Tuesday, December 13, 2016

Trump picks ExxonMobil CEO Rex Tillerson to be secretary of state

President-elect Donald Trump has picked as his secretary of state Rex Tillerson, the chief executive of ExxonMobil, setting up a possible confrontation with members of his own party in the Senate, Trump’s transition team announced Tuesday.

Since Tillerson’s name emerged as a candidate for the post, leading Republicans have expressed reservations about his years of work in Russia and the Middle East on behalf of the multinational petroleum company.

GOP advisers have warned that a growing number of Republican senators may be unwilling to vote to confirm Tillerson because of his ties to Russia. While Senate Democrats cannot filibuster Trump’s Cabinet picks, Republicans have only 52 votes in the Senate, leaving them in potential jeopardy if Democrats unite in opposition to Tillerson. It will take at least 50 votes to confirm a nominee, plus Vice President-elect Mile Pence casting a tiebreaking vote.

Yet Trump, after a protracted selection process that saw him also considering 2012 presidential candidate Mitt Romney, has decided to press ahead with Tillerson. Like others in the new Trump Cabinet, the ExxonMobil chief executive lacks any experience in government but will try to apply his experience in the business world to the realm of diplomacy. And he has worked extensively around the globe and built relationships with such leaders as Russian President Vladi­mir Putin.

The Trump team is planning an aggressive public relations campaign to win confirmation for Tillerson and dispel what it sees as a false narrative about his ties to Russia, a person involved in the transition said. 

In a sign of the potential political battles ahead, Sen. Marco Rubio (R-Fla.) expressed “serious concerns” about Tillerson’s nomination, noting that America’s top diplomat must be “free of potential conflicts of interest.” Rubio, however, left open room for compromise, saying he looked forward to “learning more about [Tillerson’s] record and his views.”

At the same time, support flowed in Tuesday for Tillerson from prominent figures such as former Secretary of State Condoleezza Rice and a former defense secretary, Robert Gates. Former vice president Richard B. Cheney also is supportive and may advocate for his confirmation.

In a statement, Trump called Tillerson an “embodiment of the American Dream” and cited the oil executive’s “tenacity, broad experience and deep understanding of geopolitics.” Trump, however, made no mention of the nomination process in the announcement.
Gates was the first person to raise Tillerson as a secretary of state possibility with Trump during a meeting at Trump Tower, the transition official added. Trump did not know much about Tillerson but started chewing over the idea. He invited Tillerson for a meeting and the two global dealmakers hit it off. They recognized similarities in each other, and the more they talked, the more they liked each other, the transition official said. 

“[Tillerson] would bring to the position vast knowledge, experience and success in dealing with dozens of governments and leaders in every corner of the world,” said a statement from Gates, which did not cite any specific countries.

Rice also did not mention Russia or other nations in her statement of support, but appeared to answer potential critics of Tillerson by calling him a “patriot” who would “represent and interests and values of the United States.”

Rice, who has served on the board of Chevron, spoke with Trump about Tillerson by phone Monday as Trump made his final decision.
 
One argument that the defenders of Tillerson — who during his career has also cultivated leaders of countries such as Saudi Arabia, Yemen, and Qatar — will probably make is that he stands firm in business negotiations in Russia and elsewhere. 

“One of the things I know about the Russian government: I’m very predictable. And they know if I say no it means no. And talking about it more isn’t going to change that. No is still going to be no,” Tillerson said in a talk last year at the Texas Tech business school. “Over the years we’ve earned each other’s respect. Then when you say yes, you know we’ll follow through. It means something.”

Weighing whether to lift economic sanctions on Russia will be one of the first things on Tillerson’s plate, given Trump’s desire to smooth relations with the Kremlin. International economic sanctions, imposed after Russia annexed Crimea and gave support to insurgents in Ukraine’s eastern provinces, have fallen heavily on financial institutions and ExxonMobil. 

ExxonMobil, which has a profitable operation on Sakhalin island in eastern Russia, had begun a drilling program in the Arctic’s Kara Sea, where Exxon made a find, and had agreed to explore shale oil areas of West Siberia and deep waters of the Black Sea. If sanctions are lifted, Tillerson told analysts this year, the Black Sea drilling would probably be the first to be restarted. 

While ExxonMobil complained privately to the Obama administration about the sanctions, the company has abided by the law. 

“They understand the situation. We understand the situation,” Tillerson said of the Kremlin when asked at an oil analysts’ meeting this year about whether Exxon would resume work in Russia if sanctions were lifted.

In addition, Tillerson will have to deal with climate issues because the State Department is the lead agency in international climate negotiations. Unlike Trump, Tillerson has said that he believes that climate change is real and has favored a revenue-neutral carbon tax of more than $20 a ton. 

