Oil and Gas Issues

[gerontocrat]

I happen to believe that RIG....a company that specializes in DEEP WATER and "harsh environment" drilling services....is going LOWER and COULD go to zero. 

STATOIL (Norway) has woken up to that much of its expertise could be applied to offshore wind, design, erection., maintenance, servicing. And it is doing it.

Others will not wake up and go bust.

[Richard Rathbone]

" The simplest solution is to pour it into rivers (Pennsylvania) ... "

They had to quit that after they found elevated radiation levels downstream. Nw they truck it to Ohio and cause earthquakes there. The stretch on 70 from New Stanton to Ohio is chock full of haulers moving frack waste to Ohio and deadheading back. Usually 6 kilogallon sucker trucks.

It has been snowing quite a bit on 70 there this year, I'm surprised that i havent heard of wrecks yet. Stay far away from them in snow conditions, they handle like pigs in this weather. I run a few and wont send em out when theres more than half an inch in the forecast.

sidd

Have you got a source for elevated rates of earthquakes in Ohio? The amount and size of them does seem to depend on the local regulations. Is it reasonably controlled (e.g. BC) or is Ohio heading for Quakelahoma level?

[zheega]

Others will not wake up and go bust.

I doubt it. US and Canada have been RAPIDLY increasing fossil fuel production over the last ~10 years (US fossil fuel production increased faster over the last 8 years than in any other country in world history) and fossil fuel subsidies have not decreased. I think oil corporations will be able to hold their own for a loooong time, because they have the backing of some of the strongest governments on the planet.

[Buddy]

I think there is a pretty good chance (60 - 75% or so) that the oil stocks will continue their move down WITHIN the next 2 - 3 weeks.  They won't FINISH the move down....that will likely take several months.  But....the reality of XOM at $60ish is quite real before the Arctic ice sheet melting is over for this year.

Total US oil rigs were UP by 51 over the last 4 weeks.....which is an increase of about 6.5% in total rigs just over that 4 week period ended Feb 16th.
 
Keep in mind that the newer fracking wells in the US produce MORE PER WELL...so they don't need as many rigs as they did 2 - 3 years ago to produce the same or more amount of oil.

https://www.reuters.com/article/us-usa-rigs-baker-hughes/u-s-drillers-add-oil-rigs-for-fourth-consecutive-week-baker-hughes-idUSKCN1G022Y

[sidd]

Re: wastewater injection related earthquakes in ohio

https://www.scientificamerican.com/article/ohio-earthquake-likely-caused-by-fracking/

sidd

[gerontocrat]

carbonbrief.org has a long article on BP's latest "Annual Energy Outlook", one of the Bibles of the industry. (The full set of documents is downloadable at https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/energy-outlook-downloads.html)

The carbonbrief article is at :
https://www.carbonbrief.org/analysis-bp-significantly-upgrades-global-outlook-wind-solar-again

The main scenario in the company’s latest annual “Energy Outlook”, released yesterday, shows renewables rising four-fold to 2,000 million tonnes of oil equivalent (Mtoe) by 2035. This is an upwards revision of around 400Mtoe compared to last year’s main forecast.

The projections also show, for the first time, global oil demand peaking by 2040. Oil remains the world’s largest fuel source, however.

This 2018 edition of BP’s outlook also projects coal will peak before 2030, an even earlier projection than it gave last year.

As the graph below shows (1st graph), it projects a peak for both coal and oil in the coming decades, but continually rising demand for gas.......

The CO2 emissions resulting from BP’s evolving transition scenario are shown in the graph below in orange (2nd graph). Note that projections go up to 2040 for the first time, rather than 2035 as in recent years.

The second graph, I looked at in conjunction with other stuff. E.g.s, 2017CO₂ emissions went up (1.8% estimate?) and are expected to go up again in 2018, recent articles have said that Paris 2015 commitments are insufficient to stop another 1 degree celsius temperature rise, and that Governments are already lagging behind those commitments (even excluding current US policy).

So CO₂ at 450 ppm by 2035 unless BP has got it all wrong.

[oren]

Buddy, do you seriously believe there is any relation between oil price and/or O&G stocks and the Arctic melting season??

