Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Energy

Crude Oil Prices Fall Below $60, Traders Expect $55 or Lower

This article appeared online at TheNewAmerican.com on Monday, February 12, 2018: 

With the price of crude oil for March delivery falling below $60 a barrel last week on the New York Mercantile Exchange (NYMEX), half of OPEC’s worst nightmare is taking place: Higher oil prices sought by the cartel are bringing on American production at a faster rate than ever before. The other half of the nightmare would be a slowdown in global demand for the stuff.

A sell-off was triggered by an announcement last week from the Energy Information Agency (EIA) that U.S. crude oil production exceeded 10 million barrels per day (bpd) last month — the first time since 1970 — and would continue to set records into 2018. In addition, U.S. oil rig count jumped by 26, the largest jump in a year.

Helping along was the

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With Venezuela’s Marxist Dictator Gone, the Country’s Oil Production Could Soar

This article was published by The McAlvany Intelligence Advisor on Monday, February 12, 2018: 

By every measure, Venezuela’s Marxist dictator Nicolas Maduro isn’t long for this world. His socialist regime is losing altitude and airspeed at a most satisfyingly horrific rate. His people are starving, as are many in his army. Citizens are fleeing into Colombia to buy food missing from shelves at home, and many are staying there. He’s in default on his estimated $150 billion national debt, and his lenders – China, Russia, and Cuba – appear to be increasingly reluctant to throw good money after bad. American refineries, which have been supporting Maduro through their purchases of his country’s sticky crude, have happily cut them by two-thirds, finding more reliable sources in Canada and Mexico, and as a result helping to starve Maduro into oblivion.

Finally, his precious oil company, PdVSA, which is essentially Maduro’s only oxygen hose, is failing as well. Its production is down to a little over a million barrels a day. In 2014 it produced more than three.

So it’s reasonable to assume, as economist Herb Stein expressed it, that “if something cannot continue, it will end.” And the end of Maduro won’t be lamented.

In a burst of perhaps unjustified optimism,

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Fracking Revolution Pushes U.S. Daily Crude Oil Production Over 10 Million Barrels

This article appeared online at TheNewAmerican.com on Friday, February 2, 2018:  

English: Logo of the U.S. Energy Information A...

November’s production of crude oil in the United States, according to the U.S. Energy Information Agency (EIA), not only exceeded October’s by four percent, but rose to a level not seen in nearly 50 years: 10 million barrels a day. The agency went even further: At this rate daily U.S. crude oil production will exceed that of both Russia and Saudi Arabia by the end of next year.

If not sooner. The EIA’s forecast is that crude oil production will grow by 10 percent this year, but that could turn out to be much too low. As Todd Staples, head of the Texas Oil & Gas Association, noted:

American crude oil [production] is a game-changer in international trade, global politics and domestic energy security. Crude oil imports are down 20 percent from 2006 and, today, we are competing with the Middle East in the export market.

 

These outcomes were unthinkable a decade ago.

Indeed. As recently as 2011 the United States was only producing about

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U.S. Oil Production Will Soon Overtake Saudi Arabia’s

This article appeared online at TheNewAmerican.com on Monday, January 22, 2018:

Fatih Birol, head of the Paris-based International Energy Agency (IEA), told a congressional committee last week, “What we see is a result of the shale revolution [fracking]. The U.S. is becoming the undisputed leader of oil and gas production worldwide. [U.S.] oil production is growing very strongly and will continue to grow. We think that this growth is unprecedented [both in the] size of the growth and the pace of the growth.”

In 1973, Saudi Arabia punished U.S. citizens with an oil embargo in retaliation for the U.S. government’s support for Israel during the Yom Kippur War. It could do so because it held the biggest hammer: Saudi Arabia controlled the world’s largest reserves of crude oil and the kingdom. Within months, the price of oil quadrupled in the United States, resulting in shortages and rationing. Gas stations were closed, and when they reopened they were forced to restrict gasoline purchases to “odd” and “even” days depending upon their customers’ license plate numbers. The federal government imposed “double-nickel” (55 mph) speed limits on highways, and experimented with “daylight saving” time in order to reduce the impact of the embargo.

