815 million barrels of crude oil, beating the 1973 record of 790 million barrels, according to figures by IHS Markit. By the end of this year, the Permian will be producing 2.75 million bpd, IHS market estimates suggest.
Related: Oil Prices Steady After EIA Reports Crude Draw

According to the EIA’s Drilling Productivity Report from December, oil production in the Permian will grow from an average of 2.726 million bpd in December 2017 to 2.794 million bpd in January 2018, up by 68,000 bpd month-on-month and accounting for most of the total expected U.S. oil production growth in the biggest shale plays.

As U.S. shale is back in growth mode, demand for truck drivers is on the rise, and in some areas of the Permian it is already creating a labor shortage, especially in the Delaware Basin.

Production is not likely to be slowed down or shut-in, but the re-hiring of drivers could take longer than companies need, Joey Lee, General Manager with Premium Truck of Odessa, tells Bloomberg.

“Rehiring will be a slow process. It won’t happen as fast as you need it,” Lee said.

Truckers are wary of the belt-tightening budgets of the companies and worry that they won’t get paid as highly as they were in the pre-2014 days. Moreover, some of the working force has not come back to the oil industry.

“Some of those people didn’t come back to the industry. They were burned and hurt. It takes a while to build that back up,” Chris Gatjanis, who runs Halliburton’s operations in the Permian, told the Houston Chronicle in October.

Now, companies need to pay more competitive salaries to hire more drivers, Lee tells Bloomberg.
Related: Chinese Ships Caught Illegally Selling Oil To North Korea

While horizontal drilling technology has allowed fewer wells to pump the same oil volumes and fewer trucks are needed to haul them to the market, trucks for frac sand and oilfield equipment and crew transportation are still in great demand, Stephen Robertson, Executive Vice President for Midland-based Permian Basin Petroleum Association, told Bloomberg.

Trucking companies are already seeing the labor shortage and have started redeploying their assets and people to places where oil production has been growing the most, Robert McEntyre, a spokesman for the New Mexico Oil and Gas Association, told Bloomberg.

At the rate at which Permian production is rising, before hitting geological constraints and before depleting the sweetest spots, the oil industry will have to cope with a more urgent issue: the shortage of qualified oil truck drivers to haul the oil barrels pumped in increasing numbers from the Permian to the pipelines and hubs that would carry them to the oil markets.

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
The Biggest Oil Collapse In History 🛢️
« Reply #36 on: January 19, 2018, 01:34:12 AM »
https://oilprice.com/Energy/Energy-General/The-Biggest-Oil-Collapse-In-History.html

The Biggest Oil Collapse In History
By Nick Cunningham - Jan 18, 2018, 6:00 PM CST Maduro PDVSA


Venezuela’s oil production plunged to new lows in December, surprising even some of the most pessimistic forecasts.

According OPEC’s secondary sources data — provided by independent groups — Venezuela’s oil production fell by another 82,000 barrels per day (bpd) in December, taking output down to 1.745 million barrels per day (mb/d). That is certainly a bad result, but not drastically different from the pace of declines from the months before.

However, data that came directly from the Venezuelan government says that the country’s output plunged by a massive 216,000 bpd in December, dropping to 1.621 mb/d. It’s a staggering figure, and points to a more serious collapse.

OPEC provides those two sources of data — secondary sources and direct communication — in its monthly reports, and sometimes the data directly from the country can be overstated or understated, which can be the result of differing data collection practices, but also sometimes depends on some political motivations.

At times, Venezuela has submitted inflated numbers relative to the secondary figures, perhaps to obscure the state of decline.

In this context, the fact that Venezuela itself says that its production declined by such an enormous number is notable. The reason for the sharp drop off is unknown. There are endless reasons that would explain plunging output — debt, no cash to invest or even maintain production, crumbling infrastructure, a worker exodus — so the figures could very well be accurate. The December numbers could also be a one-off exaggeration, maybe to downplay the expected forthcoming declines this year.
Related: CNPC Expects Robust Oil Demand Growth In China

Either way, Venezuela’s production losses are serious and worsening. Over the course of 2017, Venezuela’s oil production fell by 649,000 bpd, a loss of 29 percent. Those losses offset around two-thirds of the gains that came from the U.S. over the same timeframe. The WSJ points out that it was probably the worst loss of oil production in a single year in recent history — Russia’s production fell by 23 percent after the collapse of the Soviet Union and Iraq lost roughly the same percentage after the U.S. invasion in 2003. There aren’t other examples of such a massive erosion of oil production in such a short period of time.

The Venezuelan crisis adds some fuel to the fears from within OPEC that their production cuts are biting faster than expected, which could make the inventory drawdowns overshoot at some point.

The sudden tightening also raises fears that OPEC is handing over too much room for rival producers, i.e., U.S. shale. OPEC admitted this scenario is already starting to play out — in its monthly report, OPEC revised up its forecast for non-OPEC supply this year to 1.15 mb/d, an increase of 0.16 mb/d from last month’s report. The reason: “higher growth expectations for the U.S. and Canada,” OPEC said.

What is remarkable is that the feeling that the oil market is tightening too much, too fast comes less than two months after OPEC decided to extend its production cuts for another year.

