REPOST: MARKET WATCH: Oil futures prices drop before US inventory gain

"The New York Mercantile Exchange January crude contract declined 41¢ on Nov. 26, closing at $93.68/bbl. The February contract fell 40¢ to settle at $94/bbl." Read more about the price drop of crude oil from OGJ.com news article:

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Oil futures prices dropped on the New York market Nov. 26 amid slow trading volumes as market participants awaited the Nov. 27 release of a weekly US government report on crude oil and product inventories that traders correctly anticipated showed a 10th consecutive climb.

The Energy Information Administration said US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, reached 391.4 million bbl for the week ended Nov. 22, a 3 million bbl increase from the week ended Nov. 15.

Separately, the American Petroleum Institute reported US crude inventories of 390.2 million bbl for the week ended Nov. 22.

EIA said crude oil inventories remain well above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.8 million bbl, staying above the upper limit of the average range.

Both finished gasoline inventories and blending components inventories increased. Distillate fuel inventories decreased by 1.7 million bbl. Propane-propylene inventories fell 1.4 million bbl.

Image Source: USNews.com

US refinery inputs averaged 15.6 million b/d for the week ended Nov. 22, which EIA said was 104,000 b/d higher than the previous week’s average. Refineries operated at 89.4% of capacity last week.

Gasoline production increased last week, averaging over 9.4 million b/d. Distillate fuel production increased last week, averaging 5 million b/d.

US crude oil imports averaged over 7.7 million b/d, down by 145,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.7 million b/d, 3.5% below the same 4-week period last year.

Total motor gasoline imports, including both finished gasoline and gasoline blending components, last week averaged 710,000 b/d, EIA said. Distillate fuel imports averaged 158,000 b/d.

Energy prices

The New York Mercantile Exchange January crude contract declined 41¢ on Nov. 26, closing at $93.68/bbl. The February contract fell 40¢ to settle at $94/bbl.

Heating oil for December delivery climbed by 1.23¢ to settle at a rounded $3.04/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for December delivery gained 0.62¢ to a rounded $2.69/gal.

The December natural gas contract on NYMEX gained 2.9¢, settling at a rounded $3.82/MMbtu. On the US spot market, the gas price at Henry Hub, La., closed at $3.845/MMbtu on Nov. 26, marking a decrease of 1.5¢.

In London, the January ICE contract for Brent crude oil dropped 12¢, settling at $110.88/bbl. The ICE gas oil contract for December rose by $9.75 to $944.50/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes climbed $1.29 on Nov. 26 to settle at $107.36/bbl.

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This Dr. Ali Ghalambor blog site contains more interesting news and entries about the oil and gas industry.

Why small nations should be wary of developing gas

Image Source: processingmagazine.com

If only for uncertain economic implications, small nations are being advised to be wary of developing their own gas. This is according to an ongoing research conducted by the Massachusetts Institute of Technology (MIT) Energy Initiative in partnership with the Cyprus Institute.

The study used Cyprus as an example – a small country which discovered a significant volume of natural gas off its coast two years ago. The country hopes for an economic turnaround after an almost total breakdown of its banking industry.

Image Source: kcra.com

While the volume does not in any way qualify Cyprus to be a potential major player – with most recent estimates of the gas find showing just a small percentage when compared to the world’s available gas resource – the country can greatly benefit from it for its own use, thereby lessening dependence on “foreign oil.”

Image Source: sciencedaily.com

Sergey Paltsev, one of the authors of the study, said that “while natural gas is often cheaper than oil and gives off fewer emissions, developing the resource comes with risks, especially for smaller nations.”

The study showed that a country like Cyprus can take about five years to develop the resource for consumption, with investments taking up about 25 percent of the country’s gross domestic product. Indeed, such is an economic risk for any small country.

Dr. Ali Ghalambor co-authored the book “Petroleum Production Engineering: A Computer-Assisted Approach.” Visit this Facebook page for more industry-related updates.

