Mexico, Saudi Arabia, Venezuela, Nigeria, Algeria, and Russia are predicted to cut crude exports to the US by 2012, and the resulting gap between supplies and demand will intensify investments to develop Canada’s oil sands. Experts claim that there will be a total drop of 2.5 million b/d of production among six of the largest suppliers of oil to the US, and crude prices are likely to hit $100/bbl by the end of next year as the biggest oil-producing nations reduce exports to supply their rapidly growing domestic consumption.
Russia’s Surgutneftegaz reports plans to build an East Siberia Pacific Ocean (ESPO) pipeline that will ensure production of 3 million tonnes/year of oil for transportation via the line. Surgutneftgaz claims that production from fields in northwest Yakutia will be combined with that from the Verkhnechonsk fields in northern lrkutsk. (Try pronouncing all of these Russian names without skipping a letter!). The two sets of fields, which have total estimated reserves of 325 million tonnes, will flow through the ESPO line, with an initial annual capacity of 30 million tonnes.
If you have mastered the above Russian names, then try your luck on Turkmenistan’s President Gurbanguly Berdimuhamedow, who met with U.S. Sec. of State Condoleeza Rice to solicit international investment in his country’s oil and gas industry. Berdimuhamedow offered assurances to potential investors, saying, “As the president of Turkmenistan, I am the guarantor of the safety of your future investments.”
Light sweet crude - $81.09/bbl; Natural gas - $6.50/MMbtu; U.S. active rig count – 1,800
A research team led by the University of Texas at Austin is conducting a field study to measure methane emissions from natural gas production. The study brings together representatives from the Environmental Defense Fund (EDF), UT, and nine gas producers: Anadarko Petroleum Corp., BG Group PLC, Chevron Corp., Encana Oil & Gas (USA) Inc., Pioneer Natural Resources Co., Shell, Southwestern Energy Co., Talisman Energy USA Inc., and ExxonMobil Corp. subsidiary XTO Energy Inc. The major focus of the field work is quantifying emissions from well completions, gas well liquid unloading, and well workovers, in addition to other routine well-site fugitive emissions.
A study commissioned by Plains Exploration & Production Co. concluded that hydraulic fracturing of two test wells in the Inglewood oil field in Los Angeles County, Calif., exhibited no detectable evidence of induced earthquakes nor any negative impact on groundwater quality. Carno Entrix of Los Angeles conducted the study, and the California Department of Conservation (DOC) posted the study on its web site. The 1,200-acre Inglewood field is one of the largest contiguous urban oil fields in the US. It's adjacent to the communities of Baldwin Hills, View Park, Windsor Hills, Blair Hills, Ladera Heights, and Culver City.
Although China gets most attention as an alternative buyer of heavy oil from Alberta, Canada's top energy official has taken a trip that deserves notice. The oil-craving Chinese government continues to look longingly at the vast oil sands resource of Alberta and has financed large investments by state-owned companies in Canadian bitumen producers and projects. CNOOC Ltd.'s July proposal to buy Nexen for $15 billion is a standout example. Canada has reciprocated the interest since the US, its default market, turned balky about extending the Keystone pipeline system to serve high-conversion refineries on the Gulf Coast. Canada's China option, though, is no sure thing, as the ability of Chinese refineries to process Canadian bitumen remains limited to a few hundred thousand barrels per day, according to the China National Petroleum Corporation. All of that makes a foray by Canadian Minister of Natural Resources Joe Oliver to India especially interesting. "Canada is well-positioned to fulfill India's rapidly increasing need for energy, minerals, metals, and wood products," Oliver said. India is a potential market for bitumen, too.
Light sweet crude - $91.38/bbl; Natural gas - $3.51/MMbtu; U.S. active rig count – 1,835
Michael R. Bromwich thinks recombining the US Bureau of Ocean Energy Management (BOEM) and US Bureau of Safety and Environmental Enforcement (BSEE) is a terrible idea. It's not simply because one of his last jobs at the Department of the Interior in 2011 was to divide the Bureau of Ocean Energy Management, Regulation, and Enforcement. “I think such a recombination is not just a profoundly bad idea that would be unnecessarily disruptive for the agencies and the industry and for which no clear case has been made, but it is also a dangerous idea that would significantly raise the risk of a catastrophic offshore accident," Bromwich told a US House Natural Resources subcommittee. The Trump administration was reportedly thinking of recombining BOEM and BSEE to make them more efficient and save money.
Institutions shunning oil and gas ignore problems of feasibility in the management of global average temperature. As governments set end dates for sales of new vehicles fueled by gasoline and diesel, BNP Paribas Group announces its withdrawal from investment in hydrocarbons from shale or oil sands. To meet the international goal of limiting the Industrial Age temperature rise to 2°C., says the big French bank, "the world must reduce its dependence on fossil fuels." In fact, that's not nearly all it must do. If global emissions of carbon dioxide could be cut by 100%, moderation of temperature rise in 2100 would be, at best, 18% of what's targeted. It also requires curtailing animal agriculture to slash emissions of methane, another greenhouse gas subject to meaningful human influence. To meet this goal, will governments have to tell people what they can and cannot eat?
Proposed US House legislation to extend federal offshore oil and gas revenue sharing to four Mid-Atlantic coastal states and Alaska drew strong fire from a House Natural Resources subcommittee's Democrats, because it also would let the US Interior secretary schedule Outer Continental Shelf lease sales that are not part of an existing 5-year management program. Another Democrat responded that extending federal offshore oil and gas revenue and royalty shares that Alabama, Mississippi, Louisiana, and Texas receive under the 2006 Gulf of Mexico Energy Security Act (GOMESA) to Virginia, North Carolina, South Carolina, Georgia, and Alaska could help win more public support for other energy policies.
Light sweet crude - $50.77/bbl; Natural gas – $2.92/MMbtu; U.S. active rig count – 928
The Rest of the Yarn
This month, we meet another one of the new barons present at The Barbecue.
The President paused on the patio to allow brief exposure to the press before its members were dispersed, and Nixon spoke to them of sports. Then, in a conscious effort to match the occasion, he raised a hand and swept it jerkily across the view. “The sweep of the country,” said the President. “This is big country, it produces big men.”
The symmetry continued. The short, stout, weather-beaten man trying unsuccessfully to make conversation with the President was Robert J. Kleberg, Jr., head of the fabulous King Ranch, a million acres spread over Texas’s southern tip that was supposedly the model for Ferber’s Reata in “Giant.” The Klebergs were the first among the big ranching families; their money was older, and Connally admired their style of life most of all. Kleberg himself worked from six in the morning until dark, and lived in a hacienda of twenty-five rooms on the ranch’s Santa Gertrudis division, for he had developed that breed of cattle. Oil produced another $16 million a year for the ranch, and Kleberg had negotiated leases with seven successive presidents of Humble, then Exxon. He owned land in countries as distant as Morocco and Argentina, including 12 million acres in Australia. Sadly, within three years, Kleberg would be dead of cancer, and the ranching empire’s future would be uncertain.
Next month, the mutual pampering of the President and the “fat cats.”
I am a city in an oilfield state. I was founded as a settlement that had an economy based on lumber, farming, and port industries. I was the sight of the first commercially successful rice mill in this state. At the turn of the 20th century, my population more than tripled in two months. What city am I?
If you would like to participate in this month’s quiz, email your answer to email@example.com by noon November 21. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift card to a nice restaurant (courtesy of the ProTechnics Division of Core Laboratories).
Answer to May’s Quiz
In the year 1949, U.S. drillers first surpassed the 20,000 ft depth barrier at Rock Springs, Wyoming. No winner in May quiz.