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WARNING: The Coming Food Crisis | Be Ready 2019
Are you ready for the collapse of the agricultural system? In this video I go over all of the factors which threaten the global food supply. Consumerism, overpopulation, urbanization, pollution, biodiversity, monoculture, farming practices, water shortages, herbicides, pesticides, fungicides, overfishing, geopolitics, bee extinction, monopoly (big agri), genetically modified food, global warming, soil erosion, land loss. drought, are just some of the many challenges to our way of life. GET READY.
Tax Cuts Or Not, Mexico’s Pemex Is Doomed
By Haley Zaremba - Feb 10, 2019, 4:00 PM CST
https://oilprice.com/Energy/Energy-General/Tax-Cuts-Or-Not-Mexicos-Pemex-Is-Doomed.html?fbclid=IwAR31KTZPyjTHMhkZ0dVxhXZ-H-HO4BPrj-0jEAu3iIriqfJtt4RUeLX6Nk8
6 Benefits of Using Seaweed in the Garden: From Seaweed Fertilizer to Pest Control
Chris Hull
Jul 13, 2016
https://www.organicauthority.com/live-grow/6-benefits-of-seaweed-to-help-your-garden-grow
Thanks, and I need to catch up on my postings.
Muscle Power
Posted on February 5, 2019 by energyskeptic
http://energyskeptic.com/2019/muscle-power/?fbclid=IwAR02bwFlLQRg5O0XHl6R2uvX6rRABol6ckhQFvMpsAK1qgEsiZGbU5sAZQk
15 things you can buy from Costco, Amazon, Sam’s Club, and BJ's to be ready for when the apocalypse hits
https://www.businessinsider.com/costco-amazon-sams-club-bulk-items-apocalypse-2019-2?fbclid=IwAR0v-Tdf6OTgc_o4teadUWzVQ3TEksuIwssMXoOyYQ09KY-2MEN7qRANt4E
How to Get High on Soil
M. vaccae, a living creature that resides in your backyard compost pile, acts like a mind-altering drug once it enters the human body, functioning like antidepressant pills to boost your mood.
Donald Barger / Shutterstock
Pagan Kennedy
Jan 31, 2012
https://www.theatlantic.com/health/archive/2012/01/how-to-get-high-on-soil/251935/?fbclid=IwAR2-3uXxYmFl3m5Skf4DGRIVDvt4iLMKXMMB8lmv06fgl6r8yJbfB0EzJwQ
I'm holding a bowl of dirt up to my nose, in hopes of getting high on the fumes of my backyard compost pile. The microbe that I'm after today is M. vaccae, a living creature that acts like a mind-altering drug once it enters the human body. It has been shown to boost the levels of serotonin and norepinephrine circulating in the systems of both humans and mice. In other words, it works in much the same manner as antidepressant pills. And yes, it is possible to dose yourself by simply breathing in the smell of good dirt.
The drug-like effects of this soil bacteria were discovered, quite by accident, about a decade ago. A doctor named Mary O'Brien created a serum out of the bacteria and gave it to lung-cancer patients, in hopes that it might boost their immune systems. Instead, she noticed another effect: The hospital patients perked up. They reported feeling happier and suffered from less pain than the patients who did not receive doses of bacteria. Further studies in mice confirmed the mood-boosting effect of the soil bugs.
So now I'm poking at the dirt in this dish, trying to release as much of the M. vaccae as I can. The compost looks like chocolate cake -- it's a rich brown-black color, and it holds together with that same kind of moistness that we love in baked goods. I'm eager for something to make me feel jaunty on this winter day. Outside, the sky glimmers a dim, silver-gray -- it's filled with clouds that Virginia Woolf would have described as "implacable." I have always been sensitive to such days. The dishwater light trickles through the window and infects me with malaise.
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As I huff the soil, I have no way of knowing exactly how much M. vaccae is floating into my lungs -- or whether it's enough to change my mind. But I can sure smell this compost. The odor hits like a punch and triggers a memory: I recall a day in Western Massachusetts on a friend's farm, turning earth with a pitchfork. Dried mud extended up my arms, like a pair of long-sleeved gloves, as if I were dressed for a gala event with forest-fairies. I felt dazzled that day, boozed up on sunshine, and in love with the potatoes I'd just dug out of the soil.
That same smell hovers over this dish now -- a sexy, outdoorsy tang. It's an odor produced by microbes in the soil as they break down plants. Scientists call it "geosmin," this dirt smell that lends the earthy taste to beets and carrots. It's the flavor of life.
Cooks have another own word for it. "Terroir" is what makes a loaf of sourdough from San Francisco taste so different from its cousin in Bordeaux. The regional microbes, in the soil and air, impart their particular notes to the bread. You can taste terroir in your wine, your cheese, and even your chocolate -- all of which are produced with the help of specialized bacterias that can vary from town to town.
This soil in the bowl is redolent with my own particular terroir. It is made from the apples that plummeted to the ground in our backyard. It contains, too, a sweetening of ashes from our wood stove. It is the smell of an unfolding revolution in microbiology. New tools -- like desktop gene sequencers -- allow scientists to read a sample of soil and find every species of microbe inside it. This is science that you can smell and taste. And sometimes, you can get high on it too.
10 Scary Things That Would Happen If The Grid Went Down
https://urbansurvivalsite.com/scary-things-would-happen-grid-down/
To restore our soils, feed the microbes
https://theconversation.com/to-restore-our-soils-feed-the-microbes-79616
To restore our soils, feed the microbes
https://theconversation.com/to-restore-our-soils-feed-the-microbes-79616
There's a Water 'Time Bomb' Lurking Beneath The Planet's Surface, Scientists Warn
DAVID NIELD
23 JAN 2019
https://www.sciencealert.com/the-world-s-water-supply-is-an-environmental-timebomb-scientists-say?fbclid=IwAR3jH2EuCeG8_fWht0Z32ziPumL-Guue6WGa8_lT4HZFBgfNrdKNW87zTwE
12 Bad Strategies That Will Get Preppers Killed
https://www.theorganicprepper.com/12-bad-strategies-that-will-get-preppers-killed?fbclid=IwAR1iSKLOnPaAkIyowYSaCqdvdB6p7nIRENn8aBHXH1TyyZMhGHwu0NGoxJU
Thanks shermann and I'm working on this list.
To be sure, it is not if it happens, but when it happens!
Good luck in your preparation.
sumi
Mountain People
Mountain People by Cinda Firestone
Hands: Fermanagh Country
All I've Ever Known: Margaret Gallagher's Story
Farming Takes Skill ~ 1954 Frith Films; Mule-Drawn Farm Implements
American Farmer (1954)
Which Homemade Laundry Detergent Recipe is Best?
Want to clean your clothes without the cost of a commercial laundry detergent? HouseLogic tested some homemade laundry soap recipes to find the best alternatives.
https://www.houselogic.com/organize-maintain/cleaning-decluttering/which-homemade-laundry-detergent-recipe-best/
Derrick, that article is receiving much attention on Peak Oil boards.
The only answer to the above trucking and delivery risk is to re-localize. We need, at a minimum, a gradual return to the 1940s. That may seem absurd, but someday it will be forced on us.
Here is Communities Guide to achieve this goal.
Building Thriving, Resilient Communities
A Collection of Resources for You & Your Neighbors
to Create a Saner, Healthier Future Together
https://www.resilience.org/communities-guide/
Happy New Year, by the way!
24 Lost Gardening Tips from 100 Years Ago
Anne May 30, 2017
http://www.prepperfortress.com/24-lost-gardening-tips-100-years-ago/?fbclid=IwAR1Ru7D_4lZ9-FNsLPTJpOBaCx6DbXHNLkhPntzmomU4VKMvKqugnQMWHLU
Timely post 'wow happens'
Today I had lunch with a gardening friend, the source of many new ideas for my garden.
She is married to an American and in her early life she lived in Asia, basically a jungle area. A member of a large family, she was the chief hunter for game. I never asked her the specifics, but she is now a vegetarian due to having hunted so many animals. However, she still believes in hunting plus harvesting roadkill as a source of food. Whatever the source, it always come down to survival in her mind.
Having finally retired last year, she can fill her days with gardening a huge garden in part of my city and it is relatively secluded in the woods, but with plenty of sun and wells that she hand dug in a very high water table.
Last autumn I visited a cousin in upstate New York. She has a fabulous garden supplying a stream of veggies augmented by a yearly deer by her husband who uses a cross bow. Her son, now married and with a family, uses a cross bow too.
When I visited her in early October, she harvested a meat chicken for one of our dinners. Her garden produce is rich due to using aged horse manure. Her Yukon potatoes were easily twice the size of mine!
I know one thing for sure; in the time of a food crises, those in the country are a lot better off than the rest of us!
Thanks for your post, wow!
sumi
Peak Oil Review 26 December 2018
By Tom Whipple, originally published by Peak-Oil.org
https://www.resilience.org/stories/2018-12-26/peak-oil-review-26-december-2018-2/
Quote of the Week
[about proposed seismic testing off the east US coast] “Almost every single one of those states is pretty adamant about not wanting that activity off their shore. The administration is pushing through the industry agenda on expanded oil and gas leasing despite all evidence that other stakeholders have other viewpoints about the appropriateness and the scope of that activity.” Elizabeth Klein, deputy director, State Energy and Environmental Impact Center, NYU School of Law
1. Oil and the Global Economy
Oil prices fell by more than 11 percent last week to their lowest since mid-2017 with London futures closing at $53.82 and New York at $45.59. There is much debate as to whether the rapid fall in prices is due to oversupply or fears of a global economic recession slowing the demand for oil. Forecasts of rapidly growing US shale oil production next year that could offset much of the OPEC+ production cut and growing political chaos in Washington, London, Paris, and other world capitals is adding to concerns about the future.
While most financial institutions are forecasting lower oil prices next year, a few are looking for a price rebound to $70 or $80 a barrel as the OPEC+ production cut comes into effect. Add this to reports that the Saudis will cut more than expected, Venezuela continues to implode, Libyan production is down by a third, and given the selling price of crude, US shale oil production may not increase as much as government forecasters are predicting.
Outside of consumers happy with low gasoline prices, and the boost that low energy costs always give to industry’s bottom line, the major consequence of the 40 percent oil price decline is what it will do to US shale oil production in the coming year. Some observers are calling the situation a “bloodbath” for shale oil producers noting that at $45 a barrel or lower, nearly all the independent shale oil producers are losing a substantial amount on nearly every barrel they produce.
Some of this gloom can be mitigated by the increasing involvement of the major international oil companies such as Exxon and Chevron into production from the Permian Basin. These firms have multi-billion-dollar profits from their conventional oil operations and can afford to wait for the higher oil prices that are sure to come in the next decade. These firms have no need to convince investors to lend them more money by using dubious accounting procedures and are attracted by the speed at which shale oil wells can be brought into production, in contrast to the years and billions of dollars involved in deepwater offshore oil production which is about their only alternative these days.
In recent years, a handful of observers have begun expressing fears about what will happen to global diesel production. These concerns are based on the premise that as an ever-increasing share of global “oil” production is coming from unconventional sources such as shale oil and natural gas liquids which in general are not suited for producing diesel, the industrial fuel that keeps trucks, farm tractors, ships, some trains, and many automobiles running. Observing a decline in global diesel production is difficult because some refineries that have access to cheap natural gas can turn heavy oil into the lighter “middle distillates” such as diesel and jet fuel by breaking down longer molecules into shorter ones.
We are already seeing the spread between gasoline and diesel increasing. Last year at this time, diesel was retailing in the US for 39 cents a gallon more than gasoline. This year the spread is 60 cents a gallon. Should the assertion that global diesel production is already at or near a peak prove to be true, it has many implications for the future of economic growth and the need to make rapid changes in our energy consumption. For now, the data, except for the price spread, is not sufficient to reach a conclusion. In a few years, we should have a better idea as to whether diesel shows signs of peaking.
The OPEC Production Cut: The cartel plans to release a table detailing output cut quotas for its members and allies OPEC’s secretary-general said in a letter seen by Reuters on Thursday. OPEC had initially said it would not publish individual quotas; however, “In the interests of openness and transparency and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” OPEC Secretary-General Barkindo said in a letter to members. Barkindo said to reach the proposed cut of 1.2 million barrels per day, the effective reduction for member countries was 3.02 percent which is higher than the 2.5 percent initially discussed; however, Iran, Libya, and Venezuela are exempt from the cut. The Secretary-General also commended Saudi Arabia for pledging to cut its production to 10.2 million b/d starting in January, a deeper reduction than allocated.
US oil production in the most recent week was 11.6 million b/d. If production expands at the rate that the EIA has forecast, it will effectively swamp the 1.2 million b/d OPEC+ cut by the end of next year. This gloomy outlook for oil prices depends on how much US production increases. Some of EIA forecast is based on several long-awaited offshore projects that are due to start producing in the latter part of next year. While the 2014-15 price slump led to sharp declines in US shale oil production, large well financed international oil companies have a foothold in the US shale oil industry and are unlikely to stop drilling due to a temporary decline in prices.
US Shale Oil Production: During the past week, the financial press has been filled with stories about what the $30 price drop is going to do to the shale oil industry. The thrust of most stories is that shale oil drillers are making major cuts in the plans for their capital expenditures in the coming year. For nearly a decade, the costs of producing shale oil have been controversial. With the constant need to raise capital to replace rapidly depleting wells, drillers have a strong incentive to publicize break-even costs below the selling price of oil. As many observers have pointed out, this usually involves creative accounting in which many costs of producing shale oil are put aside, and attention is focusing on direct costs of producing from the best wells.
In the last few years, longer laterals and more fracking sand have been touted as leading to higher initial production, but most of these wells have not been in production long enough to tell whether they produce more oil by the end of their useful lives. Longer laterals and more sand increases the cost of these wells which may or may not be more profitable than early shale oil wells. Although industry consultants say that oil produced in parts of the Permian Basin currently costs from $32 to $47 to produce, we will have little idea if these are actual costs until financial statements appear later next year showing whether individual firms are making or losing money.
The EIA says that US shale oil production will increase by 113,000 b/d in December and 134,000 b/d in January. The Bakken is to increase production by 18,000 b/d next month; Eagle Ford by 19,000 b/d; the Permian by 73,000 b/d; Anadarko by 10,000 b/d and Niobrara by 10,000 b/d. We are already getting reports that production from North Dakota’s Bakken shale is expected to level off early next year, but local officials are still optimistic that peak output is still years away.
