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Qatar Marks LNG Milestone, Sees More Output Gains
By Robert Tuttle

Dec. 14 (Bloomberg) -- Qatar gathered chief executives from the biggest energy companies to celebrate reaching an annual production capacity of 77 million tons of liquefied natural gas, underscoring its rank as the world’s largest LNG exporter.

The Persian Gulf state may further increase its capacity by as much as 10 million tons a year if it can improve efficiency at its production units, Energy Minister Abdullah al-Attiyah told reporters. Exxon Mobil Corp.’s Rex Tillerson, Royal Dutch Shell Plc’s Peter Voser and ConocoPhillips’ Jim Mulva were among the executives attending the ceremony at the Qatari industrial city of Ras Laffan yesterday.

“If in the future we want to expand, we will expand as a revamp” by making existing facilities more efficient, al- Attiyah said yesterday. Building new LNG units would be a costlier option, he said.

While Qatar is recognized as the biggest LNG exporter and holds the world’s third-largest natural gas reserves after Russia and Iran, its gas fields also supply rising volumes of natural gas liquids such as propane, butane and condensate. These products, collectively known as NGLs, have commercial uses similar to crude or refined oil products, boosting Qatar’s overall energy sales.

Qatar will be able next year to pump 1.19 million barrels of NGLs a day, according to a forecast by the Paris-based International Energy Agency. The country’s NGL output will for the first time exceed its production capacity for crude, which the IEA estimates will be 1.02 million barrels a day in 2011. Qatar’s combined capacity for producing NGLs and crude will overtake that of its OPEC partners Algeria and Libya, according to the agency’s forecast.

Higher Ranking
“It very clearly pushes Qatar up the ranks of oil producers and also -- because of the semi-refined nature of some of these -- the rankings of the refined-product producers as well,” said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York, speaking in a telephone interview in November.

The tiny nation of 1.6 million people is the second- smallest producer of crude in the Organization of Petroleum Exporting Countries. Ecuador is the smallest. OPEC quotas only cover crude, not NGLs.

Qatar’s transformation into a major producer of natural gas liquids has implications for OPEC, supplier of 40 percent of global crude, and the group’s ability to influence energy markets. Qatar was the only one of OPEC’s 12 members to see its combined output of crude and NGLs rise last year, after the group cut its production target in December 2008. By next year, Qatar will be the only member capable of producing more natural gas liquids than oil, the IEA says.

Flagship Plant
Shell is building a $19 billion gas-to-liquids plant that will add more NGL capacity. The Anglo-Dutch company expects its Pearl plant to become fully operational in early 2012 and to begin converting gas into kerosene, diesel, lubricants and naphtha in the second quarter of that year.

Qatar may expand gas-to-liquids output still further once Pearl is completed, al-Attiyah said yesterday.

Other OPEC members are producing more natural gas liquids of their own. By 2015, the group’s NGL output may equal as much as 20 percent of its combined production of oil and natural gas liquids, up from 14 percent in 2009, IEA data show.

“Although OPEC NGLs are a growing competitor to OPEC crude, it’s difficult to see how they could be brought within the quota system,” said Robin Mills, a Dubai-based oil analyst and author of ‘The Myth of the Oil Crisis,’ in an interview in August.

Early Celebration
Qatar exported its first cargo of liquefied natural gas in 1996. The country will have the capacity to produce an annual 77 million tons of LNG, or about 3.75 trillion cubic feet of pipeline gas, once Qatar Liquefied Gas Co. brings its seventh and final liquefaction plant into operation early in 2011. Qatari officials organized yesterday’s event in anticipation of this achievement.

Qatar Liquefied Gas, known as QatarGas, is a venture between state-run Qatar Petroleum, Exxon Mobil, ConocoPhillips, Total SA and Shell. Another company, Ras Laffan Liquefied Natural Gas Co., started its seventh and final LNG production unit earlier this year. RasGas, as this company is known, is a venture between Qatar Petroleum and Exxon Mobil.

A moratorium on Qatar’s North Field gas reservoir precludes the development of additional LNG projects. The North Field has the world’s largest gas reservoir, with an estimated 900 trillion cubic feet of the fuel. The moratorium won’t be lifted before 2014, if at all, Saad al-Kaabi, Qatar Petroleum’s director of oil and gas ventures, said last year.

LNG will account for half of the growth in gas trading between 2008 and 2035, the IEA reported in November. The chilled fuel can be transported by specialized ships to markets not accessible by pipeline.

Malaysia was the second-largest exporter of LNG after Qatar last year, followed by Indonesia, Australia and Algeria, according to data from BP Plc.

 

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Coal Imports May Increase 78% to China, India: Energy Markets
By Dinakar Sethuraman and Ben Sharples

Dec. 14 (Bloomberg) -- China and India may increase imports of coal by 78 percent to 337 million metric tons next year, further driving up prices from the highest in two years and diverting supplies from Europe to Asia.

China may buy 233 million tons more of the fuel than it exports next year, up from net imports of 143 million in 2010. India faces a shortfall of 104 million tons in the 12 months ending March 2012.

Asia’s two fastest-growing major economies are burning more of the fuel as economic expansion raises demand for electricity. The International Monetary Fund forecasts that China’s gross domestic product will next year expand 9.6 percent and India 8.4 percent. China added about 51 gigawatts of coal-fired capacity last year, more than half the total capacity of the U.K., according to data from Daiwa Capital Markets and the U.S. Energy Department.

“All the indications are for increased demand in 2011,” Andrew Harrington, an analyst at Patersons Securities Ltd. in Sydney, said in a Dec. 9 interview. “China has become much more important especially because of the expectations that they will be unable to meet their own needs from domestic supply.”

