oil industry – Olduvai.ca

I never thought I would be even tempted to defend the oil industry, and that’s not exactly what I intend to do here, but their situation, and the situation in which they have put us, need a little explaining. There are two major narratives about the oil business currently, spurred by spiking fuel prices and corporate profits. One is that President Biden is responsible for high fuel prices; there’s no point in even discussing that notion, it is simply too dumb to live. The other, embraced by a large number of very smart people, is that the oil companies are making obscene profits by price gouging — raising prices simply because they can, and using the profits to buy back stocks and pay higher dividends and salaries.

They are raising prices, and they are racking up historic profits, but to understand what’s happening to them, and us, we need to know, as Paul Harvey used to croon, “the rest of the story.”

Oil companies like to say they “produce” oil but they don’t — they have to find it and get it out of the ground. If they don’t find enough new oil to replace the oil they have “produced,” they are in trouble. And if that state of affairs goes on very long, they find themselves in involuntary liquidation. For several years now, they have not been finding enough oil to replace what has been used up, and 2021 saw the lowest level of new oil discoveries in 75 years.

For many years, one of the biggest expenses oil companies had was searching for new deposits. But these expenditures are categorized as capital expenditures (capex, for short) and do not appear in profit-and-loss statements. In recent years, however, most oil companies have virtually given up, and that is one reason they are diverting profits to investor and executive benefits…

…click on the above link to read the rest of the article…

‘It doesn’t have to be this way’: Lessons from the slow death of Louisiana’s oil industry

December 17, 2021

‘It doesn’t have to be this way’: Lessons from the slow death of Louisiana’s oil industry

The Gulf Coast is bleeding oil jobs. Here’s what it tells us about a just transition.

Oil Giants admit to a 5C Temperature Increase being baked in but no one else will!

December 11, 2021

Oil Giants admit to a 5C Temperature Increase being baked in but no one else will!

“Oil giants Shell and BP are planning for global temperatures to rise as much as 5°C by the middle of the century. The level is more than double the upper limit committed to by most countries in the world under the Paris Climate Agreement, which both companies publicly support.”
I believe a temperature increase of 5C and more will occur much, much sooner than mid-century. This is clearly an extinction event for most if not all complex life on planet earth.
In my May 2015 Oral Submission to the N.Z. Ministry of Environment, I pointed out that both the IEA and Shell Petroleum admit that close to 5C is baked in but none of the large NGO’s nor the global Green Party’s nor their networks are prepared to face the reality of the crisis. I received zero feedback from the Ministry minions but a standing ovation from the concerned members of the public at the hearing process. My oral presentation is embedded in the above hyperlink:
According to the conservative blogger Joe Romm at Think Progress the planet may have warmed 5C in 13 years once before;
“PETM shocker: When CO2 Levels Doubled 55 Million Years Ago, Earth May Have Warmed 9F In 13 Years

I have written to both David Parker, Environment Minister and James Shaw co-leader of the Green Party of Aotearoa in the new Labour led coalition government in New Zealand challenging them both to face up to the reality of the situation, I have yet to receive any reply. My emails are copied below, feel free to email them yourself( both of their emails are embedded in the two links directly above) and ask why they are holding back;

…click on the above link to read the rest of the article…

Covid is at the center of world’s energy crunch, but a cascade of problems is fueling it

October 12, 2021

Covid is at the center of world’s energy crunch, but a cascade of problems is fueling it

“It’s like a car that’s been taken off the road for a while and now we want to restart it quickly — it takes time,” according to an expert.

A man uses his smartphone flashlight to light up his bowl of noodles at a restaurant during a blackout in northeastern China.Olivia Zhang / AP

LONDON — Much of the world is suffering a punishing energy crisis.

Homes and factories across China are shrouded in darkness. India’s coal-fired power stations are running on scraps. Dozens of British utilities firms have gone bust. Spain announced emergency legislation after household utility bills shot up more than a third in one year. And there are fears that a harsh winter in the United States could deliver Americans’ most expensive heating costs in years.

Energy shortages are sweeping the world even before winter’s cruelest months freeze the Northern Hemisphere, and officials and experts point out that the multiple issues behind the crunch will make solutions harder to come by.

This cocktail of causes is a mix of bad weather, China trying to kick its addiction to dirty coal and even allegations that Russia is throttling the natural gas market for political gain. But most experts agree the central driving force has been the Covid-19 rebound. Stirring out of lockdowns, people are simply consuming energy faster than production can be rekindled after a year of idling.