Industry survey: Natural gas producers optimistic, safety still a top concern

According to this recent Black & Veatch’s second 2013 Strategic Directions in the North American Natural Gas Industry survey, about 95 percent of pollsters across all segments rated their general outlook of the industry’s growth to the year 2020 as “optimistic” to “very optimistic.” What is in fact remarkable in this survey, according to Peter Abt, Black & Veatch Managing Director, is that a significant part of midstream and downstream representatives shared the positive outlook.

Image Source: processingmagazine.com

There are three major sectors in the oil and gas industries: upstream, midstream, and downstream. Upstream players are those connected to the exploration and production side; the midstream sector is composed of the players involved in the transportation, storage, and wholesale marketing of the products; and finally, the downstream players are those who generally sell at retail.

Image Source: sciencedaily.com

More than 85 percent of respondents also expect growth on demands in power generation to “materially increase natural gas consumption by 2020.” They also see exports in the Europe and Asian regions to be at an upswing.

Still, a major concern across sectors is safety. Major categories rated under safety were: cybersecurity, aging infrastructure, and pipeline integrity and reliability.

Image Source: cbc.ca

Respondents believe that “improving technologies, from drilling applications to monitoring and data acquisition, are enabling the industry to better manage assets, reduce costs and be better positioned to meet evolving regulations.”

Dr. Ali Ghalambor is a well-respected figure in the oil and gas industry. He was a former director of the Society of Petroleum Engineers. More details about him can read in this Twitter page.

Draft on climate change adaptation plans up for public review

Image Source: news.thomasnet.com

The United States Environmental Protection Agency (EPA) has started distributing the draft of its climate change implementation plans for review of the public, according to an article at ogj.com. The agency has set a schedule of two months or until January 14, 2014 for the review.

This policy review is in line with the requirement for all federal agencies to develop their own climate adaptation plans as ordered by the interagency Federal Climate Change Adaptation Task Force. The task force was convened under the power of Executive Order 13514 of 2009. Its mandate is to take into consideration all of the plans and develop recommendations for the US President on how the country can better endure this global phenomenon.

Image Source: treehugger.com

The draft details the processes by which the agency intends to implement in order to help communities at the grassroots level adapt to the realities of climate change.

EPA Administrator Gina McCarthy said that the agency must work to incorporate its climate plans towards its “programs, policies, rules, and operations to ensure that the agency’s work continues to be effective even as the climate changes.” The said plans in turn have the potential to create an impact on the oil and gas governing policies across the entire US.

Image Source: examiner.com

Dr. Ali Ghalambor is a co-author of the Frac Packing Handbook. Read more views on the oil and gas industry on this Facebook page.

China could be the leading source of energy in Central Asia

Image Source: blogs.voanews.com

With its ever growing influence, China is laying stake to its claim on being the leading economy of the world. The Chinese government has been known to aggressively explore additional energy sources within and around the region. And for ten graduate fellows from the School for Advanced International Studies at Johns Hopkins University, the Asian country could very well be on its way to being the dominant energy source in the region.

When quizzed by Alexandros Peterson, advisor to the European Energy Security Initiative at the Woodrow Wilson Center for Scholars on the possibility of China racing past Russia as the main broker in Central Asia, they said that, “If [China National Petroleum Corp.] begins to distribute natural gas in central Asia, it brings tremendous potential leverage.”

Image Source: en.wikipedia.org

The fellows and the audience agreed that China’s entry to a leadership role is no longer a matter of ‘if,’ but ‘when’ and that there is now a question of “what the development of local firms pursuing green technology means alongside China’s presence.” According to them, Russia will be changing its outlook given that it is now “becoming more cooperative than confrontational.” Thus, its grasp on being the main broker could potentially be usurped by a confident China.

Image Source: chinaincentralasia.com

With over three decades of experience, Dr. Ali Ghalambor has penned various books on oil and gas production such as the Frac Packing Handbook. For more about him, visit this Facebook page.

REPOST: PIPES: Cyprus rides a troubled sea of oil and gas opportunity

This WashingtonTimes.com article talks about the newfound gas and oil reserves in Cyprus.

