Bishkek (AKIpress) - 5551d5354e4dc0eb2c0e526e4baf6b92 Russia’s oil company Rosneft has increased oil supplies to China in Q1 2014 by 47.3% to 7.5 million tons, ITAR-TASS reports citing the company's data.
In April, oil supplies to China increased by 44.5% to 1.8 million tons. In 2013, Rosneft supplied to China 15.8 million tons of oil. The supplies in the first quarter of 2014 reached 5.6 million tons.
In June 2013, Rosneft signed with China National Petroleum Corporation (CNPC) a contract on the supply of 360.3 million tons of oil within 25 years worth $270 billion. Under the document, Rosneft was to increase oil exports to China starting from January 2014. Rosneft supplies oil to China both through a branch of the East Siberia - Pacific Ocean (ESPO) pipeline and in transit via Kazakhstan.
Rosneft in 2014 has received the first tranche of the advance payment for oil supplies of more than 360 million tons within the next 25 years in the amount of $20 billion. On November 11, 2013, Rosneft, KazMunayGas and KazTransOil signed a preliminary agreement on the oil transportation through the territory of Kazakhstan. Oil company Rosneft in the first quarter of 2014 exported to China in transit through Kazakhstan 1.7 million tons of oil. The annual transit through the Atasu - Alashankou pipeline, linking Kazakhstan and China, may reach 7 million tons.
China is interested in the route via Kazakhstan, as China’s CNPC holds a 50% stake in the Atasu - Alashankou oil pipeline. The increased transit of Russian oil to China will allow Kazakhstan to load the pipeline by means of the free volumes that are currently supplied to the West and will be replaced by Rosneft’s volumes.
Mattias Westman, head of Prosperity Capital (a major portfolio investor in Russian companies’ shares) assesses the situation as follows, “I don’t think that the West, for the sake of Ukraine, is ready to venture a blockade of Russia’s oil and gas. If there is no petrol in Munich, Vienna or Warsaw, and the US oil prices go up by 20-30%, this will be a real headache. As for Russia, it will be simply supplying oil to China."
By Bloomberg News May 8, 2014 12:35 PM GMT+0700
China, which uses more oil than any country except the U.S., raised daily crude imports to a record in April as a new refinery and stockpiling bolstered demand.
Overseas purchases increased to 27.88 million metric tons, according to data released today by the General Administration of Customs in Beijing. That’s about 6.81 million barrels a day, up from the previous record of 6.66 million in January.
“China imported more crude probably to fill inventory and meet demand that will rebound in June following the maintenance season,” Amy Sun, an analyst with ICIS-C1 Energy, said by phone from Guangzhou today.
Some of the overseas crude will go to refilling commercial inventories, Sun said. Stockpiles fell about 3 percent at the end of March from a month earlier, according to China Oil, Gas & Petrochemicals, published by the official Xinhua News Agency.
Imports also rose as Sinochem Group’s Quanzhou refinery in southeast China ramps up processing after starting commercial operations last month, Sun said. The plant should run at about 90 percent of its 241,000 barrel-a-day capacity by June, up from 70 percent now, according to Sun.
April’s record buying is also to fill the country’s strategic petroleum reserves, according to Sijin Cheng, a commodities analyst at Barclays Plc. China will add 39 million barrels to emergency stockpile sites at Tianjin and Huangdao during the first half of this year, Cheng said in a note to clients today.
The nation returned to a net oil product importer in April with 2.54 million tons of imports and 2.2 million tons of exports, today’s data show. Coal purchases were at 27.11 million tons and No. 5-7 fuel oil imports at 1.67 million tons.
To contact Bloomberg News staff for this story: Jing Yang in Shanghai at jyang251@bloomberg.net
To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net Ramsey Al-Rikabi, Mike Anderson
North Sea June BFOE crude loadings up 600,000 barrels at 26.4 mil barrels
June loadings of North Sea crudes Brent, Forties, Oseberg and Ekofisk are scheduled at a total 26.4 million barrels, up 600,000 barrels from May, according to copies of the loading programs releasedTuesday and Wednesday.
Daily average loadings of the four grades are scheduled to rise an average 47,742 b/d to 880,000 b/d in June. Individually, Brent loadings are set to be unchanged at six cargoes, with Forties down two cargoes at 17, Oseberg up five cargoes at seven, and Ekofisk down two cargoes at 14.
The rise in Oseberg June output will come after the completion of planned maintenance in May, which has hit production. North Sea production in the four BFOE grades has declined from 1.78 million b/d as recently as January 2005 to a low of 700,000 b/d in September 2012.
Marathon, Husky look to continued North American crude output growth
Major North American oil producers Marathon and Husky Oil expect production gains to continue on both the heavy and light ends of the spectrum to keep the continent’s crude output renaissance on a growth track.
The increase in North American crude supplies has rippled through global oil markets, leaving traditional suppliers in North Africa and other regions seeking new homes for their light sweet crude as the US looks to less expensive domestic and Canadian crudes to refine into gasoline and diesel.