Now, OPEC’s monitoring committee is expected to meet in just a few days in Oman, and oil market watchers are paying more attention to this gathering than they otherwise would because some small cracks in OPEC’s resolve are starting to show. A growing number of investment banks are starting to predict that OPEC will abandon the cuts one way or another, whether through cheating or via some official exit strategy agreed to before the end of the year.
Related: China's Gas Production Hits Three-Year High

“There is an unintended consequence from this higher price,” said Ed Morse, head of commodities research at Citigroup Inc., according to Bloomberg. “OPEC are fearful of not only the shale response, but of deep water and of oil sands from Canada.”

Morse argues that OPEC will likely sit tight for the time being, citing more work needed on bringing inventories back to the five-year average. Indeed, several oil ministers from OPEC member countries said as much in the past week. That message will likely be repeated after the upcoming meeting in Oman in a few days’ time.

But Morse of Citi argues that at the June meeting, the group may decide to start gradually ramping up production over the summer.

By Nick Cunningham of Oilprice.com
Save As Many As You Can

Offline Palloy2

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 6097
    • View Profile
    • Palloy's Blog
Re: Oil Glut: IT'S THE DEMAND, STUPID!
« Reply #37 on: January 21, 2018, 04:43:46 PM »
Another report by BP and Oxford Institute ofr Energy Studies, trying to pretend that Peak Oil doesn't matter.

But it does.  As soon as the oil price recovers to profitable levels, demand will fall, and the oil price will collapse to uneconomic levels again.  There is no oil company whose share price can withstand that, and so their share price will implode and their ability to borrow will collapse with it.  Venezuela (which boasts the world's biggest reserves) cannot borrow due to US blockading them financially, and their slow-motion train wreck is happening right now - it's not pretty, and coming to a state near you, guaranteed.

Of course oilprice.com is facing the same kind of train wreck, but the final paragraph shows they know what will happen.

https://oilprice.com/Energy/Crude-Oil/Peak-Oil-Demand-Is-A-Slow-Motion-Train-Wreck.html
Peak Oil Demand Is A Slow-Motion Train Wreck
Nick Cunningham
Jan 18, 2018

Will oil demand peak within five years? 15 years? Or not until 2040 or 2050?

The precise date at which oil demand hits a high point and then enters into decline has been the subject of much debate, and a topic that has attracted a lot of interest just in the last few years. Consumption levels in some parts of the world have already begun to stagnate, and more and more automakers have begun to ratchet up their plans for electric vehicles.

But the exact date the world will hit peak demand kind of misses the whole point, argues a new report, which is notable since it is coauthored by BP’s chief economist Spencer Dale, along with Bassam Fattouh, the director of The Oxford Institute for Energy Studies.

They argue that the focus shouldn’t be on the date at which oil demand peaks, but rather the fact that the peak is coming at all. “The significance of peak oil is that it signals a shift from an age of perceived scarcity to an age of abundance,” they wrote. In other words, oil won’t be on the only game in town when it comes to fueling the global transportation system, which will have far-reaching consequences for oil producers and consumers alike.

The exact date is unknowable, and in any event, the year in which the world does hit peak consumption won’t result in some abrupt “discontinuity of behavior,” the report argues. Demand growth will slow and then decline, but probably won’t fall off a cliff. So, the exact date of peak oil demand is “not particularly interesting.”

Nevertheless, the implications of a looming peak in oil consumption are massive. Without an economic transformation, or at least serious diversification, oil-producing nations that depend on oil revenues for both economic growth and to finance public spending, face an uncertain future.

And slowing demand growth is occurring at a time when supply is less of a concern than it used to be, in large part because new drilling technologies have led to a wave of supply from shale. “The world isn’t going to run out of oil. Rather, it seems increasingly likely that significant amounts of recoverable oil will never be extracted,” the authors wrote.

One of the more intriguing conclusions from the report is that this new “age of abundance” could alter behavior from oil producers. In the past, some countries (notably OPEC members) restrained output, husbanding resources for the future, betting that scarcity would increase the value of their holdings over time. “A high reserves-to-production ratio — implying a country could continue producing oil at the same rate for 80, 90, 100+ years — was a sign of both strength and intergenerational fairness,” the report said.

However, looking forward, if a peak in demand looms just over the horizon, oil producers could rush to maximize their production in order to get as much value for their reserves while they can. “Better to have money in the bank than oil in the ground.”

To complicate matters further, maximizing production to fight for market share would require hundreds of billions of dollars of investment. For instance, Rystad Energy predicts upstream spending will stand at $510 billion in 2018 (which is sharply lower than in years past). Huge sums will be required even just to maintain current levels of production.

That creates another problem. As the FT notes, extending the life of oil fields, let alone investing in new ones, will require marshalling such large volumes of capital, but that might be met with skepticism from wary investors when demand begins to peak. “When that shift occurs, from a growing industry to one in decline, you change investors’ perception,” Jason Bordoff at Columbia University’s Center on Global Energy Policy, told the FT. It will be difficult to attract investment to a shrinking industry, particularly if margins continued to get squeezed. In In that sense, the timing of peak oil demand does in fact matter.

