Friday, May 30, 2014

Shale gas boom threatens US lightering operations

Increasing US shale gas production infrastructure development will destroy imports and lightering operations in the US Gulf and East Coast areas, said a leading analyst.
The completion of new US pipeline and rail projects will enable higher volumes of oil shale crude to be transported to the East and Gulf Coast areas and, with the country’s ever-increasing oil production, will further reduce the need for imports. As a result, this  will also help to eliminate lightering operations in the near future.
According to Carmine Rositano, GlobalData’s managing analyst covering downstream oil & gas, crude oil imports into the East Coast from North and West Africa, which provide primarily light sweet crude oil and the Middle East, which is mostly medium and heavy sour crudes, amounted to about 450,000 barrels per day in 2013. This represents an estimated decline of 40% from 2010 levels of 750,000 barrels per day.
These shipments, which were lifted on Suezmaxes and VLCCs, were offloaded into smaller vessels that delivered the imported oil to their respective refineries.
Rositano explained: “Over the past few years, the increase in light sweet Bakken crude oil transported to East Coast refineries has reduced crude oil imports and lightering volumes. New rail tracks, crude storage tanks and machinery that can unload train tank cars quickly are now being built in the Philadelphia area to supply nearby refineries.
“The recent start-up of the 140,000 barrels per day rail-to-barge terminal at Yorktown, Virginia, along with improvements at New Jersey’s Perth Amboy terminal, which are aimed at bringing more Bakken crude oil to the East Coast, will eliminate refiners’ needs to import light sweet crude oil from North and West Africa into this area.”
Crude oil imports into the Gulf Coast area have also declined significantly, as production from the Eagle Ford and Bakken fields has risen. These production levels, combined with new pipeline and rail infrastructure investments, will bring additional volumes of oil into Texas and Louisiana and further reduce imports and lightering activities, warned Rositano.
In addition, the Gulf of Mexico will see its lightering operations continually dwindle while crude imports from Africa are wiped out, as cargoes transported from this region are currently carried on Suezmaxes and VLCCs, which must be offloaded into Aframaxes before being shipped to Texas refineries.
“Based on new projects moving domestic crudes into the Gulf Coast areas, the elimination of African crude imports and associated lightering operations in the Gulf of Mexico could occur as early as 2016,” she concluded.   

Thursday, May 29, 2014

OPEC May Crude Output Advances From Three-Year Low in Survey

OPEC crude production climbed in May for the first time in three months, led by gains in Angola and Saudi Arabia, a Bloomberg survey showed.
Output from the 12-member Organization of Petroleum Exporting Countries rose by 75,000 barrels a day to an average 29.988 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 50,000 barrels a day higher to 29.913 million because of changes to the Saudi Arabian and United Arab Emirates estimates.
Members increased production as the International Energy Agency projected further increases will be needed to meet demand during the second half of the year. The IEA said in a May 15 report that OPEC will need to provide an average of 30.7 million barrels a day in the last six months of 2014.
“There’s still room for OPEC production to increase further,” said Sarah Emerson, managing principal of ESAI Energy Inc. in Wakefield, Massachusetts. “Both the IEA and OPEC said this month that there’s a need for additional barrels.”
Brent crude for July settlement advanced 16 cents to close at $109.97 a barrel today on the London-based ICE Futures Europe exchange. Brent is the benchmark grade for more than half the world’s oil. West Texas Intermediate crude for July delivery increased 86 cents, or 0.8 percent, to settle at $103.58 a barrel on the New York Mercantile Exchange.
Angolan output increased by 140,000 barrels a day to 1.68 million, the biggest gain for any member in May. Production climbed because of the end of maintenance at the Greater Plutonio offshore field operated by BP Plc.

Saudi Gain

Saudi Arabia, the group’s biggest producer, bolstered output by 70,000 barrels a day to 9.67 million, the first gain this year. The country pumped 10 million barrels a day in September, the most in monthly data going back to 1989. Local crude burning is ramped up as temperatures rose in the desert kingdom this month.
Iranian production declined 90,000 barrels a day to 2.75 million this month, the biggest decline in the survey. The nation pumped more than 3.1 million barrels a day from 1991 until July 2012, when additional sanctions were imposed on the Islamic republic. Iran, the group’s second-biggest producer in June 2012, is now in fourth place.
Nigeria’s production fell 70,000 barrels a day to 1.95 million in May, the second-biggest decrease in the survey. Royal Dutch Shell Plc lifted a force majeure on Forcados crude exports on May 15 after removal of theft points, according to e-mailed statement. Force majeure is a legal step that protects a company from liability when it can’t fulfill a contract for reasons beyond its control.

