Home » Posts tagged 'nick cunningham' (Page 12)

Tag Archives: nick cunningham

Venezuela’s oil production has been falling for years, but 2018 could mark a new, darker chapter for the South American nation.

Late last year, Venezuela’s government defaulted on millions of dollars’ worth of debt, with larger and more significant payments maturing this year. The ability to service billions in debt payments this year is almost certainly out of the question, although the size of the default this year remains to be seen.

The cash crunch that Venezuela has suffered through has worsened substantially over time, and the country’s oil sector has paid the price. Venezuela produced over 3.5 million barrels per day (mb/d) in the late 1990s, but output has been falling for much of the past two decades, although often at a gradual pace. The declines really started to accelerate in the past two years.

(Click to enlarge)

But 2018 could be even worse. A year ago, Venezuela produced between 2.0 and 2.2 mb/d, depending on whose data one uses. By the end of 2017, production really began to plunge, dipping to just 1.7 mb/d in December, according to S&P Global Platts. That is the lowest figure since the 1980s, aside from a brief period in 2003 when a strike knocked output offline.

Worryingly for Venezuela, the monthly declines are accelerating. A year ago, monthly declines typically ran somewhere between 10,000 bpd and 30,000 bpd. By the third quarter, those monthly dips ballooned to around 40,000 bpd, month-on-month. But Between November and December, output fell by massive 100,000 bpd, according to S&P Global Platts. Argus Media says the losses are even larger than that, with production falling by 151,000 bpd in December to 1.686 mb/d.

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

Iran Sanctions Will Help China’s Petro-Yuan

January 9, 2018

Iran Sanctions Will Help China’s Petro-Yuan

In a few days, U.S. President Trump may try to re-impose sanctions on Iran, a dramatic step that could heighten tensions between the two countries. Some analysts believe the move could contribute to a much broader global economic power shift from the U.S. to China.

The connection between the issues may not be obvious at first glance, but by seeking to isolate Iran from the international market, Iran could look elsewhere. Because the global oil trade is conducted in greenbacks, the U.S Treasury was able to restrict Iran’s ability to access the global financial system in the past. That made it extremely difficult for Iran to sell its oil prior to the thaw in relations in 2015, which kept millions of barrels of daily oil production on the sidelines.

This time around, however, the U.S. will likely go it alone. The Trump administration won’t have the backing of the international community in its campaign to resurrect sanctions against Iran, which will make isolation much more difficult. A few months ago, Goldman Sachs predicted that unilateral sanctions from the U.S. could affect a few hundred thousand barrels per day from Iran, but without help from the rest of the world, the effort would not curtail nearly the same amount of oil as the last time around.

Moreover, some analysts argue that the Washington crackdown could merely push Iran to begin selling oil under contracts denominated in yuan rather than dollars.

“Potential consequent reactivation of sanctions may cause Iran to export oil using the Chinese Yuan denominated contract, which launches on 18 January,” Bjarne Schieldrop, Chief Commodities Analyst at SEB, said in a statement. “This may spark a move away from the present long-established U.S. Dollar (USD) denominated oil trading regime.”

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

What’s Behind The Canadian Rig Count Crash

January 4, 2018

What’s Behind The Canadian Rig Count Crash

The U.S. rig count has been on the rise for months, despite some recent hiccups, but Canada’s rig count recently plunged amid low oil prices.

Canada’s rig count fell from 210 to 136 for the week ending on December 29, a massive drop off. That took the rig count to a six-month low. Obviously, the losses were concentrated in Alberta, where most of the rigs tend to be. Alberta’s rig count sank from 162 to 118 in the last week of 2017. But Saskatchewan also saw its rig count decimated—falling from 43 in mid-December to just three at the close of the year.

The losses can likely be chalked up to the meltdown in prices for Canadian oil. Western Canada Select (WCS), a benchmark that tracks heavy oil in Canada, often trades at a significant discount to oil prices in the United States. But the WCS-WTI discount became unusually large in November and December for a variety of reasons. The outage at the Keystone pipeline led to a rapid buildup in oil inventories in Canada, and storage hit a record high in December.

Also, Canada’s oil industry has been unable to build new pipelines to get the landlocked oil from Alberta to market. Alberta oil producers are essentially hostage to their buyers in the U.S., and with oil production now bumping up against a ceiling in terms of pipeline capacity, the glut is starting to weigh on WCS prices.

In December, Enbridge announced that it will ration the space on its Mainline oil pipeline system for January as Canada’s pipelines are essentially at full capacity. Enbridge said that it will apportion lines 4 and 67, which move heavy crude, by 36 percent. The term “apportionment” is a euphemism for rationing—essentially oil producers are unable to get all of their product onto the pipeline and are hit with restrictions. That means the oil has to be diverted into storage.