Exxon Mobil presence in the Permian has grown to become the most active driller in the Basin. The company’s increased presence in the Permian is a bet that it can drill wells so cheaply that they’ll be profitable. The company says its shale wells can make double-digit returns with oil at just $35 a barrel. Nearly all of the companies concentrating on shale oil drilling seem to be losing money at $45 a barrel. While Exxon can hide any losses in shale oil among its massive production of conventional oil, it will be interesting to see if it will be so efficient that it will make money where others have failed. Exxon is coming late to shale oil, and many of the best locations have already been drilled. Moreover, Exxon is subject to the same problems of moving oil to markets and shortages of workers and other infrastructure in the region. Exxon’s CEO Darren Woods, however, expects strong growth through 2025 when he’s expecting to produce much as 800,000 b/d from the Permian and the Bakken Basins.
2. The Middle East & North Africa
Iran: Iran’s revenues from crude and oil products grew by 55 percent between March and October compared to the same period of the previous year, according to data from the Central Bank of Iran. Between March and October, Iran’s oil revenues were helped by record exports in April and May, and later by high oil prices in the late summer and early fall.
After July, however, Iran’s oil exports started to drop as buyers were unwilling to commit amid uncertainties over whether anyone would be receiving a US waiver to continue importing oil from Iran. The US’s announced policy of driving Iranian oil exports down to ‘zero’ led to fears of a supply crunch, and oil prices shot up to four-year highs in early October. In October, however, crude oil exports from Iran to Asian countries—its biggest clients—sank to average 762,000 b/d, according to customs data and shipping reports. This was the lowest monthly average for Iranian crude oil exports to Asia in five years and a 56.4-percent decline on an annual basis. The US sanctions appear to have cut Iran’s crude exports by around 1 million b/d, but Tehran is still estimated to be exporting more than 1 million b/d.
Switzerland is close to launching an initiative to let companies sell food, medicine, and medical devices to Iran using a payments channel that would be the first such mechanism to win Washington’s approval. Berne’s humanitarian supplies plan comes as leading EU powers plan to set up a mechanism to finance broader trade with Tehran.
A court in Paris fined France’s Total $572,000 for having bribed public officials in 1997 in exchange for securing oil and gas contracts in Iran. Total has been accused of paying 30 million in bribes under the cover of a consultancy contract to obtain a deal to develop the gas field South Pars in Iran. In 2017, Total became the first major to have returned to do business in Iran after the earlier sanctions were lifted, with the multi-billion-dollar South Pars 11 gas development project. However, after the US withdrawal from the Iran nuclear deal this year, Total said in May that it would not continue to participate in the South Pars 11 gas project and would be out of Iran before November 2018.
Iraq: Iraqi Oil Minister Thamir announced last week that US’s Schlumberger Ltd will drill 40 wells in the giant Majnoon oilfield which currently produces some 240,000 b/d. In June, Royal Dutch Shell exited Majnoon and handed the field’s operations over to Basra Oil.
The Trump administration has granted Iraq a new, 90-day exemption from sanctions targeting Iran, enabling Baghdad to continue energy imports that account for about one-third of the country’s electricity supply. When the sanctions first came back into effect, on November 5th, the US granted a 45-day waiver that has now been extended by another 90 days.
Saudi Arabia: The kingdom’s crude oil exports jumped to a 22-month high of 7.70 million b/d in October, as the country increased shipments ahead of the return of the US sanctions on Iran. Exports in October rose by 268,000 b/d from September to the highest level since January 2017, when the initial OPEC/non-OPEC production cut deal began. Saudi Arabia’s crude oil exports in September had also increased from August – by 219,000 b/d to 7.43 million b/d. The high Saudi oil exports in September and October are believed to be a response to the US pledge to drive Iranian exports down to ‘zero,’ which oil traders interpreted as an imminent supply crunch.
After oil prices plummeted again last week amid fears of oversupply, Saudi Energy Minister al-Falih said that he expects global oil inventories to drop by the end of the first quarter next year and that we will achieve a balance between supply and demand in 2019.
King Salman announced that the Kingdom will spend 7 percent more next year, or around $295 billion. This breaks the record 2018 budget $261 billion and sparks concerns about the economy’s sustainability as the increase for next year includes a hefty bill for cost-of-living allowances introduced this year. The cost-of-living allowances were instituted at the start of this year to stimulate economic growth, but also to strengthen support for Crown Prince Mohammed whose policies have met with mixed reactions. It’s no coincidence that the allowances target public servants and military personnel, besides pensioners and the poorest segments of society.
After the kingdom announced the record government budget for 2019, analysts warned Saudi Arabia will require oil prices higher than $84 per barrel, some $30 above current world prices, to avoid running another deficit.
Libya: The National Oil Company (NOC) declared force majeure on operations at El Sharara oilfield last week, a week after the company declared force majeure on the field’s exports. The 315,000 b/d oilfield located in the south of the country was seized by a local militia group trying to get on the payroll as oilfield guards. This is a recurring theme in Libya, where many see seizing NOC facilities as an easy way to get the attention of weak governments.
The oilfield remained closed at the end of last week with the state oil firm NOC still resisting pressure from some officials to pay off the protesters which shut the field down. Prime Minister Fayez al-Sarraj flew to the oilfield last week to meet protesters who seized the southern facility and called the demands of the protestors legitimate. Preparations were being made to restart output, but conflict erupted between the government and NOC which wants to stop getting blackmailed by protesters, who occupy fields to demand cash and jobs.
3. China
Beijing will buy little or no crude from the US in the early weeks of 2019 despite a truce in a trade war between the two countries. This means that the US will continue to hold only a sliver of China’s market even as a wave of new refining capacity starts up there. It also suggests that China is unlikely to use crude purchases to help plug a widening trade gap with the United States, which remains a core source of tensions between the two.
Sinopec Economics & Development Research Institute expects China’s oil product exports to rise 9 percent year on year to 51 million tons in 2019, as an increase in domestic product supplies surpasses demand growth. The institute noted that “Oil product surplus will surge, and competition will be more intensive, as two greenfield independent refining and petrochemical firms will bring about 10 million tons of new oil product supplies to the domestic market, which will be much higher than the domestic demand growth of 6 million tons.”
China National Offshore Oil Corporation (CNOOC) has signed agreements for oil and gas exploration offshore China with nine international companies including oil majors Chevron, ConocoPhillips, Shell, Total, and Equinor. CNOOC and the nine companies will share development opportunities in areas located in the Pearl River Mouth Basin offshore China.
China is set to tighten its sulfur-limit restrictions for ships by extending the 0.5percent bunker fuel sulfur limit from the initially designated Emission Control Areas (ECAs) to the entire coastline. Given the rising concerns over environmental pollution, tightening sulfur-limit restrictions was to be expected. Meanwhile, rising coal imports may lead to higher coastal coal freights. Despite the restrictive measures taken by the government, China imported 271 million tons of coal in the first 11 months of 2018, up 9.3 percent over 2017.
4. Russia
Russian energy minister Novak expects his country’s crude oil output in 2019 to be around 555-556 million tons (11.145-11.165 million b/d) but said this figure could be revised downwards due to OPEC+ agreements to cut production. A lot will depend on Russia’s oil production policy after the first half of 2019. The new OPEC+ deal, under which Russia will be cutting 228,000 b/d, is for six months with an option to review in April. Russian oil companies will reduce their production by that amount during the first quarter of 2019. Novak said this reduction would be achieved during the first quarter as production has exceeded 11.42 million b/d so far in December.
Russia’s oil production has been on an uninterrupted upward trend, thanks to new oilfields coming onstream after 2008 when it declined amid a worldwide financial crisis and plunging oil prices. If production turns out to be around 11.15 million b/d next year, it will be the first decline in ten years.
5. Nigeria
An Italian judge said last week that international oil companies Eni and Royal Dutch Shell were fully aware that their purchase of a Nigerian oilfield in 2011 would result in corrupt payments to politicians and officials. The companies bought an offshore field for about $1.3 billion in a deal that spawned one of the industry’s largest corruption scandals. It is alleged that about $1.1 billion of the total went to agents and go-betweens.
France’s Total is set to begin exports from the new ultra-deep Egina oil field offshore Nigeria in February 2019, at an initial rate of just over 100,000 b/d. The Egina oil field is based on a subsea production system connected to a floating production, storage and offloading (FPSO) unit. The field’s production capacity is forecast at 200,000 b/d—around 10 percent of Nigeria’s total oil production. According to Bloomberg estimates, 200,000 b/d in exports will make Egina the fourth biggest Nigerian crude grade in terms of volumes. The international oil companies working in Nigeria are doing their best to move their operations offshore where they are relatively immune to theft and sabotage by militant groups. It has been about ten years since an offshore facility was attacked by militants.
6. Venezuela
Oil output is down from over 2.2 million b/d in January 2018 to some 1.1 million in November. That represents a fall of over 68 percent from the country’s peak production of almost 3.5 million b/d in 1998. Some believe that production is already below 1 million b/d.
President Maduro has replaced the official running PDVSA’s oil-production joint ventures, two people familiar with the matter said on Friday. Rafael Urdaneta, who became vice president of PDVSA, will be replaced by current oil ministry official Radames Gomez. Urdaneta, a former housing official, has been in frequent disputes with foreign partners over payment delays involving oil-for-loan pacts.
A group of investors is demanding the Venezuelan government pay off both the interest and principal of a defaulted $1.5 billion bond that won’t mature until 2034, escalating the battle between bondholders and President Nicolás Maduro’s administration. The group of five investment firms owns about $380 million worth of the sovereign debt that has been in default since January, according to S&P Global Ratings. The default, plus the size of the firms’ stake, gives the group the right to call for immediate payment, according to Mark Stancil, an attorney in Washington who represents the investors.
The investor group is the first to demand full payment of Venezuelan debt since the country began spiraling into widespread default late last year. US sanctions, a paucity of seizable assets, and the abundance of creditors have made investors reticent to push for payment, which will likely touch off complicated and costly legal battles.
7. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
Qatar Petroleum, the country’s state energy major, is looking to invest as much as $20 billion in LNG projects in the United States over the next few years. The investment is separate, apparently, from Qatar’s plans to boost its local production capacity from the current 77 million tons of LNG annually to 110 million tons by the early 2020s. (12/18)
Qatar Petroleum signed a deal with Italy’s Eni late Sunday to acquire a 35% stake in three offshore oilfields in Mexico, QP said in a statement. QP already holds some stakes in Area 1, as part of a Shell-Eni consortium participating in the exploration of five offshore blocks in the Perdido and Campeche basins. (12/17)
India imported 4.2 million b/d of crude oil in November, down 11.4 percent year on year. Crude imports were also down 19.4 percent from October. Analysts said the biggest decline in nearly four years was mainly due to lower overseas purchases by refiners after US sanctions on Iran, and also due to maintenance shutdowns by some refiners. (12/21)
In North Korea, coal gasification may have freed supplies of imported fuel for the military, among other uses, experts said. A fresh drive since 2016 to generate chemical products from coal was also designed to allow them to face down sanctions—in perpetuity if necessary. China, North Korea’s longtime ally, has provided technology and expertise for the coal-conversion efforts. (12/18)
Mexico’s Pemex will focus on existing shallow water assets and refining next year at the expense of riskier, deepwater projects under a new government that has vowed to turn around the ailing company. The 2019 budget blueprint presented on Saturday by officials of President Andres Manuel Lopez Obrador calls for some $23 billion in discretionary spending for the company known as Pemex, up about 14 percent from this year. (12/17)
Canada’s federal government will provide a $1.2-billion lifeline to Alberta’s energy industry, adding that most of the funds will be used for “job support.” The report comes on the heels of protests in Alberta against the lack of oil transport capacity that has seen the price of Canadian crude take a nosedive, hitting not just producers’ bottom lines but their workforce as well. (12/19)
In British Columbia, ExxonMobil has withdrawn its Canadian liquefied natural gas (LNG) export project WCC from an environmental impact review, effectively meaning that the plan has been shelved. The WCC LNG project, led by Exxon and also participated in by Imperial Oil Resources Ltd, withdraws from the Environmental Assessment process in British Columbia. (12/21)
The US oil rig count increased by nine to 883 while the gas rig count decreased by one to 197, Baker Hughes reported. This was a turnaround after three losses in a row in the three weeks prior. The total number of active oil and gas drilling rigs now stands at 1,080. (12/22)
GOM: Activity booms, first-ever production, and key sanctions are some of the factors leading to a grand year for the US Gulf of Mexico. The Gulf is on track to have a stellar 2019, with increases in drilling and merger and acquisition activity, new project sanctions and first-ever production from a Jurassic play. (12/21)
ANWR: The Coastal Plain of the Arctic National Wildlife Refuge has nearly 428,000 acres with high potential for petroleum resources, according to a draft environmental impact statement. A tax reform bill signed into law roughly a year ago by President Donald Trump requires Interior to hold at least two lease sales in ANWR by the end of 2024. These sales must both offer at least 400,000 acres of the “highest hydrocarbon potential lands” within the Coastal Plain and allow for 2,000 surface acres of federal land to be used for production and support facilities. (12/21)
East coast lockdown: Attorneys general from nine coastal states are intervening in a lawsuit aimed at blocking seismic surveys that could help pinpoint oil under Atlantic waters but also imperil whales and dolphins. The move brings the heft and resources of top state law enforcement officials to a fight over the future of oil and gas exploration along the US East Coast. (12/21)
Gasoline prices fell another 5 cents last week, to $2.37 per gallon, and the price drops that have been going on for about 10 weeks straight may continue at least to the end of the year, thanks to slowing demand and plentiful supplies. (12/19)
Inventories of ultra-low sulfur diesel on the US Gulf Coast hit a four-year low during the week ended December 14, EIA data showed Wednesday. USGC ULSD stocks plunged 1.37 million barrels to 30.23 million barrels last week. The last time they were reported lower was November 7, 2014, at 30.03 million barrels. The draw came on the back of USGC production rates falling 30,000 b/d to 2.76 million b/d. (12/20)
ExxonMobil Corp. is calling on the EPA to regulate emissions of methane from all new and existing oil and gas wells across the country. Exxon has two reasons to back such a regulation. First, it is facing pressure from investors and lawsuits over climate change. By calling for regulations, it’s an attempt to show Exxon wants gas to be as clean as possible, even if those regulations never happen. Second, as a massive global company, Exxon is positioned to benefit financially over smaller companies. It can easily afford pollution-control equipment that others have a harder time obtaining. (12/18)
