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IEA: The Oil Glut Is Going Nowhere

IEA: The Oil Glut Is Going Nowhere

Barrels

Global oil markets will remain well supplied this year, with a possible overhang of some 1 million bpd, the head of the International Energy Agency, Fatih Bitol, told Reuters.close [x]ReplayUnmuteLoaded: 0%Progress: 0%Remaining Time -0:00CaptionsFullscreen

“Non-OPEC production is very strong. We still expect production coming from, not just United States, but also Norway, Canada, Guyana, among other countries,” Birol said, adding “Therefore, I can tell you that the markets are, in my view, very well supplied with oil, and as a result of that, we see prices remain at $65 a barrel.”

Norway is about to experience a sharp jump in oil production in the next four years, a new forecast from its Petroleum Directorate has shown. After a steady decline over several years, production is set for a 43-percent increase between 2019 and 2024, the NPD said, reaching 2.02 million bpd in 2024. This will be thanks to the start of production at the Johan Sverdrup offshore field along with several smaller fields.

In Guyana, Exxon has just begun production from the Liza-1 well. Daily output from the deepwater field should reach 120,000 bpd before the end of 2020. Exxon is also building a second production vessel that should raise the total to 220,000 bpd.

In Canada, meanwhile, oil production is also set to grow despite a government-imposed curtailment aimed at supporting prices. The curtailment was relaxed twice in 2019 and it only concerns large producers, allowing smaller ones to pump as much as they can sell. Based on this, the Canadian Conference Board recently forecast oil production in the country will be growing at 4.2 percent annually between this year and 2024.

Demand growth, however, will be slow, according to Birol.

“We are expecting a demand growth of slightly higher than 1 million barrels per day,” the top IEA man told Reuters.

This means that except sudden spikes in prices due to geopolitical factors or possible production outages in a major producer, oil prices this year will remain largely range-bound.

By Irina Slav for Oilprice.com

Low Gas Prices Crush Appalachia Shale Boom

Low Gas Prices Crush Appalachia Shale Boom

Marcellus shale tower

Low natural gas prices have finally brought the decade-long shale gas boom in Appalachia to a halt.close

Gas production in Appalachia declined by about 1 billion cubic feet per day (Bcf/d) over the past 30 days, bringing output down to an average of 32.7 Bcf/d, according to S&P Global Platts Analytics. That helped drag down overall U.S. gas production to 91.8 Bcf/d, a 1.7 percent decline from 93.4 Bcf/d in November.

The Permian hogs a lot of attention in the press, but the Marcellus shale has been growing at a blistering rate for about a decade. That is now coming to an end as the shale gas industry struggles with oversupply and low prices, lack of profits, debt, investor skepticism and also competition from associated gas in the Permian.

Natural gas prices fell sharply last year, ending the year down more than 25 percent. The rig count in the Marcellus fell by 1 last week, dropping the total to 40. Eight months ago there were 65 rigs operating in the area.

Front-month gas contracts are trading at about $2.12/MMBtu, although at the wellhead prices can be much weaker. S&P said that prices at Dominion South, a hub in the Marcellus, have averaged just $1.78/MMBtu in the past month. S&P says that average breakeven prices are $1.80/MMBtu, but that likely understates the price level that drillers need, given the struggles that many have gone through. Related: How Long Will The Oil Price Fear Premium Last?

“Gas prices are down. It has a big impact, the difference between $2.75 gas and $2.50 gas,” Toby Rice, EQT’s new president and CEO, told the West Virginian legislature in December “A lot of this development doesn’t work as well at $2.50 gas.”

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

2020 Will Be A Crucial Year For Oil

2020 Will Be A Crucial Year For Oil

Oil

It’s the start of a new year and a new decade, and the oil market is as unpredictable as ever.

Will OPEC+ extend its cuts? Will U.S. shale finally grind to a halt? Is this the “year of the electric vehicle”? Here are 10 stories to watch in 2020.