China’s appetite for the commodity sent benchmark domestic prices at the port of Qinhuangdao to a two-year high of $129 a ton for the week ended Nov. 26, according to data from IHS McCloskey, a Petersfield, U.K.-based researcher.

Power-station fuel at the Australian port of Newcastle, the world’s biggest coal-export harbor, and South Africa’s Richards Bay climbed to the highest since October 2008, according to data compiled by IHS McCloskey on Bloomberg.

Supply ‘Constrained’
China will need 2 billion tons of coal over the next 10 years to fuel the country’s industrial development, the China Securities Journal reported today, citing Dai Yande, deputy head of China’s Energy Research Institute.

“The thermal-coal market will remain tight as strong demand from emerging markets, particularly China and India, drives record levels of imports,” said Daniel Brebner and Xiao Fu, London-based analysts at Deutsche Bank AG. “Supply is anticipated to be constrained in key producing regions such as China, Indonesia and Australia.”

Prices at Australia’s Newcastle port, a benchmark for Asia, rose to $114.50 a ton in the week ended Dec. 10, according to IHS McCloskey.

Export prices at Richards Bay Coal Terminal gained $2.89 to an average $110 a ton in the week to Dec. 10, IHS McCloskey data showed. Benchmark European coal derivatives closed at $113 a ton yesterday, the highest closing price this year. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year fell $1.50 to $111.50 a ton as of 11:52 a.m. London time.

Indonesia Prices
The Indonesian government raised the reference price for sales in December by 8.3 percent from a month earlier, the steepest gain since it was introduced in February, the energy ministry said Dec. 8. The price benchmark for the fuel with a gross energy value of 6,322 kilocalories a kilogram increased to $103.41 a ton this month, according to the Directorate General of Coal and Minerals.

Coal use in Asia climbed 6.4 percent last year, more than a 0.8 percent increase in oil consumption, according to BP Plc.

Prices have also surged because of supply disruptions from heavy rain and flooding at mines in Indonesia, Colombia and Australia, while South Africa’s export growth has been crimped by a lack of rail capacity.

Xstrata Plc, the world’s largest exporter of thermal coal, has declared force majeure on some Australian shipments on Dec. 7 because of flooding of mines. PT Bumi Resources, Indonesia’s largest coal producer, revised down its coal output target by 6 percent this year as heavy rains hampered mining, Director Dileep Srivastava said Nov. 11.

South Africa’s Share
Such disruptions have prompted South Africa and Colombia to divert supplies from traditional markets in Europe to higher- paying Asia.

South Africa accounted for about 30 percent of India’s thermal coal imports this year, according to ministry data. Shipments in the first nine months of this year increased 16 percent to 15.2 million tons, while China’s purchases surged to 5.1 million tons until October compared with 1.52 million tons it imported for the entire 2009, according to mjunction Services, which is backed by Tata Steel Ltd. and Steel Authority of India Ltd., and Chinese customs data.

“Robust Chinese coal demand and import growth will continue throughout 2011,” Jeffrey Landsberg, president of New York-based Commodore Research & Consultancy, said Dec. 10 in an e-mailed response to questions. “China still has many decades left to develop. Only a fraction of the population, and really just the eastern part of the nation, has experienced profound growth. The rest of the country needs to develop as well.”

 

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FIFA chief causes anger with Qatar gay sex comments

http://www.cnn.com/2010/SPORT/football/12/14/football.fifa.blatter.amaechi.gay.qatar/?hpt=T2

(CNN) -- Gay basketball star John Amaechi has criticized the head of soccer's ruling body for his comments about homosexuals planning to attend the 2022 World Cup in Qatar.

FIFA president Sepp Blatter was unable to keep a straight face when asked at a press conference in South Africa what to advise gay people who hope to go to the Arab emirate.

The mainly Muslim country, which will host the tournament for the first time, forbids same-sex relationships by law.

"I would say that they should refrain from sexual activities," Blatter answered on Monday, after a long pause.

"We are living in a world of freedom and when the World Cup will be in Qatar, this will be in 2022. And you can see in the Middle East the opening of this culture. It is another culture because it is another religion, but in football we have no boundaries."

 

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Aramco Project to Raise Shaybah Oil Capacity, GE Says
By Glen Carey and Anthony DiPaola

Dec. 14 (Bloomberg) -- General Electric Co. won about $500 million in equipment and services contracts from state-run Saudi Aramco in a project that will boost oil-production capacity at Saudi Arabia’s Shaybah crude deposit, the U.S. company said.

Expanding oil and gas treatment and recovery facilities at the site will boost capacity at Shaybah to 1 million barrels of oil a day, GE said in a statement today.

Aramco, the world’s largest crude exporter, completed a project last year to expand potential output at the field by 50 percent to the current level of 750,000 barrels a day. The company, seeking to boost production of natural gas, is also building processing units for that fuel at the field.

Saudi Arabia, holder of the world’s largest oil reserves, can produce some 12.5 million barrels of oil a day and has been pumping only about two-thirds of that amount since global demand dried up in the wake of the financial crisis. Aramco aims to maintain spare production capacity that can be called on to meet surges in oil demand and damp price swings. Aramco didn’t have any immediate comment on the award.

GE said the contracts are to supply equipment and services, including 11 gas turbines and 44 compressors. The generators will add 729 megawatts of electricity capacity, it said.

Equipment-Maker Acquisitions
Another plant at the site will process 2.4 billion cubic feet of gas a day into 264,000 barrels of natural gas liquids that can be used in petrochemical facilities, GE said.

Aramco is expanding petrochemicals production and oil refining capacity to help diversify the nation’s economy away from crude exports and create jobs in the kingdom, Chief Executive Officer Khalid Al-Falih said last week.

