The U.S. natural gas market may be on the verge of a big swing.
And it’s not about the talk of the town, Liquid Natural Gas (LNG).
It's about an unexpected source of natural gas demand:
Mexican imports of U.S. gas have skyrocketed 92% since 2008. And with export capacity projected to grow to over 7 billion cubic feet per day (Bcf/d), Mexico could start taking 10% of U.S. production—in a very short time frame, with very low capital costs compared to the LNG boom unfolding.
There is a lot less risk, and a lot less cost in getting huge natural gas exports to Mexico, compared to LNG—and the volumes may be enough to move margins in the North American market. ( Continue… )
America's oil boom is generating talk of something unthinkable five years ago: energy independence. But true energy independence means more than the United States supplying all its own oil.
It means that the price of America's oil is no longer set by countries in some of the most unstable regions of the world. It means that the consumer and the Department of Defense are no longer at the mercy of energy price spikes. And it means that we are able to protect our national security interests and our environmental health.
The good news is that, given present trends, we can achieve all that in the next few years. The challenge is that we can't do it by relying on oil alone.
For the average US consumer, the idea that the gas she pumps comes from Texas or North Dakota may be heartening on a theoretical level, but as a practical matter she measures her energy independence by the impact of energy prices on her wallet. There, the trends aren't heartening. In 2012, the average US household spent $257 more to fuel the family car than the year before, even while using far fewer gallons. As Americans take off for the July 4 holiday, they will drive 0.8 percent less than last year, according to the AAA, because their finances are squeezed. ( Continue… )
Taylor Energy Ltd., once the largest oil and gas producer in the Gulf of Mexico, used to operate the Mississippi Canyon 20-A production platform just at the mouth of the Mississippi River, until it disappeared in 2004.
The 550 foot tall platform stood in 479 feet of water with pipes running to 28 underwater oil and gas wells, but on the 15th September 2004, the entire rig along with all pipelines were swept away as Hurricane Ivan passed over, bringing winds of 145mph, and 71 foot waves.
After the incident Taylor Energy reported that the platform“was subsequently located lying in an almost horizontal orientation and almost entirely buried in sediment up to 100 feet deep, approximately 900 feet from its original location and in approximately 440 feet of water.” (Related Article: Evolving in the Deep: The Ultra Drill Ship)
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During one of the underwater investigations plumes of oil and gas were discovered escaping, from both the old wells and the broken platform. Taylor Energy has been forced to run daily flyovers to check the area for oil sheens, and oil has been spotted almost every day since. The company claims that a multimillion dollar operation to remove the fallen platform and plug nine of the wells has reduced the escaping hydrocarbons to a trickle, but environmental groups argue otherwise. ( Continue… )
Unrest in a country lacking significant oil exports has startled global markets.
Oil prices jumped as high as $105 a barrel in London Wednesday as protesters gathered in the streets of Egypt's capital, demanding the ouster of Egyptian President Mohamed Morsi. It's the first time oil has passed $102 a barrel in over a year.
Egypt isn't among the Middle East's major oil countries, but it controls the Suez Canal, a vital choke point in the worldwide distribution of petroleum resources. That, along with the threat of protests spreading elsewhere, has investors worried.
Production booms elsewhere may temper those fears, keeping price spikes at bay. But US drivers who have enjoyed a steady decline in gas prices over the past months may see that decline temporarily slow or even reverse.
"In the bigger picture, there’s adequate oil supply to meet global demand, especially as we see increases in North America, Iraq, Russia, and the return of oil in Sudan," energy consultant Andrew Lipow, president of Houston-based Lipow Oil Associates, said in a telephone interview. "Should a new [Egyptian] government come in place and the unrest dissipate, then I expect them to fall as rapildly as they’ve risen." ( Continue… )
Fourth of July revelers have another reason to enjoy their time off this weekend. Gas prices are falling just in time for the Fourth of July weekend.
That should come as some relief to the millions of Americans expected to crisscross the country in commemoration of Independence Day. Whether the savings last depends on the future of unrest in the Middle East and the intensity of hurricane season.
"If we see some price spikes, it will be because of hurricane season, much more than the Middle East, the dollar, or the economy," Tom Kloza, chief oil analyst for GasBuddy, a gas prices website, said in a telephone interview. "But obviously, if the economy goes down the toilet, prices for all commodities will come under pressure.
Average US gas prices dropped just a hair below $3.50 a gallon this week, according to the US Energy Information Administration (EIA). At $3.496, the average gas price is down eight cents from last week. That's still 14 cents higher than last year's Independence Day and the third highest July Fourth on record, according to Mr. Kloza. ( Continue… )
During his three country tour of Senegal, South Africa, and Tanzania, US President Obama has unveiled the Power Africa initiative, in which he has pledged $7 billion of investment over the next five years to increase energy production and access to energy across the sub-Saharan region.
The goal is to double access to electricity across six countries that Obama’s administration has selected for their promotion of good governance; Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.