But environmental groups charge that Exxon knew about the harmful effects of fossil fuels as much as 40 years ago and failed to inform investors and the public, possibly in violation of securities laws. The New York and Massachusetts attorneys general and a range of nongovernmental organizations are locked in battle over the charges.

Human rights experts are also unhappy about Tillerson’s nomination, noting that ExxonMobil does business in countries ruled by autocrats or dictators including countries in the Middle East, Equatorial Guinea and Kazakhstan. 

“I don’t think that companies’ role is to play politics,” said Pavel Molchanov, oil analyst at the investment firm Raymond James. “They’re there to invest in resources. Saying that he personally has some special feelings toward Russia just because Exxon has invested there is probably overstating the case.”

But that might not be the way lawmakers see it. 

At least four Republican senators have already publicly expressed their concerns with Tillerson’s Russia ties. Sen. Lindsey O. Graham (S.C.) called the fact that Putin awarded Tillerson the Kremlin’s Order of Friendship in 2013 “unnerving,” while Sen. John McCain (Ariz.) questioned Tillerson’s judgment on CNN on Monday noting, “I don’t see how anybody could be a friend of this old time KGB agent,” referring to Putin.

Established in 1994 by the president at the time, Boris N. Yeltsin, the Order of Friendship has been handed out by Russian leaders to figures as diverse as pianist Van Cliburn, former Cleveland Cavaliers coach David Blatt, and Raymond E. Johnson, founder of the Museum of Russian Art in Minneapolis. 

Rubio also tweeted over the weekend that “being a ‘friend of Vladimir’ is not an attribute I am hoping for from a Secretary of State,” while a spokesman for Sen. James Lankford (Okla.) said he “has a lot of questions about Mr. Tillerson and his ties to Russia.”

Of the four, only Rubio sits on the Senate Foreign Relations Committee, which first must approve Tillerson’s nomination before it can head to the floor. Committee chairman Bob Corker (R-Tenn.), who was in the running to be Trump’s Secretary of State, tweeted over the weekend that Tillerson “is a very impressive individual.”

But Republicans outnumber Democrats by only one on the Senate Foreign Relations Committee, giving Democrats an opportunity to block one of Trump’s most important Cabinet picks if they stay united in voting against Tillerson’s nomination. Democrats would not say if they expect their committee members to hold rank. But if they can, they only need one Republican to vote against Tillerson’s nomination to keep him from proceeding to the Senate floor for a full confirmation vote.

Earlier Monday, Kremlin spokesman Dmitry Peskov acknowledged Tillerson’s relationship with Putin and his friendly attitude toward Russia, but played down the idea that it would influence policy.
“As to the allegations of whether his attitude to the Russian Federation is good or bad: being secretary of state is very different from leading a company, even a very big one. Therefore, any, so to speak, sympathies become secondary,” Peskov was quoted by the Interfax news agency as telling reporters. 

“The only thing that remains here is readiness to demonstrate a constructive attitude and be professional,” he said. “We are hoping that this is what will happen.” 

Peskov said that Tillerson and Putin had met on several occasions but offered only measured comments about their relationship. 

“Indeed, he repeatedly had contacts with our representatives due to his work in the post of one of the world’s largest oil companies; he fulfills his duties very professionally,” Peskov said. 

David Filipov in Moscow, and Paul Kane, Anne Gearan and Brian Murphy in Washington contributed to this report.

Monday, December 12, 2016

Pipeline spills 176,000 gallons of crude into creek about 150 miles from Dakota Access protest camp



A pipeline leak has spilled tens of thousands of gallons of crude oil into a North Dakota creek roughly two and a half hours from Cannon Ball, where protesters are camped out in opposition to the Dakota Access pipeline.

Members of the Standing Rock Sioux and other tribes, as well as environmentalists from around the country, have fought the pipeline project on the grounds that it crosses beneath a lake that provides drinking water to native Americans. They say the route beneath Lake Oahe puts the water source in jeopardy and would destroy sacred land.

North Dakota officials estimate more than 176,000 gallons of crude oil leaked from the Belle Fourche Pipeline into the Ash Coulee Creek. State environmental scientist Bill Suess says a landowner discovered the spill on Dec. 5 near the city of Belfield, which is roughly 150 miles from the epicenter of the Dakota Access pipeline protest camps.
 
The leak was contained within hours of the its discovery, Wendy Owen, a spokeswoman for Casper, Wyoming-based True Cos., which operates the Belle Fourche pipeline, told CNBC.