Traditional heavy crude suppliers in Venezuela and Mexico have also been vexed as the onslaught of heavy crude from Canada has replaced barrels they traditionally sent to the US.
Marathon, an active driller and producer of the light sweet crude found in North Dakota’s Bakken and South Texas’ Eagle Ford shale plays, saw its first quarter 2014 production in those spots rise to 43,000 b/d and 96,000 b/d, respectively, up by 16% and 33% from
the year earlier quarter, CEO Lee Tillman said during the company’s first quarter earnings call Wednesday.
Canada’s Husky is a historical player in that nation’s oil sands and heavy oil arena. During the company’s conference call Wednesday, CEO Asim Ghosh said first quarter heavy oil thermal production reached 41,000 b/d, with the Sandal thermal oil development coming online early in the quarter at 4,500 b/d, higher than its nameplate capacity of 3,500 b/d.
Husky is looking for 55,000 b/d of heavy oil thermal production by 2016. Husky has several other heavy oil projects in its near-term plans. Development of the Eden West project will produce 3,500 b/d by 2016, with development of a second, nearby project to follow closely. “We don’t yet see the end of the production line,” Husky COO Rob Peabody said.
Husky also sees heavy oil production from Rush Lake on track to produce 10,000 b/d by the second half of 2015. Husky’s oil sands Sunrise Energy Project is 87% complete and will produce about 60,000b/d of heavy oil by the end of 2014 from the first phase of the project. Husky has a 50% stake in the project, which has estimated reserves of 3.7 billion barrels.
Statoil spuds deep, pricey, high-impact Martin well in Gulf of Mexico
Norway’s Statoil has spudded its much-anticipated Martin prospect in the deepwater Gulf of Mexico, a pricey high-impact Miocene well that will be drilled to a depth of nearly six miles, a top company executive said Wednesday.
Statoil, which paid $157 million for Martin at the 2012 Central Gulf sale — the biggest sum shelled out by an oil company in decades for a single three-by-three-mile block — will drill it to a depth of about 31,400 feet, said Veronica Roa, Statoil’s vice president of land and early stage projects-development and production for North America.
“It’s our top prospect from a value and volume standpoint,” Roa said after a presentation to the Offshore Technology Conference. “We look forward to getting results this year,” likely in the third quarter. Statoil has 42.5% interest in the well, sited in Mississippi Canyon block 718 in waters roughly 2,900 feet deep. Its partners could not immediately be ascertained. MC 718 was actually spudded April 20, Jez Averty, Statoil’s senior vice president of exploration-North America, said at a private OTC reception Tuesday, according to a Statoil statement.
Since acquiring this prospect, “we’ve advanced it in 20 months, which is considerably faster than the normal maturation time,” Averty said.
Statoil is a partner in some of the largest US Gulf fields under development, including Chevron-operated Jack/St. Malo and Big Foot, ExxonMobil-operated Julia, Hess-operated Stampede and also the Shell-operated Vito discovery.
Martin is 18 miles northwest of Vito, located at MC 984/985, according to a fact sheet on the prospect. Perseus, another Statoil prospect, should be drilled after Martin, Statoil said, although the location and block number could not immediately be ascertained.
While Martin is a Miocene well, Jack/St Malo, which will come online later this year, and Julia are Paleogene or Lower Tertiary fields further southwest of the others. That is an emerging ultra-deep trend whose discoveries are typically sited in the Walker Ridge and Keathley Canyon areas of the US Gulf.
US to require Bakken crude shippers to identify rail routes
US Transportation Secretary Anthony Foxx on Wednesday signed an emergency order requiring rail shippers and energy companies to identify the routes they are using to transport Bakken crude.
Foxx, who testified before a hearing of Senate Commerce, Science and Transportation Committee, said the order would also require shippers to notify state emergency responders along their Bakken crude routes. “Moving this oil is ... creating more risk and greater danger,” Foxx testified. “If America is going to be a world leader in producing this energy, then we’re going to have to be a world leader in safely transporting it, as well.”
In addition, Foxx issued a safety alert advising shippers and energy companies to no longer use older DOT-111 tank cars to transport oil. The safety alert, however, is not binding.
Senator Maria Cantwell, Democrat-Washington, whose state has seen a major increase in crude-by-rail shipments, asked Foxx to commit to specific deadline for the phasing out of legacy DOT-111 cars.
Canada last month ordered all legacy DOT-111 cars carrying crude be retired by May 2017. Foxx said his agency is following required rulemaking procedures, having submitted to the White House for review last week its draft proposal for upgraded crude-by-rail safety rules, including tank car requirements. The draft rule will not be publicly released until the White House finishes its review, a process that can take up to 90 days.
Foxx told Cantwell he hopes to have the rule finalized before the end of the year. “We are moving as expeditiously as we can to provide certainty to communities, as well as industry,” he said.