GE agreed yesterday to buy Wellstream Holdings Plc, bringing its acquisitions of natural gas- and oil-exploration equipment makers to $4.3 billion in the past two months. Chief Executive Officer Jeffrey Immelt is tapping emerging-market growth and energy demand while adding to the GE Oil & Gas unit, which generated $7.7 billion in sales last year.

GE Oil & Gas is part of the GE Energy Infrastructure segment, a business Immelt has said he wants to expand. Energy Infrastructure provided $37 billion of Fairfield, Connecticut- based GE’s $157 billion in 2009 sales.

The company will have more than 110 gas turbines and almost 100 compressors in Saudi Arabia with the deal and the equipment will be delivered in the first half of 2012, GE said. Saudi Arabia is now GE Energy’s single biggest customer. GE Energy equipment generates one-third of the world’s electricity.

 

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Chevron’s TengizChevroil to Gain Capacity in Caspian Pipeline
By Stephen Bierman

Dec. 15 (Bloomberg) -- Chevron Corp.’s TengizChevroil venture, Kazakhstan’s biggest oil exporter, will be able to ship 30 million metric tons of crude a year through the Caspian Pipeline Consortium’s link across Russia, which the partners today agreed to expand.

The increase will allow TengizChevroil to ship all of its output through the link, said Irina Rybalchenko, a spokeswoman in Moscow for the San Ramon, California-based company.

The CPC partners, which include Russia’s OAO Transneft and Kazakhstan’s KazMuniaGaz National Co., plan to double the pipeline’s capacity to about 67 million tons a year in 2014.

 

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Big Oil Sells Assets at Record Pace as China Inflates Prices
By Brian Swint

Dec. 16 (Bloomberg) -- The world’s largest oil companies sold assets at a record pace this year, finding buyers at higher prices as China and other emerging economies vie for reserves.

BP Plc, Royal Dutch Shell Plc and ConocoPhillips led 95 sales in 2010 valued at $49.5 billion, the most in at least 12 years, data compiled by Bloomberg show. The pace of disposals has picked up through the year -- deals in the fourth quarter topped $20 billion -- signalling momentum may carry into 2011.

BP Plc has agreed to $21 billion of sales in less than six months to help cover the cost of the Macondo oil spill. Even without the troubled London-based explorer, deals would have topped 2007’s $16 billion tally. Explorers are using funds from asset sales to meet the rising costs of production projects including deepwater drilling and liquefied natural gas plants.

“There’s a bit of a sellers’ market, they’re getting premium prices,” said Lucy Haskins, an oil industry analyst at Barclays Capital in London. “It’s a wave of new buying interest from emerging markets.”

China’s state-controlled oil companies were the biggest buyers. Cnooc Ltd. and Bridas Corp’s $7.06 billion purchase of BP’s 60 percent interest in Argentina’s Pan American Energy was the largest acquisition of an energy asset from a major. Last week, Occidental Petroleum Corp. agreed to sell its fields in Argentina to Sinopec Group for $2.45 billion.

BP Disposals
BP’s disposals show buyers paying a premium to secure supplies. The average price per barrel of BP reserves sold in Argentina, Venezuela, Vietnam, Colombia, Canada and Egypt is about $11 a barrel of oil equivalent, Evolution Securities said in a Dec. 6 note. That compares with a valuation of less than $8 a barrel based on BP’s market capitalization.

“BP has got quite good prices,” said Colin McLean, chief executive officer of SVM Asset Management Ltd. in Edinburgh, who oversees about $900 million, including Shell shares. “That has attracted some others to test the market. We’ll see more M&A activity.”

The cost of developing new fields is rising as companies depend on deepwater drilling, oil sands mines and LNG projects to replace spent fields.

Chevron Corp., the second-largest U.S. oil company, said last week it will boost capital spending 20 percent to $26 billion next year, led by deepwater projects in the Gulf of Mexico and Nigeria and an LNG project in Australia.

Supply Economy
China is keen to buy fields to supply an economy where energy demand will jump 75 percent by 2035, accounting for more than a third of the increase in the world’s need for fuel, according to the International Energy Agency. That’s drawn Asia’s other oil importers into the fray.

Rising oil prices are adding pressure to secure supplies. Crude futures in New York trading rose above $90 last week, the highest this year.

Oil & Natural Gas Corp., India’s biggest energy explorer, this month submitted a binding bid for a stake in Angola’s Block 31. The government has ordered it to make at least one big acquisition before March 31.

PTT Exploration & Production Pcl, Thailand’s biggest explorer, last month agreed to buy a 40 percent stake in Statoil ASA’s oil sands project in Canada for $2.28 billion in the biggest acquisition by a Thai company.

BP’s Dudley
BP may be the largest seller of fields for a second year in 2011. Chief Executive Officer Robert Dudley promised to sell as much as $30 billion in assets after the Gulf of Mexico oil spill forced the company to set aside $40 billion to cover cleanup and litigation costs.

Dudley said last month he’ll continue to “identify further assets that may be strategically more valuable to others than to BP.” The next disposals may include fields in Alaska and in the North Sea, regions where BP pioneered exploration in the 1960s. The company is also selling a gas-processing business in Canada that may fetch $2 billion, people with knowledge of the company’s plans said.

Shell CEO Peter Voser has already met a target of selling as much as $8 billion in assets this year and next. Last week, The Hague-based company agreed the $1.8 billion sale of gas fields in Texas to Occidental Petroleum Corp.

“They’re overachieving” by selling more than promised and moving ahead of schedule, said Gudmund Halle Isfeldt, an analyst at DnB NOR ASA in Oslo, who covers BP, Shell and other European oil companies. “The best option would be to use the proceeds and redeploy at least 80 percent in upstream.”