Those days are long gone and not likely ever to return. Saudi Arabia and its OPEC cartel are slowly being reduced to bit players in the global energy market. Saudi Crown Prince Mohammed bin Salman saw that coming more than two years ago when he announced

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Venezuela’s Oil Production Collapsing Along With Its Economy

English: Fatih Birol, the Chief Economist of t...

Fatih Birol, head of the IEA

This article appeared online at TheNewAmerican.com on Friday, January 19, 2018: 

The Paris-based International Energy Agency (IEA) reported on Friday that oil production from Venezuela’s state-owned, state-controlled, and state-operated energy company, PdVSA, dropped by 12 percent last month, following a decline by a third in 2017. The announcement avoided saying anything disparaging about the Marxist government’s ham-handed mismanagement of the company, nor did it criticize attempts to run the company with military officers with no technical training in place of the technicians who were in place earlier. Nothing was said about the arrest of dozens of top officials of the oil company in Maduro’s attempt to blame the fall in production on their corruption, mismanagement, and fraud, instead of his socialist program of Chavismo. And certainly no mention was made of the root cause of the collapse: Socialism always fails when it runs out of other people’s money.

Maduro is about out of other people’s money.

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Record Bullish Bets on Crude Oil Raising Red Flags

OPEC countries

OPEC countries

This article appeared online at TheNewAmerican.com on Monday, January 15, 2018: 

Traders in oil futures have just set a new record: The bets they have placed that crude oil will move even higher just set a world record. As of last week, there were 432,000 net long positions reflecting that optimism. That optimism could be short-lived. As analysts from JBC Energy consulting told its clients on Monday: “From a fundamental perspective, the surge in U.S. managed money raises a clear red flag for us.”

Since the low in June, the price for the future delivery of U.S. crude oil is up almost 50 percent, from $44 a barrel to $64 on Friday. In London, Brent crude traded above $70 for the first time since December 2014.

Their optimism is based on indisputable facts.

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Trump’s Interior Secretary Proposes Selling Offshore Drilling Leases Starting in 2019

This article appeared online at TheNewAmerican.com on Friday, January 5, 2018: 

English: Nancy Pelosi photo portrait as Speake...

One of the usual suspects

President Trump’s Interior Secretary Ryan Zinke was very careful in announcing his agency’s next step in expanding energy development to include the United States’ offshore reserves. He knew that environmentalists and far-left politicians would attack his plan and did what he could to placate them in advance. Said Zinke:

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Dakota Access Pipeline Fulfilling Its Promise

This article appeared online at TheNewAmerican.com on Monday, January 1, 2018: 

Fully operational since June, the Dakota Access Pipeline is lowering transportation costs, reducing tank car usage, reducing environmental and population risk, improving North Dakota’s financial condition, and putting the lie to the alarmist anti-pipeline propaganda.

There’s scarcely a downside.

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Obama Fracking Rule to be Overturned by BLM in January

This article appeared online at TheNewAmerican.com on Friday, December 29, 2017:

Map of the part of the region in Texas, red is...

Part of the Permian Basin in west Texas

A federal appeals court refused on Wednesday to reconsider its decision to overturn an Obama administration rule on fracking, holding that the issue was moot: The Trump administration is planning to throw out the rule altogether in January.

The Bureau of Land Management (BLM) said that the Obama administration’s rule “unnecessarily burdens industry compliance costs and information requirements that are duplicative of regulatory programs of many states and some tribes. As a result, we are proposing to rescind, in its entirety, the [Obama administration’s] 2015 final rule.”

The original decision in 2016 ruled that the Obama administration was guilty of federal overreach,

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The Permian Basin is Driving Another Nail into OPEC’s Coffin

This article was published by The McAlvany Intelligence Advisor on Friday, December 29, 2017:  

English: Pumpjack east of Andrews, TX

English: Pumpjack east of Andrews, TX

Just a few years ago, the Permian Basin was considered nearly depleted. But with the advent of fracking technology, the enormous basin – called a “super basin” – could now contain two trillion barrels of recoverable crude oil. That is more than the reserves of Saudi Arabia’s Aramco oil field and all of Venezuela’s proven reserves put together. IHS Markit, the world leader in information gathering and analysis, just announced that the Permian Basin’s production exceeded its previous high registered back in 1973, producing a record 815 million barrels of oil in 2017. It estimates that its daily production will approach 3 million barrels a day (mbd) next year, which will set another record of a billion barrels produced in single year.

