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Energy

  • Big Oil Going Big In The Gulf Of Mexico

    The oil industry is betting big on the Gulf of Mexico with both costs and production rising as a result. The Gulf has seen a bit of a resurgence in production this year, after declining from a peak in 2009. The oil industry extracted 1.7 million barrels per day on average in the summer of 2009, which fell to 1.2 million barrels per day last year (see chart. Data from EIA). But oil output is up around 15% since then, as the industry pours billions of dollars into the Gulf. The Wall Street Journal reported that several new projects from…

  • Outrage At Pay Package For New BG Group CEO

    When Helge Lund takes over as CEO of BG Group in March 2015, he’ll be greeted with what sports economists call a “signing bonus” of $23.6 million as well as a salary of $22.07 million during his first year. That is unless investors in the British energy giant have their way. No one is denying the assessment by the British multinational energy company that Lund is “ideally suited” for the job, given his 10 years’ service as CEO of Norway’s Statoil. But many investors believe that doesn’t warrant the amount of money the British company wants to pay him. Lund’s…

  • Something Doesn’t Add Up In Bakken Production Figures

    The US Petroleum Supply Monthly just came out with production data for every state and territory. US supply was up 168,000 bpd to 8,864,000 bpd in September. The biggest gainers were North Dakota, up 53,000 bpd to 1,185,000 bpd and Alaska up 79,000 to 477,000 bpd. Alaska was way down in both July and August and is just recovering from that. There was only one big loser, New Mexico, down 18,000 bpd. Texas was up only 9,000 barrels per day which was surprising. The Gulf of Mexico was down 3,000 bpd. The Choke Theory And Why I Ain’t Buying It.…

  • OPEC Refuses To Cut Production, Sending Oil Price Down Again

    OPEC has resisted the urging of its needier members and has decided not to cut production levels despite the five-month-old plunge in oil prices. Saudi Oil Minister Ali al-Naimi said the 12 ministers at the meeting at OPECs’ Vienna headquarters on Nov. 27 decided to keep the production level at 30 million barrels per day, a ceiling set nearly three years ago. The oil market responded immediately, with Brent crude dropping $3 to below $75 per barrel for the first time since September 2010. The global price of oil has declined by more than 30 percent since mid-June because of…

  • Bakken Sweet Spots Are Petering Out

    The Bakken, as well as other shale oil areas, is not one homogeneous area where equal amounts of oil can be found. David Hughes in DRILLING DEEPER puts it this way, though here he is talking about gas wells, the same applies to oil wells: All shale gas plays invariably have “core” areas or “sweet spots”, where individual well production is highest and hence the economics are best. Sweet spots are targeted and drilled off early in a play’s lifecycle, leaving lesser quality rock to be drilled as the play matures (requiring higher gas prices to be economic); thus the…

  • Russia Expects Oil Price To Rise, But Not Enough To Balance Moscow’s Budget

    Russia can’t live with oil prices below $79 per barrel, but Finance Minister Anton Siluanov says he doesn’t expect them to drop much lower, and they may even rise a bit in the medium and long term. Still, he says, that won’t be enough to stabilize Russia’s strained budget. Two-thirds of Moscow’s annual budget comes from taxes on Russia’s oil and natural gas companies. The budget laid out for 2015 requires an oil price of $100 per barrel. Now Siluanov has come to agree with many energy analysts that that the price will remain around $80 for the foreseeable future.…

  • Saudi Sending Negative Signals Ahead Of OPEC Meeting

    Saudi Oil Minister Ali al-Naimi says there’s no need for OPEC to reduce production to shore up the price of oil because the market will fix itself. Despite his optimism, Russia said it would refuse to cut output, apparently threatening a price war over oil. “The market will stabilize itself eventually,” al-Naimi told reporters on Nov. 25 in Vienna, where some of the world’s biggest oil producers were meeting two days before OPEC’s summit at its headquarters in the Austrian capital. The cartel’s meeting is crucial because oil prices have plummeted by about 30 percent since mid-June, from around $110…

  • A Truce In The Holy Oil War?

    Could this be the first step in defeating the Islamic State? In an unexpected move Sunday, Saudi Arabia, the United Arab Emirates and Bahrain agreed to return their ambassadors to Qatar, signaling an end to an eight-month rift over Doha's support for Islamist groups, according to a statement made by the Gulf Cooperation Council. If all sides respect the agreement this could well put to rest the holy oil war that has been going on behind the scenes as the oil-rich countries in the Gulf were opposed not only politically, but also on religious grounds with Qatar. When it was…

  • China Strengthening Claim To South China Sea Oil And Gas

    Not gone and not forgotten, China is ready to solidify its claim to the South China Sea (SCS). Recent satellite imagery confirms China is conducting significant land reclamation operations in the Spratly Islands in the SCS. The SCS is an important fishing ground and is believed to hold large amounts of oil and gas. Undermining the United States’ influence in the region, China intends to play the shepherd in one of the world’s busiest trade routes.Source: BBC   The Spratly Islands along with the Paracel Islands and several maritime boundaries in the SCS have been hotly disputed for several centuries.…

  • Utilities Facing Coal Shortages Due To Rail Congestion

    With winter approaching, the piles of coal at utility yards are running well below average, and several utilities are pressuring rail companies to allow more coal trains through. The problem is the traffic jam on railways across the country. A bumper crop for U.S. grain has led to a surge in shipments, with farmers shipping 15% more grain so far in 2014 compared to a year earlier. The story is similar with oil. Shipments of oil by rail – owing to a dearth of pipeline capacity – are up more than 13% this year. But coal still makes up the…