Tuesday, November 25, 2014
Small quake shakes Dallas area, stirring fracking critics
By Jim Forsyth
(Reuters) - A light earthquake shook the Dallas-Ft. Worth area of North Texas on Saturday night, leaving no known damage or casualties but stirring concern about the potential of the area's oil and gas fracking industry to generate seismic activity.
The magnitude 3.3 earthquake struck about 9:15 p.m. Central time on Saturday, said Dale Grant, an geophysicist with the U.S. Geological Survey.
The epicenter was near the border of the cities of Dallas and Irving, near the site of the former Texas Stadium, where the Dallas Cowboys football team played for nearly 40 years.
Comments on Twitter from the Dallas Ft. Worth area indicate that the quake was felt across the region.
"We have not received any reports of damage, nor are we expecting any," Grant said.
Grant said earthquakes of that size are not uncommon in the Barnett Shale Field of North Texas, near the area hit by Saturday's temblor.
Critics said the quake was a reminder of the threat posed by hydraulic fracturing, or fracking. The technique, pioneered in the Barnett shale formation, is the driving force behind the U.S. energy boom.
"We are guinea pigs in the middle of this fracking experiment. Texas homes are built to withstand wind, not earthquakes," Sharon Wilson, an organizer for Earthworks, an advocacy group, said on Sunday. "Who will pay for the damage to private property?"
Fracking involve the injection a mix of pressurized water, sand and chemicals to unlock hydrocarbons from rock can trigger earthquakes. Many environmental groups say the technique is wasteful, polluting and noisy, but the industry says it is safe.
Even so, the Texas Oil & Gas Association, an industry lobby group, concedes that the issue deserved more careful study.
"The oil and natural gas industry agrees that recent seismic activity warrants robust investigation to determine the precise location, impact and cause or causes of seismic events," Todd Staples, the association's president, said in an email.
The city of Denton, about 40 miles (65 km) north of the Dallas Ft. Worth area, earlier this month banned fracking in the city limits, after activists complained that the process leads to earthquakes.
(Reporting by Jim Forsyth in San Antonio, Texas; Writing By Frank McGurty; Editing by Marguerita Choy)
Saudi sights set on US shale at crucial OPEC meeting
By Ian Timberlake
Riyadh (AFP) - OPEC's biggest crude producer Saudi Arabia will have its sights set on the upstart US shale oil business at a crucial cartel meeting to debate possible output cuts on Thursday.
A barrel of crude has plunged by about one third in value since June to around $80 in an increasingly competitive market.
Saudi Oil Minister Ali al-Naimi was silent about his government's intentions Monday as he arrived in Vienna ahead of the OPEC gathering.
"Is this the first time we have oversupply?" he was quoted as saying by Dow Jones Newswires when questioned about current supply and demand.
However his Iraqi counterpart Abdel Mahdi arrived in Vienna pushing for action, deeming the steep price drop "not acceptable".
Analysts say the kingdom is strong enough to withstand lower prices.
"Saudi Arabia wants to try and knock out shale oil competitors from the market," said Saudi economist Abdulwahab Abu-Dahesh.
"They have the fiscal strength to remain steadfast for two to three years," he told AFP.
Oil prices have collapsed to four-year lows on factors including dampening demand in a sluggish world economy, a sharp rise in output from shale oil and other unconventional sources, and a strong dollar.
- Oil prices fall further -
Global oil prices fell Monday amid skepticism that OPEC would move aggressively to lift prices.
US benchmark West Texas Intermediate crude for January delivery dipped 73 cents to $75.78 a barrel on the New York Mercantile Exchange.
Meanwhile European Brent oil for January dropped 68 cents to $79.68 a barrel in London.
Although Saudi Arabia and its Gulf neighbours the United Arab Emirates and Kuwait could bear the burden of lower production, "I don't think they will cut because they will lose their market share," said Fahad Alturki, chief economist and head of research at Jadwa Investment in the Saudi capital.
Figures from the US Energy Information Administration showed Saudi exports to the US dropped by almost 30 percent from 1.25 million barrels per day in July to below 900,000 bpd in August, although it remains the second largest US supplier after Canada.