[Buddy]

Oren:

NO.  I was using the end of melting season as a "time frame".  I could have said the beginning of fall.....or the end of summer....or end of August/beginning of September.....etc.

[oren]

Okay, thanks for clarifying.

[numerobis]

gerontocrat: notice how BP is still only expecting linear growth in wind + solar. I'm willing to bet it's going to grow exponentially for a while yet.

[Buddy]

Peak U.S. Shale Could Be 4 Years Away

Again....as long as OPEC is cutting back....frackers will be more than happy to fill the void.  The only thing slowing down the frackers right now.....is pipelines.  As frackers continue to pump more oil....especially after they finish some pipelines... the frackers will keep a "ceiling" on oil price for the next few years.

From the article linked above....

U.S. shale production growth has outperformed even the most bullish forecasts, forcing OPEC and the International Energy Agency (IEA) to revise up American supply growth projections month after month.

The U.S. Energy Information Administration (EIA) also expects shale/tight oil to continue to grow in all possible modeled scenarios for the next four years, according to its Annual Energy Outlook 2018 published this month.

https://finance.yahoo.com/news/peak-u-shale-could-4-170000963.html

[Sigmetnow]

Keystone XL Pipeline Ruling: Trump Administration Must Release Documents
The oil pipeline's opponents believe the State Department used old, out-of-date environmental reviews when it approved the tar sands project last year.

A federal judge in Montana has ordered the Trump administration to release documents it relied on to approve construction of the Keystone XL pipeline last year, a development that pipeline opponents believe could stymie the controversial project.

Last March, the State Department approved construction of the nearly 1,200-mile pipeline, which would carry crude oil from the tar sands region of Alberta, Canada, to Nebraska and ultimately to refineries on the Gulf Coast. The approval reversed a 2015 decision by the Obama administration, which had blocked the project by refusing to issue a permit for the pipeline to cross the Canadian border.

Environmental groups sued the Trump administration, saying its reversal broke three laws and that it failed to conduct additional, updated environmental reviews before granting approval. ...

https://insideclimatenews.org/news/22022018/keystone-xl-oil-pipeline-ruling-trump-documents-environmental-nepa-review-canada-tar-sands

[Sigmetnow]

Judge agrees to halt construction of Louisiana oil pipeline

A federal judge agreed Friday to suspend construction of a crude oil pipeline through a swamp in Louisiana’s Cajun country, a victory for environmental groups opposed to the project.

U.S. District Judge Shelly Dick granted the groups’ request for a preliminary injunction that temporarily halts pipeline construction in the environmentally fragile Atchafalaya Basin until their lawsuit over the project is resolved.

The judge’s two-page order bars the company that is building the Bayou Bridge pipeline “from taking any further action on the project” pending a trial on the merits of the case. It wasn’t immediately clear if the order is limited to work in the basin or applies to the entire length of the 162-mile-long (261-kilometer) pipeline from Lake Charles to St. James Parish.

No matter the scope, Earthjustice attorney Jan Hasselman said the ruling is a “very significant victory for the people who rely on and care about the Atchafalaya Basin.”

“For too long, the oil industry has treated this place as garbage dump,” he said. “Finally, it is getting the kind of protection that it deserves.” ...

http://www.beauregarddailynews.net/news/20180225/judge-agrees-to-halt-construction-of-louisiana-oil-pipeline

[Buddy]

One thing I will be watching over the coming months..... are some of the assets sales in the O&G market.  Specifically.....sale of any "deep water interests".

At some point over the coming few years....it is going to become a game of "musical chairs"....without everyone looking to get out of "expensive to drill/produce properties."

https://finance.yahoo.com/news/exxon-selling-stake-canadas-terra-161410992.html

Exxon specifically has a higher cost of recoverable oil than some of the other big firms.... so I will be watching to see if XOM pulls back more from deep water type or expensive type of oil fields.

Eventually....it is going to be "dog eat dog" in the oil patch.

[Buddy]

Oil prices decline, on back of weak Chinese, Japanese industrial data

https://profit.pakistantoday.com.pk/2018/02/28/oil-prices-decline-on-back-of-weak-chinese-japanese-industrial-data/

While China’s week-long Lunar New Year holiday this month disrupted business activity, traders also pointed to tougher pollution rules that curtailed factory output.