It's not yet clear why electronic monitoring equipment didn't detect the leak, Owen told the Asssociated Press.

Owen said the pipeline was shut down immediately after the leak was discovered. The pipeline is buried on a hill near Ash Coulee creek, and the "hillside sloughed," which may have ruptured the line, she said.

"That is our number one theory, but nothing is definitive," Owen said. "We have several working theories and the investigation is ongoing."

Last week, the Army Corp of Engineers said it would deny Dallas-based Energy Transfer Partners (ETP) the easement it needs to complete the final stretch of the $3.7 billion Dakota Access pipeline. United States Assistant Secretary of the Army Jo-Ellen Darcy said the best path forward was to explore alternative routes for the pipeline, something Energy Transfer Partners says it will not do.

Energy Transfer Partners says the Dakota Access pipeline would include safeguards such as leak detection equipment and that workers monitoring the pipeline remotely in Texas could close valves within three minutes if a breach is detected.

Republican President-elect Donald Trump has voiced support for the Dakota Access Pipeline. About 5,000 people are still occupying land near the planned construction site.

The 6-inch steel Belle Fourche pipeline is mostly underground but was built above ground where it crosses Ash Coulee Creek, Suess said. Owen said the pipeline was built in the 1980s and is used to gather oil from nearby oil wells to a collection point.

Suess said the spill migrated almost 6 miles from the spill site along Ash Coulee Creek, and it fouled an unknown amount of private and U.S. Forest Service land along the waterway. The creek feeds into the Little Missouri River, but Seuss said it appears no oil got that far and that no drinking water sources were threatened. The creek was free-flowing when the spill occurred but has since frozen over.

About 60 workers were on site Monday, and crews have been averaging about 100 yards daily in their cleanup efforts, he said. Some of the oil remains trapped beneath the frozen creek.

Suess says about 37,000 gallons of oil have been recovered.

"It's going to take some time," Suess said of the cleanup. "Obviously there will be some component of the cleanup that will go toward spring."

True Cos. has a history of oil field–related spills in North Dakota and Montana, including a January 2015 pipeline break into the Yellowstone River. The 32,000-gallon spill temporarily shut down water supplies in the downstream community of Glendive, Montana, after oil was detected in the city's water treatment system.

True Cos. operates at least three pipeline companies with a combined 1,648 miles of line in Montana, North Dakota and Wyoming, according to information the companies submitted to federal regulators. Since 2006, the companies have reported 36 spills totaling 320,000 gallons of petroleum products, most of which was never recovered.

Trump to nominate ExxonMobil CEO Tillerson secretary of state, transition sources say

Rex Tillerson Putin, Rex Tillerson Donald Trump, Rex Tillerson Secretary of State


President-elect Donald Trump will nominate ExxonMobil CEO Rex Tillerson for secretary of state, according to two sources close to the transition.

The sources warned that nothing is official until the president-elect announces it, which is likely to come over the next few days. Trump told Chris Wallace on “Fox News Sunday” that he was “getting very, very close” to an official announcement. 

In another Cabinet development, Trump officially announced Monday morning that he plans to nominate retired Marine Gen. John Kelly for secretary of the Homeland Security Department. Trump had been widely expected to announce the former U.S. Southern Command leader for the post. 

Trump met with Tillerson earlier this week, whose company is based in dozens of countries across six continents and has business dealings in Russia, Yemen and other political hot spots. A source close to Trump told Fox News on Friday that the president-elect was impressed with Tillerson.

Trump spoke highly of Tillerson on “Fox News Sunday,” saying that he was “much more than a business executive.”

“He's in charge of an oil company that's pretty much double the size of his next nearest competitor. “It’s been a company that's been unbelievably managed-and to me a great advantage is he knows many of the players-and he knows them well, he does massive deals in Russia, he does massive deals-for the company, not for himself for the company.”

Trump’s potential Tillerson selection came under earlier Sunday as Sen. Marco Rubio and other GOP senators raised concerns about his reported Russian ties. The Wall Street Journal reported last week that Tillerson has close ties to Russian leader Vladimir Putin and other world leaders.

Rubio posted a thinly veiled warning about Tillerson on Twitter without mentioning him by name.

Sen. John McCain, R-Ariz., chairman of the Armed Services Committee, told Fox News on Saturday that Putin is a “thug” and while he doesn’t know the nature of Tillerson’s relationship with the Russian leader, it’s a matter of concern.

Speaking Sunday with CBS News’ “Face the Nation,” McCain said the Senate would give him a “fair hearing” and noted Tillerson’s ties could be “strictly commercial.”

But he reiterated that “it should be a matter of concern.” He voiced concern that Tillerson’s relationship could “color his approach” toward Putin and the Russian threat.