Shell is spending on high-technology projects. Together with PetroChina Co. it bought Arrow Energy Ltd. this year to develop an LNG project in Queensland using gas from coal seams. Shell expects its $19 billion Pearl gas-to-liquids plant in Qatar to be fully operational in early 2012.

ConocoPhillips is also investing in LNG in Australia, while BP earlier this year bought licenses for deepwater exploration off the coast of Brazil from Devon Energy Corp.

“The mantra is that these guys are carrying a bit of weight,” said Jason Kenney, an analyst at ING Wholesale Banking. “They can slim down, and there’s a market for it at the minute because others need access to resources. Some of the mature assets aren’t worth the majors’ time when they really need to focus on exploration.”

 

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Oil Sands Have Limited Local Impact on Health, Ecology, RSC Says
By Eduard Gismatullin

Dec. 16 (Bloomberg) -- Canadian oil sand production has limited impact on the local environment and population, while the government needs to increase regulation of the industry to keep up with expansion, an academy of scientists said.

The Royal Society of Canada’s panel of experts couldn’t find “credible evidence” of increasing cancer rates in people living near the oil sands operations in northern Alberta, it said in a statement posted on its website. The industry doesn’t “threaten” the Athabasca River system and the impact on air quality is “minimal,” the RSC said.

At the same time, environmental regulations don’t “appear to have kept pace with the rapid expansion of the oil sands industry over the past decade,” the RSC said in its 414-page study. Improvements in technology haven’t dealt with increasing tailing ponds and greenhouse gas emissions, it said.

Royal Dutch Shell Plc, BP Plc, and Husky Energy Inc. are among companies investing in Alberta oil sands, which contain the biggest crude reserves outside of Saudi Arabia, according to Canadian government estimates. Crude extracted from local bitumen will be the largest single source of U.S. oil imports this year, according to industry consulting group, IHS CERA.

Shell plans to raise its production of heavy crude in the Americas by 60 percent through 2020, the Anglo-Dutch company said in a presentation on Sept. 28. PTT Exploration & Production Pcl, Thailand’s biggest energy explorer, became the latest company to secure an oil sand project in Alberta when it teamed up with Statoil ASA last month.

Statoil, Shell and BP have faced opposition from shareholders because of environmental concerns about the energy- intensive projects to extract oil from the tar-like sands. Dwindling reserves in easier-to-access areas and rising prices are making oil sands developments more attractive to producers.

Total SA, Suncor Energy Inc., Imperial Oil Ltd. and other explorers this month have agreed to “work together in a unified effort to advance tailings management,” Shell said in a statement. The partners plan to complete research next year.

 

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Rosneft May Gain Foreign Strategic Investor, Boost Value by 2015
By Stephen Bierman

Dec. 16 (Bloomberg) -- OAO Rosneft, Russia’s largest oil producer, may invite a strategic foreign investor to buy shares in the next five years after seeking to increase its market value as much as two-thirds.

The company may seek a strategic partner as the government plans to cut its holding in 2014 or 2105, Rosneft Chief Executive Officer Eduard Khudainatov said yesterday in Istanbul, according to a statement posted today on the company’s website.

Russia’s government is planning 1 trillion rubles ($32.5 billion) of asset sales in the next three years to help close a budget deficit. By 2015, a 15 percent stake in Rosneft may be sold and 10 percent minus one share offered for asset swaps, the Economy Ministry said on its website in November.

Rosneft aims to boost its market value, which is now about a third of what it ought to be, before a sale, Khudainatov said in the statement. “Look at how much Exxon and BP are worth.”

Rosneft shares fell 0.5 percent today to 217.79 rubles at 3:05 p.m. in Moscow, extending its decline this year to 14 percent and giving it a market value of about $75 billion. Exxon Mobil Corp.’s shares have risen 5.4 percent this year, boosting its market value to $362 billion.

Rosneft shares are “a sort of ticket” for possible access to reserves in Russia, Ildar Davletshin, an oil and gas analyst at Renaissance Capital, said by e-mail today.

BP Plc bought $1 billion of shares during Rosneft’s 2006 initial public offering. Petroliam Nasional Bhd., Malaysia’s state oil company known as Petronas, spent $1.1 billion and China National Petroleum Corp. spent $500 million in the $10.6 billion sale.

No Plans to Sell
Petronas has yet to see benefits from its purchase, Davletshin said. It may want to keep its options open, he said. BP gets about a quarter of output and a fifth of reserves come from Russia, through its TNK-BP venture, set up in 2003 with a group of billionaires. Last year China agreed to lend $25 billion to Rosneft and OAO Transneft, the oil pipeline operator, and will get about 300,000 barrels a day of crude for 20 years.

BP has no plans to sell Rosneft shares, Vladimir Buyanov, a Moscow-based spokesman for the company, said today. BP is selling mature assets after a spill at its Macondo well in the Gulf of Mexico left it facing a bill projected to reach $40 billion. The oil company said in July it was planning to sell $30 billion in assets.

 

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Exxon Finds Oil in Offshore Brazil Well After Dry Hole
By Juan Pablo Spinetto and Laura Price

Dec. 16 (Bloomberg) -- Exxon Mobil Corp., the world’s biggest company by market capitalization, discovered oil in a deep-water field in Brazil’s Santos Basin after hitting a dry hole in the same block last year.

Traces of oil were found in the well, known as Sabia-1, in the BM-S-22 block, according to a posting on the website of Brazil’s National Petroleum Regulator. Exxon last year failed to find oil or natural gas at the Guarani well in the same block.