Libyan Slump

Libyan output fell by 35,000 barrels a day to 180,000, the lowest level since September 2011. Production this month was down 87 percent from a year earlier. The North African country’s pumped 1.59 million in January 2011 before the uprising that led to former leader Muammar Qaddafi’s ouster and subsequent killing that year.
“If there is an improvement in Libya or Iran, everything changes for OPEC,” Emerson said. “Members will be looking to cut output, not increasing it, in the second half of the year.”
OPEC ministers kept their output target unchanged at 30 million barrels a day on Dec. 4. The group will next meet on June 11 in Vienna.
To contact the reporter on this story: Mark Shenk in New York at
To contact the editors responsible for this story: Dan Stets at Bill Banker

Wednesday, May 28, 2014

New safety requirements set for Keystone pipeline

Associated Press
WASHINGTON (AP) — Safety regulators have quietly placed two extra conditions on construction of TransCanada Corp.'s Keystone XL oil pipeline after learning of potentially dangerous construction defects involving the southern leg of the Canada-to-Texas project.
The defects — high rates of bad welds, dented pipe and damaged pipeline coating — have been fixed. But the federal Pipeline and Hazardous Materials Safety Administration wants to make sure similar problems don't occur during construction of the pipeline's controversial northern segment, which is on hold pending a decision by the Obama administration.
One condition requires TransCanada to hire a third-party contractor chosen by the pipeline safety agency to monitor the construction and make reports to the U.S. government on whether the work is sound.
The second requires TransCanada to adopt a quality management program to ensure "this pipeline is — from the beginning — built to the highest standards by both Keystone personnel and its many contractors."
The conditions are buried near the end of the 26 appendices in a voluminous environmental impact statement on Keystone XL released by the State Department on Jan. 31.
Most of Appendix Z is devoted to 57 well-known "special conditions" that TransCanada agreed to three years ago. But conditions 58 and 59 are listed on an additional page.
"Everybody looked at that appendix and said, 'Oh, 57 conditions. Move on.' Well, there are a couple more there," energy analyst Kevin Book said. "They just added them without saying anything."
The new conditions were added four months after the pipeline safety agency sent TransCanada two warning letters last year about defects and other construction problems on the Keystone Gulf Coast Pipeline, which extends from Oklahoma to the Texas Gulf Coast.
"From the start of welding, TransCanada experienced a high weld rejection rate," said one letter dated Sept. 26. Over 72 percent of welds required repairs during one week. In another week, TransCanada stopped welding work after 205 of 425 welds required repair.
Map shows the proposed Keystone pipeline route; 2c …
Inspections by the safety agency found TransCanada wasn't using approved welding procedures to connect pipes, the letter said. The company had hired welders who weren't qualified to work on the project because TransCanada used improper procedures to test them, the letter said. In order to qualify to work on a pipeline, welders must have recent experience using approved welding procedures and pass a test of their work.
The weld failure rates are "horrible," said Robert Bea, professor emeritus of civil and environmental engineering at the University of California, Berkeley. "The level of defects is indeed cause for alarm and indicative of something that is going on in the Keystone organization that isn't satisfactory."
In high-risk projects such as nuclear submarines or nuclear power plants, even one-tenth of a percent rate of bad welds would be cause for deep concern, Bea said. He is a certified welder and was an expert consultant on the construction of the trans-Alaska pipeline in the 1970s.
"In this case, you are talking about a pipeline that has requirements on its performance that rival those of a nuclear power plant," he said.
Another letter, dated Sept. 10, said a government inspector witnessed TransCanada officials investigating dents in pipeline that had been laid without first sufficiently clearing rock from trenches or from soil used as backfill. The same letter said coating that protects pipeline from corrosion was damaged by weld splatter because a contractor hadn't followed the company's welding procedures. Eventually, pipeline was excavated in 98 places to make coating repairs.
Dents and damaged coatings are serious defects because they can weaken pipes and lead to failures, Bea said.
Davis Sheremata, a spokesman for TransCanada, cautioned against drawing a connection between construction problems found on the southern leg between Cushing, Oklahoma, and Nederland, Texas, and conditions placed on the northern leg, which will extend from Alberta, Canada, to Nebraska's southeast corner. The southern leg's problems are "a separate matter," he said in an email.
"TransCanada had identified and addressed these issues prior to any product being introduced into the pipeline and reported them voluntarily" to the government, Sheremata said. "The fact that the anomalies on the exterior of the pipe were discovered in the first place is a direct result of the 57 special safety conditions we agreed to implement on this project and Keystone XL, many of which are not required by regulation but are standard practice on all TransCanada pipeline construction projects."
But Book said the timing "would seem to suggest (the pipeline safety agency) was uncomfortable with the construction of Keystone south and that was part of their reasoning" for imposing additional conditions on the northern leg.
Damon Hill, a spokesman for the pipeline safety agency, said the additional conditions were the result of "observations in the field during construction projects from several pipeline operators over the past few years," as well as the agency's general knowledge and experience.
Keystone is intended to transport oil from Canadian tar sands to oil refineries on the Gulf Coast. Supporters say the pipeline will create thousands of jobs and aid energy independence. Environmentalists warn of possible spills and say tar sands oil is especially "dirty" and will contribute to global warming.
The project has become a major flashpoint alongside the larger debate over carbon emissions, drilling policies and tax breaks for energy companies.
The administration said in April it was putting off its decision on whether to approve the pipeline indefinitely. A decision now isn't expected until after the November elections.
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Tuesday, May 27, 2014