By Maher Chmaytelli May 7, 2014 7:05 PM GMT+0700 0 Comments Email Print
Rebels blocking oil shipments from eastern Libya threatened to occupy two ports just weeks after they restarted cargo loadings, jeopardizing a revival in shipments from the North African country.
The port of Zueitina shipped its first cargo since July on May 4, about three weeks after a similar resumption from Hariga farther east. The restarts followed an April 6 accord between rebels and the government and were a precondition for the return of Es Sider and Ras Lanuf, the east’s biggest oil ports.
“We may cancel the agreement altogether, whether it’s about the handing over of Zueitina and Hariga or the talks that were planned to hand over Es Sider and Ras Lanuf,” Ali Al-Hasy, a spokesman for self-declared Executive Office for Barqa, or Cyrenaica region, said by phone today. The action would be a response to the election of Ahmed Maitiq as Prime Minister, according to Al-Hasy.
Eastern Libya federalists agreed last month to hand over control of Zueitina and Hariga to the central government in exchange for an amnesty and the payment of salaries to defectors from Libya’s Petroleum Facilities Guard. Another round of talks with the government was planned for them to hand over the ports of Es Sider and Ras Lanuf.
Oil output in Libya slumped more than 80 percent since the start of the uprising against Muammar Qaddafi in 2011. Supply from what is now OPEC’s smallest producer influences the price of Brent, Europe’s benchmark crude, relative to West Texas Intermediate, its U.S. equivalent. The world’s most-traded oil spread widened to as much as $23 a barrel last year, from about $3 at the end of 2010.
The North African nation was producing at a daily rate of about 250,000 barrels yesterday, compared with 1.6 million barrels under Qaddafi.
“The federalists will probably keep the biggest ports of Es Sider and Ras Lanuf offline and will re-occupy the ports of Hariga and Zueitina,” Eurasia Group, a political risk consulting firm, said in an e-mailed note today.
To contact the reporter on this story: Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron
Europe will struggle to eliminate its dependence on Russian natural gas any time soon, with Sanford C. Bernstein & Co. estimating the cost at more than $200 billion.
Existing projects and anticipated future supply suggest the region’s reliance on Russia can drop to 25 percent by the end of the decade, from 30 percent now, according to Wood Mackenzie Ltd., a consultant. That’s about the same proportion as in 2011. While Europe has 12 options for replacing Russian gas, they would require $215 billion of infrastructure and boost annual costs by $37 billion, analysts at Sanford C. Bernstein said last month.
Group of Seven leaders pledged yesterday in Rome to find new sources of energy for Europe to prevent Russia from using its oil and gas as a political weapon. Russia has said it may cut off gas supplies to Ukraine because of unpaid bills, something it did in 2006 and 2009. That boosted gas costs across the region because Ukraine is the transit point for about half of Russia’s exports to Europe.
“In the short-term, there isn’t really a whole lot they can do,” Thomas Pugh, a commodities economist at Capital Economics in London, said yesterday by phone. “Energy security was taken as a given and it wasn’t something people were talking about a few months ago.”
Negotiators from Russia, Ukraine and the European Union agreed to guarantee no disruptions in gas supply through the end of this month, EU Energy Commissioner Guenther Oettinger said last week after a meeting between the three parties in Warsaw.
90 Days
Europe can cope with a 90-day interruption in flows from Ukraine, assuming “reasonably high” stockpiles, cooperation between European states and normal flows of Russian gas through routes other than Ukraine, consultant Poeyry Oyj said today in an e-mailed report.
European gas prices have fallen 33 percent since Feb. 28, the last trading day before Russia took control of Ukraine’s Crimea region. U.K. front-month gas, the benchmark European contract, declined as much as 2.3 percent today to 44.7 pence a therm ($7.58 a million British thermal units), its lowest since September 2010 as milder-than-normal weather and above-average storage levels offset the threat of supply disruptions.
Russian gas flows to Ukraine and transit to Europe via Ukraine remain uninterrupted, a Gazprom spokesman said today by telephone, asking not to be identified in line with company policy. Ukraine imported 105.4 million cubic meters of gas from Russia on May 5 versus 109.9 million the previous day while exports to Turkey and western Europe rose to 434.7 million from 423.1 million, according to data from the Russian Energy Ministry’s CDU-TEK unit.
Sanctions List
Storage facilities in Europe were 53 percent full as of yesterday as the mildest winter in seven years cut demand for the fuel, according to data from Gas Infrastructure Europe, a Brussels-based lobby group. That’s the highest level for this time of the year since at least 2007.
The U.S. and EU have imposed sanctions on people and companies close to President Vladimir Putin and threatened to tighten them if Russia doesn’t stop supporting separatists in Ukraine before a presidential vote on May 25. Russia pulled back troops from its border with Ukraine and urged the separatists to delay a referendum to ease the tensions, Putin said today.
The 28-nation EU should reduce its reliance on imports of the fuel and place “gas at the very back end of the sanctions list” on Russia over the crisis in Ukraine, Oettinger said yesterday in Berlin.