In Japan, the world’s third-largest economy, industrial output in January took its biggest tumble since a devastating earthquake in March 2011, highlighting a weakening in demand and a build-up of inventory.

In the United States, the world’s biggest oil consumer, rising crude stockpiles weighed on prices.

Data on Tuesday from the American Petroleum Institute showed that crude inventories rose by 933,000 barrels in the week to Feb. 23, to 421.2 million barrels.

Refinery crude runs dropped by 209,000 barrels per day (bpd), the API data also showed, implying a drop-in demand for feedstock crude. Gasoline stocks rose by 1.9 million barrels.

[Buddy]

Oil Prices Outlook for 2018: Things Could Get Ugly

https://www.lombardiletter.com/oil-prices-get-ugly-oil-investors-2018/26244/

Dear readers, don’t ever forget that when it comes to the commodity markets, supply and demand matters a lot. As I see it, we have a lot of supply, but demand could be tumbling soon. As this is happening, technical analysis suggests a lot of bearish sentiment. So, don’t be surprised if it all gets much uglier later in 2018.

Keep in mind, if oil prices go down, oil companies will see their profit margins get thin. They could face a lot of scrutiny in the midst of all this. Oil company stocks have already declined by 13% since mid-January. If oil prices were to tumble 15%–20% in 2018, oil stocks could drop much more in value.

[gerontocrat]

US vs OPEC - the continuing story

https://www.bloomberg.com/news/articles/2018-03-01/u-s-shale-surge-offsets-lowest-saudi-oil-imports-since-1980s

[Sigmetnow]

Oil and coal drove Trump’s call to shrink Bears Ears and Grand Staircase, according to insider emails released by court order

Oil and gas resources played a bigger role in the controversial boundary changes ordered by President Donald Trump that removed 2 million acres from southern Utah’s two large national monuments than previously disclosed, according to Interior Department communications obtained by The New York Times.

https://www.sltrib.com/news/environment/2018/03/02/interior-department-emails-show-oil-and-coal-played-a-big-role-in-bears-ears-grand-staircase-monument-redraws/

[Buddy]

Exxon CEO struggles to reverse Tillerson's legacy of failed bets

Some of the biggest bets taken by his predecessor Rex Tillerson, now the U.S. secretary of state, have resulted in billions of dollars in write-downs amid falling production and a stock price that has long lagged peers.

Nothing worse than being the dirtiest piece of laundry (Exxon) ....in a bag full of dirty laundry (Oil and Gas companies).

But it is comforting to know that someone with such a GOOD DECISION MAKING PROCESS is now the Secretary of State.     What could possibly go wrong?

[numerobis]

It got him the job. What more would you want?

PS: did you mean to share a link? I’d read the story you’re quoting.

[gerontocrat]

One for Buddy,

The Cohn / Tariffs effect

Market summary > Exxon Mobil Corporation
NYSE: XOM - Mar 7, 3:04 PM EST
73.63USD  Price decrease2.56 (3.36%)

What happens this week and if he signs the order will determine the market next Monday morning. Interesting times.

[Buddy]

Exxon tries to sell Wall Street on growth plan, but shares drop

Exxon's growth plan will require billions of dollars in spending [/b]spread across U.S. shale fields, along with refinery expansions and deepwater megaprojects. The company said investments should drive profit to $31 billion in 2025 with crude prices at or above current levels.

https://finance.yahoo.com/news/exxon-sees-earnings-doubling-2025-current-oil-prices-131620694--finance.html

And therein lies the problem:  "with crude prices at or above current levels."


And when oil prices are BELOW $40 or worse (long term).... or as Tony Seba thinks...ABOUT $25.... then you have "screwed the pooch."

SHORT TERM....I'm bearish, and LONG TERM I am bearish.  At some point....we will get a STRONG intermediate term "counter trend rally UP).  But we're not down to a bottom yet...and may not get there for many more months.