Either way, peak demand should be an alarming prospect for OPEC, Russia, the oil majors — basically any and all oil producers who will find themselves fighting more aggressively for a shrinking pie. “Faced with the possibility that significant amounts of recoverable oil may never be extracted, low-cost producers have a strong incentive to use their comparative advantage to squeeze out high-cost producers and gain market share — just as with any other competitive market,” Dale and Fattouh wrote. 

Oil producers will need to adapt to a “higher volume, lower price” environment. For consumers, however, the shift will bring benefits, including more options and cheaper energy.
Related: What’s The Limit For Permian Oil Production?

At the country level, this is scary stuff. Many oil producers have hefty spending requirements to satisfy their populaces, including for healthcare, housing, employment, etc. Ample global oil supply for the foreseeable future, combined with an eventual peak in demand, threatens persistent fiscal deficits and some hard choices.

Saudi Arabia has offered up its Vision 2030, which the report by Dale and Fattouh say is probably “the most prominent example of a major oil producer responding to the changing environment,” but economic transformations are incredibly difficult and would conceivably take decades to pull off.

It’s hard to imagine countries that depend on oil for more than 90 percent of their export revenue adapting well — it’s a slow-motion train wreck. Dale and Fattouh say it may require “an eventual adjustment in living standards,” which is a rather diplomatic way of putting it.
"The State is a body of armed men."

Offline agelbert

  • Global Moderator
  • Master Chef
  • *****
  • Posts: 11820
    • View Profile
    • Renewable Rervolution
Peak Demand, YES. Peak Oil, my ARSE!
« Reply #38 on: January 21, 2018, 05:48:13 PM »
Another report by BP and Oxford Institute ofr Energy Studies, trying to pretend that Peak Oil doesn't matter.

But it does.  As soon as the oil price recovers to profitable levels, demand will fall, and the oil price will collapse to uneconomic levels again.  There is no oil company whose share price can withstand that, and so their share price will implode and their ability to borrow will collapse with it.  Venezuela (which boasts the world's biggest reserves) cannot borrow due to US blockading them financially, and their slow-motion train wreck is happening right now - it's not pretty, and coming to a state near you, guaranteed.

Of course oilprice.com is facing the same kind of train wreck, but the final paragraph shows they know what will happen.

https://oilprice.com/Energy/Crude-Oil/Peak-Oil-Demand-Is-A-Slow-Motion-Train-Wreck.html
Peak Oil Demand Is A Slow-Motion Train Wreck
Nick Cunningham
Jan 18, 2018

Will oil demand peak within five years? 15 years? Or not until 2040 or 2050?

The precise date at which oil demand hits a high point and then enters into decline has been the subject of much debate, and a topic that has attracted a lot of interest just in the last few years. Consumption levels in some parts of the world have already begun to stagnate, and more and more automakers have begun to ratchet up their plans for electric vehicles.

But the exact date the world will hit peak demand kind of misses the whole point, argues a new report, which is notable since it is coauthored by BP’s chief economist Spencer Dale, along with Bassam Fattouh, the director of The Oxford Institute for Energy Studies.

They argue that the focus shouldn’t be on the date at which oil demand peaks, but rather the fact that the peak is coming at all. “The significance of peak oil is that it signals a shift from an age of perceived scarcity to an age of abundance,” they wrote. In other words, oil won’t be on the only game in town when it comes to fueling the global transportation system, which will have far-reaching consequences for oil producers and consumers alike.


The exact date is unknowable, and in any event, the year in which the world does hit peak consumption won’t result in some abrupt “discontinuity of behavior,” the report argues. Demand growth will slow and then decline, but probably won’t fall off a cliff. So, the exact date of peak oil demand is “not particularly interesting.”

Nevertheless, the implications of a looming peak in oil consumption are massive. Without an economic transformation, or at least serious diversification, oil-producing nations that depend on oil revenues for both economic growth and to finance public spending, face an uncertain future.

And slowing demand growth is occurring at a time when supply is less of a concern than it used to be, in large part because new drilling technologies have led to a wave of supply from shale. “The world isn’t going to run out of oil. Rather, it seems increasingly likely that significant amounts of recoverable oil will never be extracted,” the authors wrote.

One of the more intriguing conclusions from the report is that this new “age of abundance” could alter behavior from oil producers. In the past, some countries (notably OPEC members) restrained output, husbanding resources for the future, betting that scarcity would increase the value of their holdings over time. “A high reserves-to-production ratio — implying a country could continue producing oil at the same rate for 80, 90, 100+ years — was a sign of both strength and intergenerational fairness,” the report said.

However, looking forward, if a peak in demand looms just over the horizon, oil producers could rush to maximize their production in order to get as much value for their reserves while they can. “Better to have money in the bank than oil in the ground.”

To complicate matters further, maximizing production to fight for market share would require hundreds of billions of dollars of investment. For instance, Rystad Energy predicts upstream spending will stand at $510 billion in 2018 (which is sharply lower than in years past). Huge sums will be required even just to maintain current levels of production.

That creates another problem. As the FT notes, extending the life of oil fields, let alone investing in new ones, will require marshalling such large volumes of capital, but that might be met with skepticism from wary investors when demand begins to peak. “When that shift occurs, from a growing industry to one in decline, you change investors’ perception,” Jason Bordoff at Columbia University’s Center on Global Energy Policy, told the FT. It will be difficult to attract investment to a shrinking industry, particularly if margins continued to get squeezed. In In that sense, the timing of peak oil demand does in fact matter.

