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Publishers: Tom Whipple, Steve Andrews
Quote of the week
"This [Exxon] is the company that denied the [climate] science, despite the damage caused by their oil exploitation; who has funded campaigns to block climate action and now refuses to face his environmental crimes by attending today's hearing. We can not allow lobbyists of such companies to freely access the corridors of the European Parliament. We must remove their badges immediately. "
Molly Scott Cato, Member of the European Parliament
Graph of the week
1. Oil and the global economy
Prices climbed during the first three trading days of last week due to the contraction in the oil supply due to OPEC + cuts, sanctions imposed by the United States on oil prices. 39, Iran and Venezuela and a decline of 9.6 million barrels of US crude stocks. Prices in London closed Wednesday at $ 68.50 – a four-month high. However, market sentiment changed on Thursday and Friday as fears of an economic downturn hit the stock and oil markets. The Federal Reserve's signals that there may no longer be interest rate increases this year have contributed to the idea that economic conditions will be more difficult. A report released on Friday showed that factory output in the eurozone had fallen in March to the fastest pace in almost six years, while manufacturing activity in the US dropped to its lowest point. level in almost two years.
Evidence continues to accumulate that a major paradigm shift is underway in the American shale oil industry, which is generally recognized as the key to future growth in the world's supply of oil. oil. The American shale has never met the expectations of its donors, that it would one day be very profitable. After a decade of regular losses by many oil shale drillers, we are witnessing a drying up of financing for unprofitable companies, forcing them to reduce their plans to increase production. The number of US rigs has dropped in the last five weeks to reach 1,016 rigs.
At the same time, the small drillers, who started the oil shale revolution, face an obstacle to their growth, they are selling slowly to the rich international oil tankers. They claim that their superior technology and larger-scale integrated operations can be profitable – at least in the Permian Basin. Conoco and Exxon say they can increase Permian production by millions of barrels a day over the next five years, so global oil shortages are not expected to develop during this period. There are of course those who say that the big oil companies will not be able to increase and maintain their production as much as they say because of the geology of shale oil that It is profitable only in a limited number of sites and depletes so quickly that constant drilling is necessary to stay even.
The success of major oil companies in the Permian Basin, including Exxon and Conoco, over the next few years promises to be a critical element in determining how long global oil reserves can continue to grow.
The cut of production of OPEC: The agreement + canceled its scheduled meeting in April and will decide if the production cuts will be extended at a meeting on June 25 and 26. This delay will leave time to badess the impact of US sanctions on Iran and the crisis in Venezuela. The Saudi energy minister said the market still seemed oversupplied, but it would be too early to make a decision on a production policy. The minister also said he was confident that OPEC and its partners would be able to fully comply with the announced reduction, or even exceed it, in the coming weeks.
The UAE Energy Minister said Wednesday that he hoped that OPEC will finalize the long-term cooperation charter with its non-OPEC partners in June. The question of a formal OPEC + pact has existed for some time, but Moscow has preferred that the alliance maintain ad hoc production agreements if necessary. The inclusion of Russia and its oil-producing allies in the OPEC agreement would however give the organization more leverage to deal with importing countries.
Shale oil production in the United States: The title of the week reads as follows: "The big oil companies are rushing to dominate the American shale while the independents are going backwards." The story goes on to explain how Exxon is building a vast shale oil project that, according to its executives, will enable it to overcome the ups and downs of the industry. According to Drillinginfo, the major oil companies have spent $ 10 billion in permit purchases in the Permian since early 2017 and currently have 75 drill rigs in operation, up from 31 in 2017.
Exxon's CEO, Darren Woods, recently said that Exxon would change "the way the game is played" in shale. Its size and activities could allow Exxon to generate double-digit percentage yields in the Permian, even if the price of oil fell below $ 35 per barrel. The company's 1.6 million acres in the basin allow Exxon to treat its Permian operations as a megaproject.
As integrated companies, Exxon and other major oil companies must not make a profit selling their newly produced oil, as do the smaller drillers, but can earn money through transportation, refining and retailing petroleum products. producing oil in the Permian. According to IHS Markit, the Permian is expected to produce about 5.4 million b / d in 2023, compared with 4.1 million today. On the face of it, there is no doubt that the big oil companies have many advantages over smaller drills, which would allow them to drill at lower cost and earn revenue from shale oil other than the sale of crude oil.