[Buddy]

Saudis Hint They Could Delay Aramco IPO Until 2019

https://oilprice.com/Energy/Energy-General/Saudis-Hint-They-Could-Delay-Aramco-IPO-Until-2019.html

As I noted before....I am SHORT TERM BEARISH and LONG TERM BEARISH....but expect an INTERMEDIATE TERM rally AFTER we get done with this short term downtrend.  It looks like the Saudi's are waiting till they get a rally in the oil price/oil sector as well....before they come to the public to milk them with the IPO.

For me....an INTERMEDIATE TERM RALLY in oil prices could last 2 or 3 years.  That is intermediate term to ME.  But that would start AFTER the short term downturn we are in.

And that fits in to what I believe may play out in oil price.  Right now.....the oil companies have been UNDERINVESTING...and that may lead to a shortage in the coming year or two.  If there is a shortage....that would lead to an increase in price.

Right now....I believe oil price (WTIC) is heading into the mid $50's or slightly below over the coming 2 - 6 months....and that is dependent on the supply from "the frackers"...especially in Texas and New Mexico.

Timing is going to be interesting on the oil market as we transition from fossil fuel transportation to EV transportation.  It will be a VERY BUMPY RIDE.

Will be watching inventory levels of O&G products....as well as rig counts. 

[Tor Bejnar]

Oil industry falls out of love with Trump
Politico (03/10/2018)

Steel tariffs, jousting over NAFTA and wariness about regulation rollbacks are making oil and gas executives nervous.

[Buddy]

The OPEC deal could fall apart in June

OPEC’s oil production cut agreement could start falling apart soon, as Saudi Arabia and Iran once again face off. This time, however, the spat is over determining what the best price level is for the commodity. That’s what Iran’s Oil Minister Bijan Zanganeh told the Wall Street Journal in an interview.

The split, apparently, stems from Saudi Arabia’s insistence that crude oil should be kept closer to US$70 a barrel—a level Brent touched briefly early this year—and Iran’s equal insistence that US$60 is a better place for oil to trade at.

By the way....I have NO idea whether the deal will fall apart or not.  All I know...is that the frackers will keep pumping out oil in the US as long as they are making enough profit.  If OPEC wants to cut back....they will be glad to step in.

https://finance.yahoo.com/news/opec-deal-could-fall-apart-133000351.html

[Buddy]

OPEC Acknowledges the Scale of the Shale Boom

https://www.yahoo.com/finance/m/b59439fe-1889-3648-b118-798915784ee1/ss_opec-acknowledges-the-scale.html

OPEC for the first time is forecasting that new oil supplies from its rivals will exceed growth in demand this year as the U.S. industry thrives. The Organization of Petroleum Exporting Countries raised its expectation for supply growth from the U.S. and other producers for a fourth consecutive month, according to its monthly market report.

[Sigmetnow]

The Red Lake Nation votes to evict Enbridge oil corporation and its four pipelines from tribal property in Minnesota.

http://www.bemidjipioneer.com/news/government-and-politics/4417789-red-lake-votes-remove-pipelines

[Buddy]

Below is a chart of Saudi Arabia oil imports into the US from 1973 through the end of 2017.

As the Permian Basin in Texas/New Mexico continues to pump out oil.....those Saudi imports of oil could diminish further....

 

[Buddy]

And keep in mind that an attack on Iran would make 3+ people happy:

1)  Traitor Don
2)  Saudi Arabia
3)  Bibi (Israel.... he is also now fighting for his political life in a bribery scandal)
+)  Several members of the US Congress (Lindsay Graham, etc.... Mike Pompeo Sec of State, etc)...

Iran would be a hat trick +.....

[Buddy]

Boy....are things getting interesting around oil.  Both fundamentally.... and politically.

Yesterday, oil got a very nice dead cat bounce (sorry cat lovers).  And what did the oil stocks do?  Not much of anything.  Not a good sign for oil stocks.  Still too many people wanting/needing to "get out of Dodge" (their oil stocks).....and seeing the long term future of oil as somewhat bleak...at least for now.  In order to get a longer term bounce...maybe multi year....oil stocks are going to have to head lower.

Saudi Aramco is only going to IPO a small piece of their oil company..... and NOT in international exchanges (no Wallstreet....no China... no Taiwan...etc  ONLY on the Saudi Arabia exchange....AND...a smaller piece).