The kingdom then cut its prices for crude sold to the US market, sending global prices plummeting in early November by almost $2.
- Defending US market share -
Analysts saw the Saudi move as an effort to hold onto North American market share against cheaper oil from US shale fields.
Saudi Arabia also raised prices for its oil sold to Asia and other areas but was apparently "concentrating more on defending its market share in the US", Commerzbank analysts said.
The kingdom exports two-thirds of its crude to Asia but this year has seen its market share fall in China and India, said analysts from Platts, a global energy information provider.
OPEC pumped 30.6 million bpd last month, above its 30 million bpd target, according to the International Energy Agency which advises member countries on energy policy.
Of that total, Saudi Arabia produced around 9.6 million bpd in October, according to data cited by OPEC.
Some analysts expect OPEC's 12 members to retain the 30 million bpd ceiling in Vienna.
- Saudi 'is happy' -
"I think the only beneficiaries of an oil cut would be the shale oil producers who are now losing money as the prices are becoming lower than their marginal cost," Alturki said.
Technological innovations have unlocked shale resources in North America and raised daily US oil output by more than 40 percent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil.
Alturki said that as prices fall into the $70 range "we think the basic survival of the shale oil producer will be a question".
He said the kingdom doesn't need to make major production cuts because continuing lower prices will push shale producers out of the market, reduce excess supply and raise prices.
"So I think Saudi Arabia is happy with such a dynamic," said Alturki.
British-based analysts at Capital Economics said Saudi Arabia is "in a much stronger position" economically than many other OPEC members, and is likely to resist pressure to lower its output.
"Over the longer-term, Saudi Arabia may see a period of lower oil prices as working in its favour," boosting oil demand, they said.
"In addition, it may cause problems for the shale industry in the US and the Saudis are probably content seeing the less-friendly oil producers in the Middle East, notably Iran, coming under pressure," the analysts said in a briefing paper.
Monday, November 24, 2014
Gas Prices Slide to 4-Year Low as Holiday Travel Looms
By Caroline Humer
The average price of a gallon of gasoline in the United States dropped 10 cents in the past two weeks, hitting a four-year low, according to the latest Lundberg survey released Sunday.
Gasoline prices fell to $2.84 a gallon of regular-grade gasoline, the lowest level since November 2010, said the survey conducted Friday.
The decline in price was driven by lower crude oil prices, said Trilby Lundberg, publisher of the survey.
"Circumstances continue to favor low oil prices," Lundberg said, adding the oil supply remained very abundant and that the stronger dollar helped. "For months now it has been crude oil leading the price down."
The gasoline price is down about 41 cents a gallon from a year ago and has dropped 88 cents from a 2014 peak of $3.72 in May.
The highest price within the survey area within 48 U.S. states was recorded in San Francisco at $3.14 a gallon, with the lowest in Albuquerque, New Mexico, at $2.47 a gallon.
The average price of a gallon of gasoline in the United States dropped 10 cents in the past two weeks, hitting a four-year low, according to the latest Lundberg survey released Sunday.
Gasoline prices fell to $2.84 a gallon of regular-grade gasoline, the lowest level since November 2010, said the survey conducted Friday.
The decline in price was driven by lower crude oil prices, said Trilby Lundberg, publisher of the survey.
"Circumstances continue to favor low oil prices," Lundberg said, adding the oil supply remained very abundant and that the stronger dollar helped. "For months now it has been crude oil leading the price down."
The gasoline price is down about 41 cents a gallon from a year ago and has dropped 88 cents from a 2014 peak of $3.72 in May.
The highest price within the survey area within 48 U.S. states was recorded in San Francisco at $3.14 a gallon, with the lowest in Albuquerque, New Mexico, at $2.47 a gallon.
Friday, November 21, 2014
Gulf of Guinea- no room for complacency
Unconfirmed reports of a pirate attack off the Nigerian coast recently show the area is still volatile and there must be no room for complacency, said maritime security company MAST.
Gerry Northwood OBE, MAST COO, said: “Complacency costs sailors lives. Professional security advice should be sought before entering the region, ensuring that both physical and medical security risks are addressed.”
The advice follows recent reports from of a pirate attack 62 miles south off the Nigerian coast, involving the Malta-flagged ‘Basat’ with 14 Turkish crew, where two crew members were allegedly kidnapped.