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

Iranian Crisis Could Send Oil To $100

January 3, 2018

Iranian Crisis Could Send Oil To $100

Oil prices started the year on a high note as some geopolitical tension pushed aside bearish concerns. Both WTI and Brent opened above $60 per barrel for the first time in years.

The protests in Iran were the main driver of the bullish sentiment in the oil market. Anti-government demonstrations swept across the country in recent days, and unlike the widespread protests in 2009, the current rallies are related to economic woes and are also taking place in more cities than just Tehran. “Growing unrest in Iran set the table for a bullish start to 2018,” the Schork Report said in a note to clients on January 2.

At least 14 people have been killed in the protests and an estimated 450 have been arrested. It is the most serious challenge to the Iranian government in years, and Iran’s Supreme Leader put the blame on foreign agents, presumably the United States. “In recent days, enemies of Iran used different tools including cash, weapons, politics and intelligence apparatus to create troubles for the Islamic Republic,” Ayatollah Ali Khamenei said.

Meanwhile, tension over North Korea – although not a new development – could be spreading to include a spat between the U.S. and Russia as well as the U.S. and China. Reuters reportedlate last week that Russian oil tankers have sent fuel to North Korea on multiple occasions in the last few months by transferring cargoes at sea. If true, the actions would amount to a violation of UN sanctions. Sources told Reuters that there is no evidence that the Russian state was involved, but the news has raised the specter of U.S.-Russian tension as Washington seeks a hard line on Pyongyang.

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

Russia’s Grip On European Gas Markets Is Tightening

January 2, 2018

Russia’s Grip On European Gas Markets Is Tightening

Despite years of effort from the EU, Russia’s grip over natural gas supplies in Europe is tightening, not waning.

Gazprom shipped 190 billion cubic meters of natural gas to Europe in 2017—a record high, according to Bloomberg. In 2018, that figure is expected to dip slightly to 180 billion cubic meters, which will still be the second most on record.

The higher reliance on Russian gas may come as a surprise, not least because of the ongoing tension between Russia and some European countries on a variety of issues. Russia’s intervention in Ukraine and its annexation of Crimea in 2014 led to a standoff between Russia and the West—but Europe’s imports of Russian gas are up more than 25 percent since then, despite a lot of rhetoric in Brussels about diversification.

There has been some progress. U.S. LNG has begun arriving on European shores for the first time, promising to compete with Russian gas. Importing LNG has been a lifeline particularly in some areas that are acutely exposed to Russia’s gas grip. Lithuania began importing LNG, offering an alternative to Russian gas and forcing price concessions from Gazprom.

For years, U.S. LNG has been billed as somewhat of a game changer, threatening to end Russia’s control of the European market. There have been some notable concessions from Gazprom—more flexible pricing, for example, and an erosion of oil-indexed pricing—but the Russian gas giant has not lost market share. A lot of U.S. LNG has been shipped to Latin America, not Europe.

Part of the reason is that European natural gas production continues to fall, leaving a void that Russia has been eager to fill. At the same time, Gazprom’s Deputy Chief Executive Officer Alexander Medvedev told Bloomberg that coal prices are expected to rise a bit in 2018, making Russian gas more competitive.

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

The Biggest Oil Story Of 2017

December 30, 2017

The Biggest Oil Story Of 2017

There have been plenty of eye-catching stories in the energy industry this year, but one notable development has been the rise of the U.S. as a crude oil exporter.

The ban on crude exports from the U.S. was lifted at the end of 2015, and exports ticked up in the following year, but only modestly. 2017, however, was the year that the floodgates opened.

In the first half of the year, there were several weeks when the U.S. topped 1 million barrels per day (mb/d), but exports averaged about 750,000 bpd between January and June.

(Click to enlarge)

In the third quarter, the export machine really kicked into high gear, and Hurricane Harvey was arguably the spark. It may seem odd at first blush that a disastrous storm that ravaged Texas would be the thing that spurred a rise in U.S. oil exports, but because so many refineries were damaged, a lot of the oil produced in Texas had to go elsewhere.

That surplus of crude and the temporary shortage of refining capacity was visible in the discount for WTI relative to Brent, a price differential that widened to as much as $7 per barrel after the storm, the largest disparity in years. If you are a buyer in say, China, paying $7 less per barrel than elsewhere is pretty appealing, even after factoring in high transport costs. As such, it is no surprise that U.S. oil exports to China surged this year.