This far exceeds the requirements for any oil basin to quality as a “super basin”: 5 billion in reserves and 5 billion in accumulated production. It also far exceeds the reserves of Saudi Arabia’s Aramco oil field (265 billion) and those of Venezuela (300 billion).

It’s also a “disrupter,” according to Pete Stark, a director of IHS: “When we consider the impact on the world’s crude markets, the Permian has to be considered a global disrupter.” IHS’ Reed Olmstead added:

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Crude Oil Price Outlook: Back to the ’40s?

This article appeared online at TheNewAmerican.com on Tuesday, December 26, 2017:

English: Flag of the Organization of Petroleum...

The same day that OPEC announced it would be extending its production cut agreement through the end of next year, the U.S. Energy Information Administration (EIA) announced that U.S. crude oil production jumped an astonishing 290,000 barrels per day from August levels.

Oil traders yawned and drove the price of crude higher. After all, it was a one-month spike, and compliance among both OPEC members and non-members remained surprisingly high. The agreement was taking crude oil off the market faster than producers were adding it. Voila! Increased demand coupled with decreased supply equals higher prices. Futures moved higher with Brent (prices set in London) moving past $62 a barrel with West Texas Intermediate (WTI, prices set in Cushing, Oklahoma) approaching $60.

Those traders were happy to ignore the increase in rig counts in the United States, and the more than 1,000 new horizontal wells being developed as a result — the highest seen since March 2015.

But all three official observers of the world’s crude oil market had a surprise waiting:

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Opening ANWR to Energy Development May Be Too Late

This article appeared online at TheNewAmerican.com on Wednesday, December 20, 2017: 

Part of the motivation by Republicans to open the Arctic National Wildlife Refuge (ANWR) to energy development — off limits for nearly 40 years thanks to environmental extremists and the Obama administration — is to use lease fees to offset the deficits in the tax reform bill.

The numbers coming from the Congressional Budget Office (CBO) are impressive. Leasing even a tiny part of the tiny part that “Section 1002” represents of the total ANWR acreage would produce $2.2 billion in revenues over the next 10 years, to be split evenly between Alaska and the federal government.

Alaska’s Republican Senator Lisa Murkowski said in a speech on the floor of the Senate late Tuesday night that

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Citgo’s Future in Doubt, Thanks to its Takeover by Venezuela’s Military

This article was published by The McAlvany Intelligence Advisor on Friday, December 1, 2017:

Immediately following Maduro’s arrest of 50 people running his oil company, allegedly in an attempt to eliminate corruption at that company, PdVSA, he named a military general as his oil minister and replaced the company’s manager with a political crony. Neither has any oil industry experience.

At first glance, the move seems insane. Production by PdVSA is half what it was just two years ago under skilled (many U.S.-trained) executives, and now the Marxist dictator has replaced them with people who know nothing at all about how to run an oil company. Maduro said he was rooting out corruption at the company, claiming that the executives fudged the company’s production numbers in order to make the company’s dismal and declining profitability appear better than it is.

Citgo was once a jewel of the PdVSA, operating more than 5,000 gas stations in the U.S. and many refineries on the Gulf Coast specifically designed and built to refine the heavy Venezuelan oil flowing out of the world’s largest cache of crude oil reserves. The 4,000 employees, many of them working in Houston, are now in limbo, wondering how further destruction of the parent company in Venezuela will affect them.

For five of those top executives, all American citizens, the future is particularly dim. The Trump administration, which has repeatedly excoriated the Marxist dictator, is now attempting to have them moved from their present incarceration into the American embassy.

For those 4,000 employees working for Citgo, many are no doubt polishing their resumes to secure their future in other companies in the American oil industry.

For Maduro, the military takeover of PdVSA makes perfect sense. First, it virtually completes the military takeover of every aspect of the failing country’s economy. Prior to Monday’s announcement, the military was in charge of food production and distribution, imports and exports, and communications.

Second, the military secures Maduro’s position as president of the country, at least for the moment. With its support he has little to fear from the vast majority of his serfs who oppose his dictatorship. Next, as the country’s economy continues to crater, the military will have only themselves to blame, keeping Maduro out of the line of fire.