A recent study on the profitability of small oil companies shows that the stock of the smaller average company is down 43% since the peak reached in October 2018. The study casts doubt on their prospects and their ability to borrow money. As major oil companies head to the Permian, most shale oil production in the United States still comes from financially troubled small businesses that reduce new drilling, which means that production could begin to decline. .
The underlying problem is the geology of shale oil. Currently, Eagle Ford and Bakken produce about 1.4 million barrels a day and grow very slowly. The big oil companies stay away from these basins and place their bets on the Permian. A recent report on Bakken indicates that the basin produced 55 million barrels of water in December and 40 million barrels of oil. The share of water from the wells, including a natural portion and a portion injected during the fracturing process, increases as a percentage of the total liquid production of the Bakken wells. At an average cost of $ 4 per barrel for wastewater disposal, the total estimated cost of Bakken wastewater disposal now rises to over $ 2 billion annually. This situation is obviously not a good omen for the future of the basin.
Major changes are underway in the American shale oil industry. Whether these changes lead to an increase in production over the next five years or that the shale oil boom, which has added about 8.5 million barrels per day to oil production in the United States, has not still been achieved.
2. The Middle East and North Africa
IranDaily oil exports from Tehran appear to have fallen in March to their lowest level this year. According to data from Refinitiv Eikon and three other companies tracking Iranian exports, the volume of shipments is estimated at between 1.0 and 1.1 million b / d on average. This figure is lower than in February, when shipments reached at least 1.3 million b / d. The situation could worsen if Washington ceased granting exemptions to importing countries. The figures on Iranian exports should be taken with a grain of salt because Tehran has become expert in the concealment of its shipments. The Iranians recently sent several oil tankers to Asia with the help of fake documents that indicated the oil was coming from Iraq, according to Reuters. There are reports of shipments to Iranian oil ship at sea to conceal the origin of the cargo.
The United States has granted waivers to eight major Iranian customers, including China and India, after imposing sanctions on Iranian oil in the fourth quarter of 2018. These waivers will expire in six weeks. to be renewed. The waiver granted by Iraq, which was due to expire last week, has been extended by 90 days, but it mainly concerns imports of Iranian gas intended to run Iraqi plants that would have trouble operating without Iranian fuel.
Iranian President Rouhani has launched four new phases of development on the giant offshore gas field of South Pars, which will add 110 million cubic meters to the daily production of the gas field. The expansion cost $ 11 billion. Petroleum Minister Zanganeh said South Pars would produce 27 phases of development within a year and that production would reach more than 750 million cubic meters later this year. Iran's total natural gas production is currently 841 million cubic meters per day, which is expected to increase to 880 million cubic meters per day by next March and 950 million cubic meters per day in 2021.
OPEC data on February oil production from Ron Patterson's barrel of oil.
Syria / Iraq: US sanctions cut Iranian oil deliveries to Syria. Tehran is unable to deliver oil to Syria since Jan. 2, according to maritime data provider TankerTrackers.com. This compares with an average of 66,000 barrels a day in the last three months of 2018. Storage tanks are virtually empty in the port city of Baniyas, home to Syria's largest oil refinery. Iran's exports of crude oil to Syria were vital to the country during the civil war, as Syrian domestic oil production fell from 353,000 b / d in 2011 to 25,000 b / d in 2017, according to figures released by BP. Moscow has shipped oil products to Syria to keep the country running.
In Iraq, widespread floods threaten to close the Majnoon oilfield, with a capacity of 117,000 b / d, and have already flooded thousands of acres of agricultural land in Basra. Production at Majnoon has not been affected so far, but the floodwaters have already reached four wellheads and new breaches in a nearby earth wall could overwhelm the main facilities in the field.
OPEC data on February oil production from Ron Patterson's barrel of oil.
Saudi ArabiaExports of the kingdom's crude oil in January fell to 7.254 billion b / d, against 7.687 million b / d in December, according to official data released last week. Production in January was 10.2 million barrels a day, down 400,000 barrels a day from December. About 377,000 crude oil was burned directly to generate electricity in January. Burning oil directly to produce electricity is a useless practice and the government is trying to switch to natural gas or even solar energy.
