Shale Pioneer Billionaire Harold Hamm Loses $12 Billion

http://finance.yahoo.com/video/shale-pioneer-billionaire-harold-hamm-141654579.html


(Bloomberg) -- Billionaire wildcatter Harold Hamm, a founding father of the U.S. shale boom whose personal fortune has fallen by more than half in the past three months, said U.S. drilling will slow as producers cut back amid falling oil prices. Betty Liu reports on “Big Number” on “In The Loop.” (Source: Bloomberg)

What US should do to fight this 'oil war': Insana

http://finance.yahoo.com/news/us-fight-oil-war-insana-183525723.html

Saudi Arabia, and its fellow members of OPEC, may have just launched an oil war. At the conclusion of its December conference, held in Vienna on Thanksgiving Day, OPEC, led by Saudi Arabia, decided not to cut oil production to halt the better than 30-percent drop in the price of crude oil this year.

For American consumers of energy products, that may very well be the best news of 2014. But the Saudis don't appear to be letting oil prices drop out of the goodness of their hearts. Increasingly, energy experts are saying that the Saudis are using a menacing little maneuver to manipulate the price of crude back up by punishing companies - and countries - mainly the U.S. and its energy industry, by driving prices so low that the recent increases in domestic oil production will be scaled back dramatically as fracking becomes a money-losing endeavor for both marginal and major oil producers in the U.S. Read More Harold Hamm loses $10 billion from oil shock Unlike Russia, or other OPEC members, Saudi Arabia is said to have enough spare change that it can fund its government for several years to come, and, thus, can suffer plunging prices better than other producers. It appears that Saudi Arabia is ripping out a play from its 1986 strategy book when it flooded the energy market with crude oil in an effort to punish cartel members who were not abiding by their agreed-upon quotas and as a result, grabbing market share from Saudi Arabia.

Back in the 1980s, the Saudis were the so-called "swing producers" of OPEC, raising and lowering their output to maintain stable to higher prices on the world oil market. That, of course, came after the world suffered two oil shocks, one in 1973, as the result of Arab oil embargo, and again in 1979, during the Iranian Revolution. During that period, the price of crude gushed from about $2 a barrel to an all-time high of $35.

As higher prices begat more production, OPEC, and major U.S. oil companies, were enjoying record profits, while cartel members exceeded their output limits to bring in ever more revenue. By 1986, the Saudis had had enough and drove oil to $10 a barrel and brought other oil producing nations to heel. Read More Commodities: The selloff may carry on into 2015 The U.S. "oil patch" that, in those days, included almost all of Oklahoma and Texas, and large swaths of California, buckled under the weight of the crash in crude oil prices. Marginal wells were capped, not to be resurrected again. Enormous amounts of oil production capacity was shuttered in the U.S., forcing many oil companies to go dry and fall into bankruptcy.

It would appear that the Saudis are at it again, trying to firmly control the production, and sale, of crude oil around the world. This renewed threat from OPEC, and more specifically Saudi Arabia, demands the energy policy equivalent of a military response!!! While my suggestions will no doubt be offensive to environmentalists, progressives, or anyone who finds "big oil" to be an evil industry, the fracking revolution must be protected at all costs, even if it means subsidizing the industry with tax credits that allow the drilling to go on at below-market prices. Read More Falling oil isn't the end of the world!: Kudlow While the cost of fracking oil and gas can vary from $50 a barrel to $80 a barrel, the Saudis are intent on looking for the prices that will force U.S. energy production to collapse. While we wait for alternative forms of energy, from wind to solar, to Lockheed Martin's plans for distributed cold fusion power plants across the nation, the battle must be joined now. The U.S. has lost too many economic wars over the last 50 years, allowing foreign producers to "dump" cheap goods onto world markets to make U.S. energy companies, textile-makers and auto-manufacturers suffer near-death experiences. The U.S. is on the edge of energy freedom ... freedom from nations who use oil money to finance aggression, like Russia ... to finance terror, like many in the Middle East, most recently the Islamic State and freedom from indebtedness that may one day become quite burdensome, if not cataclysmic. If this is the war to end all oil wars, the U.S. should use every means at its disposal to win.Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. He also editor of "Insana's Market Intellgence," available at Marketfy.com. He delivers a daily podcast, "Insana Insights," and a long-form weekly version, both available on iTunes and at roninsana.com. Follow him on Twitter @rinsana.Disclosure: Ron Insana doesn't trade any of the commodities mentioned in this article.

Mining the Largest Shale Gas Reserve in the Northern Hemisphere: What th...

Ghana signs a massive exploration of oil and gas deal

http://www.spyghana.com/ghana-signs-a-massive-exploration-of-oil-and-gas-deal/

Government has officially signed an exploration and production agreement with Eni Exploration for the commencement of work on the US$6 billion Sankofa Oil and Gas Fields located Offshore Cape Three Points (OCTP).

The next stage of the project will be the approval of the Plan of Development (POD) after which Parliament would be called upon to ratify it to complete the process. These processes are expected to fully end close of year 2014.