Finally, the move secures the military’s ability to finance itself, rather than relying on Maduro’s slim and slowly evaporating revenue stream. As Chris Tomlinson, writing for theHouston Chronicle noted, “The military supplements its income by demanding bribes, smuggling fuel to neighboring countries, and facilitating illicit narcotics shipments to Mexico and other Caribbean countries.”

As far as Citgo itself is concerned, Maduro sold 49.6 percent of it to Russia’s Marxist leader, Vladimir Putin, in exchange for a loan of $1.5 billion to keep his faltering regime afloat for a few more months.

With military people now in charge of Maduro’s only revenue stream through PdVSA, it’s only a matter of time before his regime collapses, either by the military which is now calling the shots, or by pressure from bondholders facing inevitable defaults on some $150 billion that Maduro owes them.

By the time the dust settles, it’s increasingly likely that Citgo, which used to be under the thumb of one Marxist dictator, will be owned, operated and controlled by another, this one in Moscow.

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Related article:

Tracking Socialist Venezuela’s Death Spiral: 4,000 Percent Inflation

IEA: United States to Dominate World Energy Market Within Eight Years

This article appeared online at TheNewAmerican.com on Wednesday, November 15, 2017:

According to the International Energy Agency (IEA), the growth of energy production in the United States, doubling as it has in just the last eight years, is expected to double again in the next eight. Authors of the IEA’s annual World Energy Outlook report released on Tuesday could hardly contain their surprise: “A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country ever managed; already a net exporter of [natural] gas, the U.S. becomes a net exporter of oil in the late 2020s. In our projections … the rise in US tight oil output [fracking] from 2010 to 2025 would match the highest maintained period of oil output growth by a single country in the history of oil markets.”

The U.S. production increase makes up an astonishing

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Aramco CEO Not Worried About American Frackers

This article appeared online at TheNewAmerican.com on Thursday, October 26, 2017:

English: Headquarters of Aramco Services Company

Headquarters of Aramco Services Company

Saudi Aramco CEO Armin Nasser told CNBC’s Squawk Box on Sunday that he wasn’t at all worried about American frackers, since they are concentrating on “sweet spots” — the richest fields with the highest returns — which can’t last forever: “The concentration that we are seeing today [by American frackers] is on the sweet spot of shale, and this will not last forever. You can concentrate for some time on the sweet spots and produce more oil. But ultimately you need to venture downward, and that’s where you have less quality and you require more cost to produce these barrels. Shale oil will contribute additional barrels [to world crude oil supplies], but it will all depend on the price of crude.”

Nasser no doubt was referring to data released last week that showed

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Aramco’s CEO Tells Half a Truth

This article was published by The McAlvany Intelligence Advisor on Friday, October 27, 2017: 

Carbon print of Alfred Lord Tennyson, 1869, pr...

Alfred Lord Tennyson, 1869

A Yiddish proverb holds that “a half-truth is a whole lie,” while Ann Landers said that “the naked truth is always better than the best-dressed lie.” Alfred Lord Tennyson said it best: “A lie which is half a truth is ever the blackest of lies.”

Whether Aramco’s CEO intended to tell a lie or just wasn’t completely forthright remains unknown. What Armin Nasser did tell CBNC’s “Squawk Box” on Sunday certainly wasn’t the whole picture. He blew off America’s energy frackers:

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Venezuela Falling Behind on Its Payments, Putting Maduro’s Regime in Jeopardy

This article appeared online at TheNewAmerican.com on Monday, October 23, 2017: 

English: "El Palito" - PDVSA Refiner...

PDVSA Refinery, Venezuela

Venezuela failed to make five payments due on its debt last week in order to make a big payment on Friday and another one next Thursday. The $350 million in missed payments each have a 30-day grace period, while Friday’s payment of nearly $1 billion and another one of $1.2 billion due the following Thursday must be paid on time. Another $1.2 billion of principal and interest payments are due before the end of the year.

Venezuelan President Nicolás Maduro is running out of both time and money. With less than $10 billion in foreign reserves (and much of it illiquid), he is scrambling to keep from defaulting.

His state-owned energy company, PDVSA, is so far behind on payments to storage terminals in the Caribbean that it is being barred from using them until they get caught up. One such facility, NuStar’s Statia facility on the island of St. Eustatius, is owed $26 million by PDVSA, not having received any payments for nearly a year. PDVSA set up a payment schedule with NuStar but then missed the first payment. So NuStar is holding an auction of Venezuela crude that’s currently in storage in order to make up for those missed payments.