New gas developments in Norway, Europe’s biggest supplier after Russia, and Azerbaijan will help reduce dependency while new LNG projects from Australia to the U.S. should lead to more fuel ending up in Europe, Massimo Di Odoardo, a gas analyst at Woodmac, said yesterday by phone from London.
12 Options
Europe received 163 billion cubic meters of gas from Russia last year, Bernstein said in an April 2 report. Six short-term alternatives would help save 57 billion cubic meters of annual demand and cost $33 billion a year, it said.
They are drawing down gas stocks, switching to oil in power and paying higher prices for LNG than Japan, the world’s biggest consumer of the super-chilled fuel. To reduce demand, the region could close unprofitable refineries, shut down or cut gas-intensive industries such as chemicals and force “every single person in Europe to be willing to take a cold shower and turn off their central heating one day a month,” Bernstein said.
Within five years, the options would expand to providing tax breaks for Norway’s marginal gas fields, build more coal-fired, nuclear and renewable generation capacity and importing gas as LNG from the U.S. and by pipeline from the Caspian region, the researcher said. These measures would help replace 114 billion cubic meters of Russian gas a year and require $215 billion in investments, Bernstein said.
Contracted Volumes
With about 120 billion cubic meters a year of Russian gas contracted for supply after 2020 under long-term take-or-pay agreements, Gazprom would claim about $50 billion annually for the fuel European buyers might reject to import, Bernstein said.
The U.K., which will have to import 70 percent of its gas by 2030 because of declining production in the North Sea, should try to drill for shale gas to see if it can be extracted as easily as it has been in the U.S., Energy Minister Michael Fallon said after yesterday’s G-7 meeting.
Replicating the U.S. success in tapping gas trapped in shale-rock formations will take years. Poland is developing Europe’s largest recoverable deposits, estimated at 4.2 trillion cubic meters by the U.S. Energy Information Administration. While that’s enough to meet nine years of EU consumption, the country will likely be producing no more than 20 billion cubic meters annually by 2020, according to Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd., a research company.
More Coal
While using more dirtier-burning coal in power generation to replace gas is possible, it will go “against the renewable push,” Capital Economics’ Pugh said.
Russia also supplies Europe with oil. Europe’s developed economies bought 3.1 million barrels of Russian crude every day last year, or 36 percent of their total net imports, according to the International Energy Agency.
The U.S. could help to replace these imports by releasing oil from its Strategic Petroleum Reserve and asking Saudi Arabia and other Persian Gulf allies to increase production, Abhishek Deshpande, an oil markets analyst at Natixis SA in London, said by e-mail.
Oil, Products
Europe bought 1 million barrels of refined fuels from Russia every day last year, including about 69 percent of its net imports of diesel and heating oil, according to the IEA, a Paris-based adviser to developed nations.
The continent could boost non-Russian fuel supplies by importing from new refineries in Asia and using surplus capacity at its own processing plants, Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland, said by phone. Taking barrels to Europe from other regions would tighten supplies in those markets, he said.
Sanctions on energy would be too expensive for both Russia and Europe, Amrita Sen, chief oil markets analyst at Energy Aspects in London, said by phone.
“Even during the height of the Cold War, there were never any sanctions on oil and gas exports,” she said.
To contact the reporters on this story: Anna Shiryaevskaya in London at ashiryaevska@bloomberg.net; Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Rob Verdonck, Dan Weeks
By Rebecca Penty May 8, 2014 4:01 AM GMT+0700 0 Comments Email Print
Encana Corp. (ECA), the Canadian energy producer seeking to boost investor returns by shifting toward crude, is doubling its oil output with a $3.1 billion purchase of shale lands from Freeport-McMoRan Copper & Gold Inc. (FCX)
The agreement to buy 45,500 net acres (18,413 hectares) in Texas’s oil-rich Eagle Ford basin from Freeport’s energy unit gives Encana “the opportunity to accelerate the rebalancing of our portfolio” to higher-priced crude, Encana Chief Executive Officer Doug Suttles said today on a conference call.
Suttles is lifting crude production to cut Encana’s reliance on natural gas after modern drilling technologies unlocked vast supplies of the heating and power-plant fuel from shale in North America and pushed prices below historical averages. Freeport said the proceeds would be used to cut debt and further invest in the deepwater Gulf of Mexico.
“The near-term metrics are fantastic,” Greg Dean, a portfolio manager at CI Investments Inc. in Toronto who holds Encana shares, said today in a phone interview, adding the producer is paying less relative to cash flow than recent Eagle Ford deals. “It’s a great transition asset.”
Encana rose 4.6 percent to C$25.69 at the close in Toronto, the most since March 2013. Freeport increased 0.4 percent to $33.99.
The assets, located in the Karnes, Wilson and Atascosa counties of South Texas, produced the equivalent of about 53,000 barrels of oil a day in the first quarter, Encana said. The company will increase the rig count to four from three by the end of the year on the lands and foresees drilling 400 more wells in the next three to five years, Suttles said on the call.