MEND Claims Responsibility for Refinery Fire

Nigeria’s main militant group in the Niger Delta, the Movement for the Emancipation of the Niger Delta (MEND), has claimed responsibility for the fire explosion that occurred at NNPC’s refinery jetty at Okrika, Rivers State on May 18. The fire claimed the lives of seven people and several others suffered severe burns according to reports.
The attack is in line with MEND’s ‘Hurricane Exodus’ according to the group’s spokesperson Jomo Gbomo. He also said the attack, intended to bring down the entire refining facility at the jetty, was made possible by the infiltration of the facility by some MEND fighters, aided by some internal agents within NNPC.
“This facility was infiltrated by a few of our fighters with the aid of our internal agents within the NNPC, contrary to  speculations that the sabotage was carried out by pipeline vandals and oil thieves, which is a very convenient phrase used in shielding the truth from the public.
“Thorough investigations will reveal bomb fragments are the same used in the Warri Refinery explosion of Tuesday, October 22, 2013. We will persist with our attacks on the Nigerian oil industry due to the inaction of President Goodluck Jonathan who continues to rely on an unsustainable and fraudulent Niger Delta amnesty program.
“The entire amnesty process is a fraud on the people of Nigeria, who are being promised peace in the Niger Delta in the absence of justice.  Hurricane Exodus is still on course,” Gbomo said.

Thursday, May 22, 2014

Marathon Petroleum Buys Hess Stations for $2.87B

 Associated Press

Marathon Petroleum will spend $2.87 billion to acquire the retail operations of Hess, the largest chain of company operated gas stations and convenience stores on the East Coast.
The deal, which is being orchestrated under subsidiary Speedway LLC, will expand Marathon's retail operations from nine states to 23 states along the coast and in the Southeast.
Hess Corp. has been reshaping itself as a pure production and exploration company since coming under pressure from hedge fund Elliott Capital Management in 2013. It said last year it would seek a buyer for its retail operations.
Hess will use proceeds from the sale for additional stock buybacks. The company boosted its existing share repurchase authorization to $6.5 billion from $4 billion.
The deal announced Thursday consists of $2.37 billion in cash, an estimated $230 million of working capital and $274 million of capital leases. The transaction includes all of Hess' retail locations, transport operations and shipper history on various pipelines, including approximately 40,000 barrels per day on Colonial Pipeline that runs from New York to Houston.
"With this significant geographic expansion, we will be able to further leverage our integrated refining and transportation logistics operations, providing an outlet for an incremental 200,000 (barrels per day) of assured sales from our refining system," Marathon Petroleum CEO Gary Heminger said.
Marathon Petroleum Corp. is itself part of an earlier split in the energy sector in 2012, when Marathon Oil Corp. broke off its refining division so that it could focus on exploration and production.
Hess on Thursday reassured customers that the holiday tradition of the Hess toy truck will continue. The company said that the toy trucks will be sold at Hess retail stores and online this year. Starting in 2015, Hess plans to sell the toy trucks online.
Shares of Hess gained $2.70, or 3 percent, to $92 before the market open.
The acquisition is expected to close late in the third quarter.

Wednesday, May 21, 2014

Arc Terminals Portland now accepting Utah crude trains

An Arc Terminals fuel terminal in Portland, Oregon, US, has begun accepting train shipments of crude oil from Utah, state officials say.

The 84-tank facility, located along the Willamette River, is now Oregon's second oil-by-rail destination.