Bunker fuel conundrum: When the International Maritime Organization announced it would introduce a new, lower sulfur emission ceiling for bunkering fuel, many in the energy industry worried that demand for high-sulfur fuel oil would suffer a blow from which it would not be able to recover. But by January 2020, when the new emission rules come into effect, the number of scrubbers both installed and ordered could reach nearly 2,300. And all these vessels will be producing sulfur acid-rich wastewater from the scrubbers and will need high-sulfur fuel. (12/18)
The Port of Houston has grown thanks to its hometown energy industry but has also recently invested hundreds of millions in new infrastructure to attract the potentially more lucrative larger container ships. Houston is the largest US port for energy exports, and exports of oil and byproducts such as natural-gas liquids are booming now that the US is pumping crude at a record of more than 11 million b/d. In contrast to the energy exports, some of the container ships are unloaded by the port, bringing it substantial revenues. (12/20)
US liquefied natural gas export capacity is on the brink of doubling in 2019, which will boost the super-cooled fuel’s influence on the US natural gas market, where volatility surged in 2018 after several years of slumber. LNG exports have been the fastest growing source of US natural gas demand since the country started ramping up exports in 2016 and are expected to expand deliveries in the coming years as several more export terminals enter service. Its imprint is being felt in the US gas futures market, which in November experienced its longest stretch of extreme volatility in nine years due to demand, low inventories and unseasonably cold US weather. (12/20)
Biofuels bypass: The US EPA granted oil major Exxon Mobil a financial hardship waiver this year temporarily freeing its Montana refinery from US biofuel laws, three sources familiar with the matter told Reuters. Exxon, which reported earnings of almost $20 billion in 2017, became the largest known company to be awarded a such a waiver by the Trump administration’s EPA under a program meant to protect the smallest fuel facilities from going bust. (12/20)
E-truck: Daimler Trucks North America has delivered the first vehicle in its Freightliner Electric Innovation Fleet—a Freightliner eM2—to Penske Truck Leasing, fulfilling its promise to put an electric commercial truck in customer’s hands in 2018. The Freightliner eM2 106 is intended for local distribution operations in the food sector and last-mile delivery services. The batteries of the new electric version provide 325 KwH for up to 480 hp. The range of the eM2 is around 230 miles. (12/21)
Global demand for coal, an energy source that has raised air quality concerns, is set to rise for the second year in a row in 2018 and will remain stable in the next five years. Declines in Europe and North America are offset by strong growth in India and Southeast Asia, according to a report from the IEA, which expects 0.2%/year growth over the next five years. (12/20)
The future of the nuclear power industry lies in China. The Chinese are presently building more nuclear electric power generating stations than any other country. This year, the Chinese will add three more nuclear power stations to their fleet bringing their total up to 40, while eighteen nuclear plants are also under construction. According to MIT estimates, the Chinese can erect a nuclear plant for half the cost of a plant here in the US. If so, what’s the problem? First, let’s put the numbers into perspective. Nuclear power accounts for about 4 percent of Chinese electric power production. (Nuclear accounts for about 20 percent of electric power generation in the US.) Solar and wind generation accounts for 7 percent of production in China and the renewable component has been growing far faster than nuclear. (12/20)
EDF Renewables North America said on Wednesday it had formed a joint venture with oil and gas firm Royal Dutch Shell’s new energies division to co-develop a lease area for offshore wind energy in New Jersey. The area, spread over 183,353 acres and located off the coast of Atlantic City, has the potential to produce about 2,500 megawatts of offshore wind energy. (12/20)
Climate team: A collection of US northeastern states already has a regional cap-and-trade program for major power plants. Now, the region is pursuing a similar approach for transportation, an ambitious and challenging endeavor, but one that is an outgrowth of frustration with inaction at the federal level. The aim of the Transportation and Climate Initiative, as the program is called, would be to reduce greenhouse gas emissions from cars and trucks while structuring the program in such a way that it leads to net economic and social benefits. (12/21)
Ten Charts Show How the World is Progressing on Clean Energy
By Iain Staffell, originally published by Carbon Brief
December 21, 2018
https://www.resilience.org/stories/2018-12-21/ten-charts-show-how-the-world-is-progressing-on-clean-energy/
Peak Diesel or no Peak Diesel? The Debate is Ongoing
By Antonio Turiel, Gail Tverberg, Ugo Bardi, originally published by Cassandra's legacy
December 19, 2018
https://www.resilience.org/stories/2018-12-19/peak-diesel-or-no-peak-diesel-the-debate-is-ongoing/
Richard Heinberg on Our Bonus Decade
By Alex Wise, Richard Heinberg, originally published by Sea Change Radio
December 18, 2018
https://www.resilience.org/stories/2018-12-18/richard-heinberg-on-our-bonus-decade/
Peak Oil Review 17 December 2018
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
https://www.resilience.org/stories/2018-12-17/peak-oil-review-17-december-2018/
Quote of the Week
“Last week’s meeting reminded us that the Big Three of oil – Russia, Saudi Arabia, and the United States – whose total liquids production now comprises about 40 percent of the global total, are the dominant players.” International Energy Agency (12/14)
1. Oil and the Global Economy
Oil prices were volatile last week trading inside a narrow range of about $1.50 a barrel and climbing or falling in response to the news of the day. Reports of the OPEC production freeze, the Iran sanctions, or production slowdowns in Libya and Venezuela push prices up while news of economic problems and falling equity markets tend to push prices down. At week’s end, New York futures settled at $51.20, about where they have been since the $7 a barrel price in mid-November. London futures closed $9 higher at $60.28 which is about they have been since November 22nd.
For the past three weeks, oil prices have been relatively steady. Fears of the reduction in oil supplies stemming from the Iranian sanctions have been abated for a while as the US has issued partial waivers. The OPEC+ production freeze will not take hold until next spring, and US shale oil output is still rising despite the $25 decline in prices during October and November. While there are signs that US shale oil production is starting to slow, this will not become apparent until later this winter. While oil prices are still $30 above the lows hit three years ago, a prolonged period of US prices hovering around $50 a barrel is likely to result in lower US oil production as it did 3-4 years ago.
The big unknown is the global economy. While the US has been doing well of late, likely due to the stimulus of tax cuts that took place earlier this year, the situation in Europe and China is not looking so good. There are numerous indications that China’s economy is slowing despite the glowing GNP numbers Beijing keeps publishing. This pullback is spooking the global equity markets as is the uncertainty about the effects of the already imposed and impending new US and Chinese tariffs. As we have seen so many times in the past, a significant economic recession is likely to reduce the demand for oil by so much that all the sanctions, production cuts, and local production outages the markets worry about today are likely to become minor issues in the determination of oil prices.
OPEC: Concerns are rising that the OPEC+ production freeze may not be as effective as thought. The announcement by Moscow that it would only cut production slowly starting with 50,000-60,000 b/d in January suggests that it may be many months before the effects are seen. The non-OPEC group is expected to reduce output by 400,000 b/d, but if Russia is only going to do its part gradually, the non-OPEC cuts might not reach the promised levels anytime soon. Because there are no country-specific allotments, it will be hard to hold any producer accountable. Even if OPEC+ were to adhere to its promised cuts, it still might not be enough. The fears that the global economy is faltering are growing, demand is showing signs of strain, and supply continues to rise. The EIA still expects significant production growth from US shale despite the downturn in prices.
The nature of the nearly 60-year-old cartel is changing as it becomes more involved in shifting world geopolitics. The recent meeting to initiate another production freeze to drive up prices shows that OPEC by itself can no longer be effective without help from Moscow and its associates in the former Soviet Union. Outside of the Saudis, Kuwait, the UAE, and the troubled Iran and Iraq, the rest of the coalition exports so little oil these days they are meaningless as world production hits 100 million b/d. Most of the world’s oil production now comes from Saudi Arabia, Russia, the US and the handful of countries associated with the big producers.
Given the nature of US and Canadian economic organization, they are unsuited to play the same role in regulating oil production as s do those countries with state-owned national oil companies. The developing Moscow-Riyadh duumvirate together control enough oil production to push up prices; however, it is doubtful that they can increase production enough to lower prices in a worldwide market that already consumes some 100 million barrels per day. The special relationship that the US has had with the Saudis since World War II is fracturing as the new crown prince is pursuing policies that are distasteful to the US and other Western nations. This situation, in turn, is driving the Saudis and the Russian closer as they have a common interest in oil prices and a similar approach to governing.
US Shale Oil Production: The industry press is still discussing the implications of the United States Geological Survey’s announcement that the Permian Basin contains 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids. An important caveat in the announcement is that these figures represent technically recoverable resources. “Whether or not it is profitable to produce these resources has not been evaluated.” This is the issue of “sweet spots” and whether or not it costs more to drill, frack, and operate a well than the value of the oil or gas that is ultimately produced. In North Dakota and south Texas, drillers are already being forced to drill in less profitable locations. Given that all the “new technology” that is being touted by industry does not come for free and adds to the cost of each barrel produced, it may be sometime before the announcement of more oil being assessed as existing in the Permian is significant. Given that the world is currently consuming some 36 billion barrels of oil per year, the newly “found” oil would only cover a year’s consumption even if it can all be produced.
With oil prices back down to circa $50 a barrel in the US, several major oil companies have announced that they plan to increase their investment in shale oil. They do not have much choice if they plan to stay in the oil business. Offshore oil production is very expensive and takes many years of work before the oil begins to flow, while shale oil wells can be drilled quickly and can produce oil in a matter of months. Unlike the smaller producers, larger oil companies have incomes from conventional wells drilled years ago and do not risk bankruptcy if some newly drilled shale oil wells are not particularly profitable at first. These companies are banking on the efficiencies a larger company can bring to the shale oil business and on oil prices spiking to profitable levels in the next five years.
In the meantime, there are indications that US shale oil production is slowing and may even contract as it did three years ago. The US rig count continued to drop last week, and layoffs are in the offing for hundreds of oil and gas workers in Texas. While North Dakota’s oil output averaged over 1.39 million b/d in October, up nearly 32,600 b/d from September, the state government warned that a combination of low oil prices, limited gas capture infrastructure, and cold weather could slow future production. The state’s oil regulator said, “The signals I’m hearing from industry … they’re going to slow investment through the first quarter of next year.”
2. The Middle East & North Africa
Iran: The China National Petroleum Corp (CNCP) suspended investment in Iran’s South Pars natural gas project in response to US pressure last week. South Pars is the world’s largest gas field, and CNPC’s investment freeze is a blow to Tehran’s efforts to maintain financing for energy projects amid the re-imposition US sanctions. In August, CNPC company replaced France’s Total in the project for development of Phase 11 of South Pars Gas Field, increasing its stake in the deal to as much as 80 percent, with Iran holding the rest. Iranian officials said they would determine whether China’s CNPC has broken accords related to the development of South Pars.
The loss of Chinese involvement in the development of South Pars could be a major blow to Tehran’s plans to develop the world’s largest natural gas field and become a major exporter of natural gas to Europe and India.
Iran has set the official selling price of its light crude for its Asian buyers at 30 cents above the Oman/Dubai average for January, $1 lower than the previous month. Tehran has also cut prices for the other three crude grades it sells to Asia, keeping Iranian oil prices at the largest discounts in more than a decade against Saudi crude.
According to data released Wednesday by OPEC, citing secondary sources, Iranian crude oil production showed the biggest decline among members in November, as it fell by 380,000 b/d from October to 2.95 million b/d. India’s monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the US sanctions.
Japanese refiners plan to resume loadings of Iranian oil next month but won’t take the risk of loading cargoes beyond March amid doubts over whether Washington would extend the 180-day sanctions waiver.
Iraq: Iraqi oil exports in November fell by 80,000 b/d to 3.80 million. Increased exports through the Kurdistan region was offset by a fall in loadings from the Persian Gulf terminals due to bad weather. November crude production was only marginally lower, averaging 4.455 million b/d from 4.46 million b/d the previous month. With crude oil exports in November from Iraq’s Gulf terminals and Ceyhan falling to a seven-month low of 3.3372 million b/d, the latest data implies that exports by the Kurdistan Regional Government totaled 437,000 b/d in November up from 420,000 b/d the previous month.
Baghdad says total domestic consumption for power generation and refining was 646,000 b/d, compared with 571,000 b/d and 507,000 b/d in October and September respectively. With US pressure to stop importing Iranian natural gas to produce electric power, Baghdad is going to have to consume more crude domestically to keep the lights on.
Iraq has increased production at its southern Halfaya oilfield operated by PetroChina by 100,000 b/d to a total of 370,000 b/d. Production rose after the completion of a new oil processing facility. The new facility can process 200,000 b/d of crude oil and will help further boost output from Halfaya to reach 470,000 b/d. Iraq is one of the last places on earth with shallow, easy-to-produce conventional oil. This is the reason why major foreign oil companies have been able to increase Iraq’s oil production so rapidly in the last decade.
Saudi Arabia: Saudi Arabia’s oil minister Khalid Al-Falih said last week the kingdom produced 11.1 million b/d in November but should reduce production by 400,000 b/d in December amid lower demand and the production agreement. In December, the kingdom is expected to produce 10.7 million b/d, and then reduce its production by 500,000 b/d in January, to average 10.2 million, he said. The commitment is for Saudi Arabia to cut its production by 2.5 percent from its October levels, which would mean roughly 267,000 b/d. Demand in Saudi Arabia is dropping due to cooler weather, but Al-Falih also said international demand for its crude has been falling. The peak seen in mid-2018 was driven up by anticipation of the effect of sanctions on Iraqi production on the market, he said. Buyers ordered more Saudi crude to fill their inventories, and now are asking for fewer shipments as the US sanctions on Iran have been “relaxed.
A combination of the Khashoggi affair and the war in Yemen are starting to weigh on the Saudis’ position in the world. The Trump administration still is standing behind King Salman and his son; however, in a historic rebuke of the Trump administration’s Saudi policy, senators voted to end US support for the Yemen war, then unanimously held Saudi Arabia’s crown prince responsible for the murder of Jamal Khashoggi. While the Senate vote will change little, it is a harbinger of growing congressional unease with aspects of the U.S.-Saudi partnership, which Trump has made the pillar of his entire Middle East strategy, particularly with regard to confronting Iran. The discomfort will grow only more urgent next month when a new, Democratic-led House convenes.
