October 2009 Archives

There ought to be a law! It's the usual refrain, and often legislative action, when faced with serious concerns such as those that inspired a pending US House bill that would give the Department of Homeland Security authority over what chemicals are used in the refining process.

US natural gas shale plays continue on a streak of impressive production bulkups, although their copious well outputs, which in a more robust economy would inspire rave reviews, have raised eyebrows in some corners of Wall Street given a currently oversupplied market. 

One recent example of just how jaw-dropping the US shale gas story has become came from big independent Newfield Exploration. Houston-based Newfield said in a conference call this week that its production from Oklahoma's Woodford Shale today is 308,000 Mcfe/d, versus about 240,000 Mcfe/d at June 30 -- up nearly 30% in less than four months. Moreover, the company has an inventory of 28 drilled but uncompleted Woodford wells waiting to be put online by early 2010, signalling the potential to boost production still higher.

The world of oil is in for a roller-coaster ride over the next few years if Deutsche Bank analysts are right, with oil demand set to peak in just seven years' time as crude spikes again, this time to $175/barrel, before falling into long-term decline.

It won't be a case of oil running out, however. Rather, the world will become much more efficient in its use of energy. But in the next few years, Deutsche predicts, we will see a lot of volatility and even more chronic under-investment in production capacity.

Growing up in India, one of the highlights of my summer vacations was the annual trip from the capital New Delhi to my grandparents' home in Kerala located at the southernmost tip of the peninsula.

The family home, which is more than 300 years old, was seen by my sisters and cousins as the ultimate holiday destination with its many rooms, corridors, cellars and attic. What we didn't realize then was that it was also the ultimate in environmentally friendly construction, energy efficiency, self-sustainability and promoting recycling habits.

Steadily diminishing OPEC compliance with last December's 4.2 million b/d output pact is turning out to be no big deal in light of rising hopes that the world economy may finally be on the path to recovery.

The latest Platts estimates show total OPEC production in September at 28.83 million b/d and output from the 11 members bound by quotas at 26.33 million b/d, up 40,000 b/d and 90,000 b/d respectively from August. OPEC's own estimates, derived from secondary sources, put the September volumes even higher -- 28.9 million b/d for all 12 members, including Iraq, and 26.42 million b/d for the OPEC-11, minus Iraq.

Sunoco's plans to indefinitely shut for economic reasons its 145,000 b/d Eagle Point refinery in Westville, New Jersey, near Philadelphia, did not come as a major surprise to most in the gasoline market.

But they add it would take many more similar shutdowns, not only on the US Atlantic Coast but also down on the US Gulf Coast, before such moves would generate any tangible effect on US refining margins.

Cautious optimism best describes the International Energy Agency's latest assessment of the world oil market, which suggests an upturn in oil demand is just around the corner.

The demise of the petrodollar is back on the agenda. By 2018, oil producers in the Persian (or Arab, if you prefer) Gulf will no longer be selling their primary cash earner in US dollars, but against a basket of currencies. So says Robert Fisk, Middle East correspondent with the UK's Independent newspaper, citing Middle East and Chinese banking sources in Hong Kong.

On October 2nd, Russia was declared world's largest oil producer in terms of September production, courtesy of OPEC's own statistics.

This wasn't the first time its production had nudged ahead of Saudi Arabia's. Since August 2006 it's been in the statistical lead often. Even the US Energy Information Administration describes Saudi Arabia as the world's second largest crude oil producer after Russia. What was a more significant first was that Russian production exceeded 10m bpd (10.01) in September. That was a record for Russia and certainly close to Saudi Arabia's production high.

The Environmental Protection Agency agrees with critics who contend that if the agency applies the Clean Air Act to regulate greenhouse gases it would vastly expand the universe of regulated entities.

This is particularly true, the agency notes, if it applies the same emission standards under the act that apply to conventional pollutants. In fact, doing so would lead to "absurd results," EPA said. So, last week the agency a proposed rule that would tailor provisions of the act to better fit major sources of greenhouse gas emissions.

They won't all make the playoffs this year, but there's one thing a growing list of big leaguers have come together on: promoting recycling and reducing the use of oil to blunt the environmental impact of pro ballparks and stadiums across the US.

From educational campaigns about alternative energy and making biodiesel from concession grease, to powering ballpark tractors and mowers with biodiesel blends and composting the clippings, going green is a rising trend in professional sports.

Some very specific proposals in the US' landmark new renewable fuel standards are reportedly threatening Caribbean ethanol producers, who represent a small but a significant chunk of alternative fuel's imports.