Cash Flow
The deal is “positive at first blush,” with Encana paying about $14,000 per acre, or 2.4 times the first-quarter cash flow from the properties, Matthew Portillo, an analyst at Tudor Pickering & Co. in Houston, said in a note.
Dean said Encana may be seeking more oil properties with better production growth prospects than the Eagle Ford lands, adding “people should be cautious in assuming this is an asset they can meaningfully grow.”
Suttles, who became CEO of Calgary-based Encana in June, promised last year to prune assets and jobs, focusing on five areas that yield oil and natural gas liquids. The Eagle Ford will become a sixth area of focus, Suttles said.
Louisiana Sweet
The properties produce mostly oil at Light Louisiana Sweet prices, which trade at a premium to the West Texas Intermediate benchmark, Suttles said. The company may expand in the Eagle Ford formation and other areas of focus with purchases except the Tuscaloosa Marine Shale area, which spreads across Mississippi and Louisiana, he said.
Freeport, the largest publicly traded copper producer, is seeking to reduce debt that jumped almost sixfold last year to more than $20 billion following its acquisitions of two oil and natural gas companies. About half the proceeds from the Encana sale will be used to repay debt and the rest will be reinvested in its energy business, the Phoenix-based miner said today in a statement.
The sale of a profitable asset to pay debt and fund capital expenditures may not have been the best option for Freeport, Tony Robson, an analyst at Bank of Montreal in London, wrote in a note.
“The high-margin, oil-rich Eagle Ford was a key part of” Freeport’s energy business, Robson said. “Selling a key asset to allow for debt reductions and help fund capex sends very mixed signals to investors.”
Gas Assets
The acquisition is expected to close by the end of the second quarter and will be funded with cash, including from asset sales closing this quarter. The deal won’t affect Encana’s spending plans in other areas because the properties will produce cash flow immediately, Suttles said.
Encana this year has agreed to sell about $2.3 billion of gas properties, including its Jonah field in Wyoming and lands in East Texas, and is marketing its 480,000-acre Bighorn fields in Alberta, people familiar with the process said in February. Encana also plans to sell shares in a royalty unit as early as this month.
Encana’s production was 87 percent gas in the fourth quarter, according to data compiled by Bloomberg. The company reports first-quarter earnings on May 13.
The purchase is “credit positive” for Encana because it will be funded in cash and adds more liquids to Encana’s portfolio, Matthew Kolodzie, a credit analyst at Royal Bank of Canada in Toronto, said in a note.
The company’s shares have gained 34 percent this year, valuing the company at C$19 billion ($17.4 billion).
Scotia Waterous, a unit of Bank of Nova Scotia, advised Encana on the transaction, while Freeport was advised by Barclays Plc.
(An earlier version of this story corrected the spelling of Mississippi.)
To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net
To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; Susan Warren at susanwarren@bloomberg.net Carlos Caminada, Steven Frank
By Jim Snyder and Thomas Black May 8, 2014 7:01 AM GMT+0700 1 Comment Email Print
The U.S. Transportation Department issued an emergency order designed to reduce the risks of transporting crude from North Dakota’s booming Bakken region by rail, a week after an oil train derailed and burned in Virginia.
The order requires railroads to notify state emergency agencies when they haul Bakken crude through communities. A separate advisory discourages carriers from using an older tank car known as the DOT-111 tied to some accidents, though the order doesn’t ban their use.
“The safety of our nation’s railroad system, and the people who live along rail corridors is of paramount concern,” Transportation Secretary Anthony Foxx said in a statement.
Recent accidents have heightened concern about transporting oil by trains. Last year, a train operated by one person that was left unattended overnight rolled into the center of Lac-Megantic, Quebec, and touched off an explosion that destroyed half the town and killed 47 people.
Railroads agreed in February to slow oil trains in urban areas and install sensors on tracks to detect problems. U.S. regulators said last month they planned to require at least two crew members for crude shipments. The proposed rules are being reviewed at the White House, Foxx told a Senate committee today.
Today’s order applies to trains carrying more than 1 million gallons of Bakken crude, the equivalent typically contained in 35 tank cars. Some carriers assemble trains with 100 or more cars filled with oil.
Lynchburg Accident
Foxx issued the order a week after a CSX Corp. (CSX) train carrying Bakken crude derailed and burned in Lynchburg, Virginia, forcing evacuation of the downtown. No one was hurt in Lynchburg, and the fire was doused in about three hours.
Senator Maria Cantwell, a Washington Democrat, told Foxx that requiring carriers to notify authorities about a train’s route wasn’t sufficient for residents.
“Just knowing that they’re coming through there isn’t going to be enough,” Cantwell told Foxx at a Senate Commerce Committee hearing today.
BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), said in an e-mailed statement it already provides state agencies and emergency response organizations with route information on hazardous materials upon request. BNSF, which operates mostly west of the Mississippi River, is the main railroad that provides service to the Bakken region, which is centered in North Dakota.
The railroads, which usually don’t own tank cars, have urged regulators to mandate studier cars and to require that older ones be phased out over a shorter period than the shippers or leasing companies that own the cars want.