U.S. oil exports hit a high at 2.133 mb/d in the last week of October, and have fallen back a bit since. In fact, it would seem to be a struggle for the U.S. to maintain such a high level of shipments. The more oil that is exported, the more likely the discount between WTI and Brent would narrow, which would essentially eat away at the competitiveness of U.S. crude.

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

Oil Giants Are Increasingly Focused On Sustainability

December 28, 2017

Oil Giants Are Increasingly Focused On Sustainability

Pioneer Natural Resources just published its first Sustainability Report, a sign that a growing number of oil companies are feeling the heat from investors over climate change.

Environmental groups have mostly targeted the largest oil companies, both because their sheer size means that they have a larger impact on global greenhouse gas emissions and because of the symbolic value of forcing energy titans to change their act. Activist investors, for their part, are concerned about the loss of shareholder value if oil companies fail to pivot with changing business environment.

After years of resisting its own shareholders, ExxonMobil recently caved to pressure and said that it would publish details of its exposure to various climate threats – regulatory threats, peak oil demand, low prices, etc. – although that came after a shareholder resolution passed earlier this year calling on them to do so.

Pioneer Natural Resources, a Texas shale driller and not an oil major like ExxonMobil, also sees the writing on the wall and it too was the target of shareholder resolution earlier this year. Pioneer’s Sustainability Report is a response to that vote.

“Climate change is an important concern for Pioneer and our stakeholders, and our strategy is to proactively manage our environmental footprint and emissions,” Pioneer’s CEO Timothy Dove said in a statement.

The acknowledgement of the threat of climate pressure from Pioneer is notable. “It is significant that Pioneer, perhaps the most influential company in the Permian, is publishing a sustainability report for the first time,” Andrew Logan, who directs the oil and gas program at Ceres, an organization that pressures companies to make more sustainable investments, told Axios. “It should lead to pressure on its peers to follow suit.”

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

Trump To Rollback Deepwater Horizon Regulations

December 27, 2017

Trump To Rollback Deepwater Horizon Regulations

The Trump administration is hoping to slash regulations on offshore oil drilling that were implemented after the 2010 Deepwater Horizon disaster that killed nearly a dozen people and led to an oil leak that spewed for months.

According to the Wall Street Journal, the Bureau of Safety and Environmental Enforcement (BSEE), which is the agency housed in the Interior Department that regulates offshore oil drilling, is proposing a rollback of a series of changes made after the 2010 disaster.

BSEE says that the cuts will save the oil industry $900 million over ten years. The proposal has not been made public, but the WSJ reports that some of the changes include easing rules that require the streaming of real-time data of oil production operations to facilities onshore, which allows regulators to see what is going on. Another rule that would be removed requires third-party inspectors of equipment, such as the blowout preventer, to receive certification by BSEE.

Another example includes alterations to the “well-control rule,” one of the signature regulations that was implemented by the Obama administration after years of review following BP’s oil spill. The well-control rule required the use of certain safety equipment and operations intended to reduce the risk of another disaster.

But the Trump administration, in a nod to the oil industry, has proposed deleting the word “safe” from a section of the rule, the WSJ reports, which would restrict BSEE’s ability to withhold permits. “Based on BSEE experience during the implementation of the original [well control rule], BSEE has concluded that the term ‘safe’ creates ambiguity in that it could be read to suggest that additional unspecified standards, beyond those expressly stated, may be imposed in the approval of proposed drilling margins,” BSEE wrote in a justification of the rule change, according to the WSJ.

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

Canadian Oil Prices Plunge To $30

December 17, 2017

Canadian Oil Prices Plunge To $30

Oil from Canada’s oil sands is now selling at a $27-per-barrel discount relative to WTI, the sharpest difference in more than four years.

Western Canada Select (WCS), a benchmark for oil from Alberta’s oil sands, has plunged in December, falling to just $30 per barrel at the end of this past week. WCS typically trades at a discount to WTI, reflecting the differences in quality from lighter forms of oil, as well as the extra transportation costs to move oil hundreds of miles out of Alberta.

But a discount is usually something like $10 per barrel, not more than $25. A price deterioration of this magnitude has not been seen in years.

(Click to enlarge)

There are several reasons why the WCS price has deteriorated. First, the spill and shutdown of TransCanada’s Keystone pipeline in November slowed the flow of oil from Canada to the U.S. as the company was forced to make repairs. That led to a minor spike in WTI as supply tightened a bit in the U.S., but upstream in Canada it put downward pressure on WCS amid a glut of supply. Canadian oil was diverted into storage as the pipeline underwent repairs, and the backup pushed prices down.