Either way, peak demand should be an alarming prospect for OPEC, Russia, the oil majors — basically any and all oil producers who will find themselves fighting more aggressively for a shrinking pie. “Faced with the possibility that significant amounts of recoverable oil may never be extracted, low-cost producers have a strong incentive to use their comparative advantage to squeeze out high-cost producers and gain market share — just as with any other competitive market,” Dale and Fattouh wrote. 

Oil producers will need to adapt to a “higher volume, lower price” environment. For consumers, however, the shift will bring benefits, including more options and cheaper energy.

At the country level, this is scary stuff. Many oil producers have hefty spending requirements to satisfy their populaces, including for healthcare, housing, employment, etc. Ample global oil supply for the foreseeable future, combined with an eventual peak in demand, threatens persistent fiscal deficits and some hard choices.

Saudi Arabia has offered up its Vision 2030, which the report by Dale and Fattouh say is probably “the most prominent example of a major oil producer responding to the changing environment,” but economic transformations are incredibly difficult and would conceivably take decades to pull off.

It’s hard to imagine countries that depend on oil for more than 90 percent of their export revenue adapting well — it’s a slow-motion train wreck. Dale and Fattouh say it may require “an eventual adjustment in living standards,” which is a rather diplomatic way of putting it.

To claim the oil majors do not concern themselves with Peak DEMAND is ridiculous. The REASON they buy governments so regulations won't force them to price carbon correctly is to PROTECT DEMAND for fossil fuels. Anyone who knows even a tiny bit about the modus operandi of fossil fuel corporations KNOWS the welfare queen treatment (i.e. subsidies plus free pass on pollution) is sine qua non to their "profitable" business model. THAT is not free. They HAVE TO bribe politicians to keep from going BANKRUPT. And that BANKRUPTCY they sweat will come about EXCLUSIVELY because of a massive drop in DEMAND from CHEAPER Renewable Energy sources. So, they LIE about peak demand "not beng a big deal". It's HUGE DEAL!   

PEAK OIL AND GAS? ??? Slow Motion Train Wreck? Peak Oil Demand, YES. Peak Oil, my ARSE!

Norway Aiming For 🔥 Oil & Gas Output To Reach Record Highs By ~2022

January 21st, 2018 by James Ayre

SNIPPET:
Quote

“Norway’s combined output of oil and gas is expected to hit 4.4 million barrels per day of oil equivalents in 2022, the NPD said, a rise of 10% from the forecast 4 million barrels per day of oil equivalents seen for 2018. Investments, excluding exploration cost, were expected to rise marginally in 2018 to 122 billion Norwegian crowns ($15.13 billion) and to about 140 billion crowns in each of the years 2019 and 2020, the NPD said.”

So, the “good news” I guess is that Norway will be able to maintain the currently extravagant lifestyle expectations of its population for longer than expected … by continuing to sell fossil crack co caine to the rest of the world. 



full article:

https://cleantechnica.com/2018/01/21/norway-aiming-oil-gas-output-reach-record-highs-2022/

Aerial view of the Auger Tension Leg Platform in the deep-water US Gulf of Mexico in foreground. Noble Jim Thompson drilling rig in background. Photo credit: Royal Dutch Shell

Will Oil Majors Actually Sink Money Into America’s Waters?

January 5, 2018 by Bloomberg

SNIPPET 1:

It’s not that there aren’t potentially good prospects out there. Alaska and the Gulf of Mexico are obviously well-developed in certain areas already. The waters off southern California are also tempting. Meanwhile, using a little Pangaean jigsaw-puzzling, West Africa’s prolific fields suggest there may be similar riches off the Eastern Seaboard.

And it’s not like major oil companies are brimming with exploration prospects right now. The energy crash crushed spending on discoveries, with 2017 seeing the fewest on record, according to Rystad Energy, a consultancy. Another firm, Wood Mackenzie, estimates just $37 billion will be spent on exploration this year, down more than 60 percent from 2015.

There are two big complications when it comes to capitalizing on America’s federal waters, though: politics and time.

SNIPPET 2:

Offshore spending isn’t dead.Some operators, such as Norway’s Statoil ASA, have worked hard to cut costs and shorten schedules to make projects work at lower prices.

In the Gulf of Mexico, William Turner of Wood Mackenzie authored a recent report forecasting oil and gas production to reach a record of 1.94 million barrels of oil equivalent per day in 2018.

However, he cautions that exploration spending there will remain flat this year and activity will focus on less-ambitious projects, such as those tying back to existing fields and infrastructure. Current energy pricing, and the renewed focus on staying nimble when it comes to deploying capital, are powerful restraints.

And these challenges would be magnified in new, relatively undeveloped areas. Turner points out, for example, that the swiftness of the Gulf Stream, a wide current running parallel to the Eastern Seaboard, could present big challenges to drilling on the Atlantic shelf.