Union Pacific trains carry the crude from Utah into Oregon, along the Columbia River Gorge, towards northwest Portland.

Once it has reached the site, which has a total capacity of 1,466,000 barrels, the oil will be loaded onto ships or barges bound for West Coast refineries.

Arc Terminals investors purchased the facility in January this year with intentions to invest $10 million (€7.2 million) in infrastructure upgrades. According to reports, the site is able to accommodate up to 20 tank cars at a time.

The announcement comes at a time when shipping crude by rail is under fire in the US, with governors in Oregon and Washington calling for reviews of oil train safety following the derailment of several trains carrying crude from the Bakken shale.

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Tuesday, May 20, 2014

US Oil Production Booms While OPEC Flounders

Copyright: Thinkstock

Instability in the Middle East is posing problems for OPEC, the world’s largest oil cartel. The cartel may have trouble producing enough oil to meet demand later this year, according to energy analysts.

But in the U.S., oil production continues to boom, reaching a 28-year high last week, rising 78,000 barrels per day to reach 8.428 million — close to the 1970 all-time production high of 9.6 million barrels per day.

Last week, the International Energy Agency (IEA) said that while OPEC production rebounded slightly from earlier this year the cartel would need to “hike third-quarter production by another 900,000 b/d from April levels” in order to meet forecast demand.

OPEC production recently took a hit from unrest in Libya and northern Iraq. IEA says it’s unclear if either of those regions will be able to recover from the violence and unrest enough to increase production.

IEA warned that “while OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above‐ground hurdles that have plagued some of its member countries lately.”

OPEC production hit five-month lows in March, reports the Wall Street Journal, which rebounded slightly in April to reach 29.9 million barrels per day. But this is short of the 30.7 million barrels per day the cartel needs to meet demand for its crude in the coming months, according to IEA projections.

But it’s not just OPEC production that’s falling short, as other non-OPEC countries have seen production fall this year.

“The downward revision is due to lower forecasts for Azerbaijan, China, Colombia, Kazakhstan, Mexico and South Sudan, which more than offset upward revisions among a number of producers, including Brazil and Russia,” IEA said.

“Even OECD Americas production edged marginally lower as an increase in the US of roughly 120,000 b/d month-on-month only partially offset declines in Canada (-185,000 b/d) and Mexico (-20,000 b/d),” the group added.

Non-OPEC oil production fell by 550,000 barrels per day in March because output fell in virtually every region outside Latin America and the U.S., said IEA.

“Growing domestic production of natural gas and oil continues to reshape the U.S. energy economy, with crude oil approaching the 1970 all-time high of 9.6 million barrels per day,” according to the U.S. Energy Information Administration (EIA), the statistics and forecasting arm of the Energy Department.

The advent of hydraulic fracturing, or fracking, coupled with horizontal drilling has enabled drilling companies to unlock vast reserves of oil and natural gas locked in tight underground shale formations.

Fracking involves injecting water, sand and chemicals to crack shale formations and release oil and natural gas. Environmentalists have condemned the drilling practice as dangerous to water and air quality, but so far such criticisms have been unsubstantiated.

“This is an incredible phenomena that looks set to continue,” John Kilduff, an energy market analyst at the New York-based Again Capital LLC, told Bloomberg last week. “There’s a long way to go before we explore and exploit all of the shale deposits out there.”

Last year, the U.S. was able to meet 87 percent of its own energy needs, including being able to meet 90 percent of its own energy needs in December — the most since March 1985. EIA expects crude oil output to average 8.46 million barrels per day this year, but increase to 9.24 million barrels per day on average in 2015,

But even higher U.S. oil output has not been enough to satisfy rapidly growing world demand, pushing up gas prices. EIA says that on May 12th, the national average gas price was $3.67, up 7 cents from a year ago. Diesel prices were at $3.95 per gallon last week, up 82 cents from a year ago.
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Monday, May 19, 2014

