VLCCs back in demand

http://www.tankeroperator.com/news/todisplaynews.asp?NewsID=3423

There is presently greater oil demand than at any time since the economic crash in the autumn of 2008 pushing up rates for large tankers, said a recent tanker market report.

Oil prices have been rising with the concerns of potential shortages, due to the threatened loss of Iranian crude, as well as production shortfalls from less influential producers, which has added to the rush to secure supplies, said Gibson Research in its latest weekly report.

Among the OPEC producers who have stepped up production are Angola, Iraq and Libya, replacing lost barrels and perhaps more importantly adding tonne/miles.

However, in any oil crisis, it is Saudi Arabia the world looks towards to fill any shortfall and in the hope of instigating correction to oil prices. Saudi Arabia has had a long history of increasing production and supporting the oil markets in the event of a crisis.

“Today, we are experiencing more cargo loading, albeit in a different scenario to the booming economic times prior to the crash in 2008. At that time burgeoning oil demand pushed prices up to record levels - now the threat to supply and the necessity to ensure stocks remain high appears to be paramount,” the report said.

Crude oil stocks in the US are currently at their highest levels since August last year. At the same time, European, the Middle East and Asia inventories are also at high levels.

"Given the situation, it is not surprising that we are currently witnessing a surge in VLCC spot earnings, at the same time as utilisation of this fleet is up over the first quarter of this year," Gibson said.

Several factors appear to be combining to provide owners with a very welcome respite from the dire market of recent times.

For example, Saudi Aramco’s chartering arm Vela recently entered the spot market taking a number of VLCCs. China also came back into the spot market, further reducing the pool of available tonnage.

With a reduction of available VLCC tonnage and increasing demand, fundamentals have led to a tightening of tonnage in the East.

Less than six months ago, earnings on the benchmark MEG-Japan (TD3) route were at negative values. Slow steaming was universally adopted by owners as bunker costs continue to climb with the oil price.

Also, the increasing pressure on Iran has added tonne/miles as more countries move towards the tougher sanctions against Tehran.

“We are currently witnessing the highest earnings for the VLCC sector since the crisis in Libya last year. There is every chance that this recovery could be sustained, or go even higher, if the uncertainty surrounding Iran remains,” Gibson concluded.

Magellan plans major expansion

http://tankstoragemag.com/industry_news.php?item_id=4774

Magellan Midstream Partners says it is investing $1 billion (€750 million) into new facilities with between 60-75% of them relating to crude oil.

Previously the company announced plans worth $650 million but it also is considering further developments worth $500 million.

The company mostly focuses on storing and transporting refined products, making 90% of its operating profits from this type of petrochemical.

Magellan is connecting the booming oil production regions of the Permian Basin and the Eagle Ford Shale in the US to the Texas Gulf Coast, as it has storage facilities in Houston and Corpus Christi.

Because a large amount of oil is expected to come from these regions in the coming years, Magellan plans to build further infrastructure to accommodate these petrochemicals.

Tesoro buys terminal in California

http://tankstoragemag.com/industry_news.php?item_id=4777

Tesoro Corporation and Tesoro Logistics have bought the Martinez Crude Oil Marine Terminal in Martinez, California, for $75 million (€57 million).

The terminal is situated on the Sacramento River near Tesoro's Martinez refinery and features a single berth dock, tank storage for crude oil with a capacity of 425,000 barrels, and pipelines. The facility has a throughput of 145,000 barrels a day.

Tesoro paid $67.5 million for the facility in cash and used its equity valued at more than $7.5 million for the rest of the payment.

Tesoro and the partnership have signed a 10 year terminalling agreement with a minimum throughput commitment. The company estimates that the terminal will make it $15 million in incremental revenue.