“BNSF believes that promulgation of a federal tank car standard will provide much needed certainty for shippers and improved safety and response time for all first responders,” the Fort Worth, Texas-based railroad said in the statement.
Crude-by-rail shipments have soared as drillers employ new technologies to crack open and free oil and gas from shale formations at a faster pace than pipelines can handle.
Railroads moved about 400,000 oil carloads in 2013, dwarfing 2005’s 6,000, according to an estimate by Logan Purk, a St. Louis-based Edward Jones & Co. analyst.
The train that derailed in Quebec included the DOT-111s. Canada ordered a phase out last month of older tank cars over a three-year period.
Brigham McCown, a former head of the Pipeline and Hazardous Materials Safety Administration, said that while the advisory on the tank cars stops short of prohibiting use of older models, the effect could be far reaching.
“Now it becomes a potential legal liability to ship in an old car if there is an accident,” he said in an interview. Regulators should focus on why trains are derailing rather than on the sturdiness of the tank cars, he said.
To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; Thomas Black in Dallas at tblack@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net; Ed Dufner at edufner@bloomberg.net Steve Geimann, Michael Shepard
By Daniel J. Graeber | Wed, 07 May 2014 22:25 | 0
Oil production in the Gulf of Mexico is on the road to recovery, with next year's projected level on pace to end a four-year slump.
The U.S. Energy Information Administration (EIA) said total crude oil production is expected to average 8.5 million barrels per day this year, a 14 percent increase from the previous year.
Much of the success story for U.S. oil has come from inland shale basins in Texas and North Dakota. For February, the last full month for which data are available from the EIA, Texas produced 81.8 million barrels of oil, a 24 percent increase year-on-year. North Dakota's 26.6 million barrels produced in February was 22 percent higher than in February 2013.
By next year, oil from shale-rich states like Texas and North Dakota is expected to push total U.S. production to 9.2 million barrels per day (bpd), just shy of the high-water mark of 9.6 million bpd in 1970.
A 2013 report from the International Energy Agency said the United States is on pace to pass Russia and Saudi Arabia to become the premier oil-producing nation by the end of the decade.
Both the IEA, and OPEC, however, have said the pace is unsustainable and predicted that the U.S. boom cycle will go bust by the 2030s.
Now the EIA says it has revised its forecast for production from the Gulf of Mexico because new wells from the Mars field began producing in February, ahead of schedule.
Shell announced it started production at the Mars B development using its Olympus floating deepwater platform, the first project of its kind in the region. The Dutch supermajor said the new infrastructure should extend the life of the Mars field through 2050 and the entire basin should deliver an estimated 1 billion barrels of oil equivalent.
The EIA said Mars B, owned by Shell and British energy company BP, should reach a production level of 100,000 bpd next year. As a result, the administration said it was raising its expectations for performance in the Gulf of Mexico.
"U.S. federal Gulf of Mexico production, which has fallen for four consecutive years, is projected to increase by 150,000 bpd in 2014 and by an additional 240,000 bpd in 2015," the EIA said in its monthly market report.
Crude oil production from the Gulf of Mexico was 18 million bpd in 2010, the year of the BP oil spill. The federal government placed a brief moratorium on deepwater activity in response to the tragedy and production in 2011 plummeted as a result.
A capping system meant to prevent another catastrophe in the Gulf is ready for deployment, Marty Massey, the chief executive at the Marine Well Containment Co. said at a Houston energy conference. Once in place, the Gulf’s comeback should be complete.
By Daniel J. Graeber of Oilprice.com
By James Burgess | Wed, 07 May 2014 21:10 | 0
A standoff between Vietnam and China over disputed territory in the South China Sea grew worse on May 7 as Vietnam sent naval vessels to confront Chinese ships.
Last weekend, China sent an oil rig into territory within Vietnam’s 200-mile exclusive economic zone, prompting Vietnam to demand its removal.
An unnamed Vietnamese official said that no shots had been fired so far, adding, “Vietnam won't fire unless China fires first,” according to Reuters.
Vietnam claims that on May 7 Chinese vessels tried to ram Vietnamese ships. Chinese ships fired water cannons to repel the Vietnamese, injuring some sailors in the process. “On May 4, Chinese ships intentionally rammed two Vietnamese Sea Guard vessels,” Tran Duy Hai, a Vietnamese Foreign Ministry official said in Hanoi at a press conference. “Chinese ships, with air support, sought to intimidate Vietnamese vessels. Water cannon was used.”
Hai said that Vietnam has requested a meeting with the Chinese leadership and said Vietnam would do “everything necessary” to settle the dispute peacefully.
In a separate incident, the Philippines detained a Chinese fishing vessel near the Spratly Islands on May 6. China demanded that the Philippines “make rational explanations” of its actions and “take no more provocative action.”
Regional disagreement over who controls vast swathes of territory in the South China Sea persists because all sides have very different views over where to draw boundaries. Many smaller nations with coastlines on the sea argue that the 200-mile exclusive economic zone spelled out in the Law of the Sea Treaty should delineate borders.
