Gas prices continue to slide as U.S. oil refinery production nears peak high

The average price for regular gasoline at U.S. pumps continues to drop as refineries process the most petroleum since 1989. New Jersey pump prices have also dropped sharply. (Daniel Acker/Bloomberg News)

 

http://www.nj.com/business/index.ssf/2014/07/gas_prices_continue_to_slide_as_us_refinery_production_nears_peak_high.html

 

By Bloomberg News The Star-Ledger    

 

U.S. refineries are flexing their muscles and helping lower gasoline prices in the middle of the peak driving season.

 

The average price for regular gasoline at U.S. pumps dropped 9.04 cents in the two weeks ended July 25 to $3.5795 a gallon, according to Lundberg Survey. It’s based on information obtained at about 2,500 filling stations by the Camarillo, Calif.-based company. Prices are 9.51 cents lower than a year ago and are at the lowest level since March 21, the survey showed.

 

New Jersey pump prices also continue to drop, with the average gallon of gas today selling for $3.43, according to GasBuddy. That's four cents less than it was last week and 12 cents below the average price last month.

 

Retail prices also declined as refineries processed the most petroleum in government records dating back to 1989 in the week ended July 11. Plants in the Midwest exceeded their nameplate capacity during that week.

 

“It’s really a mid-summer gift,” Trilby Lundberg, the president of Lundberg Survey, said in a telephone interview Sunday. “Refiners have been on a kick to run more crude, run at high rates and to cut price.”

 

The highest price for gasoline in the lower 48 states among the markets surveyed was in San Francisco, at $4.03 a gallon, Lundberg said. The lowest price was in Tulsa, Oklahoma, where customers paid an average of $3.23. Regular gasoline averaged $3.83 on Long Island, New York, and $3.96 in Los Angeles.

 

Refineries processed 16.81 million barrels a day in the week ended July 18, just off the highs reached the prior week, Energy Information Administration data show.

 

Gasoline Futures

 

Plants are taking advantage of the U.S. shale boom, which has raised oil production 65 percent in the past five years. The increased output has pushed the settlement price of U.S. benchmark West Texas Intermediate futures below European Brent every day since Aug. 17, 2010.

 

Gasoline futures on the Nymex slipped 4.32 cents, or 1.5 percent, to $2.8653 a gallon in the two weeks ended July 25 as supplies grew on strong refinery production.

 

Gasoline stockpiles increased 3.38 million barrels to 217.9 million, EIA data show. Demand over the four weeks ended July 18 was 8.988 million barrels a day, 0.6 percent below a year earlier.

 

WTI crude rose $1.26, or 1.2 percent, to $102.09 a barrel on the New York Mercantile Exchange in the two weeks to July 25 as supplies at the delivery point in Cushing, Oklahoma, fell to the lowest level since 2008.

 

Crude inventories in the U.S. fell for the fourth straight week, dropping 3.97 million barrels to 371.1 million in the seven days ended July 18, according to the Energy Information Administration, the Energy Department’s statistical arm.

 

Star-Ledger staff writer Alexi Friedman contributed to this report.

Tullow Starts Gas Flaring to Sustain Jubilee Output in Ghana

 

http://www.bloomberg.com/news/2014-07-30/tullow-oil-starts-gas-flaring-to-sustain-jubilee-output-in-ghana.html

 

By Eduard Gismatullin

 

Tullow Oil Plc (TLW), the U.K. explorer focusing on Africa and Scandinavia, started burning gas off Ghana to sustain production at its largest project.

 

“We are still injecting majority of the gas,” Chief Operating Officer Paul McDade said in a phone interview. Flaring “is assisting us, while we are waiting for the gas plant” to “sustain target production,” he said.

 

The company has permission to flare 500 million cubic feet of gas a month, which is pumped together with crude oil, at the Jubilee field, it said today in a statement. The gas must be expended to avoid damaging the reservoir, which is expected to start producing about 100,000 barrels of oil a day this year. Tullow expects to start processing the gas once a treatment plant comes on stream in the fourth quarter.