‘The contribution of the Martinez Crude Oil Marine Terminal marks Tesoro's first drop down to the partnership and demonstrates Tesoro's commitment to capturing the full value of our logistics assets and helping the partnership expand its portfolio,’ says Greg Goff, Tesoro Corporation's president and Tesoro Logistics' chairman. ‘We are committed to growing the partnership's distributions and expect this transaction to be immediately accretive.’

Kinder Morgan opens ethanol pipeline

http://tankstoragemag.com/industry_news.php?item_id=4775

Energy company Kinder Morgan has completed the build on its 16” ethanol pipeline between its unit train facility in Linden, New Jersey in the US, and its New York Harbor terminal in Carteret, New Jersey.
The pipeline has a full automation and a state-of-the-art leak detection system.

The terminal in Linden handles about 36,000 barrels of ethanol a day, storing 550,000 barrels through the Citgo Petroleum’s Tremley Point terminal, which has a truck rack, barge and ship dock.

The project is part of a $60 million (€46 million) expansion at Carteret, which has increased its storage by 1 million barrels to just under 8 million barrels.

The new pipeline will have access to four barge docks and two ship docks at Carteret and also allows the storage capacity at the Linden terminal to now be expanded. Ethanol customers will also be able to access a unit train receiving system.

At Carteret, Kinder Morgan estimates a further 195,000 barrels will be used for ethanol services.

The Most Oil-Rich States

http://247wallst.com/2012/04/03/ten-most-oil-rich-states/2/

10. Montana
Proved reserves of crude oil: 343 million barrels
Oil refineries: 4 (tied for 10th most)
Unemployment rate, Jan. 2012: 6.5% (tied for 13th lowest)
Share of jobs supported by oil and gas: 6.4% (11th highest)

Montana’s huge oil reserves have caused the oil industry to become a major in-state jobs provider. As of 2009, the oil and natural gas industry accounted for 6.4% of total employment, including both direct and indirect employment, in the state. Additionally, the labor income — defined as the wages, s

Salaries and benefits, as well as proprietors’ income — made by those working in the industry accounted for 7.7% of the state’s total labor income. This is the eighth-largest share in the country.

Also Read: The Most Popular Cities of the Ultra-Rich

9. Louisiana
Proved reserves of crude oil: 370 million barrels
Oil refineries: 17 (3rd most)
Unemployment rate, Jan. 2012: 6.9% (16th lowest)
Share of jobs supported by oil and gas: 15.1% (2nd highest)

The oil and gas industry appears to have a greater effect on Louisiana’s economy than it has in some states with even more crude oil reserves. For instance, the state has 17 oil refineries, the third most in the country, and the oil and natural gas industry accounts for 15.1% of total employment in the state — the second-largest share in the country. The industry also supports just under 23% of the state’s economy — also among the country’s highest rates.

8. Utah
Proved reserves of crude oil: 398 million barrels
Oil refineries: 5 (tied for seventh most)
Unemployment rate, Jan. 2012: 5.7% (ninth lowest)
Share of jobs supported by oil and gas: 4.9% (15th highest)

In general, Utah has a strong economy. Its unemployment rate is significantly lower than the national average, and from 2005 to 2010, median household income in the state increased by more than 14% — one of the country’s highest rates. The state also sits on top of nearly 400 million barrels of crude oil. The oil and natural gas industry accounts for 7.4% of the state’s economy. While this is only the 14th largest share, it is still quite significant.

7. Wyoming
Proved reserves of crude oil: 583 million barrels
Oil refineries: 6 (tied for fourth most)
Unemployment rate, Jan. 2012: 5.5% (seventh lowest)
Share of jobs supported by oil and gas: 15.8% (the highest)

Wyoming has the second-lowest population density in the country — and lots of oil. As a result, nearly one in six residents work for the natural gas and oil industry, either directly or indirectly. This is the largest share in the country. Just under 20% of labor income is produced in the industry — also the highest rate. Compared to 2005, residents of Wyoming are now making more money on average. Median household income has increased by 15.8%, the second most in the nation.