Shale debt, shale slowdown. The debt-fueled shale drilling boom is facing a reckoning. Around 200 North American oil and gas companies have declared bankruptcy since 2015, but the mountain of debt taken out a few years ago is finally coming due. Roughly $41 billion in debt matures in 2020, which ensures more bankruptcies will be announced this year. The wave of debt may also force the industry to slam on the breaks as companies scramble to come up with cash to pay off creditors.

Year of the EV. Some analysts say that 2020 will be the “year of the EV” because of the dozens of new EV models set to hit the market. In Europe, available EV models will rise from 100 to 175. The pace of sales slowed at the end of last year, but the entire global auto market contracted. EVs may struggle to keep the pace of growth going, but EVs are capturing a growing portion of a shrinking pie.

Climate change. 2020 starts off with hellish images from the out-of-control Australian bushfires. 2019 was one of the warmest years on record and the 2010s was the warmest decade on record. As temperatures rise and disasters multiply, pressure will continue to mount on the oil and gas industry. As Bloomberg Opinion points out, climate change has surged as a point of concern for publicly-listed companies. Oil executives are betting against climate action, but they are surely aware of the rising investment risk. In the past two months, the European Investment Bank is ending financing for oil, gas and coal, and Goldman Sachs cut out financing for coal and Arctic oil. More announcements like this are inevitable.

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

Russia Halts Oil Supply To Key European Transit Hub

Russia Halts Oil Supply To Key European Transit Hub

Oil Supply

Russia has halted oil supplies to Belarus amid a disagreement over tariffs, according to officials at a Belarusian oil refinery in the northern city of Navapolatsak.

The officials told RFE/RL that the shipments stopped on January 1 and the facility is currently processing only Russian oil delivered before that date.

Belarus has been at odds with Russia over oil-transit prices for some time against a backdrop of increasing pressure by Moscow on Belarusian President Alyaksandr Lukashenka to deepen integration between the two countries.

A two-month deal on natural-gas prices hours before a December 31 deadline helped the sides avoid a gas shutoff to start the year.

Belarus is heavily reliant on Russia for fuel and funding and is a key transit route for Russian energy supplies to Europe. And now, Russia has just broken a new oil production record

Moscow and Minsk signed an agreement in 1999 to form a unified state, but little progress has been made in the ensuing two decades. 

Meetings between Russian President Vladimir Putin and Lukashenka last year failed to bring the two sides together as the Belarusian president complained he was merely seeking “equal” terms.

Belarusian protests in December targeted the perceived secrecy of the talks and objected to closer ties to Russia.

Mike Pompeo this week postponed a planned visit to Minsk to meet with Lukashenka in what would have been the first visit by a U.S. secretary of state to that post-Soviet country in a quarter century.

Burn, Pay, Or Shut It Down: Three Evils For Permian Drillers

Burn, Pay, Or Shut It Down: Three Evils For Permian Drillers

Evil Permian Drillers

There was a time when natural gas was a welcomed byproduct of crude oil drilling, and drillers in the prolific Permian basin enjoyed this consolation prize–at least when natural gas prices were on the rise. All good things come to an end, though, and the amount of natural gas now exceeds the capacity to get rid of it.

With pipeline capacity fully exploited and natural gas prices squarely in the red, Permian drillers today are faced with three lousy choices: burn off the natural gas, pay to have the gas removed, or slow oil drilling activities to staunch the flow of natural gas.

Crude oil and natural gas are like two peas in a pod: when you find oil, you often find gas. 

Crude oil is pumped out of the well, and a small amount of natural gas comes almost inevitably comes with it. 

But over time, this ratio changes: less oil, more natural gas. 

Now, there is simply too much natural gas, and drillers in the American shale patch must face the not-so-pleasant music, with only one question remaining: which shale drillers can hold on until more pipeline capacity comes online?

Burn, Baby, Burn

The first option for drillers trying to weather the natural gas storm is to burn it off. 

This is flaring–and it’s a rather unpopular method, publicly speaking, due to the negative impact on the environment. For drillers, though, it’s a cost-effective way of dealing with the glut, and since they all must answer to shareholders and lenders, flaring is the first choice when it comes to watching the bottom line. 