Second, railroad companies have been unable to accommodate the oil industry on such short notice. “It’s hard for the railroads to change their operating plan really quickly,” Steve Owens, rail analyst at IHS Markit, told Bloomberg. “There are equipment constraints and crew constraints.”

Rail companies have apparently been tied up trying to ship delayed grain cargoes and have not been able to accept oil shipments. To make matters worse, Canadian National Railway Co. is suffering from a backlog after three train derailments in the past two months slowed the typical volume of grain moving on the railways, according to Ag Transport Coalition.

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

Is The Oil Glut Set To Return?

December 14, 2017

Is The Oil Glut Set To Return?

For the second month in a row, the IEA has poured cold water onto the oil market, publishing an analysis that suggests 2018 could hold some bearish surprises for crude.

The IEA’s December Oil Market Report dramatically revises up the expected growth of U.S. shale, which goes a long way to torpedoing the excitement around the OPEC extension.

Late last month, when OPEC agreed to extend its production cuts through the end of 2018, the U.S. EIA came out with data – on the same day as the OPEC announcement – that showed an explosive increase in shale output for the month of September, up 290,000 bpd from the month before.

Although there is a time lag on publishing production data, the huge jump in output in September, plus the spike in rig count activity over the past few weeks, points to strength in the U.S. shale sector. Against that backdrop, the IEA predicted that non-OPEC supply would grow by 1.6 million barrels per day (mb/d) in 2018, a rather significant upward revision of 0.2 mb/d compared to last month’s report.

Adding insult to injury for OPEC, the IEA sees oil demand growing by just 1.3 mb/d. In other words, supply will grow at a faster pace than demand next year, opening up a global surplus once again. “So, on our current outlook 2018 may not necessarily be a happy New Year for those who would like to see a tighter market,” the IEA said. The surplus will be front-loaded – the first half of the year will see a glut of about 200,000 bpd.

(Click to enlarge)

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

‘Perfect Storm’ Wreaks Havoc On Europe’s Energy Market

December 14, 2017

‘Perfect Storm’ Wreaks Havoc On Europe’s Energy Market

The natural gas market in Europe suddenly got a lot tighter this week, with two unexpected supply outages wreaking havoc across the continent, forcing Italy to declare a state of emergency.

The first incident that made big headlines was the crack in the Forties pipeline in the North Sea, which caused Brent crude oil prices to immediately spike. The outage of the crucial 450,000 bpd pipeline sent a jolt through the oil market and was felt around the world, not only because it interrupted oil flows but also because of the influence the pipeline system has on the Brent futures contract.

But the shuttering of the pipeline system will also affect natural gas.

At least two UK natural gas fields – the Elgin-Franklin and Britannia – were forced to shut down because of the outage at the Forties system. Those two fields produce a combined 20 million cubic meters of natural gas per day (million cu m/d), according to S&P Global Platts. Add in maintenance at the North Morecambe field and the UK is currently down 27 million cu m/d.

Meanwhile, some unrelated problems due to a power outage at the Norwegian Troll field in the North Sea – Europe’s largest offshore natural gas field – knocked an additional 47 million cu m/d offline, although only for a brief period of time. Piling on, the Netherlands had to briefly reduce gas shipments to the UK because of problems with a compression station.

Because the UK doesn’t have nearly as much storage capacity for gas as parts of continental Europe, the disruptions will immediately translate into higher prices. UK natural gas futures for front-month contracts spiked by 23 percent to $9.86/MMBtu, according to Bloomberg. That is the highest price in four years. Wood Mackenzie estimates the UK may have lost the equivalent of about 10 percent of winter demand from the outage at the Forties pipeline system.

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

Exxon To Disclose The Real Risk Of Climate Change

December 13, 2017

Exxon To Disclose The Real Risk Of Climate Change

ExxonMobil finally conceded to the multi-year campaign by shareholders and activists to disclose its risk to climate change, a notable departure after years of trying to dismiss the issue.

According to a new filing by Exxon to the U.S. Securities and Exchange Commission (SEC), Exxon said that its board “has reconsidered the proposal requesting a report on impacts of climate change policies” by major shareholders at its annual meeting earlier this year. The company will disclose more information regarding “energy demand sensitivities, implications of two degree Celsius scenarios, and positioning for a lower-carbon future,” the company’s filing stated.

The pressure from activists and shareholders to disclose more information related to Exxon’s vulnerability to climate change are the latest in a series of headwinds over the past few years, Bloomberg writes. The oil supermajor has also had to contend with its inability to find and replace all of the oil and gas reserves that it produces in a given year, and for several years in a row, that reserve-replacement ratio has been under 100 percent, an indication of a declining reserve base.