Northern Nigeria’s oil barons lap luxury as poverty spurs insurgency

The palatial home of Ahmed Mai Deribe, the famed billionaire of Bornu, in northern Nigeria is purported to be the most expensive home ever built in modern Africa.
Fit for a king, the mansion which was completed at a staggering cost of $100 million in 1991 is today a tourist attraction for people brave enough to visit the battleground that its location, Maiduguri, has become.
Northern Nigerian oil barons like Deribe, who is now late, got their start as businessmen in the freewheeling days of military rule in Nigeria when the government, dominated by Northerners, dispensed favours by gifting off state-owned oil fields to friends and cronies.
The beneficiaries in turn controlled a disproportionate amount of the Nigerian economy through their dominance of the country’s natural resources, even as the northern regions progressively got poorer over the years.
The north-east, base of the murderous Islamist group, Boko Haram, is the poorest region in the nation, with 69.1 percent and 76.3 percent absolute and relative poverty levels, respectively, according to the National Bureau of Statistics (NBS) Poverty Profile Report.
On the other hand, OML 110, with the good yielding OBE field, awarded to Mai Deribe by military dictator Sani Abacha on July 8, 1996 and operated by Cavendish Petroleum, is estimated to have proven oil reserves in excess of 500 million barrels.
Oriental Energy Resources Limited is another of such oil bloc awardees. It is a company owned by Mohammed Indimi who, sources say, is a close friend of former Nigerian military ruler Ibrahim Babangida.
Oriental Energy Resources Limited runs three oil blocs: OML 115, the Okwok field and the Ebok field. OML 115 and Okwok are OML PSC, while Ebok is an OML JV.
Perhaps the most famous northern oil bloc owner is T. Y. Danjuma, a retired general who served as defence minister during former President Olusegun Obasanjo’s stint as civilian ruler.
South Atlantic Petroleum (SAPETRO), owned by Danjuma, was awarded the Oil Prospecting Licence (OPL) 246 in February 1998 by Abacha. SAPETRO divested 45 percent of its contractor rights and obligations to China National Offshore Oil Corporation (CNOOC) for $1.75 billion (N283.5 billion) in 2006, retaining a 5-percent stake.
Another northern oil baron is Sani Bello, chairman of AMNI International Petroleum and Development Company, who hails from Kontagora, Niger State.
AMNI International Petroleum Development Company owns two oil blocs, OML 112 and OML 117, both awarded by Abdulsalami Abubakar who presided over elections that ushered in Nigeria’s current civilian democracy.
The Okoro and Setu fields in OML 112 are operated by Afren Energy, a company in which  a former petroleum minister from northern Nigeria is believed to have substantial interest.
The Okoro and Setu oil fields have about 50 million barrels in reserve and currently produce/export just a little below 20,000 barrels per day.
Express Petroleum and Gas Limited floated by Aminu Dantata are owners of OML 108 awarded by Abacha in 1995, and OPL 227. The firm’s holding which contains up to 2.7 million barrels per day of oil may be valued as high as $22 million, according to research and investment firm CBO Capital.
While these indigenous energy companies are seen by some as a sign of the maturing Nigerian oil and gas industry, which has seen numerous homegrown players emerge in recent times, critics say they are only existing as a result of undue political influence.
“These companies usually lack the technical know-how to operate their oil licences and often have to partner with established international oil majors to extract either crude, gas or condensate,” said one industry source who preferred to remain anonymous. 
The Nigerian government, eager to lessen the country’s dependence on oil and gas, is pushing a marshal plan for the blighted north-east to attract investments and jobs to the area. However, there have been few takers from within the northern oil barons or elsewhere.
Many see the solution to this problem in investment that would create jobs and generate reasonably distributed wealth. “Unless we create more jobs, we won’t eliminate Boko Haram. Even if we do, another such group will come. We have to empower our people,”  said one major investor in the Nigerian economy.

Thursday, May 15, 2014

Ghana losing 5,000 barrels of oil daily

oil n gas
Ghana is losing 5,000 barrels of oil per day as a result of re-injection of gas into the wells.
The Jubilee partners have no option than to choke production by 5,000 barrels of oil per day to make way for successful re-injection of 120 million standard cubic feet of gas every day.

The re-injection has been occasioned by the lack of plant to process the gas.

On April 14, 2014, the FPSO Kwame Nkrumah completed the 100th off-take from the Jubilee fields’; followed closely by the production of the 100 millionth barrel on May 4.

Mr. Charles Darku, General Director (GM), Tullow Oil Company, said that if the gas processing plant was in operation, 70 million standard cubic feet of gas would have been taken care of by the processing plant every day while between 45 million and 50 million cubic feet of gas would be re-injected every day.

He explained that the re-injection of 45 million and 50 million cubic feet of gas is what should be done every day at the Jubilee fields to sustain oil production at optimum level.

However, he said because government policy bans flaring of gas, they had to be re-injecting 120 million standard cubic feet of gas every day, thereby choking production by 5,000 barrels of oil per day.

Consequently, he said Tullow was collaborating with Ghana Gas Company to install a by-pass facility to provide an alternative route to give a limited processed gas to the Volta River Authority (VRA).

Mr. Charles said the FPSO has the capacity to process 30 million standard cubic feet of gas a day and the by-pass facility will carry the gas directly to VRA thermal plants.

