What follows is a discussion in which I will post/share industry related articles that I believe to be of general interest to some who frequent this site.

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Source:  http://www.bloomberg.com/news/2014-09-26/natural-gas-futures-rise-a...

Natural Gas Futures Rise as Cold May Limit Supply Gains

Natural gas futures capped a weekly gain in New York on concern that supplies may not be adequate as the heating season approaches.

Stockpiles of the power-plant fuel were 13 percent below the five-year average as of Sept. 19 and 11 percent lower than a year earlier, the Energy Information Administration said yesterday. Cold weather may blanket parts of the Midwest over the next eight to 14 days, a government forecast shows. The contract for October delivery expired today.

“We’ve kind of stopped falling,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “It’s holding its own. On Monday we’ll be trading the first winter month.”

Natural gas for October delivery rose 1.3 cents, or 0.3 percent, to settle at $3.984 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 12 percent below the 100-day average at 3:14 p.m. Gas gained 3.8 percent this week and is down 5.8 percent this year.

The combination of colder weather and below-average stockpiles may prompt prices for the fuel to increase, Saal said. “We’re going to be behind, it’s just by how much.”

Gas supply rose 97 billion cubic feet last week, surpassing the five-year average gain of 79 billion, the EIA said.

Shale Gas

Natural gas production from the Marcellus shale formation in Appalachia may climb 1 percent in October to 16 billion cubic feet a day from a month earlier, the EIA said Sept. 8 in its monthly Drilling Productivity Report. Total U.S. marketed output may gain 5.3 percent this year to 73.93 billion a day, the agency said Sept. 9 in its Short-Term Energy Outlook.

Drilling rigs targeting natural gas increased by nine to 338, led by gains in Texas, Baker Hughes Inc. said in a report today.

Power-plants account for 31 percent of gas demand, according to the EIA.

Below-normal temperatures will cover a portion of the central U.S., stretching from the northwest corner of Texas to North Dakota, Oct. 3 through Oct. 9, according to a forecast from the Climate Prediction Center in College Park, Maryland.

“We’ve seen a wash of buying,” said Aaron Calder, senior market analyst at Gelber & Associates Corp. in Houston. “Some of that is the perceived cold to start October.”

Calder said gas is “at a crossroads” and that whether gas will approach the $4.30 price levels or fall below $3.80 depends on whether the frigid weather materializes.

To contact the reporters on this story: Christine Buurma in New York at cbuurma1@bloomberg.net; Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Bill Banker, Charlotte Porter

My added comments:

We additionally have a situation in which the railroads (particularly BNSF, owned by Barack Hussein Obama's BFF Warren Buffet) are busy moving oil by rail from the Bakken Shale. In fact they are so busy moving oil that they are limiting the amount of grain and COAL that they are prepared to transport.

Too bad that Keystone XL pipeline has been held up for six years +, awaiting regulatory approval; it could be moving that Bakken oil.

Many of the remaining Coal powered power plants are short on inventories of coal for the coming winter.

We are a bit low on Natural Gas storage.

We are a bit low on thermal coal inventory sitting at the power plants; due to lack of sufficient rail availability.

We are having a surplus corn and grain crop; awaiting rail shipment.

A early and wet crop of corn and grain will require an extraordinary amount of propane for drying; less drying in the fields and on the stalk ... more drying with propane.

Predictions for a coming COLD winter, similar to last winter.

The next six to eight weeks will be most telling.

All IMHO,

                    JS

JS,

Generally I am not a conspiracy theorist.

However, it is becoming more apparent that this Administration likes chaos. In particular chaos of it's own making.

Each of the issues which you cite are a direct result of the policies of this Administration.

We in the middle class always feel the full impact of negativities in the economy. The "poor" have government handouts to keep them warm and fed. The rich of course have their wealth. We on the otherhand must scrim and scrape just to keep our heads above water (economically speaking.

Good info as always.

Thanks for the post.

The Oil Weapon: A New Way To Wage War

Tyler Durden's picture

Washington Takes on ISIS, Iran, and Russia.

