Tuesday, March 10, 2009

P52. Pick Points

Half-a-dozen or so stories of interest:

With OPEC coming up on their next meeting this Sunday, I suppose it is time to guess whether or not they will make another production cut. The latest thought seems to be that they won’t. Though not all agree, and prices did dip a little Tuesday, back to $45.71. The EIA have forecast a decline in demand of almost 1.4 mbd, down around 200,000 bd over earlier forecasts. They see global demand dropping to 82.47 mbd, but they also see prices remaining lower, at slightly below today’s prices. They project natural gas at around $4.70 per kcf. We’ll just have to wait for the TWIP tomorrow to give us a little help to make up our minds. But these seem low.

To try and encourage demand Russia is dropping their export duty from $15.73 per barrel to $14.73 or more (depending on grade). Troubles in their oil patch are such, however, that the head of the oil-rich Bashkortostan region may be in trouble, and soon out of a job. The do have an agreement to run the Hungarian section of the South Stream pipeline, with a gas storage facility also being provided by the time it comes on line in 2015. (That date keeps slipping). Croatia is hoping to put a pipeline in place that would allow it to get its supplies through Hungary. Croatia uses 113 billion cu.ft. a year, but produces 60% of that in country. The rest comes from Russia.

There is talk of an LNG terminal in the Adriatic to help, and it is on the list that Exxon Mobil is anticipating for this year. The other is at South Hook in West Wales, and that is within weeks of completion. Meanwhile the new terminal in Rio de Janeiro will receive its first cargo today (March 11). It is coming from Trinidad and Tobago. The roughly 5 million cu ft tanker is on a test run to ensure that everything works well, before settling into production later in the year. While the terminal can produce up to 700 mcf of natural gas a day, the current thought is that may not be needed as much this year, as the water levels are relatively high, and Brazil uses a lot of hydro power. GDF Suez just brought one new plant at 241 MW on line last month. Brazil is one of more dependent countries on hydro-electricity with over 600 dams. and is pressing ahead with two more projects. Having seen power cuts in 2001, the government is determined that won’t happen again.

It isn’t quite that moist in the Middle East, where sandstorms have shut down ports in Kuwait and Saudi Arabia, they should end today. Not that this helps Japan, since Saudi Aramco continue to cut the volumes that will be shipped there in April. Because of sluggish demand, there was some thought that there might be another 15% cut in supply, but the Japanese think this unlikely.

There has been a bit of talk about coal reserves over at The Oil Drum, and Euan has just put up a post on Carbon Capture and Storage (that’s CO2). Some of the past debate has been about reserves and resources, and that was part of the reason for my Sunday post, since technology can change resource to reserve. Well so, apparently can state government. Some W. Va. Landowners got a shock in January when the coal under their property was reclassified from resource to reserve. This added some 3.7 million acres of reserve over last year, and with a tax bill of $100 an acre, both appeared to give the state a windfall, and unsuspecting homeowners sticker shock. The reassessments are being reviewed.

Well while the rest of the world waits to see how demand for more conventional fuel is going, up in Alaska the Iditarod is underway. And our trees are in bud, and crocuses came up in the year last week. Spring is a coming!!

More stories can be found at The Energy Bulletin and Drumbeat at The Oil Drum.

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