China claims a much broader section of territory based on its “nine-dashed line” principle. Despite there being no basis in international law, China uses this principle to claim territory hundreds of miles from its mainland.
By James Burgess of Oilprice.com
2014 Thursday 8TH posted by Morning Star in World
Vietnamese naval vessels and Chinese ships collide in the South China Sea as Hanoi seeks to prevent Beijing setting up an oil rig in an area claimed by both nations
Vietnamese naval vessels and Chinese ships collided in the South China Sea yesterday as Hanoi sought to prevent Beijing setting up an oil rig in an area claimed by both nations.
A Vietnamese government official said no shots were fired and there were no reports of injuries in the incident, the most serious in years between the two countries at sea.
Diplomats said Vietnam dispatched up to 29 armed naval and coastguard ships to areas near the oil rig when it became aware of China’s intentions.
China moved the giant deep-sea oil rig to an area close to the Paracel Islands on May 2 accompanied by a large flotilla of naval vessels.
China’s stationing of the oil rig was part of a gradual campaign of asserting sovereignty in the South China Sea.
It also announced that no foreign ships would be allowed within a three-mile radius of the £600 million rig.
By Justin Loiseau | More Articles
May 7, 2014 | Comments (0)
U.S. crude oil supplies shrank 1.8 million barrels (0.5%) for the week ending May 2, according to an Energy Information Administration report (link opens a PDF) released today.
After increasing 1.7 million barrels the previous week, this latest report marks the first crude oil contraction since late March. A sizable 598,000-barrel-per-day decrease in imports was the main reason behind this report's draw. Despite the decrease, overall inventories have still managed to edge up 0.5% in the past 12 months.
http://g.foolcdn.com/editorial/images/123900/news_crude-oil_050714_large.jpg
While oil supplies shrank, gasoline inventories expanded 1.6 million barrels (0.8%), the same amount as the week before. Demand for motor gasoline over the last four-week period is up a seasonally adjusted 1.4%. In the last year, supplies have shrunk 0.9%.
Over the past week, the average retail price for gasoline at the pump dropped $0.029 to $3.684 per gallon.
http://g.foolcdn.com/editorial/images/123900/gas_large.jpg
Distillates supplies, which include diesel and heating oil, dipped 0.4 million barrels (0.3%) after expanding for the previous two weeks. Distillates demand for the last four weeks is up a seasonally adjusted 11.6%. In the past year, distillates inventories have decreased 3.1%.
http://g.foolcdn.com/editorial/images/123900/dis_large.jpg
Alison Ciaccio, Platts Markets Editor
New York - May 7, 2014
U.S. commercial crude oil stocks fell an unexpected 1.8 million barrels the week ended May 2, the first draw in five weeks, as crude oil imports plunged, Energy Information Administration (EIA) data showed Wednesday.
At 397.58 million barrels for the May 2 reporting week, U.S. crude oil stocks were still at a surplus to the five-year average at 5.7%. That's down, however, from a 13.3% surplus in November 2013.
Analysts surveyed Monday by Platts expected stocks to have risen by around 1.3 million barrels.
The crude oil stock draw was led by a 1.9 million-barrel drop in U.S. Gulf Coast (USGC) crude oil stocks and a 1.1 million-barrel decline in U.S. Midwest stocks.
At the New York Mercantile Exchange (NYMEX) delivery hub at Cushing, Oklahoma, crude oil stocks fell 1.4 million barrels the week ended May 2 to 24 million barrels -- a level that puts stocks at a 40.2% deficit to the EIA five-year average.
USGC refiners held utilization rates steady the week ended May 2 at 92.9% of capacity as regional refiners took units out just as Motiva's massive Port Arthur, Texas, refinery restarted a fluid catalytic cracker (FCC).
Refiners have more room to ramp up in the USGC though, as crude oil continues to move south from Cushing.
USGC refineries often operate in the mid-90% range during the lead-up to summer demand, and rates were as high as 94.3% of capacity as recently as the week ended January 3.
Total U.S. refinery run rates fell 0.8 percentage point to 90.2% of capacity -- counter to expectations of a 0.5 percentage-point increase.
Platts data showed an FCC at Motiva's 600,000 barrels per day (b/d) Port Arthur, Texas, refinery -- the largest in the U.S. -- was started up the week ended May 2 following planned maintenance.
Despite the return of a likely massive unit, Platts data also showed that many USGC refineries took units out of production the week ended May 2.
In Texas, Citgo shut the 77,400 b/d No. 2 FCC in the east section of its 165,000 b/d Corpus Christi refinery for repairs following a regenerator line leak. A 23,000 b/d FCC at Alon's Big Spring refinery, also in Texas, was shut the week ended May 2 due to planned maintenance.
Further, issues with the No. 3 FCC at Marathon's 475,000 b/d Galveston Bay refinery led to flaring the week ended May 2, although it was unclear if production was impacted.