Full article:

http://gcaptain.com/will-oil-majors-actually-sink-money-americas-waters/


Russia Posts Highest-Ever Natural Gas Output in Expansion Drive

The Christophe de Margerie, the first of 15 icebreaking LNG carriers ordered for the Yamal LNG project to provide transport of LNG year-round in the Arctic, loads its first cargo at the Yamal LNG plant at the Port of Sabetta on the Yamal Peninsula, December 8, 2017. Photo: SCF Group


January 2, 2018 by Bloomberg

By Elena Mazneva and Jake Rudnitsky (Bloomberg) — Russia registered its highest-ever natural gas production last year amid plans to expand into China and boost sales of liquefied natural gas.

The nation’s output of the fuel jumped 7.9 percent to 690.5 billion cubic meters, according to data emailed Tuesday by the Russian Energy Ministry’s CDU-TEK unit. That beat the previous record, set in 2011, by 2.9 percent.

Russia, the world’s largest gas exporter, is working to boost output with plans to increase production of LNG with new plants in an area that stretches from the Baltic region to its Pacific coast. That will put the country up against the biggest producers of the super-chilled fuel, including Qatar, Australia and the U.S. Russia has resources to increase its LNG production almost 10 times by 2035, led by the privately-owned Novatek PJSC in the Arctic, according to the nation’s Energy Ministry.

Full article:

http://gcaptain.com/russia-posts-highest-ever-natural-gas-output-in-expansion-drive/


Don't forget to laugh in any person's face who claims that fossil fuel use is going down (DEMAND is GOING UP, NOT DOWN!). Gallows humor is appropriate at this time of abysmal Russian AND U.S. stupidity. 
Try again when global warming HELL forces us to stop being STUPID (about ten or fifteen years at the most). By then people that live in jungles will be crispy critters in a toasted arid wasteland.   


Putin's Natural Gas BRIDGE to the FUTURE is the SAME "bridge" the frackers in the USA are BUILDING.
Russia is the world's largest exporter of "Natural" Gas.
« Last Edit: January 21, 2018, 06:01:48 PM by agelbert »
Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
🔥 Trump’s Offshore Drilling Plan
« Reply #39 on: January 26, 2018, 01:15:06 AM »
I doubt much offshore drilling will be done for economic reasons.  However, still worth following the story.

RE

https://www.counterpunch.org/2018/01/26/trumps-offshore-drilling-plan/

January 26, 2018
Trump’s Offshore Drilling Plan

by Karl Grossman


Photo by Anita Ritenour | CC BY 2.0

It was offshore oil drilling deja vu for me—having broken the story about the oil industry seeking to drill in the offshore Atlantic nearly 50 years ago.

But this time offshore drilling would be completely unnecessary with the U.S, awash in petroleum (thus $2.50-a-gallon gas) and oil drilling in the sea ten times more costly than drilling on land. Plus, renewable energy, led by solar and wind, is now well-developed and cheaper than fossil fuels.

And although in 1970, the spill in 1969 from an oil-drilling platform off Santa Barbara, California that blackened miles of coastline and killed birds, fish and marine mammals had just demonstrated the environmental dangers of offshore oil drilling, just eight years ago the Deepwater Horizon oil rig explosion and consequent oil spill disaster in 2010 was even worse, blackening the coasts of several states along the Gulf of Mexico with oil and killing marine life on an even more massive scale. It was the biggest offshore oil spill ever.

Meanwhile, global warming—mainly caused by burning of fossil fuels notably oil—has shown in recent years the danger of continuing to use oil. Another difference: this time partisan politics has become part of the process.

But there I was as the new year began vacationing at an inn in Key West, Florida. This was among the areas I traveled to after, in 1970, at the daily Long Island Press, exposing the oil industry’s Atlantic offshore drilling plans. I picked up The Key West Citizen and read about the Trump administration giving a blanket go-ahead to oil drilling off virtually every U.S. coast.

The arguments against it in The Key West Citizen were similar to those made in the Keys and up and down the Atlantic Coast nearly 50 years ago—that drilling would threaten marine life and a “robust tourist-based economy which generates $2 billion alone in water-based activities,” as the newspaper noted.” Florida Senator Bill Nelson was quoted as calling the Trump administration plan “an assault on Florida’s economy, our national security, the will of the public and the environment. This proposal defies all common sense.”

Back decades ago in traveling the Atlantic coast investigating the, I visited the first offshore drill rig set up in the Atlantic, off Nova Scotia. The dangers of drilling were obvious. On the rig it was admitted by the executive from Shell Canada that the booms promoted in oil industry ads as containing spills “just don’t work in over five-foot seas.” Peat moss was being stockpiled along the Nova Scotia coast to try to sop up spilled oil. On Long Island, “you’d use straw,” the Shell Canada man said. A rescue boat circled the rig 24 hours a day.

But a succession of moratoria voted in overwhelmingly by Congress caused drilling off the U.S. Atlantic coast to largely fade away.

Now the Trump administration had thrown the door to offshore oil drilling door completely open—for drilling not only on the Atlantic coast but on the Pacific coast, too, and in Arctic waters.