OPEC data on February oil production from Ron Patterson's barrel of oil.
LibyaCrude oil production reached 1.2 million barrels a day as the Sharara oil field approaches 330,000 barrels a day, after being closed by militants for three months. The president of the National Oil Corporation (NOC), a state-owned company, said the country could increase production to 1.4 million b / d this year – "if the security situation remains stable" .
The NOC is working to revive the upstream sector of Libya by opening wells and oil processing facilities, which have been closed since Gaddafi's time. The goal of the NOC, which is to reach a production capacity of 2.1 million b / d by 2021, is based on Libya's attractiveness to attract foreign investment and on a significant improvement in the situation. in security matters.
OPEC data on February oil production from Ron Patterson's barrel of oil.
3. China
In the first two months of 2019, Chinese refineries processed 12.68 million b / d, the largest increase ever recorded and an increase of 6.1% over the same period of last year, according to the Chinese customs data. Refiners are in the process of processing more than 13 million barrels of oil a day for the first time in their history in the third quarter of this year. Most of the processed crude came from imports of crude oil, which continued to increase this year compared to the same month of 2018. In February, China imported 10.23 million b / d, an increase of 21, 6% on the year. In January, imports reached 10.03 million barrels a day, up 4.8% year-on-year.
Beijing has been increasing its refining operations for several years in order to dominate the Asian markets for petroleum products. Large-scale purchases of efficient, modern refineries give Chinese refiners an edge over their traditional competitors. Zhejiang Petrochemical and Hengli Petrochemicals should each have a new refinery with a capacity of 400,000 bpd by the end of the third quarter of this year.
If oil prices continue to rise, the next increases could largely depend on what happens between the US and Chinese trade talks. There have been contradictory reports in recent days. Both parties have gone so far in proposing easy solutions. China has agreed to buy more energy and US agricultural products. The United States has postponed its tariffs and has expressed a desire to eliminate them. But the difficult problems will be difficult to solve. These include intellectual property rights, access by US companies to the Chinese market, data services and other practices of the Chinese government that Washington regards as unfair. President Trump said last week that the United States should maintain tariffs on Chinese products for a "substantial period", even after an agreement. "We must make sure that if we reach an agreement with China, China will respect this agreement."
4. Nigeria
The Kolmani River-II well in northern Nigeria is progressing well, with drilling of 6,700 feet to date. This exploration well is being drilled in the hope of finding oil and gas in northern Nigeria. The target for the Kolmani River well is 14,200 feet and could be deeper depending on the results. If substantial quantities of gas were to be found in the north of the country, the government is again talking about building a 2,000-kilometer pipeline across the Niger, then to Algeria and even Morocco, where it could be connected to pipelines in Europe. Seven months ago, the government announced that it was collaborating with a Chinese consortium to finance a 614-kilometer pipeline connecting gas fields in southern Nigeria to Kaduna in northern Nigeria. country.
As in many years, the state of refining in Nigeria is chaotic, with most refined products being imported at considerable cost to an oil-producing country. The heart of the problem is the lack of maintenance, which forces refineries to process a fraction of their nominal capacity and operate at a loss. Last week, the government announced that it was planning to revise the two Port Harcourt refineries, which have a combined treatment capacity of 210,000 b / d, but have not undergone major revisions during of the last 19 years. It has been said that the progress of the new 650,000 bpd Dangote Refinery, which is expected to replace existing refineries, is running out of steam. Port Harcourt Refinery projects, 30 and 55 years old, suggest that the government is protecting itself from the Dangote project.
5. Venezuela
Electricity is back in many parts of Venezuela, but the country has not left the country yet. The country's electricity grid, which depends on the Guri dam for 80% of its energy, is in a deplorable state and experts expect frequent and persistent power outages. The side effects of power outages could be profound. In many areas, water services are not yet normal because there is not enough electricity to run the pumps and many are worried about the lack of seeds and fertilizer for crops in this area. year.