“It’s like a car that’s been taken off the road for a while and now we want to restart it quickly — it takes time,” said Jianzhong Wu, a professor specializing in energy infrastructure at Wales’ Cardiff University.

…click on the above link to read the rest of the article…

The age of fossil fuel abundance is dead

October 12, 2021

The age of fossil fuel abundance is dead

JOE GIDDENS/AP

Workers at Buncefield oil depot, known as the Hertfordshire Oil Storage Terminal. British military personnel have begun delivering fuel to gas stations after a shortage of truck drivers disrupted supplies for more than a week, leading to long lines at the pumps as anxious drivers scrambled to fill their tanks.

ANALYSIS: For much of the past half-decade, the operative word in the energy sector was “abundance”.

An industry that had long sought to ration the production of fossil fuels to keep prices high suddenly found itself swamped with oversupply, as America’s shale boom lowered the price of oil around the world and clean-energy sources, such as wind and solar, competed with other fuels used for power generation, such as coal and natural gas.

In recent weeks, however, it is a shortage of energy, rather than an abundance of it, that has caught the world’s attention. On the surface, its manifestations are mostly unconnected. Britain’s miffed motorists are suffering from a shortage of lorry drivers to deliver petrol.

Power cuts in parts of China partly stem from the country’s attempts to curb emissions. Dwindling coal stocks at power stations in India are linked to a surge in the price of imports of the commodity.

Yet an underlying factor is expected to make scarcity even worse in the next few years: a slump in investment in oil wells, natural-gas hubs and coal mines. This is partly a hangover from the period of abundance, with years of overinvestment giving rise to more capital discipline. It is also the result of growing pressures to decarbonise.

This year the investment shortfall is one of the main reasons prices of all three energy commodities have soared.

…click on the above link to read the rest of the article…

For Oil and Its Dependents, It’s Code Blue

April 19, 2020

For Oil and Its Dependents, It’s Code Blue

The great price collapse of 2020 will topple companies and transform states.

Oil drop — Failing vital signs: Economists predict a depression after the pandemic. That will mean less energy spending, which translates into ongoing low energy prices that already no longer cover the cost of extraction in many places. Illustration for The Tyee by Christopher Cheung. Oil rig image: Creative Commons.

If oil has been laid low by the coronavirus, then the nations whose economies most depend on it might soon be on ventilators. By any prognosis the great oil price collapse of 2020 has pushed the world’s most volatile commodity into Code Blue.

No one expects oil, its peddlers or consumers to emerge wealthier or wiser from this crisis. Oil company bankruptcies, already happening before the pandemic, will escalate. And more petro states will begin to stumble, like Venezuela, down the rabbit hole of collapse.

The pandemic, combined with suicidal overproduction and a brief price war between Russia and Saudi Arabia, has reduced oil consumption and revenues on a scale that is mindboggling.

Prior to the pandemic, the world gulped about 100 million barrels a day, filling the atmosphere with destabilizing carbon. Today it sips somewhere between 65 million and 80 million barrels.

At least 20 to 30 per cent of global demand has vanished and nearly two dozen petro-producing countries including Canada have agreed to withhold nearly 10 million barrels from the market. Few expect this agreement will stop the price bleeding.

In fact, the price of Western Canadian Select or diluted bitumen remains below five dollars a barrel — cheaper than hand sanitizer. That’s a drop of more than 80 per cent compared to the month before.

Because the spending of oil fertilizes economic growth and expands national GDPs, most of the world’s economists now predict a long depression after the pandemic.

…click on the above link to read the rest of the article…

Oil Price War Claims Another Victim

April 13, 2020

Oil Price War Claims Another Victim

LNG Qatar

The oil price war has already claimed its first victim.

Whiting Petroleum Corp. (NYSE: WLL), once the largest oil and gas producer in North Dakota’s Bakken Shale, has filed for Chapter 11 bankruptcy becoming the first major shale producer to do so in the current year. Whiting has cited the “severe downturn” in oil and gas prices courtesy of the Saudi Arabia-Russia oil price war and COVID-19-related impact on demand.

But this shale producer has no plans to go into a state of suspended animation: Whiting has announced that it will go ahead with full production claiming it has ample liquidity with $585M of cash on its balance sheet and has reached an agreement in principle with certain noteholders for a comprehensive restructuring.

In short, Whiting’s playbook is to buy more time hoping for a rebound in energy prices to bail it out.