For now, little seems likely to happen to the US-Saudi relationship or the power structure in Riyadh; however, as Western interest decreases in investing in the Saudis new economic initiatives, this could change. The recent drop in oil prices has put that Saudi government back into the red. Given that the Saudis and their Gulf Arab associates control a major part of world oil exports, any political disorders in the area are always a matter of concern.
Libya: Last Monday the National Oil Company (NOC) declared force majeure on exports from the 315,000 b/d El Sharara oilfield after it was seized ten days ago by a local militia group. The nearby El-Feel oilfield, which uses the same power supply as El Sharara, was still producing normally, a spokesman for the company said, without giving an output figure. The field usually pumps around 70,000 b/d. On Friday, the NOC announced that it is against paying a ransom to an armed group that has halted crude production at the oilfield. “Any attempt to pay a ransom to the armed militia which shut down El Sharara would set a dangerous precedent that would threaten the recovery of the Libyan economy.”
3. China
China’s crude imports averaged more than 10 million b/d for the first time in November, as they beat the previous record for highest crude imports set in October. Imports were up by 8.5 percent compared to November 2017 and surpassing the previous record of 9.61 million b/d, which was established in October 2018. Demand was driven by independent refiners who were rushing to fulfill their 2018 oil import quotas before they expire. In November, the independent refiners—the so-called teapots—continued to buy high volumes and some of them increased intake as they start trial runs at newly-built oil refineries. An independent refiner Hengli is planning trials at its new 400,000 b/d refinery at Dalian, in northeastern China.
Despite the increase in oil imports, a sharp slowdown in Chinese spending growth and manufacturing is adding to the gathering gloom for the international economy, sending financial markets lower around the world at the prospect of global loss of momentum. Retail sales grew at the slowest pace in 15 years in November, while factory output was the weakest in nearly three years, suggesting economic stimulus measures enacted by Beijing earlier this year have failed to reverse dwindling growth. Car sales have plunged 10 percent from last year and are down 14 percent in November from October. The housing market is stumbling. Some factories are letting workers off for the big Lunar New Year holiday two months early. Many economists say the slowdown is the worst since the global financial crisis a decade ago when Beijing was forced to plow trillions of dollars into its economy to keep growth from derailing.
The big question is what will happen next year, particularly in coastal areas dependent on exports to the United States. Many supply chains have been stockpiling with extra inventory so that American importers may need fewer goods in the months ahead. If any of this economic decline is due to the US administration’s trade war is unknown. Most believe the impact of the reciprocal tariffs has not yet been felt. One well-known factor is that the oil markets have become very sensitive to the ups and downs in the news about the Sino/US trade negotiations.
4. Russia
Russia will cut its liquids output by 50,000-60,000 b/d in January under the latest agreement with OPEC, Energy Minister Novak said Tuesday. Russia committed to reducing output step by step, as freezing winter temperatures in the country make a rapid reduction impractical. The minister did not elaborate on the plan for subsequent months, which is supposed to see Russia eventually reduce output by 228,000 b/d. Novak also said that the OPEC+ group of oil-producing countries maintains its target to keep global stocks at around the five-year average under the new deal, agreed last week in Vienna. Moscow’s immediate production cut is only a fraction of what the Saudis say they are cutting next month, but Russia’s demand for heating oil spikes in the winter, while the Saudis need for air conditioning plummets.
Talks about a possible asset swap deal between Royal Dutch Shell and Gazprom have been suspended, Kommersant business daily reported on Wednesday. The memorandum on the possible asset swap was signed in 2015 and was seen as a coup for Gazprom at a time when many Western companies were reducing their exposure to Russia because of Western sanctions over Moscow’s actions in Ukraine. Plans for the expansion of the Sakhalin-2 plant, which produces 11 million tons of liquefied natural gas per year, hinge on the outcome of the talks with the Sakhalin-1 consortium led by Exxon Mobil Corp and Rosneft about gas supplies.
5. Nigeria
Despite assurances that Nigeria is working to diversify its economy away from oil, the country continues to depend heavily on oil exports, and consequently, on oil prices, for revenues. The value of Nigeria’s crude oil exports in the third quarter accounted for 85.4 percent of the value of all exports. Other oil products accounted for 11.2 percent of Nigeria’s total exports, while non-oil products made up a mere 3.4 percent of the country’s exports in the third quarter.
Petroleum product Marketers and Depot Owners Associations gave the government yet another ultimatum the week before last, to redeem their long overdue balance for over N800bn for fuel, already sold at Government regulated retail price of N145/liter. The N800bn is the difference between government’s regulated price and the actual open market price that the retailers have to pay for their imported gasoline. The marketers are also demanding compensation for exchange rate differentials and relief from the extended burden of interest on their bank loans.
The open market price for gasoline in neighboring countries is presently between N305 – N360/liter while the government regulated retail price is N145/liter in Nigeria. This difference caused gasoline wholesalers and retailers to suffer an N800 billion loss in recent years. The much lower gasoline price in Nigeria has encouraged large-scale cross-border smuggling of Nigeria’s gasoline imports to neighboring nations such as the Republics of Benin, Togo, Cameroun, Niger, and Chad.
Minister of State for Petroleum Resource Kachikwu said that President Muhammadu Buhari-led government had not spent a dime on the country’s four refineries. More than N264 billion was spent on maintenance of the refineries by successive governments before the present administration but the refineries are in terrible condition, and the bulk of the country’s oil products must be imported. The minister said all the efforts made so far to fix the refineries have been to find private investors to collaborate with government to put these refineries in order and then save the government money. “What is important is that for the first time, the president had been able to say that he would repair the refineries without government money.”
For an oil exporting country of 191 million people, the lack of much refining capacity is ridiculous. The government is spending billions each year to import refined oil products and is leaving much of the costs of these imports on the back of the oil importing firms.
6. Venezuela
Following a three-day visit to Moscow two weeks ago and meetings with dozens of Russia’s top officials, President Maduro boasted of $6 billion worth of investment pledges and a string of other deals designed to help prop up its collapsing economy. Maduro said Moscow had pledged to invest $5 billion in joint ventures in the country’s oil sector, $1 billion in mining projects and to export 600,000 tons of wheat to Venezuela to cover its 2019 needs. He said that Russia had also agreed to modernize Venezuela’s armed forces and to look into potential projects in the country’s diamond industry.
However, following Maduro’s visit, Russian officials sought to damp expectations of any major financial support. “Quite obviously Rosneft would have made a statement and bragged about a deal of that size had it really happened,” a Rosneft official said. “Besides, the amount of investment in the joint oil projects Maduro named sounds suspiciously close to the amount in the existing deal.”
Several years ago, Rosneft lent $6 billion to PDVSA partly as pre-payment for crude. More than half of this debt remained outstanding as of the end of September. Last November Moscow agreed to restructure $3.15 billion worth of this debt after international rating agencies said the country had defaulted on $60 billion worth of obligations. In recent months there have been reports that Rosneft wants its money back as the amount of oil being shipped to Russia has dwindled.
A joint venture with a state-owned Chinese company, Sinovensa, accounting for around 10 percent of Venezuela’s oil output has nearly doubled production in the past seven months, PDVSA said last week. “They are managing to recover so-called ‘deferred output’ which they had lost due to issues like equipment theft,” said Antero Alvarado, Venezuela director at consultancy Gas Energy Latin America. “But this will have a short-term impact because output will fall again, and they will need to drill more wells.”
Venezuela told OEPC it produced 1.46 million b/d in November, up from 1.43 million in October. Data from secondary sources showed a decline to 1.1 million b/d in November, according to the OPEC report, published last Wednesday.
Canadian miner Crystallex has accused Venezuela of breaching a $1.4 billion settlement agreement as PDVSA continued to try and overturn a court order that allowed Crystallex to take control of the stock of Citgo’s parent company. Crystallex had already hired banks to organize a forced sale of Citgo stock in order to get its $1.4 billion, a lawyer for the Canadian mining company said, but the process has been suspended because Venezuela is appealing Crystallex’ accusation.
The issue is the ownership of Citgo. While Citgo is a unit of PDVSA, PDVSA is a state-owned company, according to a court ruling from earlier this year. The court’s decision was unique: government assets such as Citgo’s parent, PDVSA, are as a rule protected from lawsuits targeting a state. The judge said that Venezuela had blurred the lines between the government and the state oil firm, with a military official at the helm of PDVSA.
ConocoPhillips also won a case against Venezuela and earlier this year stepped up its efforts to obtain the money awarded by the courts by seizing PDVSA assets in the Caribbean. The strategy worked, and PDVSA coughed up US$345 million as the first part of a US$2-billion settlement.
7. Climate Change Conference
The rules that will govern the climate pact were approved on Saturday by the nearly 200 countries that signed the Paris agreement. The agreement passed over the weekend includes a universal system for measuring and reporting emissions, whereby all countries will abide by the same rules that will take effect in 2024. The rules will eliminate an earlier distinction between developed and developing countries over their commitments, but the final agreement failed to include provisions on a global carbon market mechanism.
Earlier in the week, objections from the US, Saudi Arabia, Russia and Kuwait over a recent scientific report from the Intergovernmental Panel on Climate Change sparked a heated debate that resulted in watered down language used to describe the study. The policy director at the Union of Concerned Scientists said that the deal was “a bit of a mixed bag”. “When you turn to climate ambition it is a fairly weak response to the clarion call from scientists just over two months ago.”
The major disagreement in the final hours of the meeting was over carbon markets — a provision for a global scheme that would allow countries to trade emissions reductions. The article related to this issue was largely deleted from the final agreement due to opposition from Brazil, with the carbon market discussion delayed to next year.
Absent leadership from Washington, the meeting did little to speed up the reduction in carbon emissions in response to the IPCC report. While several European governments are planning serious and expensive efforts to reduce carbon emissions, the major emitters, China, the US, India, and Russia, are doing little or nothing. It seems like the world’s climate will have to get far worse before people and their governments are ready to make major sacrifices.
(selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
8. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
The cut agreement: Last week, major oil producers meeting in Austria agreed to cut oil production by 1.2 million b/d. OPEC producers and non-OPEC oil exporting countries including Russia agreed last Friday to make the cut, which will be done during the first six months of 2019. (12/14)
War on diesels: Jürgen Resch is upending the German car industry— one court case at a time. The white-haired veteran of the country’s environmental movement is behind a sweeping legal campaign to uphold air quality by imposing driving bans in German cities. His main target: diesel cars made by the likes of Volkswagen, Daimler, and BMW. There is no dispute over his record: an unbroken string of courtroom victories, millions of furious vehicle owners and an industry reeling from reputational and financial blows, with potential losses running to billions of euros. (12/14)
EU car sales drop: Volkswagen, Renault, and Fiat Chrysler led an 8.1 percent decline in European car sales in November as the introduction of tougher new emissions tests continued to weigh on demand. Registrations fell to 1.16 million cars in the European Union and European Free Trade Association countries last month from 1.26 million in the year-earlier month. (12/14)
In Singapore, around $150 millions’ worth of oil was stolen from Shell’s biggest global refinery over four years, far more than the $10 million reported when police first revealed the heist earlier this year. Raids last January led to over a dozen arrests, including of several former employees of the local unit of Royal Dutch Shell. (12/14)
Australia overtook Qatar as the world’s largest exporter of liquefied natural gas (LNG) for the first time in November. The surge in Australian exports follows the start-up of many export projects in the country over the past three years, most recently the Ichthys start-up offshore its northern coast. In November, Australia loaded 6.5 million tons of LNG for exports while Qatar exported over 6.2 million tons. (12/10)
Off French Guyana, Total S.A. said Monday it dispatched a ship to begin drilling off the coast and assured it won’t damage coral reefs in the area. The move comes just days after Brazil denied it a license for work on its offshore portion, and despite warnings from environment protection organizations. (12/12)
In Mexico, new President Andrés Manuel López Obrador’s ultimatum to his country’s oil industry: pump more oil in three years. He has announced an ambitious $3.7bn cash injection to reverse cratering production at debt-laden national oil champion Pemex, as well as a goal to halt oil exports, become self-sufficient in fuel and build a new $8bn refinery. (12/15)
Mexico’s energy regulator on Tuesday canceled two oil field auctions scheduled for February after the new leftist government said it would not hand over more resources to private companies until they proved themselves as producers. (12/12)
Since Alberta Premier Rachel Notley announced an oil production cut of 325,000 b/d beginning next month, the spot price for Western Canadian Select has gained over 70 percent. The deep discount, at certain times more than US$40 a barrel, had closed by more than half over the last eight days since the cut was announced. (12/12)
In Canada, Suncor Energy said it expects average upstream production to rise 10 percent in 2019, even after implementing Alberta’s mandated output cuts. Alberta has mandated temporary output cuts of 325,000 b/d until excess crude in storage is drawn down. Suncor forecast average upstream production of 780,000 to 820,000 barrels of oil equivalent per day (boe/d), an increase from about 730,000 boe/d in 2018. (12/15)
The US dropped oil rigs for the second week in a row, according to weekly data compiled by Baker Hughes, a GE Company. After declining by ten oil rigs the previous week, the US dropped another four rigs last week, bringing the total oil rig count to 873. Gas rigs remained flat this week, with no rigs added or cut. (12/15)
US crude oil output growth was expected to slow slightly for this year compared with previous forecasts, the US EIA said, but at a record 10.88 million b/d, the nation will end 2018 as the world’s top producer. Output this year was forecast to rise by 1.53 million b/d. (12/12)
US net imports have averaged 3.1 million b/d in 2018 to date. Ten years ago, just ahead of the shale revolution, the figure was 11.1 million b/d., the IEA said. (12/12)
LNG boom: The US is poised to become a much bigger player in the global supply of LNG. Cheniere and Dominion Energy are both exporting LNG produced from shale gas, and three more developers are expected to have export terminals up and running next year in Texas, Louisiana, and Georgia. (12/12)
Gas pipeline: Dominion Energy has suspended construction on the full 600-mile route of the Atlantic Coast Pipeline, except for some ‘stand-down’ activities, after an appeals court stay last week. Dominion said its action to halt work on the natural gas project was in response to the 4th US Circuit Court of Appeals’ stay of implementation of the US Fish and Wildlife Service’s biological opinion and incidental take statement. Both documents relate to the project’s impact on vulnerable species. (12/10)
Oil rig batteries: Siemens last week announced the launch of the first hybrid power plant for offshore rigs combined with energy storage featuring lithium-ion batteries. The company first unveiled the Blue Vault power supply and storage system in May this year in yet another sign of its growing focus on energy storage at just the right time. In the case of Blue Vault, Siemens said the system could reduce a rig’s fuel consumption by 12 percent with carbon dioxide emissions down by 15 percent. (12/11)
Dealing re vehicle mpg: When the Trump administration laid out a plan this year that would eventually allow cars to be less efficient and emit more pollution, automakers, the obvious winners from the proposal, balked. The changes, they said, went too far even for them. But it turns out that there was a hidden beneficiary of the plan that was pushing for the changes all along: the nation’s oil industry. Marathon Petroleum, the country’s largest refiner, worked with powerful oil-industry groups and a conservative policy network financed by the billionaire industrialist Charles G. Koch to run a stealth campaign to roll back car emissions standards. (12/14)
CA pushes EV buses: California on Friday became the first state to mandate a full shift to electric buses on public transit routes, flexing its muscle as the nation’s leading environmental regulator and bringing battery-powered, heavy-duty vehicles a step closer to the mainstream. Starting in 2029, mass transit agencies in California will only be allowed to buy buses that are fully electric under a rule adopted by the state’s powerful clean air agency. (12/15)
German EV truck: A battery-powered eTruck from MAN will be used by Porsche for logistics in the Stuttgart area. The truck is an 18-ton semitrailer tractor that can haul 32 tons. Lithium-ion batteries with a storage capacity of 149 kWh allow the eTruck to cover a range of 130 kilometers (81 miles). The truck can be charged in 45 minutes to go an additional 100 km. (12/15)
Battery boom: Daimler will buy more than $23 billion of battery cells for electric drive vehicles by 2030. The suppliers are already producing battery cells in Asia and Europe and are continuing to expand in Europe and additionally in the US. Daimler currently has battery cell supply deals with SK Innovation, LG Chem and China’s Contemporary Amperex Technology.