Africa as a continent and economic region is growing rapidly, and US companies see great potential. The US Trade Representative claims that in 2011 the continent imported $21 billion of merchandise from the US, up 23% on the year before; whilst exports to the US were up 14% to $74 billion, with most of the being oil.
Obama understands that Africa has huge potential to grow, but lacks the financial backing. His new initiative will focus on supplying Africa with the means to support itself, rather than just handing over money to stem the problems for a short while. ( Continue… )
President Obama kicked a soccer ball in Tanzania Tuesday, but it was more than just a soccer ball.
The so-called Soccket ball dribbled by the president captures kinetic energy that can later be used to power a light or charge a cell phone. It's the kind of innovative technology some hope can bring electricity to rural parts of Tanzania and other developing countries where traditional power grids are far from reach.
Mr. Obama, who played soccer as a child in Indonesia, used the ball to underscore his $7 billion plan to improve energy access across Africa.
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"I thought it was pretty cool," Obama said after batting the ball about, dressed in a buttoned-up suit jacket and tie. "You can imagine this in villages all across the country." ( Continue… )
Majority of Global Oil Reserves in Areas of Geopolitical Risk
The last two weeks I have been writing about deepwater oil and gas exploration and the trend to push out into deeper waters further offshore. This week I wanted to drill deeper into the drivers of this important exploration and production trend in the oil and gas industry.
Against a backdrop where 43% of global oil production is in high risk regions — the Mid-East and Africa account for 32.5% and 10.9%, respectively — and add on top of that another 16% from Russia and Venezuela, you have nearly 60% of world oil production in areas of high geopolitical risk. Looked at from another perspective, National Oil Companies control roughly 75% of proven crude oil reserves (probability that 90% of the reserves will come to production), with the remainder held generally by multinationals – IOCs.
Clearly, the hydrocarbon (oil and natural gas) pie is limited to a few players and the IOCs – and the eight Majors have a dwindling share of that pie. Couple that reality with the fact that worldwide oil production for the eight majors (ExxonMobil, Shell, BP, Chevron, ConocoPhillips, ENI, Total, and Statoil) since 2004 has declined 2% per annum, and although revenues have increased 9% over the comparable period, margins are shrinking due to production costs increases of 11%. In addition, the IOC’s global oil reserve replacement — the ability to replace production — from 2004 to 2012 was a dismal 78%. In other words, for every 100 barrels of production the IOCs replaced 78 barrels. The net result is that the IOCs have little recourse but to explore for oil deposits in highly difficult regions. ( Continue… )
The one thing you need to know about President Obama's plan to address climate change is that the most it will accomplish is slowing very slightly the pace at which the world is currently hurtling toward catastrophic climate change. Having said this, his plan is nonetheless a brave and even historic move in a country whose political campaigns and public discourse have been utterly poisoned by the science-free propaganda of the fossil fuel industry.
I would be more enthusiastic about the president's baby steps if the devastating droughts and floods and swiftly melting ice in the polar regions and mountain glaciers weren't telling us that drastic action is necessary right now. Nature doesn't really care about the timetables of politicians or about what is politically feasible. Nature doesn't negotiate, and it doesn't compromise. The laws of physics and chemistry cannot be repealed or altered by the Obama administration, the United States Congress or any other body. And, these physical laws are deaf to complaints about the negative economic consequences of addressing climate change--consequences that will be far worse if we do nothing about climate change.
But let me return to the goal announced by the president and put his plan into perspective. Using existing executive powers--mostly through the U.S. Environmental Protection Agency which the Supreme Court affirmed in 2007 has the power to regulate greenhouse gases--the Obama Administration will endeavor to reduce the RATE of greenhouse gas emissions in the United States to 17 percent below the RATE in 2005 and do this by 2020. It's a relatively easy target because half the reduction has already taken place. In recent years electric utilities have been changing from coal to cheaper and cleaner-burning natural gas to fuel their plants, and drivers, stung by unemployment and high gasoline prices, have reduced their driving. ( Continue… )
An oppressive heat wave strained California power plants through the weekend and into Monday, as overheated residents blasted fans and air conditioning to keep cool in record temperatures.
It's the grid's first major test of summer's spiking energy demand, and so far it seems to be passing. Improved grid technology and better communication of energy use have helped prevent any major blackouts so far. But the permanent closing of one major nuclear plant last month and the temporary shutdown of another last week further complicates the stress of summer's high temperatures, and utilities remain on high alert.
"Over time they’ve added transmisson to the grid," Jeff Roark, senior project manager at Electric Power Research Institute, said in a telephone interview, "as well as technology that provides info on what’s happening on the grid. Those devices are providing new information of the type that utilities didn’t have before."
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The improved information technology is helping customers as well. Utilities can now provide realtime demand information to consumers online and send out alerts via mobile phones and social media. That helps spread the call for efficiency during times of peak demand. ( Continue… )