WLL shares have jumped 15.1 percent after the bankruptcy announcement–probably an indication that investors believe the company has healthy odds at a comeback. Still, the shares have crashed an appalling 95 percent YTD, making the sector’s 46.9 percent YTD plunge appear tame in comparison. Whiting has announced that existing shareholders holders will only receive 3 percent of the equity in the reorganized company.

The bankruptcy is symptomatic of the sheer pain reverberating throughout the oil supply chainas per Bloomberg.

It also serves as a cautionary tale for the battered natural gas sector which is, sadly, following in the footsteps of Saudi Arabia, Russia and the oil sector by stubbornly refusing to lower production.

Head Fake

…click on the above link to read the rest of the article…

Big Oil is using the coronavirus pandemic to push through the Keystone XL pipeline

April 9, 2020

Big Oil is using the coronavirus pandemic to push through the Keystone XL pipeline

The oil industry saw its opening and moved with breathtaking speed to take advantage of this moment

TransCanada’s Keystone pipeline facility. Photograph: Jeff McIntosh/AP

I’m going to tell you the single worst story I’ve heard in these past few horrid months, a story that combines naked greed, political influence peddling, a willingness to endanger innocent human beings, utter blindness to one of the greatest calamities in human history and a complete disregard for the next crisis aiming for our planet. I’m going to try to stay calm enough to tell it properly, but I confess it’s hard.

The background: a decade ago, beginning with indigenous activists in Canada and farmers and ranchers in the American west and midwest, opposition began to something called the Keystone XL pipeline, designed to carry filthy tar sands oil from the Canadian province of Alberta to the Gulf of Mexico. It quickly became a flashpoint for the fast-growing climate movement, especially after Nasa scientist James Hansen explained that draining those tar sands deposits would be “game over” for the climate system. And so thousands went to jail and millions rallied and eventually Barack Obama bent to that pressure and blocked the pipeline. Donald Trump, days after taking office, reversed that decision, but the pipeline has never been built, both because its builder, TC Energy, has had trouble arranging the financing and permits, and because 30,000 people have trained to do nonviolent civil disobedience to block construction. It’s been widely assumed that, should a Democrat win the White House in November, the project would finally be gone for good.

And then came the coronavirus epidemic – and the oil industry saw its opening. It moved with breathtaking speed to take advantage of the moment.

…click on the above link to read the rest of the article…

These Secretive Oil Companies Control $3 Trillion In Wealth

December 11, 2019

These Secretive Oil Companies Control $3 Trillion In Wealth

They control the vast majority of the world’s oil and gas assets, yet the average person has never even heard of them, outside of those that are famous for things like getting attacked by missiles or becoming embroiled in a high-profile corruption scandal.

State-owned oil and gas companies (aka, the national oil companies, or NOCs) control at least US$3 trillion in oil and gas assets, compared to around $2.5 trillion as of 2017, and hold an estimated 90% of all known reserves–considerably more than publicly listed companies such as BP, ExxonMobil and Shell. Meanwhile, Saudi Aramco leads the pack as the world’s most profitable company.

That means that NOCs control about as much wealth as all U.S. billionaires or roughly twice the assets of global multilateral development banks.

If we go by annual revenue alone, China’s state-run Sinopec—explorer, producer, refiner, marketer and distributor—was the biggest oil and gas company in the world at the end of 2018. By net income, that title goes to Saudi Aramco, which reported net income in 2018 of $111.1 billion, compared to Sinopec’s $9.1 billion.

These numbers may seem a bit wild, but no one really ever knows where they come from or how they are derived.

By annual revenue metrics, by year-end 2018, four of the top 10 oil and gas companies in the world were state-owned: Sinopec, Aramco, China National Petroleum Corporation (CNPC) and Russian Gazprom. The other six Top 10 titles went to Shell (4th), BP (5th), Exxon (6th), Total (7Th) Valero (8th) and Phillips 66 (10th). Related: The Best And Worst Oil Majors Of 2019

Despite their economic importance, most of these 71 NOCs are notoriously secretive–Norway’s Equinor being one of the few exceptions. For the remainder of the NOCs, their opacity poses a significant fiscal and governance risk, especially when they carry huge debts.

…click on the above link to read the rest of the article…

THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports

April 12, 2019

THE COMING MIDDLE EAST OIL CRISIS: The Collapse Of Net Oil Exports

The Middle East is heading for a crisis in its oil industry. Unfortunately, the market doesn’t realize there is any danger on the horizon because it mainly focuses on how much oil the Middle East is producing rather than its exports. You see, it doesn’t really matter how much oil a country produces but rather the amount of its net oil exports.