Returning home to Long Island from Florida, I read the strong protests in this area to the move. DuWayne Gregory, presiding officer of the Suffolk County Legislature, said the Trump offshore oil-drilling plan “would be devastating to our coastal communities on Long Island by damaging marine life and precious natural resources, increasing the chances for a catastrophic spill.” Members of the Suffolk Legislature in a letter to U.S. Secretary of Interior Ryan Zinke, noted that “the proposed program would promote oil and gas drilling on more than 98 percent of the Outer Continental Shelf, including a region that encompasses the entirety of Suffolk County…This program will cause substantial harm to our county’s tourism revenue…as well as our precious marine resources.”

“Our beautiful coastline is crucial to this state’s economy,” declared New York Governor Andrew Cuomo. It “generates billions of dollars through tourism, fishing and other industries.”

Both Cuomo and the Suffolk County legislators cited a sudden deal between Zinke and Florida Governor Rick Scott exempting Florida from the drilling scheme, and asked for an exemption, too.

That deal, it has been widely reported, has to do with the Trump administration wanting to help Republican Scott in a run for the U.S. Senate, challenging Nelson, a Democrat. At least when I got into the issue in 1970, with Richard Nixon as president, politics had nothing to do with his administration’s decisions about where drilling should take place—this would be an “equal opportunity” environmental threat.

In the many protests to the Trump plan, the Zinke-Scott deal has also been cited.

This Monday, North Carolina Governor Roy Cooper—who joined with the governors of six other Atlantic states last week in a letter to Zinke asking that Trump administration offshore drilling plan be reconsidered—said North Carolina would sue the federal government if’s not, and that the Florida exemption would be part of the litigation.
Cooper pointed out that Zinke in granting the exemption spoke of concern because Florida is “heavily reliant on tourism as an economic driver.” Said Cooper: “If that’s the reason to exempt Florida, then it’s the reason to exempt North Carolina.”

But then, on Tuesday it was reported that this past Friday in Washington, Walter Cruickshank, acting director of the Interior Department’s Bureau of Ocean Energy Management, told a subcommittee of the House Committee on Natural Resources that the Florida exemption was “not final.”

I originally got into the offshore oil drilling story with a tip from a fisherman out of Montauk, Long Island who said he had seen in the ocean east of Montauk, a major Atlantic Coast fishing port, the same sort of vessel as the boats he observed searching for petroleum when he was a shrimper in the Gulf of Mexico.

I telephoned oil company after company with each saying they were not involved in searching for oil in the Atlantic. Then there was a call from a PR guy at Gulf saying, yes, Gulf was involved in exploring for oil in the Atlantic, in a “consortium” of 32 oil companies doing the searching. These included the companies that all had issued denials. This was a first lesson in oil industry honesty, an oxymoron.
Join the debate on Facebook
More articles by:Karl Grossman

Karl Grossman, professor of journalism at the State University of New York/College of New York, is the author of the book, The Wrong Stuff: The Space’s Program’s Nuclear Threat to Our Planet. Grossman is an associate of the media watch group Fairness and Accuracy in Reporting (FAIR). He is a contributor to Hopeless: Barack Obama and the Politics of Illusion.
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
🛢️ The New Alaskan Oil Rush
« Reply #40 on: April 23, 2018, 02:05:08 PM »
Assuming they actually make the investment and drill these finds, this will give the Alaska Pipeline a couple of more years of life.  Industrial economy up here should hold up until I buy my ticket to the Great Beyond, even if it's a military run command economy.

RE

https://oilprice.com/Energy/Crude-Oil/The-New-Alaskan-Oil-Rush.html

The New Alaskan Oil Rush
By Haley Zaremba - Apr 22, 2018, 2:00 PM CDT Alaska


ConocoPhillips is coming off of an incredible exploration season, reportedly the best they’ve had in over a decade, and they have Alaskan oil to thank for it. The company stuck big in the National Petroleum Reserve-Alaska (NPR-A) this winter, successfully finding oil at all six of their test wells (three exploration and three appraisal), which means chances are good that the trans-Alaska pipeline system could soon be seeing a lot more (much-needed) action.

The Houston-based supermajor has estimated that there are at least 300 million barrels of recoverable oil in its  "Willow Discovery" along Alaska's Western North Slope, and these appraisal wells seem to strongly support that projection. More importantly, this discovery could represent just a fraction of the available reserves along the North Slope, and ConocoPhillips plans to keep exploring the area over another busy exploration season next year, starting with a recent $400 million deal to buy all of Anadarko Petroleum Corp.’s North Slope assets.

Over the next five years, it is projected that ConocoPhillips will be adding 100,000 barrels a day to the trans-Alaska pipeline for a total 650,000 barrels a day, an 18 percent increase. This is great news after years of dwindling volumes--to put today’s 550,000 barrels per day in perspective, when the pipeline peaked in 1988 it was funneling  2.1 million barrels of oil per day through Alaska, an economy that relies heavily on oil revenues but has been seeing volatile returns in the past years.

ConocoPhillips’ “Willow Discovery” is also a glimmer of hope for Alaska’s long-suffering North Slope. Once the powerhouse of the country, many of its once-abundant fields have been sucked dry. Onetime major fields like Prudhoe Bay, the Kuparuk River and the Alpine are now nearly tapped. Now companies like ConocoPhillips are breathing new life into the region, picking up speed since several major oil fields were discovered there over the past few years.

Related: Is Saudi Arabia Losing Its Asian Oil Market Share?