He said the imported equipment for the project had already been imported and arrived in the country last Tues-, day, with installations expected to begin this week.

He explained that the by-pass facility is not taking over from the Ghana. Gas Processing Plant, but would serve as a back-up facility when the plant breaks down or shuts down for routine maintenance.

Mr. Darku said the collaboration centres mainly on engineering assistance in terms of quality and installation procedures and did not go into any agreement on financial assistance.

He said the collaboration was necessary to find quick solutions to the problem while government continues to find ways to complete the gas plant.

The GM noted that for now the company is re-injecting gas back to the wells, and assured the public that their engineers are on the ground and are monitoring their operations very critically.

“For now, we are managing the situation well and we are comfortable at the rate at which we are re-injecting and we will continue to do that to avoid damaging our reservoirs,” he said.

Mr. Darku said the company spent $100 million in developing the third gas rejecting ,well last October to augment the existing two wells.

He said though it turned out to take less gas than expected, there is enough space in the other two wells to accommodate the capacity being injected currently.

Answering a question on how long the company would continue to re-inject gas, Mr Darku said the decision is in the domain of the engineers, who are monitoring the issue on daily basis and would offer an advice when they reach their ultimate limit.

“I can assure you that we do not have imminent problem, at hand now. We are currently re-injecting 120 mil-lion standard cubic feet of gas daily and we are comfortable with that, but we also want to urge government and Ghana Gas Company* to facilitate work on the plant to the benefit of all,” he added.

Earlier, there was an investor forum to take stock of the company’s performance in 2013 and strategies for 2014.

The forum was an annual event after the Shareholders’ Annual General Meeting (AGM) in London.

The 2013 AGM took place last week, during which the company declared a dividend of 12.0 pence per share.

Ian Springett, Chief Finance Officer of Tullow, said the company had also recorded a net debt of S1, 909 million as against $989 million in 2012, an increase 93%.

He stated that the company paid the Government of Ghana $300 million last year.

He said $130 million was spent on local suppliers, explaining that over 40% of Tullow Ghana’s contracts under $100,000 were awarded to local businesses, as well as 24% of contracts between $100,000 and $1 mil- ; lion were also awarded to local businesses.

Tuesday, May 13, 2014

Diezani challenges Nigerian oil companies to take over IOC divestments

Diezani Allison-Madueke, Nigeria’s Minister of Petroleum. [Photo:]
The recent spate of asset divestments by IOCs operating in Nigeria is a positive trend, the Petroleum Minister said.
Nigerian operators in the country’s oil and gas industry must brace up to take over asset that multinational oil companies have divested from, the Minister of Petroleum Resources, Diezani Alison-Madueke, has said.
The Minister was speaking at an investment luncheon organized by the Petroleum Technology Association of Nigeria, PETAN, during the recent Offshore Technology Conference in Houston, Texas.
Ms. Alison-Madueke was represented by the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Andrew Yakubu.
She said contrary to the apprehension in some quarters that the recent spate of asset divestments by IOCs operating in Nigeria could create crisis in the oil and gas industry, the trend is actually positive.
The Minister said rather than result in crisis, the divested asset provide opportunity for indigenous oil and gas companies to become active players in the upstream sub-sector of the industry.
She said that with the divestments, indigenous oil and gas companies now have opportunity to acquire the asset being divested as springboard for the development of local capacity.
Speaking on “Assets divestments in the Nigerian Oil and Gas Industry: Opportunities and Challenges”, the minister said, “Let me allay your fears that the spate of divestments would not lead to crisis in the nation’s oil and gas industry.
“Rather the divestment by the majors is changing the onshore corporate landscape and creating material brownfield opportunities for upstream players looking to enter the Nigerian upstream space.”