A perfect example of this is Mexico. As I mentioned in a recent article, NEXT OIL DOMINO TO FALL? Mexico Becomes A Net Oil Importer, Mexico is now a net importer of oil for the first time in more than 50 years. Furthermore, the IEA – International Energy Agency, published in their newest OMR Report that Mexico is forecasted to lose another 170,000 barrels per day of oil production in 2019. Thus, this is terrible news for the United States southern neighbor as it will have to import even more oil to satisfy its domestic consumption.

Now, when we think of the Middle East, we are mostly concerned with its oil production. However, the Middle Eastern countries, just like Mexico, have been increasing their domestic consumption, quite considerably, over the past 40+ years. How much… well, let’s take a look. Since 2000, total Middle East domestic oil consumption jumped from 5.1 million barrels per day (mbd) to 9.3 mbd in 2017:

As we can see, while Middle East oil production increased by 7.9 mbd from 2000 to 2017, domestic consumption expanded by 4.2 mbd. This means that more than 50% of the Middle East’s production growth during this period was absorbed by domestic use. The next chart shows how the changes in the regions oil production and consumption impacted net oil exports.

…click on the above link to read the rest of the article…

Smart Money Is Piling Into Oil

April 10, 2019

Smart Money Is Piling Into Oil

Oil prices jumped to five-month highs this week, pushed higher by a bullish cocktail of supply outages, geopolitical unrest and a sputtering shale sector.

The most recent factor is the sudden eruption of the long simmering feud in Libya between rival factions. The attack on Tripoli by the Libyan National Army (LNA), a militia led by Khalifa Haftar, led to a spike in oil prices on Monday as the market priced in the possibility of supply outages.

One oil export terminal near Tripoli is the most obvious asset at risk. “If this port were to be shut down due to the fighting, this could see a delivery outage of up to 300,000 barrels per day,” Commerzbank said in a note on Tuesday. “The oil market is already undersupplied, so if supply from Libya also falls away the supply deficit will become even bigger.” Brent jumped to $71 and WTI to $64 on the news, the highest level in five months.

Intriguingly, speculators have only recently turned bullish on crude oil in terms of their positions in the futures market. “Indeed, our money-manager positioning index implies that speculative funds only moved from neutral to positive on oil in the latest week,” Standard Chartered wrote in a report on April 9. The investment bank argued that major investors only began to properly factor in geopolitical risk in the last few days, having overlooked risk for much of this year. Standard Chartered analysts said that the “supply security” of Libyan oil is “low,” and that output could decline in both the short and medium term.

…click on the above link to read the rest of the article…

Oil Industry Ponders Getting ‘Dragged into Low-Carbon Future’ While Claiming it ‘Stepped up’ on Climate

March 27, 2019

Oil Industry Ponders Getting ‘Dragged into Low-Carbon Future’ While Claiming it ‘Stepped up’ on Climate

The fossil fuel industry’s faith that the modern world economy will be powered by its products for the indefinite future is usually unwavering. But cracks in that faith recently appeared in Houston at the top annual oil industry conference, known as CERAweek.

The trade publication Platts S&P Global noted that “talk of oil at CERAWeek felt a bit more lackluster this time around,” according to several attendees. Various pressures — from climate-anxious investors to competition from renewables — apparently are tempering the oil and gas industry’s usual optimism.

Perhaps also contributing to the mood was Norway’s announcement, just a day before the conference began, that its sovereign wealth fund was divesting from over 100 oil and gas exploration companies around the world. This news led to headlines like “World’s largest sovereign wealth fund to scrap oil and gas stocks.” Its fund managers were clear this decision wasn’t out of concern for the climate, but instead to make sure they didn’t lose money on risky oil and gas investments.

Only a few years ago, however, CERAweek was brimming with industry bravado, in which oil company CEOs mocked renewable energy sources and made claims that the oil industry just wanted to lift poor people out of poverty.

At the 2014 conference, attendees even heard Gina McCarthy — the Obama-appointed head of the Environmental Protection Agency at the time — promise that “[c]onventional fuels like coal and natural gas are going to play a critical role in a diverse energy mix for years to come.”

Oil and Gas ‘Crisis of Confidence’

Embed from Getty Images

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The Oil Industry Faces A ‘Crisis Of Confidence’

March 14, 2019

The Oil Industry Faces A ‘Crisis Of Confidence’

The oil industry is starting to feel the pressure of climate change.