It was heinous. It was underhanded.  It was beyond the bounds of international morality. It was an attack on the American way of life.  It was what you might expect from unscrupulous Arabs.  It was “the oil weapon” -- and back in 1973, it was directed at the United States. Skip ahead four decades and it’s smart, it’s effective, and it’s the American way.  The Obama administration has appropriated it as a major tool of foreign policy, a new way to go to war with nations it considers hostile without relying on planes, missiles, and troops.  It is, of course, that very same oil weapon.

Until recently, the use of the term “the oil weapon” has largely been identified with the efforts of Arab producers to dissuade the United States from supporting Israel by cutting off the flow of petroleum. The most memorable example of its use was the embargo imposed by Arab members of the Organization of the Petroleum Exporting Countries (OPEC) on oil exports to the United States during the Arab-Israeli war of 1973, causing scarcity in the U.S., long lines at American filling stations, and a global economic recession.

After suffering enormously from that embargo, Washington took a number of steps to disarm the oil weapon and prevent its reuse. These included an increased emphasis on domestic oil production and the establishment of a mutual aid arrangement overseen by the International Energy Agency (IEA) that obliged participating nations to share their oil with any member state subjected to an embargo.

So consider it a surprising reversal that, having tested out the oil weapon against Saddam Hussein’s Iraq with devastating effect back in the 1990s, Washington is now the key country brandishing that same weapon, using trade sanctions and other means to curb the exports of energy-producing states it categorizes as hostile.  The Obama administration has taken this aggressive path even at the risk of curtailing global energy supplies.

When first employed, the oil weapon was intended to exploit the industrial world’s heavy dependence on petroleum imports from the Middle East. Over time, however, those producing countries became ever more dependent on oil revenues to finance their governments and enrich their citizens.  Washington now seeks to exploit this by selectively denying access to world oil markets, whether through sanctions or the use of force, and so depriving hostile producing powers of operating revenues.

The most dramatic instance of this came on September 23rd, when American aircraft bombed refineries and other oil installations in areas of Syria controlled by the Islamic State of Iraq and Syria (ISIS, also known as ISIL or IS).  An extremist insurgent movement that has declared a new “caliphate,” ISIS is not, of course, a major oil producer, but it has taken control of oil fields and refineries that once were operated by the regime of Bashar al-Assad in eastern Syria. The revenue generated by these fields, reportedly $1 to $2 million daily, is being used by ISIS to generate a significant share of its operating expenses. This has given that movement the wherewithal to finance the further recruitment and support of thousands of foreign fighters, even as it sustains a high tempo of combat operations.

Black-market dealers in Iran, Iraq, Syria, and Turkey have evidently been assisting ISIS in this effort, purchasing the crude at a discount and selling at global market rates, now hovering at about $90 per barrel. Ironically, this clandestine export network was initially established in the 1990s by Saddam Hussein’s regime to evade U.S. sanctions on Iraq.

The Islamic State has proven adept indeed at exploiting the fields under its control, even selling the oil to agents of opposing forces, including the Assad regime. To stop this flow, Washington launched what is planned to be a long-term air campaign against those fields and their associated infrastructure. By bombing them, President Obama evidently hopes to curtail the movement’s export earnings and thereby diminish its combat capabilities. These strikes, he declared in announcing the bombing campaign, are intended to “take out terrorist targets” and “cut off ISIL’s financing.”

It is too early to assess the impact of the air strikes on ISIS’s capacity to pump and sell oil.  However, since the movement has been producing only about 80,000 barrels per day (roughly 1/1,000th of worldwide oil consumption), the attacks, if successful, are not expected to have any significant impact on a global market already increasingly glutted, in part because of an explosion of drilling in that “new Saudi Arabia,” the United States.

As it happens, though, the Obama administration is also wielding the oil weapon against two of the world’s leading producers, Iran and Russia. These efforts, which include embargoes and trade sanctions, are likely to have a far greater impact on world output, reflecting White House confidence that, in the pursuit of U.S. strategic interests, anything goes.