 

“The focus of these six months has really been on West Africa, keeping the Jubilee production up while the gas plant is getting ready,” Chief Executive Officer Aidan Heavey said in a phone interview.

 

Tullow, based in London, today reported a $95 million loss in the first half, compared with a $313 million profit a year earlier, after writing off $402 million in exploration costs. Part of this charge is related to a project delay in Uganda, Chief Financial Officer Ian Springett said today in a phone interview.

 

The shares fell 1.1 percent to 755.50 pence by the close in London.

Mozambique Exit

In East Africa, Tullow has exited exploration off Mozambique after failing to make a discovery. The company is reassessing its drilling plans to conserve cash, McDade said.

 

“The cost environment in the industry is making exploration in ultra-deepwater and drilling complex deepwater wells rather expensive,” Exploration Director Angus McCoss said. “So we are moving to more cost effective plays on the shelf and onshore.”

 

Statoil ASA, Tullow’s partner in Mozambique, has also exited exploration licenses for the blocks in area 2 and 5, where it had a 50 percent stake, spokesman Knut Rostad said by phone.

 

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

 

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net John Viljoen

EIA: OPEC’s 2013 oil export revenues fall 7%

http://www.ogj.com/articles/2014/07/eia-opec-s-2013-oil-export-revenues-fall-7.html

According to recent estimates from the US Energy Information Administration, members of the Organization of the Petroleum Exporting Countries, excluding Iran, earned about $826 billion in net oil export revenues in 2013, a 7% decrease from 2012 earnings. But this was still the second-largest earnings totals during 1975-2013—the timespan of how long EIA has tracked OPEC oil revenues.

For each country, EIA derived net oil exports based on its oil production and consumption estimates from the latest edition of the EIA’s Short-Term Energy Outlook. For countries that export several different crude varieties, EIA assumes that the proportion of total net oil exports represented by each variety is equal to the proportion of the total domestic production represented by that variety.

These net export earnings do not include Iran's revenues. As explained by EIA, this is because of the difficulties associated with estimating Iran’s earnings, including the country’s inability to receive payments and possible price discounts Iran offers its existing customers.

According to EIA, a drop in OPEC oil production in 2013, largely because of the supply disruption in Libya, and a 3% decline in average crude oil prices as measured by the Brent crude oil price marker have led to the decline in OPEC earnings.

Saudi Arabia earned the largest share of these earnings, $274 billion in 2013, representing about one third of total OPEC oil revenues. On a per capita basis, OPEC (excluding Iran) net oil export earnings reached about $2,520 in 2013.

Based on projections from EIA's July 2014 STEO, EIA estimates that OPEC (excluding Iran) could earn about $774 billion in net oil export revenues in 2014 and $723 billion in 2015 (unadjusted for inflation). These declines from the 2013 level reflect projected declines in the call on OPEC crude oil production because of the large increases in non-OPEC production for 2014-15, as well as expected crude oil price declines that are also the result of declines in the call on OPEC crude oil production.

Hydra Wins TEN Gig in Ghana

 

http://www.petroleumafrica.com/hydra-wins-ten-gig-in-ghana/

 

Hydra Offshore Ltd. signed a two-year contract to provide local engineering support to Wood Group Ghana Ltd (WG Ghana) for the provision of subsea engineering services for work on Tullow Oil’s TEN development. The contract follows the initial memorandum of understanding (MOU) signed by WG Ghana and Hydra Offshore in December 2013 for Hydra Offshore to partner WG Ghana in the delivery of its services to the Ghana oil & gas industry.

 

Hydra Offshore will initially second engineers through WG Ghana into Wood Group Kenny (WGK) which was awarded an engineering services contract earlier this month by Tullow Ghana Ltd. to support Tullow Ghana and its partners through the execution phase of the TEN project offshore. WGK will provide Tullow Ghana with project engineering resources, specialist technical support, and technical assurance services across the subsea, umbilical, risers, flowlines (SURF) implementation work scope through to first oil, scheduled for 2016.