Also, Exxon’s total oil and gas production has actually declined in four of the last five years—Bloomberg calculates that Exxon averaged 4 million barrels of oil equivalent per day (boe/d) in the first nine months of 2017, down from 4.51 mb/d in 2011. Part of that is because of Exxon’s size—a depletion rate that leads to the erosion of several percentage points from a rather large number is still a large number.

On top of that, Exxon’s shale activity is only beginning to ramp up, having spent billions to acquire acreage earlier this year. Bloomberg says that these obstacles now have Exxon trading at a discount relative to other energy companies in the S&P 500 Index, the first time that has occurred in 20 years.

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

The Massive Energy Bill In The $1 Trillion Infrastructure Package

December 11, 2017

The Massive Energy Bill In The $1 Trillion Infrastructure Package

The GOP tax bill working its way through Congress contains provisions that have huge ramifications for the energy industry, but legislators in Washington may not be done yet.

A top Republican on energy issues, Senator Lisa Murkowski, is eyeing a sweeping piece of energy legislation for 2018. With her long-sought goal of opening up the Arctic National Wildlife Refuge (ANWR) nearly a done deal, Murkowski has plans to tee up a bipartisan energy bill that could potentially break through the usual Washington logjam.

The Alaska Republican, according to Platts, is trying to pitch the energy bill as a way to spark momentum in the oft-cited but vague $1 trillion infrastructure plan supported by President Trump. In fact, the White House just said that President Trump would unveil “detailed legislative principles” for the massive infrastructure proposal in January. That would likely “serve as the building block” for the GOP bill, according to The Hill.

Moving such a monumental piece of legislation is much less likely with the GOP tax bill blowing a trillion-dollar hole in the budget deficit. But Senator Murkowski says she has the vehicle to get the bill moving, and wants to White House to look at it because it is “ready to go” and it is “already pre-vetted,” according to Platts.

What she is referring to is a bill that nearly got signed into law in 2016. Sen. Murkowski and her colleagues on the Senate Energy & Natural Resources Committee have worked on it for more than two years – in fact they have introduced the legislation for three years running. Related: Oil Price Boom Keeps Lid On Natural Gas Prices

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

Venezuela Could Lose A Lot More Oil Production

November 27, 2017

Venezuela Could Lose A Lot More Oil Production

After defaulting on debt, Venezuela’s crisis continues to unfold, threatening to worsen the state-owned oil company’s production.

PDVSA reportedly told employees that they needed to carry out an austerity campaign, looking for ways to cut costs by 50 percent. The internal memo said that savings needed to be found amid the “national economic emergency” while avoiding any hit to the company’s oil production. Profits at PDVSA fell by 90 percent in 2016 compared to the year before.

But it is hard to see how the company can prevent a deeper slide in output after slashing spending to such a degree. Bloomberg reported that PDVSA is demanding financing plans from its joint venture partners, and that any projects will be halted if they do not receive financing. The memo included a long list of other cost saving measures: credit card use for employees will be limited, employees should use video conferencing instead of traveling; company vehicle use should be curtailed; and the use of electricity, water, cell phones, internet cards, computing gear and PR will all see reductions.

Venezuela’s oil production has been sliding for years, but the descent accelerated in 2015 amid low oil prices and a deteriorating cash position for PDVSA and the government. Production dipped below 1.9 million barrels in recent weeks, the lowest level in more than three decades.

The problems will only grow worse, especially because they tend to snowball. Without cash, PDVSA will struggle to import diluent to blend with its heavy oil – the result could be steeper production losses. Again, without cash, existing facilities cannot be maintained, likely leading to an accelerating pace of decline. An array of refineries are “completely paralyzed,” the head of an oil workers union told Bloomberg. Defaults on more debt payments could spark retaliation from creditors, which could eventually put oil exports in jeopardy.

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

Oil Major: 70% Of Crude Can Be Left In The Ground

November 25, 2017

Oil Major: 70% Of Crude Can Be Left In The Ground

Canada’s oil sands are too dirty to be produced, and should probably stay in the ground.

That has long been the sentiment of environmental groups, but it is also gaining acceptance even among some of the largest oil companies in the world.

“A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands. It is really about accessing the most carbon-efficient barrels.”

Meanwhile, Statoil is under pressure at home on another front: its Arctic wells in the Barents Sea have come up dry, capping off a highly disappointing drilling season.

If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.

Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market.

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

Tag Archives: nick cunningham

Content

Post categories

Economic Links

Energy/Resource Links

Environmental Links

Geopolitical Links

Liberty Links

News Links

Other Links

Survival Skills

Post Archives by Category

Post navigation

Latest Posts