Fighting the Iranians

In the case of Iran, Washington has moved aggressively to curtail Tehran’s ability to finance its extensive nuclear program both by blocking its access to Western oil-drilling technology and by curbing its export sales. Under the Iran Sanctions Act, foreign firms that invest in the Iranian oil industry are barred from access to U.S. financial markets and subject to other penalties. In addition, the Obama administration has put immense pressure on major oil-importing countries, including China, India, South Korea, and the European powers, to reduce or eliminate their purchases from Iran.

These measures, which involve tough restrictions on financial transactions related to Iranian oil exports, have had a significant impact on that country’s oil output. By some estimates, those exports have fallen by one million barrels per day, which also represents a significant contraction in global supplies. As a result, Iran’s income from oil exports is estimated to have fallen from $118 billion in 2011-2012 to $56 billion in 2013-2014, while pinching ordinary Iranians in a multitude of ways.

In earlier times, when global oil supplies were tight, a daily loss of one million barrels would have meant widespread scarcity and a possible global recession. The Obama administration, however, assumes that only Iran is likely to suffer in the present situation. Credit this mainly to the recent upsurge in North American energy production (largely achieved through the use of hydro-fracking to extract oil and natural gas from buried shale deposits) and the increased availability of crude from other non-OPEC sources. According to the most recent data from the Department of Energy (DoE), U.S. crude output rose from 5.7 million barrels per day in 2011 to 8.4 million barrels in the second quarter of 2014, a remarkable 47% gain.  And this is to be no flash in the pan.  The DoE predicts that domestic output will rise to some 9.6 million barrels per day in 2020, putting the U.S. back in the top league of global producers.

For the Obama administration, the results of this are clear.  Not only will American reliance on imported oil be significantly reduced, but with the U.S. absorbing ever less of the non-domestic supply, import-dependent countries like India, Japan, China, and South Korea should be able to satisfy their needs even if Iranian energy production keeps falling. As a result, Washington has been able to secure greater cooperation from such countries in observing the Iranian sanctions -- something they would no doubt have been reluctant to do if global supplies were less abundant.

There is another factor, no less crucial, in the aggressive use of the oil weapon as an essential element of foreign policy.  The increase in domestic crude output has imbued American leaders with a new sense of energy omnipotence, allowing them to contemplate the decline in Iranian exports without trepidation. In an April 2013 speech at Columbia University, Tom Donilon, then Obama’s national security adviser, publicly expressed this outlook with particular force. “America’s new energy posture allows us to engage from a position of greater strength,” he avowed. “Increasing U.S. energy supplies acts as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks. It also affords us a stronger hand in pursuing and implementing our international security goals.”

This “stronger hand,” he made clear, was reflected in U.S. dealings with Iran. To put pressure on Tehran, he noted, “The United States engaged in tireless diplomacy to persuade consuming nations to end or significantly reduce their consumption of Iranian oil.” At the same time, “the substantial increase in oil production in the United States and elsewhere meant that international sanctions and U.S. and allied efforts could remove over 1 million barrels per day of Iranian oil while minimizing the burdens on the rest of the world.” It was this happy circumstance, he suggested, that had forced Iran to the negotiating table.

Fighting Vladimir Putin

The same outlook apparently governs U.S. policy toward Russia.

Prior to Russia’s seizure of Crimea and its covert intervention in eastern Ukraine, major Western oil companies, including BP, Chevron, ExxonMobil, and Total of France, were pursuing elaborate plans to begin production in Russian-controlled sectors of the Black Sea and the Arctic Ocean, mainly in collaboration with state-owned or state-controlled firms like Gazprom and Rosneft. There were, for instance, a number of expansive joint ventures between Exxon and Rosneft to drill in those energy-rich waters.

“These agreements,” Rex Tillerson, the CEO of Exxon, said proudly in 2012 on inking the deal, “are important milestones in this strategic relationship... Our focus now will move to technical planning and execution of safe and environmentally responsible exploration activities with the goal of developing significant new energy supplies to meet growing global demand.” Seen as a boon for American energy corporations and the oil-dependent global economy, these and similar endeavors were largely welcomed by U.S. officials.