And what will lower oil prices in the near/intermediate term do for Russia and Saudi Arabia?  Not good I'm afraid.  Little punk Vladimir might be in a little more trouble in a year or two if the price of oil doesn't head north.  Russia remains mired in a long recession....and eventually the masses will get restless.  He better hope that Traitor Donnie is able to stay in office....

Traitor Don is trying to tank the stock market..... and I think he may finally succeed at something.  It's going to be a long and bumpy ride...not only in oil, but the broader equity market as well.  Starting a trade war is not going to be received well I'm afraid....especially when the market is "over priced".

Anyone tired of "all that winning" that was going to take place?   

[gerontocrat]

Trump expected to announce tariffs at 12.30 pm Eastern Time.

Trump is scheduled to sign a "presidential memorandum targeting China's economic aggression" at 12:30 p.m. ET, according to the White House, and Trump is expected to invoke Section 301 of the 1974 Trade Act, which formed the basis for the administration's investigation.

CNN Politics.

Which is why the oil companies and investors are not buying into the recent rise in the price of crude.

[numerobis]

Woohoo, trade war.

That'll reduce US carbon emissions, just like 2007 did.

[Sigmetnow]

The legacy of West Texas oil extraction looks like it will be earthquakes and giant sinkholes.

More Sinkholes Could Form as Texas is "Punctured Like a Pin Cushion"
"The ground movement we're seeing is not normal."

The West Texas desert is home to two infamously large sinkholes. One, near the town of Wink — about 230 miles east of El Paso — opened up in 1980 near an abandoned oil well. The next, a mile away, appeared in 2002. These giant, empty pits are now part of the weird desert landscape, but scientists report Thursday in Scientific Reports that they’re not likely to be the last ones to pockmark the West Texan terrain.

The scientists from Southern Methodist University show in their new study that a large region close to the existing sinkhole — an area covering 4,000 square miles — is sinking and uplifting at an abnormal rate. This denotes an instability that the researchers say could lead to more sinkholes in the future.

“The ground movement we’re seeing is not normal. The ground doesn’t typically do this without some cause,” said geophysicist Zhong Lu, Ph.D., a professor in the Roy M. Huffington Department of Earth Sciences at SMU in a statement published Thursday.

That cause, the authors of the paper write, is likely the preponderance of oil wells and injection wells in the area. West Texas is oil country, and to harvest that oil, wells have been drilled deep into the ground for nearly 70 years. Turns out that doing so isn’t great for the stability of the region, especially considering that its geology isn’t the strongest: It’s mostly underlaid by water-soluble salt and limestone, as well as shale, a soft rock.

“We’re fairly certain that when we look further, and we are, that we’ll find there’s ground movement even beyond that,” said study co-author and research scientist Jin-Woo Kim, Ph.D., a research scientist in the SMU Department of Earth Sciences, in a statement. “This region of Texas has been punctured like a pin cushion with oil wells and injection wells since the 1940s and our findings associate that activity with ground movement.” ...

https://www.inverse.com/article/42712-west-texas-sinkholes-oil-drilling-fluid-injection

Image from Google Earth

[Buddy]

Court cases will continue to weigh on oil and gas companies as they wind their way through the legal system...

Everyone should take the climate change class a federal judge just held in his courtroom

Now, he’s presiding over a case in the US District Court for the Northern District of California that will decide if San Francisco and Oakland can hold Chevron, ConocoPhillips, Royal Dutch Shell, BP, and Exxon Mobil liable for the effects of climate change. At issue is whether oil companies can be held responsible for the effects of climate change, given the evidence they knew fossil fuels were driving climate change decades before the general public started to catch on, and continued to try to persuade the public that nothing was wrong. (Exxon, meanwhile, is counter-suing the cities right back.)

https://qz.com/1236356/a-fossil-fuel-lawsuit-in-california-yielded-a-master-class-in-climate-change-science/?utm_source=YPL&yptr=yahoo

[gerontocrat]

Meanwhile, in Alberta, Canada....

https://www.bloomberg.com/news/articles/2018-03-26/one-of-world-s-dirtiest-oil-sources-wants-to-be-green-but-how

One of World's Dirtiest Oil Sources Wants to Go Green

One of the most aggressive campaigns to fight global warming is happening in a Canadian province. There’s just one problem: the same place is also home to some of the dirtiest oil in the world.