6. Oklahoma
Proved reserves of crude oil: 622 million barrels
Oil refineries: 6 (tied for fourth most)
Unemployment rate, Jan. 2012: 6.1% (12th lowest)
Share of jobs supported by oil and gas: 14.1% (fourth highest)

Oklahoma has six oil refineries — the fourth most among states — to accommodate its vast reserves of crude oil. The state’s oil and natural gas industry supports nearly 300,000 jobs in the state, or 14.1% of total employment. This is the fourth-largest share in the country. The industry also accounts for 19.3% of the state’s total labor income — the largest share among all states.

5. New Mexico
Proved reserves of crude oil: 700 million barrels
Oil refineries: 3 (tied for 14th most)
Unemployment rate, Jan. 2012: 7.0% (tied for 19th lowest)
Share of jobs supported by oil and gas: 7.5% (seventh highest)

The oil and natural gas industry has a strong presence in New Mexico, which sits atop 700 million barrels of proved reserves of crude oil. The industry accounts for 10.6% of the state’s economy and is responsible for 7.5% of total jobs. From 2004 to 2010, the unemployment rate in the state increased
from 5.8% to 7.9%. While this is a significant increase, it is among the lowest increases in the country for this period.

4. North Dakota
Proved reserves of crude oil: 1,046 million barrels
Oil refineries: 1 (tied for 24th most)
Unemployment rate, Jan. 2012: 3.2% (the lowest)
Share of jobs supported by oil and gas: 7.5% (sixth highest)

North Dakota has one of the strongest economies in the country. The state currently has an unemployment rate of just 3.2% — the lowest among all states, and even lower than its 2004 rate of 3.5%. From 2005 to 2010, median household income in the state increased by 18.6%, the country’s highest rate. The state is currently experiencing an oil boom, with crude production in January jumping by 59% from one year prior. The oil and natural gas industry supports 11.8% of the state’s economy — the sixth-largest share in the country.

3. California
Proved reserves of crude oil: 2,835 million barrels
Oil refineries: 19 (second most)
Unemployment rate, Jan. 2012: 10.9% (tied for second highest)
Share of jobs supported by oil and gas: 4.6% (16th highest)

California is the third-largest state by size, and sits on top of the third-largest amount of oil. As a result, the state is home to 19 refineries — the second most in the country. This oil contributes a significant amount to the economy, supporting 7% of the state’s total gross domestic product in 2009. The industry also supports more than 900,000 jobs, or 4.6% of total state employment. While the share is rather small, the absolute total number is the second largest in the country.

Also Read: Countries That Spend the Most on Health Care

2. Alaska
Proved reserves of crude oil: 3,566 million barrels
Oil refineries: 6 (tied for fourth most)
Unemployment rate, Jan. 2012: 7.2% (22nd lowest)
Share of jobs supported by oil and gas: 10.3% (fifth highest)

Alaska, the nation’s largest state by size, is home to more than three and a half billion barrels of crude oil. The oil and natural gas industry supports 16.9% of the state’s economy. It also accounts for 10.3% of jobs in the state — the fifth-largest share in the country. The industry likely will expand in the near future as more oil is accessed.

1. Texas
Proved reserves of crude oil: 5,006 million barrels
Oil refineries: 23 (the most)
Unemployment rate, Jan. 2012: 7.3% (23rd lowest)
Share of jobs supported by oil and gas: 14.3% (third highest)

Texas is the nation’s largest center for oil, with more than 5 billion barrels of proven reserves. It is also home to 23 refineries, which add to the size of the sector. The oil and natural gas industry supports 24.3% of the state’s total economy, which ties with Wyoming for the nation’s largest share. The industry also is responsible for 14.3% of total employment in the state, both directly and indirectly, which is the third-highest percentage. In numbers, this represents nearly two million jobs — the highest in the country.