Irving, Texas-based Exxon said Nov. 11 that it started drilling the well using Seadrill Ltd.’s West Polaris rig. The well, which hasn’t yet been declared commercially viable, is in the so-called pre-salt area of the Santos Basin where Tupi and Libra, the two largest oil finds in the Americas in 34 years, are located.

"We are continuing to drill the well to its target depth," an Exxon spokesman in Houston, said today in an e-mailed statement. "The details of our drilling program are confidential."

Exxon’s Esso Exploracao Santos Brasileira Ltda. unit owns 40 percent of the block, Hess Brasil Petroleo Ltda. owns 40 percent and Petroleo Brasileiro SA owns 20 percent. The well’s name is 3ESSO5SPS, according to the oil regulator.

http://www.brasil-rounds.gov.br/arquivos/mapas/Santos_site_dez10.pdf

http://www.anp.gov.br/?id=730

 

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Shale-Gas Production Forecast Doubled by U.S. Agency
By Simon Lomax

Dec. 16 (Bloomberg) -- Production forecasts for natural gas locked in shale have doubled, which will help the U.S. become less reliant on imported energy, according to a federal agency.

The Energy Information Administration’s annual long-term forecast shows gas from shale will play a bigger role in meeting U.S. demand, Richard Newell, agency administrator, said today in Washington. Production in 2035 is “twice the level that we had in last year’s outlook,” he said.

The Annual Energy Outlook predicts imports will meet 18 percent of U.S. demand by 2035, down from 24 percent last year. Higher prices will spur fuel production, including natural gas, oil and coal, the agency said. Tougher energy-saving rules, such as fuel-economy mandates for new cars, and a boost in biofuel production from crops such as corn also will make the U.S. less reliant on imports by 2035, according to the forecast.

Overall U.S. energy consumption will jump 21 percent by 2035. Coal will remain the “dominant energy source for electricity generation,” although more natural-gas fired plants will be built because of higher supplies of the cleaner-burning fuel, according to the outlook.

The agency forecasts construction of five nuclear plants by 2035, contributing to a 10 percent increase in electricity generated from atomic power. The share of electricity from renewable sources such as hydroelectric dams and solar panels will rise to 14 percent in 2035 from 11 percent last year, according to the outlook.

Gas Reserves
This year’s outlook more than doubles the estimate of U.S. technically recoverable reserves of natural gas from shale, a type of sedimentary rock, to 827 trillion cubic feet from 347 trillion cubic feet. New technologies that let natural-gas producers drill horizontally and fracture the rock formations with injections of water, sand and chemicals account for the increase, Newell said.

Last year’s long-term outlook predicted annual shale-gas production would rise to 6 trillion cubic feet by 2035, Newell said. The updated forecast is 12 trillion cubic feet, he said.

The agency raised its 2035 projection for overall natural- gas production 25 percent from last year’s outlook “as a result of greater supply availability from shale gas plays,” the EIA said.

Average annual Henry Hub natural-gas prices, in 2009 dollars, are predicted to be $4.81 per million British thermal units in 2015, $5.18 in 2020 and $7.19 by 2035. Last year’s forecast for prices in 2035 was $8.88 per million Btu.

The cheaper price will drive up the use of natural gas as a fuel for generating electricity, at the expense of coal and renewable sources such as wind turbines, the EIA said. Natural- gas electricity generation by 2020 is 29 percent higher in this year’s outlook. Gas-fired generation by 2035 is 17 percent higher than last year’s forecast, the EIA said.

EIA natural gas reserve estimates

 

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U.S. Baker Hughes Rig Count Falls From 23-Month High
By Margot Habiby

Dec. 17 (Bloomberg) -- Oil and natural gas rigs operating in the U.S. fell from a 23-month high this week, according to data published by Baker Hughes Inc.

The combined oil and gas rig count declined by 14 to 1,709, the first drop in four weeks. Last week, the figure was at its highest level since Dec. 19, 2008. The rig count rose to a 22- year high in 2008, peaking at 2,031.

Oil and natural gas rigs fell by seven each, with the oil rig count at 756 and the gas total at 941.

Crude for January delivery rose 23 cents, or 0.3 percent, to $87.93 a barrel at 1:14 p.m. on the New York Mercantile Exchange. Gas for January delivery gained 5.5 cents, or 1.4 percent, to $4.103 per million British thermal units.

 

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LNG Tankers Expected to Dock in British, Belgian Ports
By Rob Verdonck and Ben Farey

Dec. 18 (Bloomberg) -- The following table is an overview of liquefied natural gas tankers scheduled to arrive in the U.K., Belgium and northwest Europe.

The snapshot is compiled using AISLive data on Bloomberg and information from port authorities. It includes spot and multiyear contract cargoes and may not capture all ships. Tanker capacity is given in cubic meters of LNG, which is gas cooled to a liquid for transport. Data on whether the ship is loading for export or unloading is given if known.

The U.K. is Europe’s largest and most-active gas market. Interconnector (U.K.) Ltd. operates a two-way pipeline between Zeebrugge, the location of Belgium’s only LNG terminal, and Bacton, east England.



U.K.

Tanker            Capacity   Expected   Origin     Terminal
------            --------   --------   ------     --------
Al Samriya         258,054   At Berth   Qatar      South Hook 2
Al Huwaila         214,176   At Berth   Qatar      Isle of Grain
Bluesky            145,700   Dec. 19    Nigeria    Dragon 1
Berge Arzew        138,089   Dec. 20    Algeria    Isle of Grain
Umm Al Amad        206,958   Dec. 21    Qatar      South Hook 2
Mozah              261,988   Dec. 23    Qatar      South Hook 2
Aamira*            268,000     ---      Qatar      Milford Haven
Al Utouriya*       211,879     ---      Qatar      Isle of Grain

* The Aamira was last seen off Malta while the Al Utouriya was
off Sicily. Both are a five to six day sail at a speed of 17
knots, according to shipping website searates.com.