Flaring has increased exponentially in recent years as the discrepancy between natural gas and pipeline capacity increased, creating unfavorable market conditions and leaving drillers holding a bag of unwanted natural gas. 

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

Germany Aims To Close All Nuclear Plants By 2022

Germany Aims To Close All Nuclear Plants By 2022

Nuclear plant

Germany is going forward with its plan to phase out nuclear reactors by 2022 as another nuclear power plant is going offline on December 31.

Power company EnBW has said that it would take the Philippsburg 2 reactor off the grid at 7 p.m. local time on New Year’s Eve.

This leaves Germany with six nuclear power plants that will have to close by 2022.

In the wake of the Fukushima disaster in Japan in 2011, Germany ordered the immediate shutdown of eight of its 17 reactors, and plans to phase out nuclear power plants entirely by 2022.

The Philippsburg 2 reactor near the city of Karlsruhe in southwestern Germany has provided energy for 35 years. The Philippsburg 1 reactor—opened in 1979—was taken offline in 2011.

Over the past few years, nuclear power generation in Germany has been declining with the shutdown of its nuclear plants, while electricity production from renewable sources has been rising.

In January this year, Germany became the latest large European economy to lay out a plan to phase out coal-fired power generation, aimed at cutting carbon emissions—a metric in which Berlin has been lagging in recent years.

A government-appointed special commission at Europe’s largest economy announced the conclusions of its months-long review and proposed that Germany shut all its 84 coal-fired power plants by 2038

Germany, where coal, hard coal, and lignite combined currently provide around 35 percent of power generation, has a longer timetable for phasing out coal than the UK and Italy, for example—who plan their coal exit by 2025—not only because of its vast coal industry, but also because Germany will shut down all its nuclear power plants within the next three years.

The closure of all nuclear reactors in Germany by 2022 means that Germany might need to retain half of its coal-fired power generation until 2030 to offset the nuclear phase-out, German Economy and Energy Minister Peter Altmaier said earlier this year.

Marcellus Shale

Marcellus Shale

Marcellus

There have been some signs the shale boom that re-energized America’s domestic energy industry a few years back, might be entering a maturing phase of its development. A phase where weaker players would hit a debt wall or be bought out at discounted value. A phase where, companies with cash who might have felt shale plays were too frothy at present levels, and had stayed on the sidelines waiting for the “froth” to dissipate. Biding their time. Now you can now almost hear the knives on the whetstone.

Beginning in 2019 these signs began to take shape in the massive retrenchment of the service industry that powered shale growth. Companies like Halliburton, (HAL) and Schlumberger, (SLB) threw in the towel and began to take charges against earnings, and layoff hundreds of staff.

This trend took on a real and tangible face when in a recent filing Chevron (CVX) said it would write down and put on the auction block its Marcellus shale assets. Assets it acquired from Atlas Energy in 2011 for $3.2 bn.

In the third quarter, 2019 conference call where this news was released to analysts, Michael Wirth, Chairman and CEO of Chevron commented-

“Mr. Wirth said Chevron must be selective about its investments moving forward, focusing on oil-rich regions like the Permian Basin in West Texas and New Mexico.” – WSJ

According to CVX, not all shale is created equal. Let’s make a note of that! My job as an oil industry expert is to dig a little deeper and see if we can determine just what drove this decision.

The Marcellus vs. The Permian

Why is Chevron abandoning the Marcellus for the Permian? Let’s take a look at the isopach maps for both. In the graphic for the Marcellus, noted as Figure 2, you can see it is a relatively thin structure over most of its extent. And thins progressively the farther west it goes. The EIA comments thusly about production in the Marcellus:

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

The Human Cost of the EV Revolution

The Human Cost of the EV Revolution

Mining

There’s a chance that the iPhone you’re about to get for Christmas contains cobalt mined by a six-year-old. There’s also a chance that that six-year-old has been killed or maimed in the processes of mining in the Democratic Republic of Congo, where the lion’s share of the world’s cobalt comes from. 

Or, maybe, for those whose Christmas lists are more upscale, you’ll be driving around in a new Tesla next week, with a battery containing cobalt from that same mine. 