China’s output of new energy vehicles rose to 173,000 units in November, up 18.5% year on year. Production of NEVs, which are purely electric and plug-in hybrid vehicles that use lithium-ion batteries, in November was up 36.9% month on month. Over January-November, NEV output totaled 1.05 million units, up 63.6% year on year. (12/12)
EV fast-charging: In Germany, the FastCharge research consortium has presented a prototype for a charging station with an output of up to 450 kW. The new charging station is suitable for electric models of all brands with the European standard Type 2 variant of the widely used Combined Charging System (CCS). A Porsche research vehicle with a net battery capacity of approximately 90 kWh achieved a charging capacity of more than 400 kW on the new charging station, allowing for charging times of less than 3 minutes for the first 100 km range. An innovative cooling system makes this possible by ensuring even gentle temperature control in the battery cells. (12/14)
TX wind record: The Electric Reliability Council of Texas set a new wind output record of 19.2 GW in late Thursday, as a storm system was moving into the area with high wind. High wind generation broke the previous all-time high of 17.9 GW set in mid-November and broke the record several hours in a row before topping out at 19.2 GW. At the time when the record was set, more than 51% of the total load was served by wind generation. (12/15)
Offshore wind bid: A US government auction for three wind leases off the coast of Massachusetts ended on Friday with record-setting bids totaling more than $400 million from European energy giants including Royal Dutch Shell Plc and Equinor ASA. The two-day sale attracted 11 bidders and lasted 32 rounds. (12/15)
China’s climate chief Xie Zhenhua has warned that the UN climate talks are “deadlocked” in certain areas, as ministers from around the world scramble to reach an agreement before the talks end this weekend. China has been thrust into the spotlight at this year’s UN climate talks in Katowice, Poland, amid a leadership vacuum created by the US, which has said it planned to withdraw from the Paris agreement. In unusually strong language, Mr. Xie said he was “disappointed” at the US withdrawal and urged the country to reclaim its place at the climate talks. (12/14)
Air pollution killer: A new animal study by a team at Ohio State University suggests that a parent’s exposure to dirty air before conception may result in cardiac dysfunction in adult male offspring. The open-access paper is published in the Journal of the American Heart Association. The study used an in vivo mouse model of preconception exposure to PM 2.5 to investigate the adverse cardiac effects on male offspring. (12/10)
Peak Oil Review: 10 December 2018
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
https://www.resilience.org/stories/2018-12-10/peak-oil-review-10-december-2018/
Quote of the Week
“As a matter of our policy, we want to end all of those subsidies [for electric vehicles]. And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth…It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021. Larry Kudlow, White House economic advisor
1. Oil and the Global Economy
Oil prices surged briefly on Friday after the announcement of a 1.2 million b/d OPEC+ production cut; however, by the close NY futures were up only $1.61 to close at $52.61, and London was up about the same to close at $61.67. The bulk of the cut is to come from the Saudis and their Gulf Arab allies. Moscow is to cut production by 228,000 b/d but does not expect its cuts to start until spring, and the Iranians were exempted from the cut. Despite the announcement, oil prices were still down slightly for the week.
Last week was marked by concerns that the OPEC+ coalition would be unable to agree on an adequate cut or even any cut at all. Prices fell almost 3 percent on Thursday after the first day of the OPEC meeting ended with only a tentative deal to tackle weak prices. Analysts had only been expecting a cut of 1 million b/d, so the extra 200,000 barrels came as a surprise and led to a price rally. The cuts are not to start until the first of the year, and even Russian Energy Minister Novak admitted that the markets would be oversupplied for the first half of the year.
Opinions are split over the efficacy of the production cut with some saying that a fully-implemented cut will clear the oversupply while others fear that growing US shale oil production will offset the cuts.
The state of the global economy is still of concern to many oil traders. With signs of an economic slowdown coming in Asia, Europe, and the US, a million b/d production cut may not be enough to offset a drop in the demand for oil products if the economic situation turns really sour.
The OPEC+ Production Cut: The story of last week’s OPEC meeting seems to be one of concessions on the part of the Saudis who are taking by far the largest share of the cut while giving in to demands for exemptions by Iran, Libya, and Venezuela. Moscow stated its opposition to a reduction several times in the last few weeks, but in the end, agreed to a slow starting cut of 228,000 b/d. The Saudis were under pressure from President Trump who kept tweeting his opposition to any production cut that might drive prices higher. The Khashoggi affair and anti-Saudi bills floating around the US Congress are yet another aspect of the pressures the Saudis are facing. Following the meeting, Saudi energy minister Khalid al-Falih tried to calm Washington by saying “We try to keep the market within a reasonable band for consumers.”
US Shale Oil Production: Unless the OPEC+ production cut results in a significant retracing of the nearly $25 a barrel drop in oil prices that has taken place in the past two months, next year may not be a good one for US shale oil producers. Oilfield service companies this year have been hit by a slowdown in demand as regional oil prices have fallen with transportation bottlenecks faced by producer customers.
Schlumberger expects sales in the US to drop 15 percent in the final three months of the year compared with the third quarter due to several factors including the swift decline in crude prices, exhausted exploration budgets, and maxed-out pipelines moving oil from the Permian Basin. “We are seeing a significantly larger drop in activity than we expected,” said Patrick Schorn, executive vice president of wells at Schlumberger.
The cost of producing shale oil vs. its selling price is still a major issue despite the boom in shale oil production. Despite boasts of low breakeven prices, many shale companies have failed to take a comprehensive look at the all-in expenses of producing oil. According to the Wall Street Journal and consulting firm R.S. Energy Group, accurate breakeven prices that incorporate costs such as land acquisition come out to about $51 per barrel in the Permian, $57 per barrel in the Eagle Ford, and $64 in the Bakken. Most of the oil and gas pipelines planned for 2019 and 2020 will connect the Permian Basin with consumers and export terminals in the Gulf of Mexico. Until those pipelines arrive, shale oil producers in the Permian basin will continue receiving $10 to $13 less for each barrel compared to WTI levels. With oil trading in the low $50s, it is evident that little money is being made to generate the dividends that will attract new investment for capital expansion.
Unless oil prices rise above $100 a barrel again and stay there, it is difficult to foresee a future in which the US shale oil industry continues to produce oil at the pace various government agencies are predicting.
A new US Geological Survey study estimates undiscovered, technically recoverable resources in Wolfcamp and Bone Spring Formations in Permian Basin are more than two times larger than the size determined in a 2016 study. The Wolfcamp shale and overlying Bone Spring Formation in the Permian Basin contain an estimated mean of 46.3 billion barrels of oil. In addition, the USGS analysis finds that the Wolfcamp holds 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids. The Geologic Survey says that the higher estimate of recoverable oil comes from recent innovations in hydraulic fracking.
The new report was hailed by the Secretary of the Interior as proof that “American energy dominance is now within our grasp as a nation.” The CEO of the API commented that “Now the world’s largest producer of natural gas and oil, the United States is a global energy leader at the same time we are driving down GHG emissions.”
2. The Middle East & North Africa
Iran: Tehran was spared the pain of cutting production under the new OPEC agreement ostensibly because of the US sanctions. Given the problems facing Iran’s oil production under US sanctions in the coming year the 2.5 percent cut that was applied to most OPEC members likely will turn out to be insignificant.
Iran hopes that the special purpose vehicle that would allow the European Union to continue buying Iranian oil despite the US sanctions will become operational by the end of the year. The “special purpose vehicle” is to act as a cut out for European buyers of Iranian oil, allowing the EU refiners to buy oil with Iran without having to pay Iran directly.
Although Iraq would like to take over a large share of Iran’s oil exports, Baghdad’s overwhelming dependence on Iranian natural gas for its power stations gives Tehran considerable leverage. Last summer, when Baghdad was late with payments for the Iranian gas, Tehran turned off the flow, which led to power outages, which, in turn, ignited the protests that shook southern Iraq.
Iranian President Rouhani yet again threatened to close the Strait of Hormuz, which affects some one-third of all global oil shipping as it’s a key transit choke point in the Persian Gulf. On Tuesday Iranian state broadcasts carried his words, saying “if someday, the United States decides to block Iran’s oil (exports), no oil will be exported from the Persian Gulf.” He further vowed that the United States would not be able to prevent Iran from exporting its crude.
Iraq: Oil revenues fell steeply in November, as exports fell by an average 85,000 b/d. Even the resumption of Kirkuk oil sales via Turkey was not enough to offset southern export disruptions and sinking oil prices. For the first time in more than a year, Baghdad exported oil northward to Turkey’s Kirikkale refinery. But those gains were more than offset by a 3 percent drop in exports via the Basra Gulf, from 3.47 million b/d in October to 3.36 million b/d in November.
Improvised explosive devices were found in the vicinity of two oil fields in southern Iraq last week, as renewed protests over a lack of jobs and services continued. There were no casualties or operational interruptions at any of the impacted fields.
Saudi Arabia: At the end of the OPEC meeting last week Saudi Energy Minister Falih said Saudi Arabia’s oil production would fall to 10.2 million b/d in January, down from 10.7 million b/d in December as it takes the largest reduction as part of the1.2 million b/d production cut agreement. A 500,000 b/d cut would be about 60 percent of OPEC’s share of the cut leaving the other Gulf oil producers and Nigeria to cut most of the remaining 300,000 b/d. Iran, Libya, and Venezuela are exempt from the cuts.
Members of the Organization of the Petroleum Exporting Countries are upset over the close ties between Saudi Arabia and Russia as the group looks to cut output to offset falling crude prices. OPEC delegates say they are growing increasingly concerned that Saudi Arabia is giving nonmember Russia too much leverage over prices, OPEC officials are saying. Many cartel members, including Venezuela, Algeria, Kuwait, and Nigeria, feel sidelined as the bond between the world’s two largest oil exporters strengthens and together, they make the decisions affecting all of OPEC’s members.
Libya: Tripoli’s oil production has fallen by about 300,000 b/d since the start of this month due to the closure of export terminal amid harsh weather and full storage tanks. Libya has been suffering severe rainfall that closed all its oil export terminals along with roads. Flooding and high waves on the coast made the docking of tankers impossible, stranding more oil in storage.
3. China
China’s imports of crude oil hit a new monthly high of 10.43 million b/d in November, beating the record set in October of 9.61 million on heavy buying from private refiners and startup of new mega-refineries. For the first 11 months, China imported 418.11 million tons of foreign crude oil, or 9.17 million b/d, putting it on track to make this year a record high for imports. Chinese oil imports from Iran are expected to rebound this month from the lows of October and November as China’s state-held companies have already started to use US waivers to continue importing Iranian oil.
China’s consumption of oil products rose 4.1 percent year on year to 28.13 million tons in October, according to data released by the National Development and Reform Commission. The growth was mainly led by gasoline consumption, which rose 11.1 percent year over year, while gasoil consumption fell 2.2 percent over the same period. Over January-October period, China’s oil product consumption was up 5.3 percent on year, with consumption of gasoline rising 6.9 percent and gasoil rising 3.1 percent. The oil product consumption growth in the first ten months was slower than the 6.8 percent year-on-year increase seen in the same period of last year.
A number of the concessions that officials in Washington claimed to have secured from the Chinese president were either unsupported by any official confirmation from the Chinese side or were mired in confusion. Doubts about the solidity of the deal rose when it was announced that Robert Lighthizer, the US trade representative who is considered to be a hardliner on China, would be leading the upcoming talks. However, Unipec, the trading arm of Sinopec, plans to resume imports of US crude oil during the 90-day trade truce window, as the tentative halt to additional tariffs and lower oil prices are making American oil attractive again.
Although crude is not on China’s tariff list, Chinese buyers have been staying away from US crude oil purchases since the summer, when the trade war escalated. According to the EIA, the US didn’t export any crude oil to China in August and in September, compared to 384,000 b/d in July and a record-high 510,000 b/d in June.
4. Russia
Russian oil production was 11.37 million b/d in November, down from the post-Soviet record high of 11.41 million in October, accord to data released by the Energy Ministry last week. At the OPEC meeting last weekend, Russia agreed to accept a 2 percent cut based on the October high of 11.4 million b/d. This equates to a reduction of 228,000 b/d. Moscow said it would reach this commitment gradually due to winter demand and technical conditions.