Belgium

Tanker            Capacity   Expected   Origin     Terminal   *
------            --------   --------   ------     --------   -
Al Jassasiya       142,890   Dec. 21    Qatar      Zeebrugge  U
Ejnan              145,000   Dec. 22    Qatar      Zeebrugge  U
Grace Acacia       146,791   Dec. 28    Qatar      Zeebrugge  U

* U - Unloading  L - Loading  NK - Not Known

 

[trysail]

2009 net ( dry basis ) U.S. natural gas production of 20.95 Tcf approached the annual peak level of 21.7 Tcf last seen in 1973. This occurred because the relatively high natural gas prices of the mid-late 2000s sent a signal to producers and operators to increase drilling. It also occurred because of the introduction of new methods and technologies ( notably, hydraulic fracturing ) to previously uneconomic areas such as the Barnett, Haynesville, Eagle Ford, Fayettville and Marcellus shales.

As a result of current low prices, operators are curtailing development expenditures.

http://www.eia.gov/dnav/ng/hist_chart/N9070US2a.jpg

http://www.eia.gov/dnav/ng/hist_chart/NW_EPG0_SAO_R48_BCFw.jpg

http://alfred.stlouisfed.org/graph/alfredgraph.png?&chart_type=line&graph_id=&category_id=&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=GASPRICE&transformation=lin&scale=Left&range=Custom&cosd=1993-11-01&coed=2010-11-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=1&vintage_date=2010-12-04&revision_date=2010-12-09&mma=0&nd=&ost=&oet=&fml=a&fq=Monthly&fam=avg&fgst=lin

http://ir.eia.gov/ngs/ngs.gif

​

http://ir.eia.gov/ngs/ngs.html

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601109&sid=a_2QDL.kGuL0&pos=12


Schlumberger Warns of Looming Shortage of Petroleum Engineers
By Wael Mahdi

Dec. 20 (Bloomberg) -- Oil companies face a dwindling pool of engineers and other technical staff needed for exploration and production, the head of the world’s largest oilfield services company said.

The number of young recruits hired to replace aging petroleum engineers has declined over the last 10 years, as many college graduates choose managerial positions over engineering jobs and other field assignments, said Andrew Gould, chairman and chief executive officer of Schlumberger Ltd.

“The talent gap is still a factor that limits the expansion of the oil and gas exploration industry,” he told a conference in Dhahran, Saudi Arabia, on Dec. 18.

Many young people believe exploration for oil and natural gas is a dying business, Gould said. In fact, engineers with advanced technological skills are in great demand at companies that need to drill deeper and in increasingly challenging conditions now that the era of “easy oil” is over, he said.

Since 2004, Schlumberger has paid its newly hired engineers more than new employees holding management degrees, Gould said.

A shortage of university professors in the necessary subjects exacerbates the problem, said Nigel Middleton, senior vice president for strategic enterprise at Colorado School of Mines in Golden, Colorado.

“It was difficult to recruit faculty for Colorado School of Mines in the last few years, as their pay in the industry is higher than that in academia,” Middleton told the conference.

Schlumberger and other large energy companies are trying to improve their collaboration with academia to ensure an adequate crop of field engineers in coming years.

Larger numbers of petroleum engineers are graduating from schools in China, India, and Indonesia. “They are as good as the ones graduating from the West,” Gould said.

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601110&sid=a3JdqX3VNiV0


Natural Gas Pressured By Pipelines From Rockies: Energy Markets
By Moming Zhou

Dec. 23 (Bloomberg) -- U.S. natural gas is poised to extend its biggest annual decline since 2004 as new pipelines from the Rocky Mountains deepen an unprecedented glut of the fuel.

National spot prices at the Henry Hub, the delivery point for New York Mercantile Exchange futures, fell 1.72 cents below those at Opal Hub, Wyoming, the benchmark price for the Rockies, for the first time in a year on Nov. 22. They have averaged 44 cents more than Opal’s so far this year and were as much as $7.52 higher in September 2008.

About 3.8 billion cubic feet a day of gas, equivalent to 6.1 percent of national output, will be able to be pumped next year from states such as Wyoming, home to the nation’s second- largest reserves, to California and Illinois, the U.S.’s second- and fifth-largest consumers, as new pipelines open. U.S. futures have tumbled 26 percent in 2010 as stockpiles climbed to an all- time high for the second consecutive year.

“Historically, Rockies gas prices were phenomenally low because they couldn’t get the gas to the customers, and now it’s moving out to the markets and arriving at a time of high gas inventories,” said James Williams, an economist at WTRG Economics, an energy-research firm in London, Arkansas. “So it just exacerbates the national price weakness.”

Two new connections from the Rockies will come on line next year. The 302-mile (486-kilometer) Bison Pipeline, owned by TransCanada Corp., will have a capacity of 477 million cubic feet a day from the Powder River Basin in south Montana and northeast Wyoming to the Midwest. It will start service in mid- January. The 680-mile Ruby Pipeline, owned by El Paso Corp., will be able to send 1.5 billion cubic feet a day to the Pacific West, starting in June.

Rockies Express
The supplies will add to those already moving via the 1,679-mile Rockies Express Pipeline, partly owned by Houston- based Kinder Morgan Energy Partners. The link started in November 2009 and can pump as much as 1.8 billion cubic feet a day of gas to the Midwest.

“You have a supply base in the Rockies but not much demand there, and the more you open up these pipelines the more gas you take from that region into higher-demand markets,” said Cameron Horwitz, an analyst at Canaccord Genuity in Houston. “The price spreads are narrowing in anticipation of the opening of new pipelines.”