-Charles B. Stockdale

Read more: The Most Oil-Rich States - 24/7 Wall St. http://247wallst.com/2012/04/03/ten-most-oil-rich-states/#ixzz1r4sUqQVb

Gold Declines in New York on Concern Physical Buying Is Slowing

http://www.bloomberg.com/news/2012-04-03/gold-may-extend-gain-as-u-s-growth-offsets-weaker-india-demand.html
By Joe Richter and Nicholas Larkin

Gold dropped for the first time in three sessions in New York on concern that physical purchases are declining and as a rise in the dollar reduces the appeal of the metal as an alternative asset.

The All India Gems & Jewellery Trade Federation said that members extended a strike for an 18th day to protest a levy on non-branded gold products. The dollar gained against a basket of currencies before the Federal Open Market Committee releases minutes of its March meeting.

“Physical demand isn’t extremely robust, as a lot of people are waiting to see if they can buy at lower prices,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “The dollar is also firm, so I think we’ll see more downward pressure on gold today.”

Gold futures for June delivery fell 0.2 percent to $1,676.30 an ounce at 10:50 a.m. on the Comex in New York. The metal rose 1.5 percent in the past two sessions. Before today, prices were up 7.2 percent this year.

About 90 percent of jewelry stores across India were shut today, said Bachhraj Bamalwa, the federation’s chairman. Gold imports in March may have dropped to 15 metric tons to 20 tons, from 75 tons to 80 tons a year ago, the Bombay Bullion Association said yesterday. Second-quarter imports may slide to 150 tons, from 250 tons a year earlier, it said.

The Federal Reserve will release minutes of policy makers’ March 13 meeting at 2 p.m. Eastern time. The central bank bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011.

Silver futures for May delivery slid 0.3 percent to $32.995 an ounce, the first decline in four sessions. Before today, silver increased 18 percent this year, the best-performing metal on the Standard & Poor’s Spot GSCI Index of 24 commodities.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Russian oil output stable at 10.36 mln bpd in March

http://www.reuters.com/article/2012/04/02/russia-oil-output-idUSL6E8F20RK20120402

* Output steady as Rosneft's Vankor pumps ahead of plan

* Saudi output contributes to overall OPEC increase

* Daily gas output falls as cold eases (Adds Rosneft field output, background on production incentives, Saudi competition)

MOSCOW, April 2 (Reuters) - Russian oil output stood at 10.36 million barrels per day in March, unchanged from a post-Soviet monthly high in February, Energy Ministry data showed on Monday.

Measured in tonnes, crude production in Russia, the world's top producer, was 43.8 million tonnes last month, the ministry said.

Russia is broadly expected to increase output by 1 percent this year from last year's average of 10.27 million barrels per day if it can control declines at old West Siberian fields and sustain output growth from new fields in more remote provinces.

Rosneft, whose new Arctic field, Vankor, is expected to be a key driver of those modest gains this year, said last week that the field, which is gradually ramping up output to peak production of 500,000 barrels per day next year, was about 18,000 barrels ahead of plan for the first quarter.

A new export duty regime aimed at encouraging crude oil production and exports has yielded modest results, and producers are keen to capture gains in oil prices, which broke $128 per barrel this year, largely due to sanctions against Iran.

Russian producers are capable of marginal production increases to capture high prices, but, unlike Saudi Arabia, its rival for the title of top world oil producer, has little capacity cushion to help ease supply shocks.

The kingdom's oil output edged up to 9.9 million barrels per day last month, contributing to an overall increase in output by the Organisation of the Petroleum Exporting Countries (OPEC) which neutralised a fall in Iranian output.

Daily gas production declined slightly after a bump in production to help meet elevated demand during a cold snap in early February. It totalled 62.19 billion cubic metres in March, or 2.00 billion cubic metres per day.

Russia's daily gas production was 2.07 billion cubic metres in February. (Reporting by Olesya Astakhova and Katya Golubkova; Writing by Melissa Akin; Editing by Erica Billingham)