The official endorsement of the agreement by the Government of Ghana, Eni Explorations and Vitol group is to pave way for the massive exploration and development of the field’s oil and gas reserves which is estimated  to produce approximately, 1.3TCF (Trillion Cubic Feet) in addition to 50, 000 barrels of oil per day.

With the agreement, production is expected to begin by 2017 to augment Ghana’s recent production capacity.

Ghana’s negotiation team was led by Minister of Energy and Petroleum, Emmanuel Armah Kofi-Buah and Minister of Finance, Seth Tekper. They both expressed relief at the completion of the negotiation which according to sources have been going on for over a year.

Operators of the OCTP, Eni Explorations say they will deliver the project on time to enable Ghana come out of its current Energy woes.

The project has a lifespan of 20 years to produce both oil and gas for domestic and commercial purposes to help Ghana address the critical constraints of power and cheaper fuels.

The commencement of the project will require additional construction of Floating Production Offshore Storage (FPSO) vessel to store the estimated oil capacity to be produced and the 50 million cubic feet from Tweneboah Enyera Ntonne (TEN) field.

Eni Exploration and Vitol will focus on domestic gas markets where they are expected to play vital roles in production.

There is an ongoing tender process to select what the government terms “the best” contractor to build the third FPSO and for it to be delivered in the last quarter of 2016 for actual oil and gas production will start in early 2017.

Ghana currently has one FPSO, named after the country’s first president, Dr Kwame Nkrumah. It was delivered to Ghana in 2010 and is currently producing an average of 120,000 barrels of crude oil daily.

A second FPSO, named FPSO J.E.A. Mills, which is currently under construction in Singapore, is 30 per cent complete and would be delivered in the last quarter of 2015. Commercial production of oil would commence on it before the end of 2016.

Large quantities of oil and gas have been discovered offshore Cape Three Points in the Western Region by Eni and Vitol, both oil companies.

The oilfields, christened Sankofa, have large deposits of gas which are expected to power the country’s thermal plants to produce more electricity to bring to an end the frequent power outages being experienced in the country.

More liquefied petroleum gas (LPG) and other petroleum products are expected to come on stream when the FPSO begins production in 2017.

A little over $500 million was spent to import crude oil over an eight-month period to power thermal plants when gas supply from Nigeria to Ghana got disrupted.

Thus, the processing of more gas on the third FPSO would save the government millions of dollars in crude oil imports.

 Experts say the FPSO would produce the largest amount of gas in the history of Ghana,” explaining further that aside from the production of more than 50,000 barrels a day, the FPSO would produce more than 150 million cubic feet of gas daily.”

Eni and Vitol are the operators of the Sankofa fields, while the Ghana National Petroleum Corporation (GNPC) is partnering them on behalf of the the country.

Source: Ebenezer Sabuteyhttp

Ghana: Petrosaudi to Run TOR

http://allafrica.com/stories/201411281524.html

By Stephen Odoi-Larbi

The Government has announced that it is in touch with PetroSaudi, seeking for a joint venture arrangement to revive the ailing Tema Oil Refinery (TOR).

Deputy Minister for Energy and Petroleum, John Jinapor, who announced this on the floor of Parliament yesterday, said the agreement when reached would see the Arabian firm plug the inefficiencies that has engulfed TOR.

"Tema Oil Refinery is not working at full capacity due to its operational inefficiency and the inability to establish letter of credit for purchase of crude oil.

"That is the reason why government has been facilitating the Joint Venture arrangement with Petro Saudi to fix the inefficiencies and ensure consistent supply of crude oil", he noted.

Mr. Jinapor had appeared in Parliament to represent the substantive Minister at the instance of the Speaker, Edward Doe Adjaho, to answer to a question posed by the Member of Parliament (MP) for Talensi, Robert Nachinab Doameng Mosore, on "whether Tema Oil Refinery is operating at full or maximum capacity".

TOR has for some time now not been operating due to the shutdown of its Crude Distillation Unit (CDU). The refinery, as announced by the deputy minister, has failed to obtaine letters of credit (LC) from its bankers to purchase crude oil for production. Junior staff of the refinery, in July, 2014, called on President Mahama to help save the company which was running on daily losses of GHc350,000 due to the shutdown of the CDU.

Power outages

Mr. Jinapor also took turn to address a question asked by the MP for Afigya Kwabre South, William Owuraku Aidoo on "what is accounting for the current power outages in the country and exactly when would the outages end".

The deputy Minister attributed the power outages to erratic gas supply from the West Africa Gas Pipeline Project, shut down of plants for planned and unplanned maintenance and low water inflow into the Bui and Akosombo reservoirs.

He said the Ministry was working closely with the thermal power generators to ensure that "these plants return into service as soon as possible to reduce the deficit in power generation".

"In addition, it is expected that following the completion of the TICO Expansion Project (110 MW) by the first quarter of 2015, the deficit in power generation will be reduced to the minimum or even eliminated.

To avoid the recurrence of the power outages, Mr. Jinapor said the Ministry was in the process of bringing into the country a power-ship of 450MW capacity which would be in operation by the second quarter of 2015.