Our luxuries are necessarily someone else’s sacrifice – and sometimes that sacrifice is the ultimate one. 

The EV and electronics revolutions have come at a steep human cost: a boom in child labor in the DRC as child cobalt miners offer battery makers and Big Tech cheap labor.

That’s the focus of the first-ever lawsuit targeting giant tech firms as end-users of cobalt from mines in which young children have died. 

Having failed to bring down giant miners of cobalt in DRC, such as Glencore, this time lawyers are going after the end users themselves. 

The first reports about child labor in the cobalt mines in the DRC emerged several years ago. And while no one likes to hear that their Tesla, lithium battery, smartphone, or fitness tracker has cost a child his health—or worse, his life—this is the reality of cobalt mining today.

This week, International Rights Advocates filed a lawsuit against Tesla, Apple, Dell, Microsoft, and Alphabet for knowingly benefiting financially from child labor in the DRC. 

The suit was filed on behalf of 13 families whose children died or were seriously injured while mining for cobalt. The suit also seeks damages from miners Glencore and Zhejiang Huayou Cobalt, which supply cobalt to the tech majors and to Tesla.

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

From Boom To Bust: Permian Shale Towns Face Exodus

From Boom To Bust: Permian Shale Towns Face Exodus

Ghost town

Perhaps it’s not evident to anyone who is not an oil-worker living in America’s biggest shale towns, but signs of the shale slowdown predicted by many analysts, and the EIA itself, are already surfacing in the form of vacant hotels, a dip in home prices, a noticeable reduction in overtime hours for oil workers, and a change in standards for hiring. 

Texas’ Permian basin lost 400 jobs in the first 10 months of this year, according to the Dallas Morning News, and fracking contractor Superior Energy Services Inc. alone announced in late November that it had cut 112 jobs from its Permian Pumpco unit. 

This is in stark contrast to the first 10 months of 2018, when the Permian added 16,700 jobs. 

According to the Dallas Federal Reserve’s “Permian Basin Economic Indicators” from November 27 this year, oil production reached a new high in September, though the rig count slipped and drilling has dropped to its lowest level in nearly two years. 

Not only are frack crews for well completions in the Permian down more than 20% this year, according to the Dallas Morning News, citing Primary Vision Inc., but oilfield services companies are firing people–from National Oilwell Varco to Halliburton and RPC. 

The Greater Houston Partnership said in a December report that Houston is facing a situation that is “eerily similar to what it faced after the 1980s bust — an oversaturated real estate market, a bleak outlook for oil and gas, and the need for innovation to drive the economy forward”. 

To that end, it’s putting its hope in other industries–not oil and gas–as it forecasts the disappearance of 4,000 oil jobs by the end of 2020. 

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

China Quietly Ramps Up Oil Production In Iran

China Quietly Ramps Up Oil Production In Iran

Azadegan

The supergiant Azadegan oil field, comprising major north and south sites, is as important to Iran’s overall strategic plan to survive the current sanctions environment and to prosper when they are lifted as the flagship South Pars supergiant gas field and the added-value products of its petrochemicals sector. Last week Iran’s Petroleum Engineering and Development Company (PEDEC) announced that five new development wells and an appraisal well are to be spudded in North Azadegan to maintain current production levels. OilPrice.com understands from various senior energy sources in Iran that this is only part of the picture, with much bigger plans having been agreed for rollout in the coming six months with the help of China and Russia.

Located around 80 kilometres west of Ahvaz, close to the Iraqi border, the entire 900 square kilometre Azadegan field is the third-largest hydrocarbon reserve in the world after the Ghawar oil field in Saudi Arabia and the Burgan oil field in Kuwait. Its total reserves are estimated at about 42 billion barrels of oil, with around 7 billion barrels currently deemed recoverable. The first exploration well was drilled in 1976 but, despite its potential, a long lead time across the four main layers – Sarvak, Kazhdomi, Godvan, and Fahilan – of the site has meant that the pace of production has been slower than at many neighbouring fields, especially those over the border in Iraq.