On top of that, quality control issues are plaguing PDVSA, thanks to shoddy performance by its workers, resulting in crude that is contaminated with water, soil, and other minerals. The situation has deteriorated over the past two years to such a point that refineries aren’t taking shipments, or are demanding discounts to offset the additional costs of refining the crude. One PDVSA worker told Reuters news agency, “We’re refitting chemical injection ports, recouping pumps and storage tanks but without chemicals, we can’t do anything.” Those chemicals cost money that PDVSA doesn’t have, and its suppliers aren’t willing to extend any further credit.

So far this year, Phillips 66 has canceled at least eight shipments due to the low quality of Venezuela’s crude being shipped to their refineries.

PDVSA provides 90 percent of Maduro’s revenues. The combination of low oil prices, expert workers at PDVSA being replaced two years ago with his political cronies, the resultant incompetence and corner-cutting to keep costs down, the barring by storage facilities of taking the company’s crude, the necessity of making those payments in the next two weeks, and the sanctions by the United States inhibiting Maduro and his people from accessing crucial funds are creating severe problems for him. The problems border on existential, with observers now estimating the chances of default somewhere between 15 and 40 percent before the end of the year. Said Ray Zucaro, chief investment officer at RVX Asset Management, Maduro’s “getting close to the edge of not [having] enough money in the checking account to pay the bills.”

There is one beneficiary enjoying Maduro’s problems: Russia. It is continuing to provide credit to the staggering and faltering communist regime in exchange for precious oil reserves. Helma Croft, global head of commodity strategy at RBC Capital Markets, explained the pickle Maduro is in and how Russia is taking advantage of it: “While it makes sense [for Maduro] to preserve as much cash to avoid default, [he] will not be able to do it without Russia. So the question will be: how much acreage will this cost [him]? Rosneft [Russia’s state-owned energy company] is acquiring Venezuela assets at fire sale prices.”

What if Your Customer Can’t Buy Your Product, but Wants to?

This article was published by The McAlvany Intelligence Advisor on Monday, October 16, 2017:

There are two basic rules of economics. The first is: if prices go down, more will be demanded. The second is: both sides of any economic transaction must benefit or there’s no deal.

The fracking revolution in the United States has pushed the price of crude oil down to the point where it is threatening the very existence of the OPEC cartel. Consumers are saving at the pump and the energy industry in the U.S. employs more than 10 million people, making up eight percent of the country’s gross domestic product.

But there’s been an all but invisible transformation taking place in natural gas. At least two of the Big Oil companies sell more natural gas than they do crude oil.

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U.S. Natural Gas Exports to Add 500,000 Jobs, $73 Billion to Economy

This article appeared online at TheNewAmerican.com on Monday, October 16, 2017:

Liquefied natural gas (LNG) tanker, section vi...

Liquefied natural gas (LNG) tanker, section view from side.

The latest estimate from API, the energy trade group, is that increased exports of LNG (liquefied natural gas) over the next 20 years will add nearly 500,000 jobs to the American economy and $73 billion to the country’s gross domestic product (GDP). Marty Durbin, API’s chief strategy officer, stated, “This report confirms that increasing U.S. LNG exports would bring great benefits to American workers and consumers and [to] the U.S. economy. Increasing the use of U.S. natural gas throughout the world means more production here at home, cleaner air, and increased energy security for our nation and our allies.”

The revolution taking place in natural gas has been almost completely overlooked.

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EV Revolution to Drive Oil to $10 a Barrel, Says Forecaster

This article appeared online at TheNewAmerican.com on Monday, October 16, 2017:

Shell Oil Company

Chris Watling, the CEO of Longview Economics, told CNBC on Friday that Saudi Arabia should hasten the sale of part of its Aramco oil company while the price of crude is still high: “I think they need to get it away quick before oil goes to $10 [per barrel].” Added Watling: “We forget, don’t we? 120 years ago the world didn’t live on oil. Oil hasn’t always driven the global economy. The point is, alternative energy in some form is gathering speed.… Things are changing.”

Watling’s views coincide with those of Bloomberg New Energy Finance (BNEF) in their just-released 2017 Long Term Electric Vehicle Outlook, which concluded that by 2040

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.