Alberta is boosting its use of renewable energy, closing power plants that burn coal and in January increased its tax on carbon emissions by 50 percent, moves that will help Canada curb emissions under the global Paris climate agreement. However, the province is also increasing output from its vast reserves of oil sands, a gooey fossil fuel that produces more than twice as much carbon dioxide during extraction and processing than the North American average.

The province in December held its first auction for renewable energy and is preparing to shutter six coal power plants. Its carbon tax on transportation and heating fuels jumped to C$30 ($23) a metric ton on Jan. 1, and promptly spurred a coal-to-gas fuel switch in Alberta, according to a Feb. 14 report from Bloomberg New Energy Finance.

But in terms of environmental benefits, it’s a wash, said Hussey. The reduced emissions from phasing out coal power are “almost exactly the same” as the increases he expects to see from increased oil production.

Alberta’s strategy strikes a “pragmatic” balance after decades of denial and inaction, Shannon Phillips, the province’s minister of environment and parks, said in an interview.

[numerobis]

Shell, desperate to stay relevant, says that hydrogen will save it:

https://www.theguardian.com/environment/2018/mar/26/hydrogen-powered-transport-key-to-climate-targets-says-shell

They say the world, but really they're mostly interested in magically repurposing all their current natural gas infrastructure to hydrogen... and to make the hydrogen from the natural gas they mine.

[Buddy]

Oil Rig Competition Flares Up Amid Permian Boom


https://finance.yahoo.com/news/oil-rig-competition-flares-amid-210000837.html

A 15-percent increase in the length of laterals last year was a significant driver for super-spec rig demand, Helmerich & Payne said in January, noting that it expects this trend to continue.

“H&P has over 40% of the active super-spec rigs and with that portion of the industry fleet fully utilized we believe pricing should continue to improve. We also have a significant advantage for future growth as we have roughly half of the 200 to 250 upgradeable rigs available in the U.S. market today that could be readily upgraded to super-spec capacity,” President and CEO John Lindsay said.

The rig count in the Permian Basin of Texas and New Mexico in effect UNDERSTATES the rig count, because the newer rigs that have been added over the last couple of years is much more efficient than older rigs.  Newer rigs can pull 20% or more oil out of the well...at a lower cost.

[numerobis]

https://www.theguardian.com/environment/2018/mar/28/extreme-fossil-fuel-investments-have-surged-under-donald-trump-report-reveals

Investment in the dirtiest oil and gas is surging again, after the 2014 oil crash.

(The Guardian blames Trump for the increase and Paris for the reduction, seems unlikely.)

[Buddy]

Oil Heads for Longest Slide in a Month as Fears of Glut Increase

Oil headed for its longest losing streak in almost a month on signs a global glut may persist.

Futures in New York fell as much as 1.3 percent after dropping about 1 percent over the previous two sessions. An industry report was said to show a 5.32 million-barrel gain in U.S. crude inventories last week, far higher than the median estimate in a Bloomberg survey before government data later Wednesday. European stockpiles rose the most in five months last week.

https://www.bloomberg.com/news/articles/2018-03-27/oil-falls-3rd-day-as-industry-data-shows-u-s-inventories-expand?utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=yahoo

[Buddy]

OPEC seeks 'very long-term' cooperation with other oil exporters

https://finance.yahoo.com/news/opec-says-seeks-more-sustainable-084746116.html

If I knew my market was going to go into decline in the coming few years.... I might do the same thing:  Look for everyone else to cut back production in order to support price.  Unfortunately, they can't do that with what is soon going to be the largest producer of oil:  The US.

The Saudi's and Russians are trying to "manufacture" a "floor" to oil price by limiting supply.  In a few years (like...3 years) when DEMAND starts to drop.... their attempts will fail.

We will likely get a nice SPIKE in oil prices AFTER this CURRENT downturn is over (looking to a POSSIBLE intermediate term bottom in oil prices around the September/October time frame PERHAPS).  And that SPIKE in oil price could last a year or two.  Hard to tell right now...

THOSE DAMN FRACKERS....   