Such collaborations between U.S. companies and Russian state enterprises were then viewed as conferring significant benefits on both sides. Exxon and other Western companies were being given access to vast new reserves -- a powerful lure at a time when many of their existing fields in other parts of the world were in decline. For the Russians, who were also facing significant declines in their existing fields, access to advanced Western drilling technology offered the promise of exploiting otherwise difficult-to-reach areas in the Arctic and “tough” drilling environments elsewhere.

Not surprisingly, key figures on both sides have sought to insulate these arrangements from the new sanctions being imposed on Russia in response to its incursions in Ukraine. Tillerson, in particular, has sought to persuade U.S. leaders to exempt its deals with Rosneft from any such measures. “Our views are being heard at the highest levels,” he indicated in June.

As a result of such pressures, Russian energy companies were not covered in the first round of U.S. sanctions imposed on various firms and individuals. After Russia intervened in eastern Ukraine, however, the White House moved on to tougher sanctions, including measures aimed at the energy sector. On September 12th, the Treasury Department announced that it was imposing strict constraints on the transfer of U.S. technology to Rosneft, Gazprom, and other Russian firms for the purpose of drilling in the Arctic. These measures, the department noted, “will impede Russia’s ability to develop so-called frontier or unconventional oil resources, areas in which Russian firms are heavily dependent on U.S. and western technology.”

The impact of these new measures cannot yet be assessed. Russian officials scoffed at them, insisting that their companies will proceed in the Arctic anyway. Nevertheless, Obama’s decision to target their drilling efforts represents a dramatic turn in U.S. policy, risking a future contraction in global oil supplies if Russian companies prove unable to offset declines at their existing fields.

The New Weapon of Choice

As these recent developments indicate, the Obama administration has come to view the oil weapon as a valuable tool of power and influence. It appears, in fact, that Washington may be in the process of replacing the threat of invasion or, as with the Soviet Union in the Cold War era, nuclear attack, as its favored response to what it views as overseas provocation. (Not surprisingly, the Russians look on the Ukrainian crisis, which is taking place on their border, in quite a different light.)  Whereas full-scale U.S. military action -- that is, anything beyond air strikes, drone attacks, and the sending in of special ops forces -- seems unlikely in the current political environment, top officials in the Obama administration clearly believe that oil combat is an effective and acceptable means of coercion -- so long, of course, as it remains in American hands.

That Washington is prepared to move in this direction reflects not only the recent surge in U.S. crude oil output, but also a sense that energy, in this time of globalization, constitutes a strategic asset of unparalleled importance. To control oil flows across the planet and deny market access to recalcitrant producers is increasingly a major objective of American foreign policy.

Yet, given Washington’s lack of success when using direct military force in these last years, it remains an open question whether the oil weapon will, in the end, prove any more satisfactory in offering strategic advantage to the United States. The Iranians, for instance, have indeed come to the negotiating table, but a favorable outcome on the nuclear talks there appears increasingly remote; with or without oil, ISIS continues to score battlefield victories; and Moscow displays no inclination to end its involvement in Ukraine. Nonetheless, in the absence of other credible options, President Obama and his key officials seem determined to wield the oil weapon.

As with any application of force, however, use of the oil weapon entails substantial risk. For one thing, despite the rise in domestic crude production, the U.S. will remain dependent on oil imports for the foreseeable future and so could still suffer if other countries were to deny it exports. More significant is the possibility that this new version of the oil wars Washington has been fighting since the 1990s could someday result in a genuine contraction in global supplies, driving prices skyward and so threatening the health of the U.S. economy. And who’s to say that, seeing Washington’s growing reliance on aggressive oil tactics to impose its sway, other countries won’t find their own innovative ways to wield the oil weapon to their advantage and to Washington’s ultimate detriment?

As with the introduction of drones, the United States now enjoys a temporary advantage in energy warfare. By unleashing such weapons on the world, however, it only ensures that others will seek to match our advantage and turn it against us.

Source: http://www.forbes.com/sites/williampentland/2014/10/16/r-i-p-henry-...

R.I.P. Henry Hub? Marcellus Shale Shifts Geography Of Natural Gas Markets

Energy 10/16/2014 @ 10:40AM

William Pentland Contributor

I write about energy and environmental issues.