Unofficial reports also show an attack on another Malta-flagged tanker about 32 miles Southeast of Kwa Ibo and a third incident as pirates apparently then moved onto attack and board a Liberia-flagged tanker. which went into lockdown.
Gerry Northwood added: “The Gulf of Guinea (GoG) is a complex region. Several states have jurisdiction along the GoG coast but have limited resources to police their territorial waters and economic zones. In the case of Nigeria, jurisdiction varies across their military districts, resulting in porous borders that facilitate criminality.”
Daniel Fearon, MAST’s operations manager who has extensive experience in GoG, said: “Masters and crews need to be vigilant and good lookout must be maintained at all times. CSOs need to make sure that thorough mission planning is conducted as this will allow them to ensure that the Master and crew are prepared.”
He added: “Every vessel transiting through the GoG should have BMP 4 measures in place, a citadel and crew well drilled. Communications security measures should also be in place to ensure that the criminals have only a minimal time window to react.”
Gerry Northwood added: “The Gulf of Guinea (GoG) is a complex region. Several states have jurisdiction along the GoG coast but have limited resources to police their territorial waters and economic zones. In the case of Nigeria, jurisdiction varies across their military districts, resulting in porous borders that facilitate criminality.”
Daniel Fearon, MAST’s operations manager who has extensive experience in GoG, said: “Masters and crews need to be vigilant and good lookout must be maintained at all times. CSOs need to make sure that thorough mission planning is conducted as this will allow them to ensure that the Master and crew are prepared.”
He added: “Every vessel transiting through the GoG should have BMP 4 measures in place, a citadel and crew well drilled. Communications security measures should also be in place to ensure that the criminals have only a minimal time window to react.”
VLCCs on a roll ahead of OPEC meeting
VLCC owners have had a good run this year, with average spot earnings on the benchmark trade from the Middle East to Japan at $24,500/day (mid-November), the highest level since 2010.
A number of factors have supported stronger VLCC returns, Gibson Research said in a report.
For example, Middle East OPEC crude production has averaged record levels since the beginning of the year. At the same time, there have been gains in the long haul trades from South America/Caribbean and West Africa to the East.
In addition, at times, VLCCs have been helped by Suezmax volatility and finally, while there have been positive demand developments, the fleet has remained virtually flat, Gibson said.
Owners were bullish for the remainder of 2014, as rates tended to firm in the run up to the holiday period on the back of typical winter related delays/disruptions and the market ‘psychology’ to fix ahead of the festive period.
Next year, there are more reasons for VLCC owners’ to be optimistic. New VLCC deliveries are anticipated to reach the lowest level since 2006, with just 20 units scheduled to enter service.
We should also continue to see further increases in the long haul trade from the Atlantic Basin to the Asia/Pacific region on the back of continued growth in US crude production and rebounding Libyan output. This will free up more Latin American and West African barrels for shipments further afield, Gibson said.
However, there are clouds gathering on the horizon. Two refineries in the Middle East, with a combined capacity of 0.8 mill barrels per day, are expected to reach full-scale operations in 2015.
Their impact on VLCC demand will be negative, as these refineries will draw a significant amount of regional supply away from international crude exports out of the MEG.
A lot will also depend on whether OPEC decides to maintain, or to cut its crude production at its next meeting at the end of this month. There is a great deal to consider - slowing growth in global oil demand, booming US crude oil production, OPEC’s market share, recovering Libyan output, a growing surplus of crude and falling oil prices, Gibson said.
If OPEC decides in favour of output cuts, these are likely to come from the Middle East, considering the budget restraints of African and Latin American producers. If that is the case, then this will push crude tanker demand from the MEG to even lower levels.
However, if OPEC decides against cutting production in order to protect its market share, this could be positive news for owners in terms of tanker demand.
In addition, unless we see stronger than expected growth in oil consumption, OPEC’s decision to maintain crude production at similar levels to those seen earlier this year, could potentially translate into a much bigger surplus of crude oil in the market.
This crude will have to be stored somewhere. From our point of view, the big question is whether it could be stored in tankers, Gibson concluded.
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