The newfound interest in Alaskan oil is not limited to ConocoPhillips, however. Investors and developers from as far-flung places as Papua New Guinea (PNG) have moved in to get a piece of the action. Last month a PNG-based company called Oil Search took over operations with a $400 million stake in the Nanushuk field. The field is part of the massive Pikka unit, reportedly the state’s third largest with an estimated volume of 1.2 billion barrels of oil (some sources have even reported up to 3 billion barrels). Oil Search bought a large stake in the field from Denver-based Armstrong Oil and Gas, while Spanish-based Repsol owns another significant portion.

Alaska’s State Department of Natural Resources Commissioner Andy Mack told the Associated Press saying that Pikka alone could reverse the extended decline in the trans-Alaska pipeline. Oil Search is equally bullish about the prospects, saying that the first planned development could account for an investment in the range of $4 billion to $6 billion, with a goal to have their oil flowing through the trans-Alaska pipeline by 2023.

Related: A Natural Gas Giant Like No Other

Now, the Trump administration is pushing ahead with legislation that will allow drilling in the vast Arctic National Wildlife Refuge, with a 60-day review to sell oil and gas leases in the pristine 19.6-million acre region. A divisive issue to say the least, the fate of the region has been bounced back and forth between political platforms since the Clinton administration, and critics point out the delicacy of the region and the threat drilling would pose to its population of migratory birds and the caribou on which the indigenous Gwich’in people depend.

The Alaskan government, however is likely extremely please, after fighting to open the refuge for years for their state which heavily depends on the wellbeing of the oil industry. In fact, the good news just keeps piling up for Alaskan oil after years of oil debts and economic decline. While not everyone is thrilled about the prospect of Big Oil’s comeback in Alaska, few can deny that the winds of change are about to blow in a lot of cash.

By Haley Zaremba for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
🛢️ Weekly Oil Storage Report - Imbalance Set To Worsen
« Reply #41 on: June 21, 2018, 04:02:47 AM »
https://seekingalpha.com/article/4182948-weekly-oil-storage-report-imbalance-set-worsen

Weekly Oil Storage Report - Imbalance Set To Worsen
Jun.20.18 | About: The United (USO)


EIA reported a higher-than-expected crude draw this week.

On the surface, this was a bullish EIA oil storage report, but we need to watch the demand variables carefully as gasoline and distillate saw builds higher than the 5-year.

Going forward, US crude storage balances are set to worsen once crude imports normalize.

US oil production will also see the record growth so far this year slowdown considerably in the second half.

This idea was discussed in more depth with members of my private investing community, HFI Research.

Welcome to the weekly oil storage report edition of Oil Markets Daily!

Highlight


EIA reported a much steeper crude storage draw than we expected this week. The 5.914 million bbl decline came on the heels of record refinery throughput of 17.7 million b/d and elevated US crude exports of 2.374 million b/d. Imports increased slightly this week to 8.242 million b/d, while the input for US oil production was flat w-o-w. A key reminder for everyone following the weekly US oil production input, EIA recently changed the estimate to where it now rounds up to the 100k b/d. You may not see a bump up to 11 million b/d until it's able to round up to that figure.

Despite the bullish crude storage draw this week, implied refined production demand took a hit again this week resulting in gasoline and distillate to show builds higher than the 5-year average. Now that we are entering peak demand season, it's important that the elevated refinery throughput translates into healthy end-user demand. If the demand variables do not follow through, we would see refined production storage build higher than average.
Save As Many As You Can

Online azozeo

  • Master Chef
  • *****
  • Posts: 9414
    • View Profile
Oil Glut IT'S THE DEMAND,STUPID-Data Overtakes Oil as Leading Global Commodity
« Reply #42 on: September 08, 2018, 11:57:13 AM »
Data Overtakes Oil as Leading Global Commodity. Alphabet (Google’s parent company), Amazon, Apple, Microsoft, the Most Valuable Listed Firms Worldwide
By Graham Vanbergen
Global Research, September 02, 2018
TruePublica 28 September 2017

First published Truepublica and Global Research on September 28, 2017

The oil industry has dominated the global commodity market for a hundred years one way or another. In that time it has also been the cause of considerable geopolitical conflict – hardly surprising when you consider than more than four billion metric tons of oil is shipped worldwide every year. Approximately one third comes from the Middle East. America and Russia account for around 12 percent each of the world’s total oil production annually. There are around 1.7 trillion barrels of oil in known reserves and although Saudi Arabia boasts a global oil reserve of 15.6 percent, Venezuela boasts 17.6 percent. Europe is the world’s largest importer and road transport is the world’s largest consumer. Overall, nearly 100 million barrels of oil are consumed every single day. In 2016, Royal Dutch Shell, Exxon and BP had combined overall revenues from oil of around $620 bn. (1)



https://www.globalresearch.ca/data-overtakes-oil-as-leading-geopolitical-global-commodity/5611050
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 39206
    • View Profile
🛢️ Why The U.S. Is Suddenly Buying A Lot More Saudi Oil
« Reply #43 on: September 11, 2018, 12:03:19 AM »
https://oilprice.com/Energy/Crude-Oil/Why-The-US-Is-Suddenly-Buying-A-Lot-More-Saudi-Oil.html

Why The U.S. Is Suddenly Buying A Lot More Saudi Oil

By Tsvetana Paraskova - Sep 10, 2018, 6:00 PM CDT oil storage


For a few months now, OPEC has been boosting production to ease concerns about high oil prices amid expected supply losses from Venezuela and Iran.