Opinions expressed by Forbes Contributors are their own.

The New York Stock Exchange of natural gas – or the closest thing to it – is an industrial complex of pipes and compressors sprawled over a few acres of what was once farmland in southern Louisiana.

Owned by Sabine Pass, a subsidiary of Chevron Corporation, the Henry Hub interconnects with 13 major pipeline systems and can transport 1.8 billion cubic feet of natural gas per day (Bcf/d).

The complex sits on the outskirts of Erath, La. a few miles from the Gulf of Mexico. More recently, Erath provided the setting for the fictional murder of Dora Lange in the first episode of HBO’s gristly crime drama, True Detective.

“People out here, it is like they don’t even know the outside world exists,” said Matthew McConaughey, the star of the HBO series. “They might as well be living on the f___ing moon.”

While the good people of Erath may not be affected by what happens outside of Erath, virtually everyone in the United States in the United States is affected by the price of natural gas bought and sold at the Henry Hub in Erath.

For more than 20 years, the average price paid for one million British thermal units (MMBtu) of natural gas at the Henry Hub has been the price used for natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX) and swaps traded on the Intercontinental Exchange.

marcellus-growth-trends-to-2014

The Henry Hub has historically been considered to be the most liquid trading point in the gas distribution system. And for good reason. The Gulf Coast region has been the nation’s primary natural gas production region. As a result, the Henry Hub price is supposed the best proxy available for the average market price of natural gas in the United States.

Until recently, it almost certainly was.

That has changed with the rise of the Marcellus Shale as a major gas producing region.

In 2010, the Marcellus Shale in Pennsylvania and West Virginia produced less than 2 Bcf/d. In 2013, the region was producing closer more than 15 BCF/d, or about 18% of all natural gas produced in the U.S., according to the U.S. Energy Information Administration.

“How important is the Henry Hub as a price proxy for the Eastern US? My thinking is that, before long, it won’t be very important at all,” Teri Viswanath, director of commodity strategy for natural gas at BNP Paribas in New York, told Reuters in September.

Over the past month or so, spot prices at market hubs in Pennsylvania and West Virginia have dropped below $2 per MMBtu on several recent days when demand was low, while spot prices at Henry Hub have traded near $4 per MMBtu, according to the EIA. The so-called “negative basis” has become far more common over the past two years at market hubs in Pennsylvania due to a shale-induced supply glut in the region.

At the same time that production in the Marcellus Shale has surged, production in Louisiana has declined, especially offshore gas production. Texas production has been flat. Meanwhile, demand is rising and likely to keep rising as a clutch of LNG export terminals come online.

The rise of a new producing region combined with production declines in traditional areas of production is shifting historical flow patterns. It is only a matter of time before the market follows.


Source: http://fuelfix.com/blog/2014/10/21/report-retirees-401ks-hold-most-shares-in-oil-gas-industry/

 

Report: Retirees, 401Ks hold most shares in oil & gas industry

Posted on October 21, 2014 at 1:27 pm by Jennifer A. Dlouhy           in Finance/Earnings, Politics/Policy              

 

WASHINGTON — The biggest owners of oil and gas companies aren’t found inside their boardrooms.

Instead, according to a study released by the American Petroleum Institute on Tuesday, they are largely retirees and people saving for retirement.

The analysis, completed by Sonecon for the trade group, examined publicly held oil and gas companies to identify their shareholders and found:

  • Public and private pension and retirement plans, including 401(k)s and IRAs, hold 46.8 percent of all shares of U.S. oil and natural gas companies.
  • Asset management companies, including mutual funds, hold 24.7 percent of those shares.
  • Individual investors own 18.7 percent.
  • Institutional investors, such as banks, insurance companies, foundations and endowments, hold 6.9 percent of the shares.
  • The officers and board members of U.S. oil and gas companies hold less than 3 percent of the shares.

API released the study and talked with reporters about the findings as oil companies announce third quarter earnings. Reports of large profits can feed criticism in the nation’s capital, sometimes driving calls to spike tax incentives enjoyed by the oil industry.

Kyle Isakower, vice president of regulatory and economic policy for API, said the study shows that “when oil and natural gas companies do well, so do millions of their owners all across America.”