On the issue of erratic gas supply, he said the government was in talks with Nigeria to ensure the flow of more gas to power the thermal plants. Besides that, he said gas has started flowing to the Aboadze Thermal Plant on commissioning basis.

Millions of Barrels of Oil Floating in the Ocean

http://www.wallstreetdaily.com/2014/11/14/oil-tanker-floating/

It seems the Bermuda Triangle is on the move – large ships are disappearing all over the world!

At least that is what it seems like lately… with massive oil tankers “going dark” and hiding out in international waters.

In fact, the world’s largest oil tanker – the TI Europe, capable of holding 3.2 million barrels of crude oil – is believed to be floating offshore of Singapore brimming with oil.

So why is all this black gold just sitting and not being sold?

Well the unusual oil market conditions of the last few months have revamped the use of a technique not seen since 2010.

Companies are storing vast amounts of oil on tankers because they are waiting for the perfect time to sell – when prices are at their highest.

Riding the Contango Wave

At the height of this practice in 2009, there was nearly 100 million barrels of oil floating in oil tankers around the world.

The reason that this trade has come back to life can be summed up in one word: contango – when prices rise for a particular commodity monthly.

The combination of the U.S. shale oil boom and Saudi Arabia’s pricing tactics are pushing oil prices down. So the smart companies are poising their crude in oil tankers and waiting to jump on the higher oil prices in the months to come.

Right now, approximately 50 million barrels of crude oil are being stored in oil tankers offshore of South Africa and Asia.

The direct beneficiaries of this practice are the oil tanker companies.

Wall Street seems to be hating anything energy related at the moment and seems to believe we’ll see an exact replay of what happened in 2008-2010, when oil demand dropped sharply. Thus the stocks of many oil tanker companies have tanked.

I don’t quiet agree with Wall Street since demand is still climbing (though barely). For now, oil remains more expensive in the later futures months – meaning the oil tanker trade will grow, benefitting tanker firms.

That means this is perfect opportunity for value investors to pounce.

All Aboard the Tanker

Rising demand and stagnant oil tanker capacity is a recipe for higher tanker rates and profits for the companies involved in the industry.

According to The Wall Street Journal, day rates for oil tankers are on the rise, with rates soaring 27% in the past month alone!

On average, tanker rates in the third quarter of 2014 were the highest for any third quarter since 2008.

There are a number of oil tanker stocks from which to choose. But two solid choices are Nordic American Tanker (NAT) and Tsakos Energy Navigation (TNP).

NAT owns a fleet of 22 Suezmax vessels, and right now it’s selling for only 75% of the book value and offers a yield of about 7%. That means investors can collect the dividend while Wall Street is still waking up to the higher profits coming in the door.

TNP operates 33 vessels in the oil trade. This stock is trading for about 50% of the book value and has a decent yield of about 3%. The management at TNP summed up the current conditions for the sector nicely, calling the drop in the oil price a “double blessing” for the company.

Not only has it made the cost of doing business (fuel for the tankers) cheaper, but the cheapness of oil has increased the need to store oil in tankers, the contango trade. In fact, TNP management says that spot rates have doubled over the past year for the ships it owns.

Those kinds of favorable tailwinds are just what the oil shipping industry needs.

And “the chase” continues,

Tim Maverick

Plunging oil takes ruble with it

http://money.cnn.com/2014/12/01/investing/oil-prices-ruble/


By Virginia Harrison   @vharrisoncnn


LONDON (CNNMoney)

Oil prices plunged to their lowest level in five years Monday, piling pressure on Russia and other producers and raising the risk of deflation in Europe.

Crude oil collapsed below $65 per barrel as new data confirmed a slowdown in manufacturing activity in Europe and China, and as OPEC's decision not to cut output continued to roil markets.

Russia depends heavily on oil revenue, and stands to lose billions from the market rout. The ruble plumbed new depths, tumbling more than 4% to hit a fresh low against the dollar.

Related: Russia's $140 billion budget blackhole

Slower global growth is one reason for the oil supply glut. The U.S. energy boom is another.

Europe's manufacturing industry stalled in November, according to data from Markit. The eurozone's top three economies -- Germany, France and Italy -- saw factory activity fall.

Prices in the eurozone rose by just 0.3% in November. Cheaper oil, and the gloomy economic outlook, will renew concerns that Europe is flirting with deflation and ramp up pressure on the European Central Bank to do more to get prices rising again.

The ECB has said that it may buy a broader range of assets to revive the economy, but the central bank is split over whether to mimic the Federal Reserve and buy government bonds.

Chinese manufacturing numbers also disappointed. Authorities in China delivered a surprise interest rate cut last week in a bid to spur growth as the world's second largest economy cools.

U.S.-traded WTI dropped 1% to $65.61 per barrel in electronic trade Monday. U.S. oil stocks were under pressure again after taking a beating Friday.

Related: OPEC's message to U.S. shale: Drop dead

The failure by OPEC to cut production at last week's meeting deflated prices in an already weak market --- oil prices have plunged more than 34% this year -- and could threaten the U.S. shale boom.