The 64-year-old Tillerson began his career at Exxon in 1975 as an engineer, rising through the ranks and becoming president and director in 2004 and CEO two years later. He was born in Wichita Falls, Texas, and studied civil engineering at University of Texas.

House Majority Leader Kevin McCarthy, R-Calif., told Fox News’ “Sunday Morning Futures” that Tillerson would be a “smart pick.”

Speaking on ABC News’ “This Week,” incoming Trump chief of staff Reince Priebus also defended Tillerson as an “incredible businessman and American patriot.”

While noting a “conclusion has not been made,” he stressed that Tillerson is in the business of finding oil around the world, and said “the fact that he actually has a relationship with people like Vladimir Putin and others across the globe is something that [we] shouldn't be ... embarrassed by.”

Asked about tough questions from Republican senators, he said, “We don't have concerns about confirmation.”

Should he become America's top diplomat, he will have a pay cut and complicated financial situation to sort out. Tillerson reportedly makes more than $40 million per year and owns more than $100 million of stock in a company that has holdings and dealings throughout the world.

Fox News was told last week that former U.N. ambassador John Bolton and Rep. Dana Rohrabacher, who were also in the mix for secretary of state, were being considered for deputy secretary.

Fox News’ Serafin Gomez and the Associated Press contributed to this report.

Saturday, December 10, 2016

Total and NNPC Start Gas Flows to Alaoji Power Plant

http://www.petroleumafrica.com/wp-content/uploads/2016/12/Alaoji.png 
 Alaoji Power Plant / Rivers State, Nigeria


The JV between Total and NNPC have commenced the supply of gas to the Alaoji Power Plant. The plant, located in the Rivers state, was built under the National Integrated Power Project scheme.

The commencement of supplies follows the completion and start up of the Obite-Ubeta-Rumuji pipeline (OUR pipeline) and the Northern Option Pipeline (NOPL) projects by the JV.

Total E&P Nigeria Ltd.’s Managing Director and CEO, Nicolas Terraz, said: “The completion of these pipelines is an important milestone in the activities of Total in Nigeria. The NOPL is unique and strategic in meeting the federal government’s objectives of gas supply to the domestic market.”

Nigeria and Morocco Sign JV Agreement for Pipeline

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During a visit to Nigeria by Morocco’s King Mohammed VI, an agreement was signed that has Morocco and Nigeria jointly developing a gas pipeline. The two countries signed an agreement aimed at connecting Nigeria and some other African countries to European gas markets.

Geoffrey Onyema, Nigeria’s Minister of Foreign Affairs, said the pipeline project would be designed with the participation of all stakeholders.

“In this agreement both countries agreed to study and take concrete steps toward the promotion of a regional gas pipeline project that will connect Nigeria’s gas resources, those of several West African countries and Morocco,”Onyema speaking to reporters.

Onyema said the project aimed to create a competitive regional electricity market with the potential to be connected to the European energy markets.No timeline was given for when the pipeline construction work will start or how much it will cost.

This is not the first scheme Nigeria has been involved in aimed at transporting natural gas to European markets via a pipeline. More than half-a-decade ago Nigeria, Niger, and Algeria embarked on a project to take gas from Nigeria, through Niger to the coast of Algeria; the Trans-Saharan Gas Pipeline or TSGP. The pipeline was discussed for a number of years, but due to a myriad of reasons it never got off the ground.

Monday, December 5, 2016

India's Strategic Crude Reserve Invites Bids to Fill Facility

Image via Shutterstock

























Indian Strategic Petroleum Reserves Ltd (ISPRL), the government-owned company mandated to store crude oil for emergency needs, has invited initial bids to fill its storage facility in the state of Karnataka.

The strategic reserve is expected to be ready by the first quarter of 2017, it said in a notice on Wednesday.

ISPRL has a total of 5.33 million tonnes or 36.87 million barrels of storage facilities across three cities in southern India - Vizag (1.33 mt), Mangalore (1.5 mt) and Padur (2.5 mt).

The current expression of interest is for Padur.

In 2005, the Oil Ministry set up ISPRL to build strategic storage in India to hedge against volatility of crude oil prices and sudden supply issues.

Once the facility is operational, India, which imports more than 80 percent of its crude requirement, will have almost 10 days of strategic reserves which can be used during emergencies. However, other big consumers of oil globally have around 50 days of reserves.

The notice by ISPRL said that interested parties can opt for filling any of the four or all four compartments it has built at Padur, all of which are around 5 million barrels in capacity.