The seizure by Russian forces of three Ukrainian vessels and their crews in the Kerch Strait at the entrance to the Sea of Azov has turned a harsh spotlight on the Nord Stream 2 gas pipeline project. Some European lawmakers suggested curtailing the project to punish Moscow for its seizure of Ukrainian ships. However, Berlin’s foreign minister said last week that Germany would not withdraw its support for the Nord Stream 2 gas pipeline project.
Nord Stream 2 has been contentious since its inception in 2015 because it would deprive Ukraine of most of the estimated $2 billion it earns annually in gas transit fees. It is opposed by the US, while most of eastern Europe is also against it. Concern has also been expressed by France, the UK, Sweden, and Canada. Last month lawmakers in the German and European parliaments signed a letter to Angela Merkel asking her to stop the pipeline. Last week, all three candidates to replace Merkel as leader of her Christian Democratic party spoke out against the pipeline.
5. Venezuela
Russia will invest $5 billion to raise Venezuela’s oil production by 1 million b/d under a new economic agreement, Venezuelan President Maduro said last Thursday. The deals would involve joint ventures between Venezuela’s state-owned company PDVSA and its Russian partners in Venezuela, although Maduro did not specify which companies would be involved. Maduro also said Russia would supply 600,000 tons of wheat to Venezuela in 2019 and signed mining contracts, including a $1 billion investment for the production of gold. Observers are skeptical that $5 billion will go very far in healing Venezuela’s oil production problems which include the lack of diluent for its heavy oil, unreliable power, human resources, and the lack of sufficient cash flow.
White House officials are urging Trump to hit Venezuela with sanctions that could further cripple its state-owned oil company PDVSA. The 30 percent decline in crude prices over the last two months could embolden the president. Trump had avoided sanctions on Venezuela’s oil sector for fear of causing a price spike. For now, it appears that the US is still reluctant to do anything that would contribute to higher oil prices. In September, the US imported 650,000 b/d of Venezuelan crude.
Venezuelan officials are traveling to London with plans to meet with the Bank of England over the repatriation of $550 million in gold held in the bank’s vaults. The Maduro government wants gold back to Venezuela because of fears it could be caught up in international sanctions on the country and seized to satisfy a court judgment.
Venezuela’s President Maduro said that Venezuela would put in place in 2019 a program to sell all its oil production in the Petro cryptocurrency, which the leader is touting as the first state-backed oil-backed digital currency. According to Maduro, Venezuela will free itself from the dollar which used by Washington “to create economic pain” to other countries, and to “persecute countries, as it does with Venezuela, Cuba, Iran, and Russia.” The Petro, however, is seen by analysts and experts as nothing but a scam and another effort by Venezuela to skirt sanctions and mask the inability to overhaul its economy.
6. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
In the Netherlands, gas production at the earthquake-prone Groningen field will drop by at least 75 percent in the next five years, ahead of schedule towards the projected end of extraction. The Dutch government decided this year to shut down in 2030 what was once Europe’s largest natural gas field because decades of extraction had caused dozens of earthquakes each year, damaging thousands of homes and buildings. (12/4)
France’s cancellation of the fuel tax increases this week in the aftermath of increasingly violent protests signaled the perils and political headwinds that governments worldwide may face as they try to wean their citizens from fossil fuels. The French government’s tax increase, written into law before President Emmanuel Macron was elected, proved a tipping point for hard-pressed families already laboring under some of Europe’s highest overall tax burdens. (12/7)
In Azerbaijan: Exxon Mobil and Chevron are seeking to sell their stakes in that nation’s largest oilfield, marking the retreat of the US majors from the former Soviet state after 25 years as they re-focus on domestic production. (12/5)
From Australia, exports of LNG from the east coast during November were the second highest since shipments began at the beginning of 2015 as volumes to China set a record. (12/6)
Argentina’s state oil and gas company YPF and Malaysian Petronas will invest jointly $2.3 billion in an oil production project in the Vaca Muerta shale play, one of the largest in the world. The project envisages daily production of 60,000 barrels of crude oil and gas, to be reached by 2022. The two companies have already spent $550 million on exploration in the La Amarga Chica area and have achieved production at a daily rate of 9,800 boe. (12/6)
Offshore Cuba, Australia’s Melbana oil exploration company, which has rights in an area known as block 9, will now also work to enhance production from the separate Santa Cruz offshore field, which has been producing oil for over a decade. Cuban production of crude oil in 2017 was about 50,000 b/d. Its consumption was about 172,000 b/d in 2015, which means it is dependent mostly on imports with Venezuela playing a key role. (12/6)
If Mexico halts auctions for two years as President Andres Manuel Lopez Obrador plans, its crude output will only reach 2.46 million b/d by 2027, not 3.07 million b/d, the previous administration said in a transition report. (12/5)
In Alberta last week, with the market saturated and prices depressed, the premier announced that her government would temporarily curtail the province’s oil production, chiefly from the tar sands. There isn’t enough pipeline capacity to ship the crude to market. New oil sands projects that were planned years ago have continued to come online over the past year, boosting production. Those projects were launched with the expectation that new pipelines would be completed by now. But most of the major pipeline proposals have been either delayed or canceled. The result has been a glut of oil filling storage tanks in Canada. (12/7)
In Canada, the pipeline shortage that has been strangling the oil industry is weighing on spending plans for next year, with Canadian Natural Resources slashing its capital budget for 2019 by $750 million, due to the lack of shipping options. (12/6)
Canada’s central bank plans to hold special, targeted meetings with members of Canada’s energy industry to discuss how the situation will affect their plans for investment and determine whether layoffs are a possibility. (12/7)
The US oil rig count declined by ten last week to 877, the biggest such cut since May 2016, according to Baker Hughes. The number of gas rigs increased by nine to 198, making a total rig count of 1075. Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,029. That keeps the total count for 2018 on track to be the highest since 2014. Canada’s oil and gas rigs for the week decreased by 17 rigs this week after losing five rigs last week, bringing its total oil and gas rig count to 186, which is 33 fewer rigs than this time last year. (12/8)
US oil exports: The Louisiana Offshore Oil Port (LOOP) is pushing out the most oil it’s shipped in any one month since the terminal began supertanker exports in February—three Very Large Crude Carriers carrying 6 million barrels of oil overseas. LOOP’s ability to handle VLCCs could help the US exceed 3 million barrels a day by this time next year. The dramatic rise in LOOP exports this month could be a fluke caused by fewer incoming tankers. (12/8)
Oil exports #2: The US became a net oil exporter last week for the first time in 75 years, and even if it is likely to be for just one week, the achievement highlights the increasing global influence of the soaring US crude oil production. (12/7)
Pipeline boom: Globally, the US ranks no. 1 in pipelines planned and under construction. Most of the oil and gas pipelines planned for 2019 and 2020 will connect the Permian Basin with consumers and export terminals in the Gulf of Mexico. Until those pipelines arrive, shale oil producers in the Permian basin will continue receiving $10 to $13 less for each barrel compared to WTI levels. (12/6)
The NYMEX January natural gas futures contract jumped 16.1 cents to settle at $4.48/MMBtu Friday as current and upcoming weather trumped a storage withdrawal that was largely in line with the five-year average. (12/8)
New chemical hub: Royal Dutch Shell gave the green light to a massive $6 billion ethane cracker facility just outside of Pittsburgh, one of numerous planned petrochemical facilities for the region. Taken together, the chemical and petrochemical boom could turn Appalachia—a region exporting inexpensive natural gas—into a new “hub” of sorts of plastics and other petrochemical products. The federal government is hoping to egg this on. The Department of Energy just published a report for the US Congress trumpeting the case for a new petrochemical hub. (12/7)
The Trump administration published documents last week detailing its plan to roll back Obama-era protections for the vast habitat of the greater sage grouse, a chicken-like bird that roams across nearly 11 million acres in 10 oil-rich Western states. (12/7)
Biofuels downside: Biodiversity conservationists have revealed that at least ten percent more land than what is currently being used to grow green crops will be required to successfully replace fossil fuels with alternatives derived from natural sources such as biofuel. The increase in the need for land for energy-related uses could undermine natural habitats across the world. Some scientists also argue that there is not enough marginal land left to grow enough biofuels to replace fossil fuels significantly. (12/7)
Nukes in Argentina? Russia signed a new nuclear cooperation agreement with Argentina, which is already negotiating with China about building nuclear reactors. The deal is not a contract to build nuclear reactors, but a framework agreement like ones Russia has signed with many countries. (12/5)
Killing EV/RE subsidies: White House economic adviser Larry Kudlow said on Monday the US will end subsidies for electric cars and other items including renewable energy sources. Kudlow said he expected subsidies for buying electric cars will end in 2020 or 2021. (12/5)
In Georgia, South Korea-based SK Innovation, a developer of lithium-ion batteries for electric vehicles, will invest $1.67 billion to build a new electric vehicle (EV) battery manufacturing plant. (12/5)
E-buses, taxis, and trucks: Some Chinese automakers have emphasized commercial EV development because they hope an early lead in the segment could eventually translate into success in the larger passenger market—and having almost no foreign competition at home for commercial EVs has helped them build early momentum. (12/3)
Electric aircraft: Amprius, Inc., a manufacturer and developer of high energy and high capacity lithium-ion batteries, announced that the company is supplying advanced lithium-ion cells to the Airbus Defense and Space Zephyr Program. Using Amprius’ cells, which contain a 100% silicon anode, the unmanned Zephyr S flew more than 25 days, setting a new endurance and altitude record for stratospheric flight. (12/6)
The world’s greenhouse gas emissions are rising at a faster pace in 2018 than they did last year, the latest evidence that planet-warming pollution is proliferating again after a three-year lull in the middle of the decade. (12/6)
Global carbon dioxide emissions are accelerating at their fastest pace in seven years and hit a record high in 2018, despite pledges by nearly 200 countries to limit global warming to well below 2C. Carbon emissions rose 2.7 percent in 2018 mainly due to emissions growth in China, India and the US. The data come as the annual UN climate talks are underway in Katowice, Poland. (12/6)
Royal Dutch Shell will set carbon emissions targets next year and link these to executive pay, reversing its chief executive’s opposition and following intense pressure from shareholders who want fossil fuel companies to take greater responsibility for their contribution to global warming. Investors such as the Church of England and Robeco have pushed Shell to make firm commitments to cut its carbon footprint, saying last year’s announcement of a long-term “ambition” to halve carbon emissions by 2050 did not go far enough. (12/3)
Peak Oil Review 3 December 2018
By Tom Whipple, Steve Andrews, originally published by Peak-Oil.org
https://www.resilience.org/stories/2018-12-03/peak-oil-review-3-december-2018/
Quote of the Week
“Total US oil reserves in 2017 exceeded a … 47-year-old record, highlighting the importance of crude oil development in shales and low permeability plays, mainly in the Southwest.” US EIA
1. Oil and the Global Economy
US oil production continued to climb in September with oil companies producing a record 11.47 million b/d, 1.98 million b/d higher than in September 2017 (it takes two months to get reliable numbers accumulated). This rapid growth is raising concerns around the world about overproduction. Coupled with slower economic growth in China and Europe, the surge in production has resulted in a $25 a barrel decline in world oil prices during the last two months. New York futures closed at $50.93 on Friday and London closed at $59.46.
With gasoline prices down by 30 cents a gallon and approaching $2 in some states, President Trump is calling for even lower prices, calling the rapid price decline “a big Tax Cut for America and the World.” If many shale oil drillers were unable to make a profit with oil at $75 a barrel, then they certainly won’t with $50 oil. The same holds true on the international market where $60 oil is well below what many exporters need to sustain their national budgets.
With US oil production doubling since 2008, America’s economy has received a substantial economic boost with the opening of new export markets for US-produced oil and gas. With the help of the additional boost from the recent tax cut, the US economy has been doing well of late, but there are signs that this may be coming to an end.
For the immediate future, much depends on what the OPEC-Russia coalition decides this week. If they can make real production cuts sufficient to reverse the increase in world crude inventories, and force prices higher, then we could see the oil industry continue to grow. However, it was only four years ago when an oil price slide sent crude down from $110 a barrel to $30. This drop in prices led to a reduction of employment in the US oil industry by more than 160,000 workers, bankrupted hundreds of small drillers, and caused problems for the firms supporting the oil industry.
Even though most expect OPEC to cut output this week, a recent Reuters poll shows oil analysts are increasingly pessimistic about the prospect of a price rally next year, when the outlook for demand is uncertain, and supply is growing rapidly.
When the price of crude oil goes through one of its periodic downturns, as it is doing now, it sends a shiver through the oil industry. History promises that higher prices will return. Until then, US shale companies are under severe pressure, and big oil companies wonder about the viability of new projects. There is more to worry them this time: not just the 29 percent fall in the price of Brent crude but the fear of this bear market enduring.
The OPEC Production Cut: Many observers are saying that decisions reached at the G20 meeting held over the weekend will be more important than what is decided at the OPEC meeting in Vienna on Dec. 6-7. The Saudis are facing a major decision: cut oil production and enrage Donald Trump who is helping them weather the Khashoggi crisis or keep pumping and risk ultra-low prices that will do great harm to their economy. Moscow is becoming convinced it needs to reduce oil output along with OPEC but is still bargaining with Saudi Arabia over the size and the timing of any cut.
Many analysts expect this week’s meeting to culminate with an official statement that leaves the market uncertain over just how many barrels OPEC intends to take off the market. That could result in a repeat of OPEC’s June meeting. With oil prices rising rapidly, the group agreed to reverse course and increase output but offered nothing about the size of the cut. This situation left the markets to wait for evidence as to what was going on with oil production
The OPEC/non-OPEC coalition may be counting on increasing troubles in the US shale industry to tamp down the rhetoric from US President Trump, who warned Saudi Arabia and OPEC several times to keep oil prices low to benefit the US. Costs of producing conventional oil in the major oil-exporting nations are generally believed to be well below costs of producing fracked shale oil.
US Shale Oil Production: Despite much bravado from the industry, there is little doubt that prices below $60/b are hurting US shale producers and potentially strengthening OPEC’s hand to introduce tighter quotas. Many US shale companies are already below their breakeven prices for production, with looming pipeline takeaway constraints in both the key Permian and Bakken regions. Many have hedged their exposure for this year in the $55-$60/b range but weakening prices in 2019 remain a significant threat. Meanwhile, crude inventories in the US keep rising, with the US Energy Information Administration reporting last week that there was a 10th consecutive weekly build in crude inventories.