US imports of crude oil from Venezuela have been reduced to zero, for the first time in record fashion, preliminary data from the Energy Information Administration released Wednesday. Imports from Venezuela, one of the largest suppliers of crude oil from the United States, rose to about 587,000 b / d by the end of January. Venezuela's main export terminal, Jose, is operational again and PDVSA has said it could return the oil sent to the US to Russia for lack of another way to send it. It remains to be seen if such a plan does much for its income.
The status of the three "modernizers" managed jointly by Venezuelan and foreign staff is not known. These devices turn the very heavy oil of Orinoco into a lighter substance that can be exported. At the last word, only one of the three processors worked and there was a serious shortage of imported solvents to mix with heavy oil.
OPEC data on February oil production from Ron Patterson's barrel of oil.
6. The memories (news articles are published – the date of the article in Peak Oil News is in parentheses – to learn more: news.peak-oil.org)
The new Low Sulfur Fuels Regulations The International Maritime Organization (IMO), effective January 1, 2020, limits the sulfur content of marine fuel to 3.5% from 3.5% currently. As 2020 approaches, oil refiners from all over the world, from Europe to the United States, through Asia, are gearing up to get as high as possible refining margins for distillates such as diesel and marine diesel. Some refiners have modified their maintenance schedules for 2019, with planned refinery shutdowns being heavily spring – loaded in the first half of the year, leaving operational refining capacity for the fall of 2019, when Fuel change for ships in 2020 will be imminent. (3/20)
In the EU, Exxon could lose its lobbying access to the European Parliament after no representative of the company has appeared at a hearing on the denial of climate change. A member of the Green Party's European Parliament has already made a request to ban society. (3/23)
In Israel, all requirements for the start of Israeli gas exports to Egypt are not yet met, first debits are expected only at least by the middle of this year. The US producer Noble Energy and its Israeli partner Delek Drilling – jointly with the Egyptian company Sphinx EG – agreed in September last year to acquire a 39% stake in the East Mediterranean pipeline for 518 million euros. dollars as part of its reverse use project for Israeli gas to Egypt. At the time it was announced that exports would begin "early in 2019" once the transaction is finalized. A little more work on the agreement remains to be done. (3/23)
Sudan Saad al-Deen Hussein al-Bishri, Minister of State at the Ministry of Oil in Khartoum, believes that the oil and gas exploration blocks offered by Egypt in the Halayeb region to the Red Sea are a direct intrusion into Sudanese territory. The Halayeb triangle, controlled by Egypt, has been claimed by Sudan since the 1950s. However, Cairo says that it is an Egyptian territory and that it has long been a source of contention between the two neighbors. (3/21)
In Angola, A fuel shortage at one of Africa's major oil producers forces drivers in the capital, Luanda, to line up to fill their tanks. Shortages cause problems for those who drive to earn a living. (3/22)
Colombia has set aside two environmental license applications submitted by oil companies ConocoPhillips and Canacol Energy Ltd for fracking projects in northern Cesar Province. Colombia does not yet allow hydraulic fracturing, but the government says the use of this technique could almost triple Colombia's oil and gas reserves. An expert commission convened by the government to study unconventional exploration methods recommended the strict monitoring of three pilot projects to determine whether the techniques should be widely used. The companies did not meet the minimum requirements for the Piranga project, while the Plata project raised possible water protection issues. (3/21)
The Mexican government plans to use money from a public revenue stabilization fund to help reduce the considerable amount of debt accumulated by the main energy supplier, Pemex. Reuters reports, citing the country's deputy finance minister, that the fund is worth $ 15.4 billion and that the government plans to make it "countercyclical". (3/23)
The number of oil and gas wells in Canada fell 56 and is now 105, which represents 56 fewer platforms compared to the same period last year, as the Canadian oil industry continues to face tough struggles for its pipeline, which is needed to move its heavy crude to the market. (3/23)
Canadian producers of natural gas have experienced a similar situation among their oil producing brothers – an insufficient storage capacity in the face of increasing production and, consequently, a fall in domestic prices. Last year, the average annual haircut of Alberta's natural gas benchmark, AECO, compared to the US benchmark Henry Hub, was at its level the higher since almost two decades – since 1999. (3/22)