A key reason for this was the attitude of Chinese firms active in Iran around that time, which can be broadly characterised as doing the minimum necessary to generate some oil flows from the fields back into China whilst not spending too much money.

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

The Fatal Flaw In A Perfect Energy Solution

The Fatal Flaw In A Perfect Energy Solution

Solar wind tower

More than thirty years ago a giant tower was built in Manzanares, Spain, to produce electricity in a way that at the time must have seen even more eccentric than it seems now, by harnessing the power of air movement. The Manzanares tower was, sadly, toppled by a storm. Decades ago, several other firms tried to replicate the idea, but none has succeeded. Why?

A simple idea

The idea behind the so-called solar wind towers is pretty straightforward. The more popular version is the solar updraft tower, which works as follows:

On the ground, around the hollow tower, there is a solar energy collector—a transparent surface suspended a little above ground—which heats the air underneath.

As the air heats up, it is drawn into the tower, also called a solar chimney, since hot air is lighter than cold air. It enters the tower and moves up it to escape through the top. In the process, it activates a number of wind turbines located around the base of the tower. The main benefit over other renewable technologies? Doing away with the intermittency of PV solar, since the air beneath the collector could stay hot even when the sun is not shining.

A more recent take on solar wind towers involved water as well. Dubbed the Solar Wind Downdraft Tower, this project first made headlines in 2014, but since then there have been few updates, and those have been far between. The latest was from last year, when the company behind it, Solar Wind Energy Tower, announced a letter of intent by an investment company to provide financing for the project. That financing was to come from investors that the company was yet to find.

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

Eastern Europe Is Turning Into An Energy Battleground

Eastern Europe Is Turning Into An Energy Battleground

Gas Flame

Bulgaria has agreed to allow NATO to use its Black Sea port for naval coordination efforts as tensions rise between the Western military alliance and Russia.

The agreement was reached following a meeting between U.S. President Donald Trump and Bulgarian Prime Minister Boyko Borisov at the White House on November 25.

NATO has bolstered its defenses in Eastern Europe, including the Black Sea region, which is becoming a new frontier for energy geopolitics, after Russia annexed Ukraine’s Crimean Peninsula in 2014 and seized Ukrainian Navy vessels last year.

NATO earlier this year carried out military exercises in the Black Sea that involved more than 20 ships and crews from Romania, Bulgaria, Canada, Greece, the Netherlands, and Turkey to the consternation of Moscow. Russia’s Black Sea fleet is based in Crimea.

“Viewing with concern the security situation in the Black Sea, the United States welcomes Bulgaria’s offer to provide a maritime coordination function at Varna in support of NATO’s Tailored Forward Presence initiative,” the United States and Bulgaria said in a joint statement.

U.S. and Bulgarian officials will hold high-level meetings to discuss further maritime military cooperation, the statement said.

NATO members Bulgaria, Romania, and Turkey border the Black Sea along with Ukraine, Georgia, and Russia. Both Ukraine and Georgia have expressed a desire to join NATO.

Trump hosted Romanian President Klaus Iohannis last month as part of a series of engagements with leaders from Central and Eastern Europe, including Poland, the Czech Republic, Slovakia, Hungary, and Austria.

Prior to his arrival in Washington, Borisov told journalists that he would not allow a permanent NATO military base on the Black Sea, a move that would anger Russia.

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

BIGGEST BREAKTHROUGH IN ENERGY: Petroteq Losses Nearly 90% Of Its Value Since Last Report

BIGGEST BREAKTHROUGH IN ENERGY: Petroteq Losses Nearly 90% Of Its Value Since Last Report

Every day a new sucker is born.  That’s precisely why companies like Petroteq exist.  Since I exposed Petroteq back in March 2018, the company has lost nearly 90% of its value.  However, that hasn’t stopped the company from issuing new stock and racking up millions of dollars in funds to keep the scam alive.

I call Petroteq… the GIFT that keeps on TAKING.