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The republic of Cyprus has entered into the maelstrom of the world’s most volatile region, thanks to newfound gas and oil reserves, combined with an erratic Turkish foreign policy and a civil war in Syria. Even as leaders of this Mediterranean island show skill dealing with these novel threats and opportunities, they need support from a strong U.S. Navy, something not now available.

Cypriot underwater gas and oil discoveries follow directly on ones found earlier in Israeli seas, located adjacent to them and uncovered by the same American (Noble) and Israeli (Delek, Avner) companies. The current estimate of 5 trillion cubic feet of natural gas, as well as some oil, has a value estimated at $800 billion, a huge sum for a small country whose current gross domestic product is a mere $24 billion.

The great majority of this energy will likely be exported to Turkey or Europe. A pipeline to Turkey would be cheapest and easiest but so long as Turkish troops continue to occupy 36 percent of Cyprus, this will not happen. A recent court decision permitting the Israeli government to decide what quantities of energy to export now offers other possibilities: Cyprus could swap gas with Israel that then goes to Turkey, or the two allies could jointly build a liquefied natural gas terminal in Cyprus.

Eventually, should Egypt, Gaza, Lebanon and Syria find gas and join the modern world, they too could take part, turning the area between Egypt and Cyprus into a truly major resource. According to the U.S. Geological Survey, the contiguous Nile Delta and Levantine basins together contain an estimated 345 trillion cubic feet of natural gas and 3.44 billion barrels of oil.

These newfound reserves can help either solve or inflame the Cyprus problem. The Cypriot government wisely delimited its maritime boundaries with Egypt in 2003, Lebanon in 2007 and Israel in 2010. It has contracted new exploration to France’s Total, Italy’s Eni and South Korea’s Kogas. Energy-hungry Turkey looms over this treasure, however. Ankara wants its northern Cyprus puppet-state to receive part of the income from the new reserves, while Turkey’s 1974 invasion of the island raises fears that its erratic and roguish prime minister, Recep Tayyip Erdogan, might invade the republic’s territory.

Mr. Erdogan and Foreign Minister Ahmet Davutoglu have pursued an ambitious foreign policy of “zero problems with neighbors” which, ironically, has led instead to zero friends. Strained relations with Georgia, Armenia, Azerbaijan, Iran, Iraq, Syria, Israel, the Palestinian Authority, Saudi Arabia, Egypt and Serbia raise the prospect of Ankara reverting to an older Turkish pattern of lashing out at Cyprus and Greece. In both cases, for instance, it could encourage disruptive refugee flows.

This is where the brutal civil war underway in Syria, just 70 miles away, enters the equation. So far, that conflict has not had a major impact on Cyprus, but the island’s proximity, its minimal defense capabilities, and its membership in the European Union make it exceedingly vulnerable (an illegal immigrant setting foot on Cyprus is close to reaching Germany or France). The 2.2 million refugees from Syria since 2011 have so far bypassed Cyprus in favor of Lebanon, Jordan, Turkey, Egypt and Iraq, in that order. However, this could quickly change if the Alawites living closest to Cyprus take to the sea in sizable numbers, or if Ankara encourages Syrians to emigrate to northern Cyprus and then sneak across the border into the republic.

Unlike nearby Israel, which is also surrounded, Cyprus lacks either a military option or protective fences: The personnel of the Turkish armed forces, about 700,000 strong, approximate the size of the entire population in the republic of Cyprus — about 850,000. Put another way, Turkey’s population outnumbers that of Cyprus by nearly 100 times. Nicosia can, however, create alliances, especially with Israel, to enhance its security.Israel in turn gains by combined gas operations, strategic depth for its air force and a diplomatic friend. As an aide to Cyprus‘ President Nicos Anastasiades told me, “We are Israel’s ambassador in the European Union.”

So far, so good. The U.S. Navy, though, has been hollowed out in the Mediterranean Sea to the point that Seth Cropsey, a former Navy official, describes the 6th Fleet as just a command ship in Italy and a few ballistic-missile destroyers in Spain. This force urgently needs to be revitalized to support America’s Levantine allies as tensions further heighten in their immediate region.

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