U.S. energy giants use crude oil loophole to post record petroleum exports

Even as big U.S. oil companies call for an end to a 1970s-era law banning exports of crude, they are exploiting a loophole that last year enabled them to export record amounts of gasoline and other petroleum products.
The loophole allows oil companies to export products that they refine from crude oil, though not the crude itself. With a major surplus of high-quality crude extracted by shale oil wells from Texas to North Dakota — and a declining appetite among American drivers — the little-known provision has resulted in an unprecedented boom in petroleum exports that is drawing down chronic U.S. trade deficits for the first time in decades.
Exports of gasoline, diesel, distillate, propane and other petroleum products soared to a record 4.3 million barrels a day in December, more than twice the 2.1 million barrels a day of petroleum products that the U.S. imported on average last year, according to the Energy Information Administration. The average 3.5 million barrels of petroleum exports a day in 2013 was double the 1.7 million five years ago.
“The U.S. is one of the largest petroleum exporters in the world,” even without lifting the ban on crude exports, said Energy Information Administration chief Adam Sieminski.
He said the U.S. is exporting gasoline primarily to Latin America and diesel to Europe. He expects the U.S. to become a net exporter of natural gas and petroleum by 2017. The U.S. already is exporting a lot of liquids that are produced as byproducts of drilling for natural gas, such as naphtha and condensates, he said.
“It’s a trade opportunity for the U.S.,” he told the Natural Gas Roundtable last week, although the rapid expansion of exports does raise questions about fuel costs for Americans because they will be competing with consumers overseas who generally pay higher prices.
Fuel prices in Europe are significantly higher than in the U.S., so lower-priced U.S. fuel is in demand. Countries in Central America, South America and Africa import gasoline and other refined products from the U.S. because their own refineries cannot meet growing demand for fuel. Mexico imports gasoline from the U.S. while exporting much of its crude oil to U.S. Gulf Coast refineries because they have the technologies and facilities needed to convert heavy crude into consumable products.
Stealth boon
The stealth surge in petroleum exports drove down the U.S. current account deficit to $81 billion — the lowest in 14 years — in the final quarter of 2013. For all of last year, the trade deficit fell to $474.9 billion from $535.7 billion in 2012.
“The declining trade deficit is good news,” and it is largely because of rapidly growing exports of surplus petroleum products in the past five years, said Jerry Jasinowski, former president of the National Association of Manufacturers. “All of a sudden the U.S. energy picture — thanks to refinements in fracking technology — is much more robust than anyone thought possible.”
Because U.S. shale oil must be refined at factories on the Gulf Coast, East Coast or West Coast before it is sent overseas, the refining revival also has contributed in a big way to the rebound in U.S. manufacturing output, exports and jobs since the recession. Investment in oil- and gas-producing facilities has led all investment by U.S. businesses in recent years.
Moreover, the availability of inexpensive oil and natural gas has been an elixir for other U.S. manufacturers and exporters that are heavily dependent on energy, including plastics, chemicals and agriculture. As a result, the energy revival has fed a renaissance in manufacturing. That, in turn, has served to drive up U.S. exports of goods and services by 3 percent in the past year, helping narrow the trade deficit.
“The falling trade deficit is a clear confirmation of our competitive gains in both energy and manufacturing,” said Mr. Jasinowski.
Like Mr. Sieminski, he noted that the energy export boom has only begun. Construction is under way on several export terminals for liquefied natural gas, which the U.S. has the ability to produce in abundance as a result of the shale revolution.
“By 2016, we will probably be exporting more oil and natural gas than we import,” and will have achieved energy independence, he said.
Hitting a wall?
While exports of gasoline have been soaring, analysts say, the trend could be cut short if U.S. refiners reach a limit on how much surplus crude oil they can absorb. Before the premium shale oil boom, U.S. refiners spent billions of dollars retooling their factories to handle heavy crude that they expected to import from the Canadian oil sands, Venezuela, Mexico and other sources. Now, they have too much capacity for such heavy crude and may be nearing the limits of how much light, sweet crude they can handle, some analysts say.
Michael Fitzsimmons, an engineer and energy analyst, said U.S. refiners may be unable to absorb much more surplus premium crude. With U.S. refineries hitting capacity, particularly those in the huge refining complex along the Gulf Coast of Louisiana and Texas, he said, they are in a position to take advantage of the crude producers upstream, forcing drilling companies to heavily discount the price of high-quality crude and enabling the refiners use the low-cost oil to fatten profit margins on their own refined products.
Refiners such as Phillips 66, Valero and Chevron have been profiting at the expense of shale oil drillers such as Continental Resources and Whiting Petroleum, which don’t own refining operations, Mr. Fitzsimmons said.
Mr. Sieminski questioned whether refiners are likely to reach a point where they cannot absorb any more surplus crude oil. He noted that facilities that process light, sweet crude do not have to be as big and complex as the refineries that process heavy crude, and “there’s a lot of construction” right now to build those simpler refineries, called “splitters.”
Mr. Sieminski estimated that U.S. refineries will have added enough splitters by 2016 to process another 800,000 barrels of crude oil a day. The gasoline they produce will go mainly for export.
Calls for crude exports
The refining bonanza has fueled a growing campaign to lift the ban on crude exports, which was enacted during the 1970s oil crisis. Mr. Sieminski said his agency has received many requests from Congress for studies on possible effects of crude oil exports, including whether such exports would result in higher fuel prices for Americans.
Squeezed by declining prices for Midwestern crude, major oil companies such as ConocoPhillips and Exxon Mobil have been arguing to lift the export ban so they can earn higher prices overseas. ConocoPhillips CEO Ryan Lance noted last month that Mexico and many South American and European countries have the capacity to refine premium crude and could serve as outlets to ease restraints at U.S. factories.
Sen. Lisa Murkowski, Alaska Republican, has taken the lead in advocating an end to the ban in Congress. Short of lifting the ban, she said, President Obama could use his executive authority to create exceptions to the ban if he determines it is in the national interest. For years, the U.S. has exported crude oil from Alaska to Japan, for example, under a presidential exemption from the export ban.
The Senate Energy and Natural Resources Committee held a hearing on the issue of crude oil exports in January, and Ms. Murkowski and Chairwoman Mary L. Landrieu, Louisiana Democrat, asked the Energy Information Administration last month to study the effects of lifting the ban.
“While we are aware that the EIA has limited resources and numerous reporting requirements to the Congress, we would like to convey the interest of our committee in the issue of crude oil exports, which are largely banned by statute,” the lawmakers wrote.
Mr. Fitzsimmons said he doesn’t expect the government to allow the export of crude oil, which remains a politically fraught topic. But even the idea that Mr. Obama could approve exemptions from the export ban is discouraging refiners from tooling up to handle more premium crude, he said, increasing the pressure on shale oil companies and their prices for crude.
He expects the refining boom to continue at the expense of the shale oil revolutionaries who made the export boom possible. “Shale oil producers will be victims of their own success,” he said.