The storage facilities at Vizag and Mangalore are already ready. The Vizag facility has been filled with Iraqi Basra oil while part of the Mangalore facility is filled with Iranian crude oil.

https://www.tankterminals.com/news_detail.php?id=4105&utm_medium=email&utm_campaign=Subscribers%20-%20Week%2049&utm_content=Subscribers%20-%20Week%2049+CID_bcc9792c404181311bc2ca64ef863f6e&utm_source=Weekly&utm_term=Indias%20Strategic%20Crude%20Reserve%20Invites%20Bids%20to%20Fill%20Facility 

Friday, December 2, 2016

US tight oil producers get lifeline in OPEC deal, but remain cautious

Workers connect drill bits and drill collars on Endeavor Energy Resources’ Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas, Dec. 12, 2014.

  • Eagle Ford, Bakken declines seen moderating at $50/b
  • Permian expected to keep leading US production
  • Offshore activity remains years away
US tight oil producers in struggling basins like the Bakken and Eagle Ford got a lifeline from OPEC's agreement to cut production, with analysts expecting their declines to start moderating if oil holds at $50/b while output would rebound at $60/b.

The Permian is expected to keep leading US production even if the OPEC deal falls apart and prices take another downturn, analysts said Thursday.

Any recovery in US offshore production remains years away, but an analyst said the OPEC cuts could accelerate that activity by a year.

Related: Listen to a special episode of Capitol Crude on OPEC's historic decision to cut production

Despite the optimism for recoveries in the Bakken and Eagle Ford, US producers will likely remain cautious well into next year while watching crude prices and the massive storage glut before moving rigs back into place, analysts said.

"The OPEC deal puts a fairly strong floor in $40s instead of leaving a trap door in the $30s without a deal," said Fred Lawrence, vice president for economics for the Independent Petroleum Association of America.

"It will be interesting to see how the first half goes, but my guess is there's still going to be capital discipline and companies are going to be continuing to set themselves up for what most of them believe are stronger prices going into 2018," Lawrence said.

'RECOVERY HYPE'

Stephens analyst Matt Marietta urged clients to "avoid sharp recovery hype" surrounding US production because the oil market has a long way to go in rebalancing supply and demand. Even with a 1 million b/d supply cut, it will take 1.5 years for OECD inventory levels to stabilize, he said.

"Even though the price action is positive, the physical market just can't absorb much production growth as it exists today until you begin drawing down the inventories," he said.

That said, Marietta does see US shale production on the road to stabilizing if oil stays around $50/b. He said the Permian would continue to offset declines elsewhere, and Eagle Ford and Bakken declines would start moderating.

He said shale output could increase 250,000-500,000 b/d over 2017 if the price holds at current levels.

Garrett Golding, vice president of The Rapidan Group, expects US onshore production to remain flat in 2017 if oil prices stay around $50/b. Permian output could increase even if prices take another downturn, but Bakken and Eagle Ford producers need $60/b to turn positive next year, he said.

"We do not see much further acceleration in Permian growth in 2017 if prices remain relatively elevated," Golding said. "More capital could flow to the Eagle Ford, Bakken, and SCOOP/STACK in that scenario."

Wood Mackenzie said prices would have to stay above $55/b for several months to increase US tight oil activity.

"This would spread drilling increases across the main Lower-48 plays, meaning tight oil becomes more than just a Permian story," Ann-Louise Hittle, vice president for research, said in a note to clients.

That could boost onshore production 200,000-300,000 b/d above WoodMac's forecast of a 650,000 b/d increase by the end of 2018.

OFFSHORE OUTLOOK

BP's announcement Thursday that it was going forward with its long-delayed $9 billion Mad Dog Phase 2 project in the Gulf of Mexico seemed to put US offshore development back on the table (See story, 1605 GMT), although analysts saw no connection between the decision and the OPEC cuts.

Stephens' Marietta said the OPEC deal's potential to accelerate a rebalancing of supply and demand could bring offshore plans forward by a year, from previous expectations of a 2019-20 restart to activity.

"A real simplistic way that I've thought about this OPEC cut is: annual demand is expected to increase about 1.2 million-1.5 million b/d," he said. "So having OPEC take effectively a year of demand growth worth of supply off the market, it almost brings everything forward by a year and that would include the potential for the offshore to show a recovery."

IPAA's Lawrence said OPEC will be watching whether US producers adjust capex and rig activity early next year before deciding whether to continue the cuts at their May meeting.

OPEC agreed in Vienna Wednesday to cut 1.2 million b/d from January to 32.5 million b/d, along with a target of obtaining 600,000 b/d in cuts from non-OPEC producers.

--Meghan Gordon, meghan.gordon@spglobal.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com