The cartel’s largest producer and exporter, Saudi Arabia, has been specifically targeting an increase in crude oil exports to the most transparent market, the United States, which reports crude oil imports and inventory levels every week.

On the one hand, the Saudis are looking to regain their foothold in the American market after having cut shipments to the United States to a 30-year-low at the end of last year, when OPEC’s efforts to erase the global oil glut were in full swing.

On the other hand, the Saudis are responding to the demands of their staunch ally U.S. President Donald Trump, who has repeatedly slammed OPEC for the high gasoline prices, urging the cartel in early July to “REDUCE PRICING NOW!”

In the week to August 31, the four-week average of U.S. crude oil imports from Saudi Arabia exceeded 1 million bpd for the first time since June 2017, data by the EIA showed.

At that time last year, Saudi Arabia started to purposefully reduce its exports to the United States, where inventory data and refinery runs are reported every week. Those reports influence the price of oil and investor sentiment.

In the last week of October 2017, the four-week average of U.S. imports from Saudi Arabia was just 506,000 bpd—almost half of the four-week average of 1.009 million bpd for the last week of August this year.

In October 2017, U.S. imports from Saudi Arabia stood at 582,000 bpd—the lowest level since November 1987, as OPEC’s leader, its fellow OPEC members, and Russia-led non-OPEC allies part of the production cut pact were working to drain the global oil glut that weighed on oil prices and on the incomes of oil producing countries.
Related: The Start Of Saudi Arabia’s Power Play
Oilprice.com
The most vital industry information will soon be
right at your fingertips

Join the world's largest community dedicated entirely to energy professionals and enthusiasts
Join Today

In the spring of this year, it became evident that OPEC and friends achieved their mission to draw global inventories down to the five-year average. The oil market tightened, but OPEC’s leader Saudi Arabia was still vowing to continue with the production cut pact at least until the end of this year.

However, the U.S. announced the return of sanctions on Iran, including on its oil, Venezuela’s production continued to plunge by around 40,000 bpd-50,000 bpd every month, outages in Libya and Nigeria continued, and Brent Crude prices hit $80 a barrel in May.

Consumers and large oil-importing nations started to express concern about the high oil prices, and analysts started to question whether $80 oil was the beginning of demand destruction. President Trump stormed into the debate with several tweets aimed at OPEC and its price-fixing policies.

After OPEC and its allies decided in June that they would ease compliance rates, that is, boost production, U.S. imports from Saudi Arabia started to rise again, exceeding 1 million bpd at the end of last month. That has come at the expense of another Middle Eastern oil supplier, Iraq, whose crude oil exports to the United States have been dropping from the highs of more than 800,000 bpd in April this year, to less than a 400,000 bpd four-week average as of August 31.

The largest U.S. refinery, the 600,000-bpd Motiva refinery in Port Arthur, Texas, controlled by Saudi Aramco, has started to boost Saudi imports again. Last year it slashed Saudi oil intake and at one point was importing more Iraqi oil than Saudi crude, according to Bloomberg. But in recent months, Motiva has resumed buying more Saudi oil, EIA data reviewed by Bloomberg shows.
Related: A Watershed Moment Is Looming For Iran

The low level of Middle East crude shipments to the United States has started to change, Gary R. Heminger, CEO at the second-largest refiner in the States, Marathon Petroleum Corporation, said in a conference presentation last week.

“The Middle East producers are becoming much more aggressive, wanting to bring their barrels back into this market this market is very important to them,” Heminger said.

Saudi Arabia’s crude shipments to the United States last month and this month are set to hit the highest two-month level since February and March 2017, according to trade flow data by Thomson Reuters. A total of 41.5 million barrels of Saudi oil is expected to arrive at the U.S. Gulf Coast and the West Coast until mid-October, with the West Coast imports at their highest since August 2013.

Saudi Arabia is resuming higher crude oil exports to the United States to achieve two goals: regain market share and keep a lid on oil prices and U.S. gas prices, at least until the mid-term elections in November.

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Online azozeo

  • Master Chef
  • *****
  • Posts: 9414
    • View Profile
Oil Glut: IT'S THE DEMAND, STUPID! Saudi's Threaten $200 Barrel Oil/Sanctions
« Reply #44 on: October 16, 2018, 02:04:58 PM »



https://www.cnbc.com/2018/10/15/oil-prices-al-arabiya-op-ed-warns-of-economic-disaster-if-us-sanctions-saudi-arabia.html
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

 

Related Topics

  Subject / Started by Replies Last post
Record Oil Glut!

Started by RE « 1 2 ... 5 6 » Energy

75 Replies
32662 Views
Last post March 13, 2014, 06:18:27 AM
by Surly1
10 Replies
2455 Views
Last post September 19, 2015, 06:04:51 AM
by MKing
10 Replies
2290 Views
Last post April 22, 2016, 05:27:56 PM
by MKing