Oil executives, by and large, have not been swayed to change their business practices despite years of warnings about the climate crisis. However, they are beginning to listen to shareholders who are demanding change, while also seeing policy risks looming just over the horizon.

The annual IHS CERAWeek Conference in Houston is usually a gathering of oil titans who meet to celebrate their business. A backslapping affair, the event doesn’t spend too much time worrying about climate change.

This year is a bit different. There has been palpable anxiety about the future. Shareholders are putting pressure on companies to report their risks and exposures to climate change. At the same time, oil executives are worried that shifting technologies, pushed along by government policy, will threaten future oil sales.

Norway’s Equinor sounded the alarm. Eldar Saetre, CEO of the Norwegian oil company, said that the industry faced a “crisis of confidence,” and that companies were not doing enough to plan for the epochal change that is beginning to unfold. “We need to drive this as an industry, to be part of the solution and not be dragged into a low-carbon future,” Saetre told the Wall Street Journal. Some companies are taking action, but “there is definitely denial within companies and in boardrooms, as well as ignorance and an unwillingness to act.”

Last week, Norway’s $1 trillion sovereign wealth fund proposed a divestment from oil exploration companies, an event that may turn out to be a significant moment in history, marking the beginning of a difficult chapter for the oil industry.

…click on the above link to read the rest of the article…

IEA 2018 World Energy Outlook: Peak oil is here, oil crunch by 2023

March 10, 2019

IEA 2018 World Energy Outlook: Peak oil is here, oil crunch by 2023

Preface. I’ve been working on a post about the latest IEA 2018 World Energy Outlook report, but the excerpts from the cleantechnica article below states most clearly why there is likely to be a supply crunch as soon as the early 2020s and the investment implications.

Meanwhile, here’s what I’ve gleaned from other summaries of the report.

Although many hope that oil companies will drill for oil when prices go up and close the supply gap looming within the next few years, very little oil has been found to drill for for several years now. The IEA 2018 report also says that shale oil will not rescue us, and likely to peak in the mid-2020s.

Oil companies do have money, but they haven’t been drilling because there’s no cheap oil to be found, so instead they’ve been spending their money buying their shares back.

From crashoil.blogspot.com: World Energy Outlook 2018: Someone shouted “peak oil”

This excerpt is in Spanish translated to English by google. It shows a civilization crashing 8% decline rate that the IEA hopes will be brought to an also civilization crashing 4% rate with new oil drilling projects.

“How is this alarming graph interpreted? According to the text, the red is what they call “natural decline” and corresponds to how oil production would decrease if the companies did not even invest in maintaining the current wells; As explained in the report, it is 8% per year. The pink area corresponds to the “observed decline” and is what the IEA inferred how production will actually decline if companies invest what is needed for the correct maintenance of the current deposits. This decline corresponds to 4% per year.

…click on the above link to read the rest of the article…

Trump Administration Drills Down on Alaska’s Arctic Refuge

February 7, 2019

Trump Administration Drills Down on Alaska’s Arctic Refuge

The deeply unpopular plan would benefit a few rich oil companies while threatening people, wildlife and the climate.

The Trump administration is barreling ahead with plans to drill for oil in Alaska’s Arctic National Wildlife Refuge, the largest refuge in the country and an area of global ecological importance.

Many refer to the coastal plain of the Arctic Refuge — the very place where oil drilling is being planned — as the “American Serengeti.” A home for grizzly bears, wolves, musk oxen and a host of other species, the area is famous as the birthing ground for the enormous Porcupine caribou herd, which each spring floods across the refuge’s coastal plain in the tens of thousands, arriving in time to raise newborn calves amid fresh tundra grasses. The coastal plain is also the annual destination for millions of migrating birds, who come from nearly every continent on Earth to raise the next generation of swans, terns and over 200 other species. In late summer these avian visitors disperse to backyards, beaches and wetlands across the planet.

Drilling on the Arctic Refuge has long been opposed by most Americans. Among the staunchest opponents of drilling are indigenous people in northern Alaska and the Canadian Arctic, whose cultures and diets are entwined with the Porcupine herd. They include the Gwich’in people of northern Alaska, who have lived in the Arctic for millennia and reside alongside the Arctic Refuge. Their name for the coastal plain is Iizhik Gwats’an Gwandaii Goodlit, or “the Sacred Place Where Life Begins,” a name reflecting the shared destiny of the caribou and the people. For the Gwich’in and others, fighting against drilling is a cultural imperative and a civil-rights issue.

…click on the above link to read the rest of the article…

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