[Sigmetnow]

Meanwhile, in Alberta, Canada....

https://www.bloomberg.com/news/articles/2018-03-26/one-of-world-s-dirtiest-oil-sources-wants-to-be-green-but-how

One of World's Dirtiest Oil Sources Wants to Go Green

One of the most aggressive campaigns to fight global warming is happening in a Canadian province. There’s just one problem: the same place is also home to some of the dirtiest oil in the world.

Alberta is boosting its use of renewable energy, closing power plants that burn coal and in January increased its tax on carbon emissions by 50 percent, moves that will help Canada curb emissions under the global Paris climate agreement. However, the province is also increasing output from its vast reserves of oil sands, a gooey fossil fuel that produces more than twice as much carbon dioxide during extraction and processing than the North American average.

The province in December held its first auction for renewable energy and is preparing to shutter six coal power plants. Its carbon tax on transportation and heating fuels jumped to C$30 ($23) a metric ton on Jan. 1, and promptly spurred a coal-to-gas fuel switch in Alberta, according to a Feb. 14 report from Bloomberg New Energy Finance.

But in terms of environmental benefits, it’s a wash, said Hussey. The reduced emissions from phasing out coal power are “almost exactly the same” as the increases he expects to see from increased oil production.

Alberta’s strategy strikes a “pragmatic” balance after decades of denial and inaction, Shannon Phillips, the province’s minister of environment and parks, said in an interview.

That Feeling When: installing renewables and a carbon tax are the Low Hanging Fruit....

[Buddy]

Uh oh....

U.S. shale companies are set to increase their capital expenditures by 20 percent this year, while also boosting their production guidance, according to Rystad Energy. Obviously, the Permian is where a lot of the action is – Permian drillers forecast a 40 percent increase in production, year-on-year, a colossal jump of about 850,000 bpd.

https://finance.yahoo.com/news/shale-breakevens-rise-amid-production-230000313.html

[Buddy]

Uh oh II....  Looks like someone is buying a LOT of "insurance" against lower prices.

World’s Most Indebted Oil Company Makes Major Hedge

In February and March, Brazil’s state-controlled oil firm Petrobras hedged 128 million barrels of its expected 2018 production —equal to around 15 percent of total production—at an average price of $65 per barrel, to protect part of its operating cash flow generation this year.

The hedge puts a floor under around 350,000 bpd of Petrobras’s oil production this year, or just above 15 percent of its oil production of around 2.2 million bpd that the company has reported for the past two years.

Petrobras has purchased put options referenced to the average Brent price in February and March through the end of 2018, at an average cost of $3.48 per barrel and average exercise price of around $65/barrel, the Brazilian company said in a statement. The options mature at the end of this year.

The cost of the hedge, 128 million barrels at $3.48 per barrel, is around US$445 million.

https://oilprice.com/Energy/Energy-General/Worlds-Most-Indebted-Oil-Company-Makes-Major-Hedge.html

[Buddy]

If oil (West Texas Intermediate Crude....WTIC) gets a close BELOW $60 in the coming days/weeks.... then volume could pick up (to the downside) on the oil and gas stocks like Exxon, Chevron, etc.

Exxon is the "red headed step child" that has been beaten to death like a rented mule over the past couple of years.  It has lagged the other oil and gas companies BADLY (BIGLY... ).

But I expect the entire O&G sector to take a beating before reaching some sort of intermediate term bottom this year....

As always....I will be watching production AND inventory numbers.  The thing about oil and gas.... is that somebody HAS TO TAKE DELIVERY OF THE ITEM.

But if $60 in WTIC gives way..... that could lead to some significant selling of oil and gas stocks.

 

[Sigmetnow]

Energy Transfer Says ‘Cyber Attack’ Shut Pipeline Data System

A system that digitally processes customer transactions for a major pipeline network in the U.S. was shut down Monday after a cyber attack.

The electronic data interchange provided by third-party Energy Services Group LLC for Energy Transfer Partners LP’s natural gas pipeline system was attacked Monday and will be hobbled until “further notice,” Energy Transfer said in a notice to shippers.