The number of American oil rigs fell 9 hours the week before March 22, bringing the total to 824, the lowest level since April 2018, said Friday Baker Baker of GE. This is the first time that the number of rigs has been declining for five weeks in a row since May 2016, a year in which it has declined for eight consecutive weeks. Gas platforms slipped from one to 192. (3/23)
US judge blocked oil drilling expected in Wyoming because the government has not sufficiently taken into account its impact on global warming – a decision that could complicate President Donald Trump's broader efforts to increase oil, gas and coal production on land United States. (3/21)
More "solar oil": According to Bloomberg, BP plans to start powering some of its US operations with electricity generated by solar power plants, said the managing director of a subsidiary, Lightsource BP. The UK-based supermajor acquired a 43% stake in Lightsource two years ago, pledging to spend $ 200 million for the company over a three year period. (3/21)
SPR Sales: The US Department of Energy sold 4.32 million barrels of soft crude from its strategic oil reserve for a total of more than $ 285.7 million, an average of $ 66.14 per b, according to documents released Thursday on the agency's website. (3/22)
Chemical fire / leaks: An earthen barrier containing chemicals that leaked from a petrochemical fire near Houston broke through on Friday, resulting in restrictions on movement around the site and in some of the busiest oil export port. the United States. It was the third time this week that releases of chemicals from the plant were causing travel restrictions in the region. (3/23)
Natural gas in US storage facilities declined from 47 billion cubic feet to 1.143 billion cubic feet during the week that ended Friday, announced Thursday the EIA in the United States. The withdrawal was lower than the 87 billion cubic feet pullover reported in the corresponding week in 2018 and the 56-year-average 56-cubic-foot draw. As a result, inventories were 315 billion cubic feet, or 21.6 percent, lower than last year's level of 1.458 tcf and 556 billion cubic feet, or 32.7 percent, below average. over five years of 1,699 Tcf. (3/22)
Problem of ethanol supply: Mbadive floods in the US Midwest have destroyed about 13% of the country's ethanol production capacity, Nebraska, Iowa and South Dakota mills have been forced to stop or reduce their production as a result devastation. As rail lines are destroyed and maize stocks are stored, production declines, driving up prices in markets that buy corn fuel. (3/22)
In California, a major battery storage project this would help the state replace three of its natural gas plants that may have to be dismantled following the bankruptcy of PG & E Corp. The company fears that it will not be able to fund the 75 megawatt Hummingbird battery storage project. (3/23)
EV Expansion: Ford Expands Next-Generation Battery Electric Vehicle Production Capacity at Second Plant in North America In connection with the company's $ 11.1 billion investment in global electric vehicles, Ford is expanding its BEV manufacturing footprint at its Flat Rock Assembly plant in southeastern Michigan. (3/21)
General Motors Co. announced Friday that it would invest $ 300 million in the construction of a new electric car at home rather than abroad, a decision made by President Trump who criticized the builder Automotive Detroit for its proposed closure of four US plants. GM said the planned investment in an existing plant in Michigan was part of a larger commitment to spend $ 1.8 billion on its manufacturing facilities in the United States, creating 700 jobs in several states over the next three years. (3/23)
Carbon dioxide emissions in the United States energy consumption will remain close to current levels until 2050, according to EIA forecasts Perspectives énergétiques annuelles 2019. CO lié à l'énergie2 les émissions suivent généralement les tendances de consommation d'énergie. Aux États-Unis, les émissions liées à la consommation de carburants à base de pétrole – essence de moteur, distillat, carburéacteur, etc.2les émissions. En 2018, la consommation du secteur des transports représentait 78% des émissions de CO2 des États-Unis.2 des émissions de pétrole et de plus d’un tiers de l’ensemble des émissions de CO liées à l’énergie aux États-Unis.2 les émissions. (3/22)
Nouveau h2 torsion: Une équipe dirigée par Stanford a développé un nouveau système d'électrolyse pour séparer l'eau de mer en hydrogène et en oxygène. Leurs conclusions sont publiées dans un article en libre accès dans les Actes de la National Academy of Sciences. Les méthodes existantes de séparation de l'eau reposent sur une eau hautement purifiée, une ressource précieuse et coûteuse à produire. Hongjie Dai et son laboratoire de recherche à l'Université de Stanford ont mis au point un prototype capable de générer de l'hydrogène à partir de l'eau de mer. (3/20)
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