Analysts are saying that many shale oil companies will likely cut spending budgets next year for the first time since the last price crash as crude spirals down again. West Texas Intermediate is now selling just above $50 a barrel, down from averaging almost $67 this year through September. This is the minimum price most big shale companies plan their growth around. Some companies will sacrifice production growth to keep a lid on expenditures, according to Wood Mackenzie Ltd. “Something has to give.”
While surging oil production in the Permian basin has helped crash oil prices, however, natural gas production is growing so fast that drillers are trying to give it away — when they can’t, they burn it off into the atmosphere. There is a pipeline bottleneck for crude oil, but there is also a shortage of pipeline space for natural gas. The glut has become so bad that next-day prices for gas at the Waha hub fell to a record negative 25 cents last week so that producers were paying to take away the gas.
There have been reports for some time that the “gas cut” from Permian Basin production is turning out to be larger than anticipated. While more-than-expected-natural gas is better than nothing, too much changes the profitability calculations for Permian wells and generally brings less revenue than higher-valued oil.
The race to export US shale oil is about to get fierce, with at least nine proposed terminals angling for a piece of a very limited pie. Within 18 months, new pipelines promise to carry an additional 2 million b/d to the Gulf Coast. But the extra crude will arrive at a time when existing terminals in the Corpus Christi area can already offer only about 300,000 barrels a day of unused capacity. Several of the proposed terminals are being designed to load a supertanker every other day, each capable of carrying 2 million barrels. More likely, only one or two new terminals are needed.
Lost in all the optimism for the future of Permian Oil production and the willingness to spend billions to take away the oil it is supposed to produce in the future, is the possibility that the finite number of “sweet spots” that can produce shale oil at economical prices will be running out in the next five years.
2. The Middle East & North Africa
Iran: The impact of the US sanctions on Tehran’s exports is still up in the air. According to a Bloomberg analysis, the six-month partial waivers that Washington issued to Iran’s best customers still allows them to import 1 million b/d until next May without any reprisals from the US. France or Germany are planning to establish a corporation that would handle the payments channel for trade with Iran under the US sanctions. The payments channel would use a system of credits to facilitate compensation for goods traded between Iran and Europe—allowing some trade to proceed without the need for European commercial banks which could be sanctioned by the US.
Tehran has been selling its crude at a discount to maintain market share, and it will be difficult for importers to find crude at the prices they have been paying. Countries such as Japan and South Korea have close economic ties to the US and are reluctant to go against Washington’s wishes. Both seem to be importing Iranian crude below the levels allowed by the waivers and seem likely to comply fully with the sanctions next May. India and China have different concerns. China is opening new pipelines to Russia which will significantly increase imports from Moscow and reduce the need for Iranian oil.
India has more of a problem. For now, it has a waiver and has seen the cost of imported oil drop significantly in the last two months. If prices climb in the spring as the sanctions become effective, New Delhi will have problems paying for its oil.
The China National Petroleum Corporation (CNPC) is replacing France’s Total in developing Iran’s multi-billion-dollar South Pars gas project. After the US withdrawal from the nuclear deal, Total said it would not be in a position to continue the South Pars gas project and would have to unwind all related operations before November 4, 2018. The Chinese state firm, however, has not started work on the project yet, as Iran has yet to hold talks with CNPC about when operations will begin, the minister added.
Before Total quit Iran, it had a 50.1 percent stake in the project and was its operator, while CNPC owned 30 percent, and Iran’s national oil company held the remaining 19.9 percent. The South Pars project is aimed initially at meeting Iran’s domestic gas demand. Production capacity is envisaged at around 2 billion cubic feet per day of gas, with the project due to come on stream in 2021. When fully operating, the project is also expected to deliver around 70,000 b/d of condensate.
Iraq: Iraq’s crude oil exports from its southern ports on the Gulf will be around 3.3 million b/d in November, down from the 3.47 million b/d exported in October. Iraq is OPEC’s second-largest producer after Saudi Arabia and pumps around 4.6 million b/d. The bulk of Iraq’s oil is shipped via the southern terminals.
Baghdad has signed a $156.74 million drilling deal with China’s Bohai Drilling Co. for the West Qurna Two oilfield, two Iraqi oil officials said on Tuesday. Bohai is to drill 28 production oil wells at West Qurna Two, operated by Russia’s Lukoil. Production at West Qurna Two is now about 400,000 b/d, according to an oil official with knowledge of the field’s output operations. Iraq is in talks with Bohai to award it a second drilling contract for West Qurna 2, which could be worth up to $148 million. Iraq is one of the last places in the world with easy-to-drill conventional oil fields and should be able to increase production provided it can build the infrastructure to export the oil.
Iraq has allocated its oil sales for 2019, with 67 percent of exports going to Asian markets, 20 percent to Europe and 13 percent to North America, the oil ministry announced last week. Earlier last month, an Iraqi official told Bloomberg that Iraq is intensifying efforts to build up its market share in Asia and aims to boost its oil supply to China by around 60 percent. Iraq currently ships about 900,000 b/d to buyers in China and is ready to send some 1.45 million b/d next year.
The US wants to use its sanctions on Iran to move Iraq out of Tehran’s orbit but fears it could weaken the country. Too much pressure could also backfire by ultimately driving Iraq closer to Iran, officials and analysts say. The US granted Baghdad a 45-day exemption from Iranian sanctions, allowing it to keep importing natural gas. Last week, a 6.3-magnitude earthquake in Iran’s western Kermanshah province near the border with Iraq injured more than 700 people. Tehran is trying to repair the damages to the gas pipeline to Iraq which supplies the power to generate 2,500 MW of electricity. Iraq’s oil ministry is providing the power plants dependent on Iranian gas with fuel to keep them working during the Iranian supply halt, but there could be power cuts in provinces.
Saudi Arabia: Saudi Arabia’s oil production has been at a record high this month— between 11.1 million and 11.3 million b/d on some days in November, but whether the Saudis pumped an all-time average monthly high will not be known until later this month.
Saudi Aramco will spend US$500 billion over the next ten years to expand internationally, with a fifth of the total amount earmarked for petrochemical projects and $160 billion for natural gas projects. This investment would be separate from the $70 billion it is planning to spend on the acquisition of a majority stake in local petrochemical major Sabic. This program will increase the Saudi’s natural gas production from a current rate of 14 billion cubic meters per day to 23 billion some of which is to be used for the production of petrochemicals.
The announcement of multi-billion-dollar investments in gas-related operations indicates a new move by Riyadh to make Saudi Arabia a major gas exporter. This ‘strategic pivot’ may come as a surprise, as Aramco is mainly known as a producer of crude oil. The reality, however, is that the Kingdom has not only been quietly investing in upstream gas projects, it is also sitting on some of the largest natural gas reserves in the world.
The Saudi plan to build a nuclear power plant will speed up the Kingdom’s economic development as it would diversify its over-reliance on crude oil. “The decision to build a nuclear power plant in the kingdom is the result of serious research that confirmed the need for this step,” Saudi energy expert Said al-Shahrani said last week. Earlier this month, Crown Prince Mohammed bin Salman launched several new strategic projects in the country, including one to build a nuclear research reactor.
Libya: Libya’s crude oil exports to China are already worth twice as much as what it exported to Beijing last year, the head of the National Oil Corporation said last week. Since January, exports to Beijing have amounted to $3.5 billion. This compares with $1.7 billion for all of 2017 when Libyan fields were suffering regular outages.
Several crude oil terminals in Libya have been closed due to high waves, with oil production in the country already down by 150,000 b/d and likely to drop by a further 50,000 b/d, Libya’s National Oil Corporation said on Friday. The state oil firm confirmed today that four oil port terminals—Ras Lanuf, Zueitina, Zawiya, and Es Sider—are currently non-operational.
In a surprise move, Algeria’s state oil and gas company has pulled out of Libya citing deteriorating security conditions. Sonatrach had partnered with the Libyan National Oil Corporation to drill seven oil wells in Libya. The Algerian company returned to Libya relatively soon after the 2011 civil war to explore for oil in the Ghadmes basin, where Sonatrach held a 25-percent stake that was awarded to it back in 2005. In general, the security situation in Libya seems to be improving with an agreement between the Eastern and Western governments under discussion and European oil companies talking about making more investments in the country.
3. China
Russia exported record volumes of crude to China in October as independent refiners continued to fill import quotas, while Iranian oil shipments fell on uncertainty over the sanctions on Tehran. China’s imports from top supplier Russia jumped 58 percent from a year earlier to about 1.73 million b/d, marking the highest ever. For the first ten months, Russian imports were 1.39 million b/d, up 16.6 percent. Chinese customs last month began updating an online database with commodity imports by country of origin.
Iranian shipments, however, tumbled 64 percent in October from the year-ago month to 1.0496 million tons, about 247,160 b/d, ahead of US sanctions that came into effect on Nov. 4. Month-on-month, imports from Iran in October marked their third fall in a row as China’s state oil firms came under growing pressure to scale back purchases ahead of the sanctions.
New Sino/American talks might focus on what both sides are calling trade “architecture,” a broad term that could encompass many issues the US wants Beijing to address, including intellectual property protection, coerced technology transfer, subsidies to state-owned enterprises, and even non-trade issues such as cyberespionage. Over the weekend, the two sides agreed that in return for the suspension of US tariffs, Beijing would lift restrictions on China’s purchases of US farm and energy products.
China’s coal imports are set to drop in December as utilities wind back purchases following signals from Beijing that it will stop clearing shipments until next year. Coal imports rose in the first 10 months of 2018 to 252 million tons, up 11 percent from a year ago and not far below last year’s total of 279 million tons, according to official data.
Residents of Jincheng in northern China’s coal heartland are enjoying cleaner air after campaigns to reduce pollution forced dozens of collieries and chemical plants to close. However, Jincheng has paid a heavy price. Factories and coal mines have shut down, devastating the local economy. The migrants have drifted away, and jobs are hard to find. Even the air is still not clean enough, falling short of the government’s pollution targets. That means that as another anti-pollution campaign gets underway this winter, Jincheng will be under even more economic pressure.
4. Russia
Moscow’s position on an OPEC initiative to cut back on oil production in order to eliminate the growing oil glut and force prices higher was the top issue last week. Early in the week, President Putin was saying that Russia is comfortable with the current level of oil prices at around $60 a barrel. The state budget is balanced at $40 oil price, and for next year, that budget-balance oil price is calculated at $43 a barrel according to Putin.
Gazprom Neft, Russia’s third-biggest oil producer, wants a production hike of 20 percent developing once-forgotten and depleted fields, key to its plans to increase its oil production by 8 percent to 2 million barrels per day. A mandated cut in oil production would throw a wrench in these plans. On Tuesday, Russian Energy Minister Novak met Russian oil companies to discuss cooperation between OPEC and non-OPEC oil producers and presumably the rapidly falling price of oil. In recent years, a weak ruble has been of great help to the oil industry as revenues for exported oil comes in dollars and production expenses are in rubles.
With the Saudis taking the position that they won’t make a production cut alone and that rest of OPEC/non-OPEC coalition must participate too, Moscow had a difficult decision. By week’s end, Moscow seemed to be coming around to the position that a production cut will have to be made at this week’s meeting.
Russia has emerged this year as a major player in the rapidly expanding market for liquefied natural gas. Meanwhile, Moscow has been pumping gas into Europe at a record pace in existing pipelines, and to the East, it’s close to opening a major pipeline into China, the world’s fastest-growing major gas market.
Supplying natural gas to Europe, and increasingly to Asian countries like China and India, gives Russia hard cash and a seat at the geopolitical table. “Our main goal is to preserve our current markets, primarily Europe, and to gain a foothold in new ones, especially Asia,” said Alexey Teksler, Russia’s first deputy Minister of Energy in an interview at his Moscow office. A giant map of Russia’s gas connections to Europe and Asia covered one wall.
Gazprom will soon complete the bulk of the work for one of its most ambitious projects ever that involves building a natural gas pipeline from Siberia to its border with China. The pipeline will ship 38 billion cubic meters annually of natural gas to China for 30 years.
5. Nigeria
Last week Nigeria’s energy ministers announced that plans to fix the country’s deteriorating refineries and make them work to capacity would not materialize until 2020. This is contrary to the minister’s earlier claim that Nigeria’s refinery capacity will reach the expected 1.1 million b/d in 2020. The minister said this would be achieved when Dangote Petrochemical’s new 650,000 b/d refinery, Nigeria’s four refineries of 450,000 b/d capacity are overhauled, and three modular refineries come on stream. Given Nigeria’s track record in building and renovating dying refineries it seems doubtful that the country will no longer need to import the bulk of its petroleum products by the year after next.
The local press is saying Nigeria will lose an estimated $6 billion in revenue to international oil companies, Shell and Eni, over the deal on the controversial oil block. According to leaked emails and confidential documents, the oil giants might have used unethical means to secure the deal as they altered earlier terms on the oil block with the intention of depriving Nigeria of billions of dollars. The report draws on an analysis from leading experts at Resources for Development Consulting commissioned by NGOs. Two weeks before the deal was signed in 2011, the then Director of Department of Petroleum Resources advised the Federal Government not to accept the deal.
6. Venezuela
Rosneft’s chief executive, Igor Sechin, flew to Caracas last week to discuss with President Maduro the continuing delays in the shipments of Venezuelan crude that Caracas had agreed to send to Russia as repayment for cash loans. Sechin brought information showing that Venezuela is meeting obligations with China but not with Russia according to a source of Reuters. A Chinese delegation was also there. Russia and China are pretty much the only countries left that are willing to help Caracas with US sanctions and falling oil production. China is the bigger benefactor, having loaned as much as $50 billion to Venezuela in recent years.
Venezuela has reached a settlement with Canadian gold miner Crystallex to hold onto its US refiner Citgo but will have to stay on top of payments through early 2021 to protect its ownership of the refiner. PDVSA’s control of Citgo, the state-owned company’s most valued asset, was thrown into uncertainty in August when a US judge said the defunct Crystallex could go after the Citgo shares to collect on a $1.2 billion judgment related to Venezuela nationalizing its mine. Venezuela has paid Crystallex $500 million of the total judgment, which has grown to $1.4 billion with interest. A January 10 deadline looms for the next payment.