 

Delali Otchi CEO of Hydra offshore said: “The TEN Project is Ghana’s next big offshore field development and we are proud to be working alongside WGK to provide engineering assurance service to achieve first oil mid-2016. Our Ghanaian subsea engineers will be seconded within WGK experienced teams, working internationally to ensure the quality and technical integrity of subsea engineering and fabrication for this hugely important project for Ghana. We pride ourselves in being a home grown company focused on developing our local engineering capabilities over this period and we applaud Wood Group for their commitment in supporting the development of local content in Ghana and specifically the development of our Ghanaian engineers.”

 

The regional business unit director for WG Ghana, Ian McKay commented: “This agreement affirms the readiness of WG Ghana to engage local companies in every aspect of their contract with Tullow Ghana and to work with them to train, coach develop their resources to a level of competence where they can compete internationally in the oil & gas sector. It will also ensure that, over time, Hydra Offshore develops a subsea engineering competence recognized internationally and a sustainable Ghanaian capability to support local field developments in the offshore oil & gas sector. The WGK program of development, coaching and the technology and experience transfer opportunities which will be afforded the Hydra Offshore team are second to none and is an incredible opportunity for the development of Hydra Offshore as a competent subsea engineering enterprise.”

Two VLCCs to be converted to FPSOs

FPSO Xikomba

http://www.tankeroperator.com/ViewNews.aspx?NewsID=5796


Sembcorp Marine’s wholly-owned subsidiary Sembawang Shipyard has won a contract worth about Sing$600 mill from Saipem for the conversion of two VLCCs into FPSOs for the Kaombo project in Offshore Angola (see above).
       
The first VLCC, ‘Olympia’, is expected to enter Sembawang Shipyard in the third quarter of this year, while the second VLCC, ‘Antartica’, will be in the shipyard during first quarter 2015.
The total conversion will take 32 months. Both vessels were formerly owned by Euronav.

Under the terms of the contract, Sembawang is responsible for the conversion of the two  sister ships into twin turret-moored FPSOs for the project located about 150 km from the Angolan coast.

The two converted FPSOs, owned by Total, will each have an oil treating capacity of 115,000 barrels per day, a water injection capacity of 200,000 barrels per day, a 100 mill scfd gas compression capacity and a storage capacity of 1.7 mill barrels of oil.

Let Our Oil and Gas Go

Steven Rattner

http://www.nytimes.com/2014/07/24/opinion/america-should-rescind-the-ban-on-crude-oil-exports.html?_r=0

AS a young reporter covering energy for The New York Times, I saw firsthand the distortions and inefficiencies caused by the web of regulations that followed the Arab oil embargo of 1973-74, and the resulting surge in gasoline prices.

So I shared in the frisson of excitement last month when the Commerce Department cleared two Texas companies to export an ultralight, processed form of oil called condensate. It seemed like a step toward relaxing the ban on the export of crude oil, the biggest stricture remaining from the ’70s energy crisis.

But then the Obama administration quickly insisted that the Commerce Department, in narrowing the definition of crude oil so that condensate could be exported, was not about to lift the ban more widely. “There has been no change to our policy on crude oil exports,” a White House spokesman said.

That’s unfortunate, because America’s renewed hydrocarbon boom could be even more robust if we eased outdated restrictions on shipping both crude oil and liquefied natural gas overseas.

It’s true that the United States still imports about six million barrels of oil a day — about one-third of our needs.

But not all oil is created equal, and the lightweight type that we are producing in growing quantities in North Dakota, Texas and elsewhere is not compatible with many of our refineries, which were built to process the heavier crude oil that we typically import.

A result is a supply and pricing mishmash that causes domestic oil to sell for as much as $10 per barrel below the global market price, currently $107.