In the U.S. Midwest, an 81,100 b/d FCC at Flint Hills Resources' Pine Bend refinery in Rosemount, Minnesota, was shut for maintenance the week ended May 2, with market sources describing the outage as "major."
SAUDI ARABIA IMPORTS DROP, USAC IMPORTS RISE
U.S. crude oil imports fell 598,000 b/d to 6.89 million b/d, with Saudi imports falling 246,000 b/d the week ended May 2 , while Nigerian and Mexican imports both dropped 152,000 b/d. Colombian imports were down 201,000 b/d the week ended May 2.
On the U.S. Atlantic Coast (USAC), crude oil imports rose to 817,000 b/d the week ended May 2 from 742,000 b/d the week ended April 25. The increase comes two weeks after imports to the region surged to 878,000 b/d.
On a four-week moving average, USAC crude oil imports at 755,000 b/d were higher for the fifth week in a row. The increase follows a general upward trend in USAC imports this time of year, as refiners exit spring maintenance.
Higher imports had been tied to the narrowing of the Brent-WTI spread, which gave Brent-priced West African crude oils the advantage over WTI-priced Bakken crude oil in the first half of April.
The delivered cost of Nigerian Bonny Light fell to a $2.31 per barrel (/b) discount to the delivered cost of Bakken on April 10; however, by May 2, Bonny rose to a $4.11/b premium to delivered Bakken.
GASOLINE STOCKS RISE, CARGOES HEAD TO USAC
U.S. gasoline stocks rose 1.6 million barrels the week ended May 2 to 213.2 million barrels, counter to expectations of a 900,000-barrel draw.
Production of finished motor gasoline rose to 8.99 million b/d from 8.62 million b/d the week ended April 25.
NYMEX front-month RBOB prices had been on a downtrend late the week ended May 2 and earlier this week as more gasoline heads to the USAC.
Platts Flow ship-tracking software showed at least 12 clean cargoes from Northwest Europe refining centers bound for the main USAC gasoline input port at Bayonne, New Jersey, by May 18.
The cFlow software does not identify the cargoes beyond calling them clean, refined products, but the cargoes originated at ports where refineries typically ship gasoline to the U.S.
Implied demand* for the fuel rose a moderate 26,000 b/d to 8.72 million b/d. Demand on a four-week moving average at 8.62 million b/d is above year-earlier levels of 8.5 million b/d.
Gasoline stocks on the USAC -- home of the New York delivery point for NYMEX RBOB - rose 300,000 barrels to 54.5 million barrels. In the U.S. Midwest, gasoline stocks were up 500,000 barrels the week ended May 2 to 50.3 million barrels.
U.S. distillate stocks fell 400,000 barrels to 114 million barrels the week ended May 2. Analysts were expecting a 1.5 million-barrel build.
Implied demand for distillate fuel rose 415,000 b/d to 4.33 million b/d the week ended May 2.
By Golnar Motevalli and Anthony DiPaola May 6, 2014 7:02 PM GMT+0700 0 Comments Email Print
Iran, hampered by sanctions over its nuclear program, plans within four years to boost crude-output capacity by 1 million barrels a day at fields it shares with neighboring states, Oil Minister Bijan Zanganeh said.
“This will be the biggest achievement in the history of the oil industry in Iran,” he said today at the opening of an energy conference in Tehran.
The fourth-largest producer in the Organization of Petroleum Exporting Countries is also pressing ahead with work at South Pars, part of a gas deposit straddling the border with Qatar, Zanganeh said. Iran expects to complete several of the project’s 17 phases in about three years, he said.
The government is trying to attract foreign investment in crude, natural gas and chemicals production even as it seeks the removal of U.S. and European sanctions. The U.S. and allied states say Iran is working to develop atomic-weapons technology, a claim the government denies. An interim nuclear accord between the two sides expires July 20.
An increase in oil-production capacity on the scale Zanganeh described would boost Iran’s output by as much as 35 percent, according to data compiled by Bloomberg. The country pumped 2.84 million barrels a day in April, the data show.
European companies including Royal Dutch Shell Plc and Repsol SA previously had contracts to develop areas of the South Pars gas field. Their contracts expired in the last decade after sanctions blocked the companies from operating there.
Pipeline Plan
Iran expects to increase gas exports after making progress at South Pars, Ali Majedi, a deputy oil minister, said at the conference. A pipeline to export gas to Europe via Turkey could be ready in two to three years if Turkey and Iran can agree on the plan, Majedi said.
Iran’s petrochemicals industry needs investment of more than $70 billion, Zanganeh said. The country plans to start eight gas condensate refineries this year, each with a fuel-processing capacity of 80,000 barrels a day, he said.
Six hundred foreign companies are participating in the three-day conference this year, three times as many as in 2013, the oil ministry’s Shana news website reported, citing Akbar Nehmatollahi, a ministry spokesman.
To contact the reporters on this story: Golnar Motevalli in Tehran at gmotevalli@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Bruce Stanley, Randall Hackley