Over the past year and a half, I have received several emails from followers or individuals who saw my article and asked if Petroteq was a good investment.  I gather my article published on March 16th, 2018 didn’t provide enough information to “Educate” the individual on why Petroteq was a crappy company.

So, I decided it was best to do an update or PART 2 on the disaster called Petroteq.

Again, back in March, I posted this article on Petroteq, BIGGEST BREAKTHROUGH IN ENERGY:  Investor Warning

If you haven’t read the article, I would recommend it. I am not going to rehash the information that I wrote back in March 2018, but what I am going to do is to show that this company continues to BAMBOOZLE INVESTORS even though the stock price is heading to ZERO.

I first came across the company from an article “TEASED” on Oilprice.com about a new technology that claims to produce oil at $20 a barrel.

Clean Oil That Only Costs $20

At first, I didn’t know what to think about this company because why would the editor in chief at Oilprice.com, James Stafford, publish this on their website if the company wasn’t legit?  However, after a bit of research, I found out that Petroteq was nothing more than your typical RUN-OF-THE-MILL Stock scam.

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

The Top 5 Ways We Use Oil & Gas

The Top 5 Ways We Use Oil & Gas

Petchem

If climate change and the use of fossil fuels is starting to worry you, consider this: The lion’s share of the petroleum in the United States is being used just to get around–to get people and things from point A to point B. 

Industrial, residential, commercial and electrical power usage of petroleum pales in comparison.   

Fossil fuels–which include crude oil and other liquids–are refined into petroleum products for a multitude of uses, and last year, the United States consumed over 20 million barrels per day. 

A whopping 69 percent of that was consumed by transportation. Industry, which the masses like to villainize most in terms of fossil fuel consumption and greenhouse gas emissions, used only 25 percent. Residential usage accounted for only 3 percent of our petroleum consumption, and commercial, only 2 percent. 

What about electricity? American electricity generation used only 1 percent of those petroleum products. 

Source: EIA

So, for anyone looking to pinpoint where we need to start cheerleading for renewables or fossil-fuels shaming, here are the top 5 uses of petroleum products to help redirect the debate: 

#5 Oceans of Plastic: Still Gas, 0.703M BPD

While primarily referring to methane and ethane, “still gas” is any form or mixture of gases produced in refineries by distillation, cracking, reforming, and other processes. That means it also includes ethylene, normal butane, butylenes, propane, propylene, and others. 

It’s used most as refinery fuel or petrochemical feedstock. 

The conversion factor is 6 million Btus per fuel oil equivalent barrel.

U.S. refineries burned nearly 240 million barrels of still gas in 2018. 

But petrochemicals are one of the largest drivers of global oil demand, so it’s a circular competition here for still gas. 

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

The EIA Is Grossly Overestimating U.S. Shale

The EIA Is Grossly Overestimating U.S. Shale

Cushing oil

The prevailing wisdom that sees explosive and long-term potential for U.S. shale may rest on some faulty and overly-optimistic assumptions, according to a new report.

Forecasts from the U.S. Energy Information Administration (EIA), along with those from its Paris-based counterpart, the International Energy Agency (IEA), are often cited as the gold standard for energy outlooks. Businesses and governments often refer to these forecasts for long-term investments and policy planning.

In that context, it is important to know if the figures are accurate, to the extent that anyone can accurately forecast precise figures decades into the future. A new report from the Post Carbon Institute asserts that the EIA’s reference case for production forecasts through 2050 “are extremely optimistic for the most part, and therefore highly unlikely to be realized.”

The U.S. has more than doubled oil production over the past decade, and at roughly 12.5 million barrels per day (mb/d), the U.S is the largest producer in the world. That is largely the result of a massive scaling-up of output in places like the Bakken, the Permian and the Eagle Ford. Conventional wisdom suggests the output will steadily rise for years to come.

It is worth reiterating that after an initial burst of production, shale wells decline rapidly, often 75 to 90 percent within just a few years. Growing output requires constant drilling. Also, the quality of shale reserves vary widely, with the “sweet spots” typically comprising only 20 percent or less of an overall shale play, J. David Hughes writes in the Post Carbon Institute report. 

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

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