That, sadly, doesn’t help consumers. Because gasoline (and other refined oil products) can legally be exported, the pump price in America reflects the higher world price. The result: undeserved excess profits for refiners, as demonstrated by the sharp drop in their stock prices when the Commerce Department made its technical change.

If the export ban were lifted completely, the price of crude oil in the United States would rise to the global price (adjusted for transportation costs and differences in quality), but the price of gasoline at the pump wouldn’t change.

Yes, the higher price of crude oil would mean more profits for producers; more important, it would encourage drilling. That means more production, more jobs, and less reliance on imports and an improvement in our trade balance.

Natural gas also needs to be freed from burdensome rules. The surge in supply that has resulted from industry advancements in hydraulic fracturing (fracking) and horizontal drilling has artificially depressed prices in the United States.

But we’ve been slow. Only one project, Cheniere Energy’s Sabine Pass facility in Louisiana, has received all the necessary permits. While the Obama administration made a recent procedural change intended to accelerate the process somewhat, it has stopped short of a full-throated endorsement. President Obama recently told reporters that Europe was too dependent on gas exports from Russia and that greater natural gas exports would benefit the United States, but that “it’s not something that can happen overnight.”

That’s partly because of opposition from environmentalists, who are determined to curtail the use of fracking. While regulation should be tough, we needn’t ban these unconventional means of energy production. After all, greater use of natural gas and oil by other countries means less burning of more damaging fuels, particularly coal.

For a change, the Republican-controlled House has produced a productive piece of legislation, a bill (supported by 46 Democrats) that would require faster action by the Department of Energy in permitting natural gas exports. The Senate should take it up.

Experts from the Brookings Institution and the Council on Foreign Relations support lifting the ban on crude oil exports. Politicians need not fret. Nothing would prevent the United States from shutting off exports during national emergencies. Nor, in the event of another huge spike in world prices, would Congress be prevented from imposing taxes on crude oil at the wellhead to prevent windfall profits.

Energy policy should not be driven by emotion. Paradoxically, the fastest way to reduce our dependence on foreign sources of energy is to speed the export of crude oil and natural gas.

Steven Rattner, a contributing opinion writer and an investment adviser, was a counselor to the Treasury Department in the Obama administration.

A version of this op-ed appears in print on July 24, 2014, on page A27 of the New York edition with the headline: Let Our Oil and Gas Go. Order Reprints|Today's Paper|Subscribe

Tema Oil Refinery in deep financial crisis

TOR

http://www.spyghana.com/tema-oil-refinery-deep-financial-crisis/

Junior staff of the Tema Oil Refinery (TOR) have appealed to President John Mahama to save the refinery from collapse.

They say the refinery is bleeding with a daily loss of GH₵350,000 due to the shutdown.

Samuel Boateng, Secretary of the Junior Staff Association of TOR, told Joy News TOR is a viable refinery that must not be allowed to collapse.

The refinery’s Crude Distillation Unit (CDU) plant was shut down in 2011 due to TOR’s inability to obtain letters of credit (LCs) from its bankers to purchase crude oil for production.

The refinery’s inability to raise the LCs was as a result of an operation framework between the commercial banks and the Bank of Ghana (BoG) that restricted the banks from raising LCs beyond a certain limit, depending on the business structure, explained acting Managing Director of TOR, Dr Alphonse Dorcoo in 2011.

Samuel Boateng said at a press conference on Tuesday July 22, 2014 that although TOR’s bankers were willing to raise the LCs, the limit put on LCs per BoG’s regulations made it difficult to raise money to buy the appropriate amounts of crude oil for the refinery.

“We need continuous supply of crude oil for us to refine”, he stressed.

According to him, the nation loses a lot of money because the plant is not running.

He said the workers would take drastic actions if government fails to intervene to restore operations at the refinery.

He said just like the Bulk Oil Distributors (BDCs) held the nation to ransom due to government’s indebtedness, by refusing to supply petroleum products to fuel stations, they may also have to take a similar step.