Spot prices at Henry Hub in Erath, Louisiana, fell 14 cents yesterday, or 3.4 percent, to $3.99 per million British thermal units, according to the Intercontinental Exchange. Opal Hub gas traded at $3.75 per million Btu, down 14 cents, or 3.6 percent.

2011 Prices
Henry Hub prices will decline for a third straight year in 2011, averaging $4.33 per million Btu, down from this year’s estimated average of $4.37, according to the Energy Department in Washington. Futures for January delivery rose 9.3 cents, or 2.3 percent, to $4.152 per million Btu on the Nymex yesterday.

Wyoming produced 2.27 trillion cubic feet of gas in 2008, the latest year Energy Department data for both demand and production are available, almost 16 times of its consumption of 142.7 billion cubic feet. The state has reserves of 36.7 trillion cubic feet, mostly so-called tight gas from shale formations with low permeability, according to the department. Texas has reserves of 85 trillion, the biggest in the U.S.

The links “raise the prices to producers in the Rockies but add to the national price weakness for gas,” said Williams. Rockies gas “is certainly increasing national stockpiles.”

Production will rise to a record 62.09 billion cubic feet a day this year, up 7 percent from 2008, according to the Energy Department. Wyoming produced an unprecedented 2.36 trillion cubic feet in 2009, up 4 percent.

Record Stockpiles
Stockpiles of gas climbed to a record 3.843 trillion cubic feet in the week ended Nov. 12, according to the department. Gas in U.S. storage totaled 3.561 trillion cubic feet for the week ended Dec. 10, 9.9 percent above the five-year average and 1 percent below last year’s level.

The Ruby pipeline will help boost gas production in Wyoming, Utah, and Colorado by 750 million cubic feet a day by 2015, according to Bentek Energy LLC, an Evergreen, Colorado- based energy market-research company. The three states currently produce 7 billion cubic feet a day.

“By the time Ruby gets in, Opal will get a little bit stronger, and Henry Hub prices will be lower, so there will be general basis tightening from both affects,” said Jack Weixel, director of client services at Evergreen, Colorado-based Bentek.

The Ruby line, which starts from Opal Hub and ends at Malin, Oregon, will connect gas from the Rockies to PG&E Corp., California’s biggest utility owner, through the existing Oregon- California interstate pipelines.

California used 2.45 trillion cubic feet of gas in 2008, the latest year government data were available, according to the Energy Department. That’s about 11 percent of total U.S. gas consumption, the second highest after Texas. The state produced 296.5 billion cubic feet of gas in the same year.

 

[eyer]

And gasoline demand in America is dropping at a rate that we'll be back to 1969 consumption levels within 20 years...

 

[trysail]

If I was a betting man, I'd be inclined to bet that either (1) the price of petroleum is going to fall or (2) the price of natural gas is going to rise or (3) some combination of (1) and (2) was likely to occur.

http://alfred.stlouisfed.org/graph/alfredgraph.png?&chart_type=line&graph_id=&category_id=&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=false&fo=ve&id=GASPRICE_OILPRICE&transformation=lin_lin&scale=Left&range=Custom&cosd=1993-01-01&coed=2010-11-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=1&vintage_date=2010-12-24_2010-12-24&revision_date=2010-12-24_2010-12-24&mma=0&nd=_&ost=&oet=&fml=b%2Fa&fq=Monthly&fam=avg&fgst=lin​

 

[Luk]

So according to that graph's shaded areas, we are out of the recession?

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601104&sid=aUiH39dxhfwk


Iraq’s Oil Output Reaches 20-Year High, Minister Says
By Kadhim Ajrash and Nayla Razzouk

Dec. 27 (Bloomberg) -- Iraq’s oil production exceeded 2.6 million barrels a day for the first time in 20 years, newly appointed Oil Minister Abdul Kareem al-Luaibi said at a press conference in Baghdad.

The rising output will boost Iraq’s oil exports by 5 percent to 2 million barrels a day next month, Falah al-Amri, head of the country’s State Oil Marketing Organization, said today in an interview in Baghdad. The nation sells about 60 percent of supplies to India, China and other Asian countries where demand is increasing, he said

Iraq, holder of the world’s fifth-largest crude reserves, is seeking foreign investors to help boost oil and gas production, which was affected by insurgent attacks and a lack of spending. Oil output hovered around 2.4 million barrels a day since the 2003 U.S.-led attack that ousted the regime of President Saddam Hussein. The government awarded 12 oil and three gas development contracts to since the invasion.

Al-Luaibi vowed to speed up the increase in output and development of exploration and drillings in collaboration with international companies operating in the country.

“We will work on rehabilitating energy industry-related infrastructure, including oil and gas pipelines,” he said during the handover ceremony with his predecessor, Deputy Prime Minister for energy affairs Hussain al-Shahristani. “We will back the foreign energy companies working in Iraq to raise output, exports and storage.”

‘Within Days’
The delayed contract for the Akkas natural gas field will be signed “within days,” al-Luaibi said. The Oil Ministry had planned to sign an agreement for the field on Nov. 14 with Korea Gas Corp., known as Kogas, and Kazakhstan’s state fuel producer, KazMunaiGaz National Co.

Iraq postponed the deal for Akkas to “clear the misunderstanding” over the planned use of fuel from that deposit, al-Luaibi said in November.

Akkas is the largest of the three fields for which the government awarded licenses on Oct. 20. Kogas and KazMunaiGaz agreed to produce 400 million standard cubic feet of gas a day at a price of $5.50 a barrel of oil equivalent.

Negotiations were continuing with Royal Dutch Shell Plc and Mitsubishi Corp. on a project to capture associated gas at oil fields in southern Iraq, Al-Luaibi said.