Monday, May 12, 2014

Blast on oil refinery pipeline, output not disrupted

An explosion on a pipeline linking Ghana’s 45,000 barrel-per-day Tema Oil Refinery in an industrial hub near the capital Accra to a nearby port has been reported. The 5 km (3 mile) stretch of pipeline was transporting naphtha, primarily used as a feedstock for producing gasoline, when it began to leak around midday. Passersby had begun collecting the highly flammable liquid, when a sudden fire broke out.
The fire sent a column of dense black smoke billowing hundreds of metres into the sky above Tema, around 20 km (12 miles) east of Accra.
The fire was brought under control in around three hours and output from the refinery would not be disrupted.
The fire also damaged part of Cocoa Processing Company’s nearby factory forcing it to shut down. The facility has capacity to process 64,500 tonnes of cocoa beans annually. 
The refinery has been hobbled by repeated shutdowns over the last few years, but was close to signing a joint venture agreement with PetroSaudi International. The refinery’s managing director was in London at the time of the accident as part of a delegation meeting with PetroSaudi to conclude the deal. 

Thursday, May 8, 2014

Techno Oil Wins Lagos Chamber of Commerce Award

Techno Oil
Nigerian downstream firm, Techno Oil Ltd., has been awarded the Lagos Chamber of Commerce and Industry’s (LCCI) 2014 Industry Award for the “most innovative and impactful company in the downstream.” This is the first year for the LCCI awards.
Speaking at a ceremony, the president of the LCCI, Alhaji Remi Bello, said Techno Oil was among other companies selected after a grueling elimination process by a jury headed by the vice chancellor of Pan African University, Lagos, Prof. Juan Elegido with other distinguished men and women.
Bello said Techno Oil’s investment in technologically advanced assets that have help it achieve a daily distribution capacity of 10 million liters of petroleum products through its 45,000 metric ton fuel terminal facility and other retail outlets across the country.
Techno is at present promoting the use of cooking gas across Lagos and other parts of Nigeria and has had groundbreaking success in popularizing the use of LPG.
Speaking on behalf of Techno, Nkechi Obi executive vice-chairman of the company said that the company was humbled by the recognition of its modest contribution to the nation’s growth. “All our investments have aided increased National Gross Domestic Product (GDP) and given meaning to the whole essence of the Local Content Act,” she said.

Wednesday, May 7, 2014

US to build oil reserve in northeast region

The US Department of Energy plans to build an oil storage reserve in the New York Harbour area in preparation for future emergencies.

Part of the government's response to the widespread damage caused by Hurricane Sandy in 2012, the facility will hold 1 million barrels of petroleum and be built at an estimated cost of $215 million (€154.3 million).

Should a similar event occur again, the new reserve will be utilised if regular supplies are disrupted.

According to reports, the reserve will be the first of several that will be constructed around the US to plan ahead for future extreme weather events.

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