The shutdown could affect a network of major pipelines owned by subsidiaries, including Panhandle Eastern Pipe Line Company, which owns lines from Michigan to Texas, Transwestern Pipeline Company LLC and Rover Pipeline LLC. The EDI system, designed to cut costs and boost speed, is used to conduct business through a computer-to-computer exchange of documents.

Though it’s not clear who was responsible for the attack, it comes after U.S. officials warned in March that Russian hackers are conducting a broad assault on the nation’s electric grid and other targets. Last month, Atlanta’s municipal government was hobbled for several days by a ransomware attack. ...

https://www.bloomberg.com/amp/news/articles/2018-04-02/energy-transfer-says-cyber-attack-shut-pipeline-data-system

[sidd]

EPA allowing refiners to elude renewable fel standards. Sen. Grassley and the corn states will be unhappy. Not that i think ethanol from corn or fresh veg oil is  such a good idea to start with.

"The EPA exemption, granted about a month ago, could reduce Andeavor’s regulatory costs by more than $50 million this year ..."

"Such windfalls for oil firms come at the expense of the corn and ethanol industries, ..."

https://www.reuters.com/article/us-usa-biofuels-epa-refineries-exclusive/exclusive-epa-gives-giant-refiner-a-hardship-waiver-from-regulation-idUSKCN1HA21P

sidd

[TerryM]

That's a hard one to parse. In my "winter mix" I get ~10% more ethanol, and I get a~ 10% fewer miles to the gallon.


Do I want to hurt Big Oil or Big Agriculture.


Decisions, Decisions.
Terry

[Tor Bejnar]

Do I want to hurt Big Oil or Big Agriculture.
Decisions, Decisions.

A good time to get good walking shoes, a bicycle or an EV! 

[Sigmetnow]

It’s time to think seriously about cutting off the supply of fossil fuels
A new paper makes the case for supply-side climate policy.

There is a bias in climate policy shared by analysts, politicians, and pundits across the political spectrum so common it is rarely remarked upon. To put it bluntly: Nobody, at least nobody in power, wants to restrict the supply of fossil fuels.

Policies that choke off fossil fuels at their origin — shutting down mines and wells; banning new ones; opting against new pipelines, refineries, and export terminals — have been embraced by climate activists, picking up steam with the Keystone pipeline protests and the recent direct action of the Valve Turners.

But they are looked upon with some disdain by the climate intelligentsia, who are united in their belief that such strategies are economically suboptimal and politically counterproductive.

Now a pair of economists has offered a cogent argument that the activists are onto something — that restrictive supply-side (RSS) climate policies have unique economic and political benefits and deserve a place alongside carbon prices and renewable energy supports in the climate policy toolkit.

“In our experience,” the authors write, “the climate policy community has for too long been excessively narrow in its preference for certain kinds of policy instruments (carbon taxes, cap-and trade), largely ignoring the characteristics of such instruments that affect their political feasibility and feedback effects.” I have written the same thing many times, so I think a climate policy argument that takes politics seriously deserves a close look.

To understand it, it helps to have a framework for classifying climate policies.

The four quadrants of climate policy
Climate policies can apply to the supply side (production of fossil fuels) or the demand side (consumption of FF), and they can be restrictive or supportive. That creates a grid with four quadrants:

1. Restrictive supply side: policies that cut off FF supply, including declining quotas, supply taxes, and subsidy reductions
2. Restrictive demand side: policies that restrict demand for FF, including carbon prices and declining emission caps
3. Supportive supply side: policies that support the supply of FF alternatives, like renewable energy subsidies and mandates
4. Supportive demand side: policies that support demand for FF alternatives, like subsidies for purchase of energy-efficiency appliances or favorable government procurement policies

Here it is as a visual:
...

https://www.vox.com/energy-and-environment/2018/4/3/17187606/fossil-fuel-supply

[wili]

Thanks for this sig.

It should be clear that we have to take less out of the ground if we are going to avoid burning it.

Not subsidizing fossil-death-fuel extraction any more should be a total no-brainer.

Then the idea of a rapidly reducing quota is the other crucial part for the supply side.

These are earth-threatening substances, that should remain where they are, safely deep in the ground, effectively sequestering their carbon for us.

Obviously we should also  stop building any more pipelines.