“There is nothing new so far on that,” he said.

An agreement with Shell and Mitsubishi is due to be signed by the end of January, Ali Hussain Khudair, the director-general of Iraq’s South Gas Co., said on Nov. 25.

The government gave initial approval on June 29 for the creation of a venture with Shell and Mitsubishi, to be called Basra Gas Co. The venture would be owned 51 percent by state-run South Gas, with Shell holding 44 percent and Mitsubishi the remaining 5 percent.

 

[busybody..]

And gasoline demand in America is dropping at a rate that we'll be back to 1969 consumption levels within 20 years...

yet prices are SKYROCKETING!

 

[trysail]

http://www.nytimes.com/2010/12/26/u...deepwater horizon&st=cse&scp=1&pagewanted=all


Deepwater Horizon's Final Hours
By DAVID BARSTOW, DAVID ROHDE and STEPHANIE SAUL
December 25, 2010

The worst of the explosions gutted the Deepwater Horizon stem to stern.

Crew members were cut down by shrapnel, hurled across rooms and buried under smoking wreckage. Some were swallowed by fireballs that raced through the oil rig’s shattered interior. Dazed and battered survivors, half-naked and dripping in highly combustible gas, crawled inch by inch in pitch darkness, willing themselves to the lifeboat deck.

It was no better there.

That same explosion had ignited a firestorm that enveloped the rig’s derrick. Searing heat baked the lifeboat deck. Crew members, certain they were about to be cooked alive, scrambled into enclosed lifeboats for shelter, only to find them like smoke-filled ovens.

Men admired for their toughness wept. Several said their prayers and jumped into the oily seas 60 feet below. An overwhelmed young crew member, Andrea Fleytas, finally screamed what so many were thinking:

“We’re going to die!”

It has been eight months since the Macondo well erupted below the Deepwater Horizon, creating one of the worst environmental catastrophes in United States history. With government inquiries under way and billions of dollars in environmental fines at stake, most of the attention has focused on what caused the blowout. Investigators have dissected BP’s well design and Halliburton’s cementing work, uncovering problem after problem.

But this was a disaster with two distinct parts — first a blowout, then the destruction of the Horizon. The second part, which killed 11 people and injured dozens, has escaped intense scrutiny, as if it were an inevitable casualty of the blowout.

It was not...

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601086&sid=aET_1YOvOnTw


Brazil Finds More Signs of Oil at Libra Offshore Field
By Peter Millard

Dec. 28 (Bloomberg) -- Brazil found more evidence of oil at the government’s Libra offshore field, which may be the largest oil discovery in the America’s in more than three decades.

Brazil’s oil regulator, known as the ANP, found a second layer of hydrocarbons at Libra, according to records on its website dated Dec. 27. The regulator first discovered oil at the field in late October.

Libra is estimated to hold as much as 15 billion barrels of recoverable oil, which would eclipse Brazil’s total current reserve base and make it the biggest find in the Americas since Mexico discovered Cantarell in 1976. The estimate disclosed by the ANP in October means Libra may hold almost twice as much oil as state-controlled Petroleo Brasileiro SA’s nearby Tupi field.

Libra is the first field the government plans to auction next year under the country’s new concession model, Magda Chambriard, a director at ANP, said in September. Petrobras, as the Rio de Janeiro-based producer is known, will operate all new concessions in the so-called pre-salt area where Libra and Tupi were discovered.

________________________

http://noir.bloomberg.com/apps/news?pid=20601110&sid=a33kcTeO.b9U



Petrobras Jumps to Six-Week High on Record Brazilian Production
By Alexander Ragir and Felipe Frisch

Dec. 28 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, advanced to a six-week high after the country’s oil output climbed to a record in November and crude traded near a two-year high.

Petrobras jumped 1.7 percent to 26.49 reais at 10:11 a.m. in New York, the biggest gain in more than a week. OGX Petroleo e Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, jumped 2.3 percent to 19.48 reais, the biggest gain since Dec. 1. The Bovespa stock index climbed 0.1 percent.

“Petrobras’ production release was strong,” said Diana Litewski, an equity analyst at Oren Investimentos in Rio de Janeiro, which manages 290 million reais ($172 million). For OGX, “elevated oil prices and positive news flow may be a new trigger for the stock.”

Brazil’s production of oil rose to a record 2.089 million barrels a day last month, the agency known as ANP said on its website yesterday. Petrobras’ total November oil and gas production was 2.6 million barrels a day, of which 2.03 million barrels was in Brazil, according to an e-mailed statement.

Crude for February delivery gained 46 cents, or 0.5 percent, to $91.46 a barrel on the New York Mercantile Exchange. It touched $91.67, 21 cents below the two-year intraday high of $91.88 reached yesterday. Futures have advanced 15 percent this year.

Separately, Brazil found more evidence of oil at the government’s Libra offshore field, which may be the largest oil discovery in the Americas in more than three decades.

ANP found a second layer of hydrocarbons at Libra, according to records on its website dated Dec. 27. The regulator first reported oil at the field in late October.

Libra is estimated to hold as much as 15 billion barrels of recoverable oil, which would eclipse Brazil’s total current reserve base and make it the biggest find in the Americas since Mexico discovered Cantarell in 1976.

 

[busybody..]

Brazil digs and drills and finds oil

We, dont drill and are running out and paying more and more

CHANGE!

 

[mercury14]

Awl Business

Christmas special, all awls 50% off. Buy now!

http://2.bp.blogspot.com/_PnT6fOkhWyg/S8z4XNcrfYI/AAAAAAAACzo/GkHYlhPmqpw/s1600/rosewood20awl.jpg

This is what I was thinking.