7. The Briefs (selections from the press – date of article in Peak Oil News is in parentheses – see more here: news.peak-oil.org)
In Germany, Volkswagen has been testing the newly developed R33 BlueDiesel fuel blend at its in-house filling station in Wolfsburg since January. The fuel, jointly developed by Volkswagen, the Coburg University and other project partners, contains up to 33 percent renewable components based exclusively on residual and waste materials and enables CO 2 savings of at least 20 percent compared to conventional diesel. (12/1)
North Korea: Reviews of confidential U.N. documents and interviews with US officials uncovered dozens of ships and companies that international authorities link to illegal North Korean trade. The behavior of the vessels and changes in their ownership reveal an expanding toolbox of strategies designed to keep North Korea’s shipping, and economy, afloat. (11/28)
The Zimbabwean oil crisis, largely caused by poor government planning, has reached an all-time low, which has resulted in the dwindling fuel supplies reaching a critical point of a crisis. The country now has less than a week of fuel left, this after a long strenuous week for consumers, who have stood in long winding lines nationwide. (12/1)
Brazil’s Petrobras said Wednesday it has sold onshore and shallow offshore fields in Brazil for $823 million, part of the company’s efforts to divest assets to focus on deepwater. (11/29)
In Brazil, President-elect Jair Bolsonaro wants to open more of the pre-salt assets—an area currently exclusively in the hands of state oil firm Petrobras—to private investors, hoping to earn US$31 billion that could help narrow Brazil’s massive budget deficit. (11/27)
In Argentina, Mexico-based Vista Oil & Gas plans to invest $157.4 million in its first pilot projects in Vaca Muerta, betting on the Argentinian shale play for oil and natural gas production growth. (11/27)
Mexican discovery: Pemex is set to add a billion barrels of oil equivalent to reserves after discovering a gas field that, within four years, will yield 80,000 b/d of condensates and 700 million cubic feet per day of gas to feed petrochemical units in southern Mexico. The company claims the discovery in the Ixachi field, state of Veracruz, is the most important made in the inland portion in the last 25 years and the fourth biggest at a worldwide level in the last decade. (11/29)
Alberta’s blues: Under pressure from falling WCS prices that are now around $15 per barrel and zero spare takeaway capacity to ship oil to its largest purchaser, the United States, Alberta revised downward its economic growth forecasts for 2019 from 2.5 percent to 2.0 percent. (12/1)
The Government of Alberta has been forced into buying more oil trains to move crude from the province, the Calgary Sun reports, quoting Premier Rachel Notley as describing the situation with Alberta’s oil as “fiscal and economic insanity.” The trains will have a total capacity of 120,000 b/d and will cost Alberta $263.77 million. The trains should reach their full capacity late next year and help reduce the discount of Western Canadian Select to West Texas Intermediate by about $3 per barrel. That’s not a lot given the current discount between WCS and WTI is more than $40 a barrel. (11/30)
The US oil rig count increased by two to 887, according to Baker Hughes. For the month, the rig count was up 12 in November, matching last month and its fifth monthly increase in a row. The gas rig count fell by five to 189. The total number of active oil and gas drilling rigs now stands at 1,076 according to the report, which is now up 147 from this time last year. Of that total, 138 of the gross increase is in oil rigs. (12/1)
US crude oil and natural gas proved reserves rose to record highs in 2017, driven by stronger energy prices and the continuing development of shale formations, the US EIA said on Thursday. Crude reserves increased 6.4 billion barrels, or 19.5 percent, to 39.2 billion barrels at year-end 2017, marginally higher than the previous record of 39 billion barrels set in 1970. Natural gas reserves jumped 123.2 trillion cubic feet (tcf), or 36.1 percent, to 464.3 tcf last year. (11/30)
US is world’s sweet spot? The US holds nine out of the top 10 global locations for investment in the upstream oil and gas sector in 2018, according to a wide-sweeping survey released Thursday by Canada’s Fraser Institute. In last year’s survey, the US represented six of the top 10 spots. The ranking is based on the policy perception index, which is created by compiling respondents’ answers to the various potential barriers to investment facing each region. The highest score a region can score is 100, which was only achieved by Texas this year, followed closely by Oklahoma. For the first time in five years no Canadian province made the top 10; the top two producing provinces in the nation, Alberta and British Columbia, ranked 43rd and 58th, respectively, of regions to invest out of 80 worldwide locations. (12/1)
TX infrastructure boom: Proposals on the table would be part of a historic buildout of oil and gas infrastructure in the US as it becomes a top exporter of both fuels. Texas, home to the most prolific oilfield in the country, is at the epicenter of the frenzy. More than 80 plants, terminals, and other projects are in the works or planned up and down the state’s Gulf Coast, from Port Arthur to Brownsville, according to a Center for Public Integrity and Texas Tribune review of corporate plans. (12/1)
Permian pipeline: Jupiter Energy Group has launched its 90-day open season for binding shipper commitments on the Jupiter Pipeline. The company says the 650-mile-long Jupiter Pipeline will be the only pipeline out of the Permian Basin that will access all three of Texas’ deepwater ports – Houston, Corpus Christi, and Brownsville. The 36-inch pipeline, which could begin service in the fourth quarter of 2020, could boast a capacity of up to 1 million barrels per day of crude oil. (12/1)
In Texas, the Corpus Christi Ship Channel Improvement Project will cost an estimated $360 million. Nearly one-half of the $360 million needed to widen and deepen the Corpus Christi Ship Channel to accommodate greater energy export volumes from Texas’ Coastal Bend region has been secured. (11/27)
Quake; pipeline shut down: A magnitude 7 earthquake struck Alaska early Friday, shutting the state’s most important oil pipeline. The temblor struck 8 miles north of Anchorage. The 800-mile Trans Alaska pipeline that carries crude from the Arctic coast to the marine terminal in Valdez was shut as a precaution. Operators were not aware of any damage to the line, which transported 530,000 barrels on Thursday. (12/1)
Keystone continuance: TransCanada Corp.’s long-delayed Keystone XL oil pipeline will face another round of environmental scrutiny, all but dashing company plans to begin construction in February. In a filing on Friday, the US State Department indicated it’s going to undertake a new review of the $8 billion project. The analysis, formally known as a supplemental environmental impact statement, will look at potential effects on greenhouse gas emissions, crude spills, cultural resources, and the overall market. (12/1)
Seismic off east coast: The Trump administration is taking a major step toward allowing a first-in-a-generation seismic search for oil and gas under Atlantic waters, despite protests that the geological tests involve loud air gun blasts that will harm whales, dolphins and other animals. (12/1)
More storage for Louisiana: The Plaquemines Liquids Terminal would open up to 20 million barrels of storage for both crude oil and refined products and export facilities capable of loading Suezmax and VLCC vessels. Tallgrass Energy, LP reported Tuesday that it had acquired a 600-plus-acre site to build its planned terminal along the Mississippi River south of New Orleans. (11/28)
Biofuels waivers: The Trump administration has decided to keep waiving some oil refineries from US biofuel mandates, despite pressure from ethanol advocates to end the practice. (11/30)
Corn fuel tiff: The EPA has rejected requests from the corn lobby to reallocate biofuel volumes waived under its small refinery exemption program into its 2019 mandate, an agency official told Reuters on Tuesday. The powerful corn lobby has complained for months that an expansion of the EPA’s refinery waiver program under the Trump administration threatens demand for crucial farm products like corn-based ethanol. (11/28)
EPA on biofuels: The EPA on Friday increased by 15% its annual blending mandate for advanced biofuels, drawing praise from the US biofuels industry, but disappointment that the government had not done more to protect the agricultural market. Under the US Renewable Fuel Standard, oil refiners must blend increasing amounts of biofuels into their fuel each year or purchase blending credits from those that do. The volume for conventional biofuels like corn-based ethanol was not increased. (12/1)
Shell on EVs: Oil supermajor Shell sees electric vehicle (EV) enthusiasts buying into the ‘cool factor’ of zero-emission vehicles, driving EV fleet growth regardless of the oil price fluctuations. Shell noted that EV enthusiasts are emphasizing the social desirability of zero-emission fun-driving-experience cars—a factor important enough to ignore the fact that EVs are currently more expensive than vehicles with internal combustion engines. (11/28)
Battery electric cars emit fewer greenhouse gases and air pollutants over their entire life cycle than petrol and diesel cars, according to a European Environment Agency (EEA) report. (11/26)
H2 for CA: France-based Air Liquide, a 65,000-employee company that sells gases to industrial and medical customers worldwide, will build for $150 million the “first world-scale liquid hydrogen” plant in the US to help efforts to replace gasoline with a cleaner fuel. The plant, to be built in the west, will have enough capacity to power “35,000 fuel cell electric vehicles.” Construction will begin in early 2019. (11/27)
In Bulgaria, more than 1,000 people urged the government to guarantee it would not shut mines and power plants at Maritsa East lignite coal complex in southern Bulgaria, despite a European Union push to decarbonize the bloc’s economy by 2050. (11/30)
Air pollution and cancer: A team at the University of Stirling in the UK has found new evidence of the link between air pollution and cancer as part of a new occupational health study. The team analyzed the case of clusters of women working as border guards at the busiest commercial border crossings in North America. (11/30)
Brazil this week pulled out of hosting next year’s United Nations global summit on climate change, the latest signal that Latin America’s largest nation no longer aspires to be an influential player in efforts to mitigate the effects of a warming planet. The decision comes about a month before the inauguration of president-elect Jair Bolsonaro, who has vowed to empower commercial ventures in the Amazon and other Brazilian biomes while weakening enforcement of environmental laws. (11/29)
EU climate progress slowing: Progress on increasing the use of renewable energy and improving energy efficiency is slowing across the European Union, putting at risk the EU’s ability to achieve its energy and emissions reduction targets. Rising energy consumption, particularly in the transport sector, is to blame for the slowdown, according to preliminary data released in the European Environment Agency’s (EEA) annual analysis on the EU’s progress towards its targets on renewables and energy efficiency.
Cutting carbon emissions to zero in line with the Paris climate accord could require up to €290bn a year in additional investment in Europe, the EU will say as it prepares the ground for a bruising battle at next week’s UN climate talks. (11/28)
Palm oil was supposed to save the planet; instead, it has unleashed a catastrophe. Indonesia’s biggest export, palm oil—used increasingly in biodiesel—has twice the carbon emissions as conventional diesel fuel, according to some expanded life-cycle analyses. The tropical rainforests of Indonesia have large amounts of carbon trapped within their trees and soil. Slashing and burning the existing forests to make way for oil-palm cultivation had a perverse effect: It released more carbon, a lot more carbon. The accelerated destruction of Borneo’s forests contributed to the largest single-year global increase in carbon emissions in two millenniums, an explosion that transformed Indonesia into the world’s fourth-largest source of such emissions. Researchers at Columbia and Harvard later estimated that the fires led to 100,000 premature deaths.
The American biofuels mandate of 2007 is what got Indonesian palm off the ground. The resulting unprecedented palm-oil boom, meanwhile, has enriched and emboldened many of the region’s largest corporations, which have begun using their newfound power and wealth to suppress critics, abuse workers and acquire more land to produce oil. Global Witness has counted at least eight assassinations of Indonesian environmentalists fighting palm oil. (11/26)
Is Linseed Oil Safe for Planter Boxes, or Will It Leach?
https://homeguides.sfgate.com/linseed-oil-safe-planter-boxes-leach-98556.html
There are two types of linseed oils; raw and boiled.
"Raw linseed oil is an eco-safe wood preservative that was commonly used before modern synthetic sealers were created. It is an all-natural product that can be purchased in organic forms. It is fairly inexpensive and easily applied with a brush. The oil is very slow-drying, and will take days or even weeks to thoroughly dry. If you choose to use linseed oil, be certain to purchase it in raw form, not boiled, which contains additives that are potentially toxic."
Above quote from: https://dengarden.com/gardening/top-5-safe-wood-sealers-for-raised-bed-and-container-gardens
"Basically, there are three types of linseed oil, two of which are non-toxic.
1) Raw linseed oil is, in fact, flax seed oil. It takes a long time to dry but is entirely non-toxic.
2) The polymerized version is true “boiled” linseed oil, sometimes called “stand oil”. Stand oil is generated by heating linseed oil near 300 °C for a few days in the complete absence of air. Under these conditions, a is highly viscous product results, which provides exceptionally uniform coatings that “dry” to more elastic coatings than linseed oil itself. It also dries much more quickly (although still more slowly than toxic, commonly-used polyurethanes.) This true boiled linseed oil is also non-toxic.
3) The “boiled linseed oil” you can buy in most stores is actually mostly raw linseed oil, but with plasticizers, hardeners, and heavy metals added to make it act like true boiled oil, without the time and effort it takes to actually boil it; in other words, it’s cheap. Folks who are concerned about the toxicity of linseed oil are likely thinking of this type."
The above quote is from: https://gimmethegoodstuff.org/is-linseed-oil-toxic/
The Jasco Boiled Linseed Oil recommended to me is now questionable and has various warnings that you might want to review.
http://www.jasco-help.com/uploads/documents/GJBLO110_SDS-1660CD.pdf
Conclusion for my purposes
I will experiment with a polymerized version of “boiled” linseed oil, if I can find a vendor who sells an outdoor product. Originally I had hoped that I could find a linseed product that would repel animals attacking my gardens, but that might only be achieved with good fencing.
sumi
PS: Non toxic, zero VOC, environmentally safe wood treatment for your raised garden beds
14 Ridiculously Good Reasons To Eat Cacao!
https://www.foodmatters.com/article/14-ridiculously-good-reasons-to-eat-cacao
14 Ridiculously Good Reasons To Eat Cacao!
https://www.foodmatters.com/article/14-ridiculously-good-reasons-to-eat-cacao
Here is some more information and examples:
Below are two charred raised beds.
My contact's husband burns the boards and then soaks with a rag in boiled linseed oil. Apparently the smell of the linseed oil keeps the wildlife away! "We have about 30 deer, chipmunks, mice, groundhogs, squirrels.... you name it, they won’t go near my beds. It’s not even fenced."
Here is the boiled linseed oil
I have many raised beds and I will apply the boiled linseed oil on all of them.
Not bad, my friend!
sumi
How the mushroom dream of a ‘long-haired hippie’ could help save the world’s bees
Originally published October 4, 2018 at 6:43 pm Updated October 4, 2018 at 8:41 pm
Paul Stamets, an expert on mushrooms and owner of Fungi Perfecti, had an epiphany: Something in mushrooms could help keep bees healthy. (John Lok / The Seattle Times, 2010)
https://tinyurl.com/y7vctvwj