“It’s important for Americans and policymakers to understand who really are the beneficiaries when oil and gas is thriving here in the United States,” Isakower added during a conference call with reporters. “It’s not only consumers — through low cost and affordable energy — but also the owners of the energy companies themselves.”

The report reflects a broad oil and gas industry ownership despite divestiture campaigns sweeping through universities and other institutions.

Sonecon CEO Robert Shapiro said broad ownership motivates companies to invest more productively “because if they don’t, shareholders move out of those companies and stock prices fall.”

It also could encourage a sharper focus on ensuring strong returns on investment — a dollar-driven focus some conservationists argue could dissuade oil companies from deploying capital to low-return efforts with big environmental gains, such as plugging methane leaks from pipelines, pumps and other equipment.

The broad distribution of shareholders also suggests that the economic health of the oil and gas industry is deeply tied to the U.S. economy as a whole.

“The oil and gas industry . . . forms the backbone of the infrastructure of modern life,” said Shapiro, an economic adviser to the campaigns of Bill Clinton, Barack Obama and other presidential candidates. “It cannot do well unless the economy is doing well, and the economy can’t do well unless it’s doing well.”

 

How Ironic

Source: http://fuelfix.com/blog/2014/10/22/ferc-highlights-new-england-gas-...

FERC highlights New England gas markets as winter approaches

Source: http://www.zerohedge.com/news/2014-10-22/meanwhile-who-quietly-buyi...

Meanwhile, This Is Who Is Quietly Buying All The Cheap Oil

With the US Shale Oil industry up in arms, Venezuela screaming, and Russia awkwardly quiet (as the Ruble slides with the falling oil price stabilizing domestic inflows), the 'secret' Saudi-US oil deal that pressured prices for crude down to $80 (18-month lows today) has 'hurt' a lot of the world's producer nations. However, as Bloomberg reports, there is one nation that is very grateful. The number of supertankers sailing toward China’s ports surged to a nine-month high as over 80 very large crude carriers (VLCCs) - the industry’s biggest ships - sail toward the Asian country’s ports. At an average of 2 million barrels each, the 160 million barrels will help refill China's 727 million barrel SPR which it started in 2012.

 

There are 89 tankers sailing for Chinese ports, 80 of which are VLCCs - the highest since January 3rd.

 

As Bloomberg reports,

The number of supertankers sailing toward China’s ports surged to a nine-month high amid speculation an oil-price slump is encouraging the world’s second-biggest crude importer to accelerate purchases.

 

There are 80 very large crude carriers, the industry’s biggest ships, sailing toward the Asian country’s ports, according to IHS Fairplay vessel-tracking signals compiled by Bloomberg at about 10 a.m. today. That’s the highest since Jan. 3. Average shipments are 2 million barrels.

 

Brent crude, the global benchmark, plunged to a four-year low yesterday amid speculation Saudi Arabia, Kuwait and other nations in the Organization of Petroleum Exporting Countries won’t curb production. The slump is likely encouraging buying to fill China’s strategic stocks, according to Energy Aspects Ltd., a London-based consultant.

 

“There’s a lot of bargain hunting going on,” Richard Mallinson, an analyst at Energy Aspects, said by phone. “Whilst prices are low we think there’ll be buying for Strategic Petroleum Reserve filling and also just trying to capture these discounted crudes.”

 

...

 

The 80 bound for China compare with an average of 63 for the past two years and match a record in data that started in October 2011.

*  *  *

In summary, just like Chinese gold imports rise when the price of gold drops; so China does the logical thing with other commodities, (i.e. oil) when prices tumble and instead of selling into the paper rout, it buys all the physical it can get its hands on.

Thank you Jack Straw !  Great information.

The Chinese are very schrewd indeed. I admire their capitalistic government. Contrast that with the USA, which one is socialist???

Jack,how much information is gleaned from seismic testing? Can oil be differentiated from methane from ngl's,etc.?
In other words,can a seismic test tell what specifically lies below? Thanks in advance.

Interesting question, Trapper !   Looking forward  to Jacks reply.  

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