Riegel: How Louisiana lost a $10 billion plant

It wasn’t easy for Tommy Kurtz to leave Louisiana. The former Louisiana Economic Development executive grew up in New Orleans—a Jesuit High School Blue Jay—and his roots run deep. When his former colleague and friend, Iain Vasey, offered him a position at the Corpus Christi Regional Economic Development Corp. in mid-2015, he was torn.

His daughter was a student at St. Joseph’s Academy at the time and, well, south Texas is hard for a boy from the Bayou State to get his arms around.

Vasey understood. As a former executive with the Baton Rouge Area Chamber, he also has close ties to Louisiana. But as president and CEO of the CCREDC, a position he assumed in February 2015, he knew the opportunities that existed in the Lone Star State and was successful in luring Kurtz and family away…

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Oil price, Trinity, Sundry-VOG-FOG-EOG-NOP-Gulfsands- And finally…

A very mixed market at the moment as shown by movements yesterday. Do they ever learn is the watchword as yet again the teenage scribblers on the Strasse completely missed the point. I read one report that suggested that it was difficult to understand why there was a build in product stocks after such a good draw in crude… Indeed the crude draw of 3.6m was much higher than the 1.1m forecast but, and it’s a big but, refinery utilisation was up thus giving higher product stats. If any further guidance was needed for the imbeciles at their desks it is that come Memorial Day (29th May this year) the driving season starts and refiners always switch to over producing gasoline at this time of year, kids eh….?

The Trinity update flew under my radar on Tuesday as I blogged rapidly ahead of all those interviews, going back to their website proved almost impossible to navigate but here goes! Production is looking good as with a clean bill of health post the raise much activity on wells is upping output, 2,500 appears to be the current norm with guidance of 2,600-2,800 b/d and a target of 3,000 b/d. The company is in fine form and released from its shackles is raring to go. I am increasingly confident about the future here and look forward to another update before long but little doubt that the bucket list beckons when a space appears…

 

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Clock ticking on Nigerian oil reform

After a 10-year wait, Nigeria and much of the oil sector globally wait this week in shared anticipation for the passing of the Petroleum Industry Bill (PIB). With just a few days left until the self-imposed deadline announced by the Senate for introducing the PIB, are we at last on the verge of a resurgence across the entire sector?

After the Osinbajo administration first proposed the reforms a decade ago, the stage was finally set in March when commercial, governmental and regulatory representatives from the oil and gas sector gathered in Abuja to explore the risks and opportunities we are facing. There it was universally agreed that the outdated legal, regulatory and institutional structures under which the oil and gas industry is operating are the single source of obstruction to its current maintenance and future development. Since then, the new and improved PIB (now the Petroleum Industries Governance Act) has gone to the Senate for debate and as recently as yesterday government officials confirmed that we were close to seeing it passed. Senator Clifford Odia told media that he is “very much sure that the bill will be passed in record time so that the people of the Niger Delta can get a sign of relief that all those problems with oil production would be reduced”…

 

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Oil price, Aminex, Sundry-Genel-Lamprell- And finally…

The oil price is up this morning, the first day since Easter and both WTI and Brent have since lost about four bucks a barrel for supply reasons. The supply in question has been from the US where I and others reported last week that the EIA had pushed up supply numbers although crude inventories were not too bad. Just proving how mad the oil followers can be, it was reported that weakness was also blamed on one set of weak product numbers, how soon they forget weeks of product draw and the driving season ahead.

One month today will see the Opec/non-Opec producers meeting swiftly followed by the cartel itself on May 25th, four weeks to hear more announcements that quotas will be rolled over for another six months. Relief this morning, certainly in European markets, that it looks like Macron but it seems that ‘experts’ are just adding the other non Le Pen votes together which may be premature…

More good news from AEX this morning as they report a ‘material increase’ in GIIP in Ntorya, Tanzania. The Pmean GIIP has tripled from 153 BCF to 466 BCF whilst the P90 number rises from 31 to 62 BCF and the P10 is now 1.13 TCF up from 332 BCF. This excludes adjacent acreage and potential liquids which might add a fair bit to the total recoverable amount but for now it is time to apply for a production permit and possibly drill Ntorya-3… Jay has been understandably difficult to pin down lately but I hope to catch him before long and preferably in front of a camera, in the meantime i’m very happy with the latest addition to the bucket list…

 

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OPEC Production Cuts and The Long Road To Market Balance

Global oil inventories are falling because of OPEC and non-OPEC production cuts but the road to market balance will be long.

Production cuts have removed approximately 1.8 million barrels per day (mmb/d) of liquids from the world market since November 2016.

Saudi Arabia has cut 619 kb/d (35% of total) and the Gulf States Cooperation Council—including Saudi Arabia—has cut 1,159 kb/d (65% of the total). Other significant contributors outside the GCC include Iraq (12%), Russia (12%) and Mexico (9%) (Table 1). Nigeria’s cuts are probably involuntary since it was exempted from the OPEC agreement. Iran and Libya–also exempted–and both increased production…

 

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Does The Biggest Winner Of The OPEC Deal Support An Extension?

OPEC continues to make progress on cooperation as they close in on an agreement to extendtheir production cuts for another six months. On April 20, several top OPEC officials voiced their most definitive statements yet on the extension, even as they caution that more work needs to be done.

“There is consensus building but it’s not done yet,” Saudi energy minister Khalid al-Falih told reporters on the sidelines of a conference in the United Arab Emirates. “We are talking to all countries,” al-Falih added, referring to the key role that Russia will play in whether or not an extension can be sealed. “We have not reached an agreement for sure, but the consensus is building.”

On top of that, OPEC’s Secretary-General Mohammed Barkindo said the deal is working – it just needs more time. “We are optimistic the policy measures have already placed us on the path of recovery,” Barkindo said in a speech. “Our collective action will continue to prove effective.” Barkindo told CNBC on the sidelines of the event that OPEC’s “credibility is at stake”…

 

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Fulfilling the Promise of Weatherford

It is said what CEOs most enjoy is a challenge with outsize reward. If so, Mark McCollum should be ecstatic. As the incoming CEO of Weatherford International, he is now tasked with resurrecting one of the more perennially promising, yet frustratingly underachieving, companies in the oil patch.

McCollum’s predecessor, long-time CEO Bernard Duroc-Danner, built an organization with a global presence and broad portfolio. However, the company found itself adrift in recent years as a string of financial losses and shifting strategies undermined employee morale and depleted investor confidence.

Weatherford’s problems are not for lack of market interest. For years, customers mostly engaged with the company due to its pricing—which falls between larger integrated competitors and smaller regional suppliers. The result was a steady diet of lower-margin business…

 

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Trump Flips Oil Prices

Last week, the US launched 59 Tomahawk missiles against the Syrian government in response to chemical gas attacks on its own the civilian population there. Then later in the week, the US announced that it has dropped the GBU-43/B Massive Ordinance Air Blast (MOAB) bomb – better known as the Mother of All Bombs – for the first time in Afghanistan, targeting an underground network of ISIS insurgents. More worryingly, the Trump administration has opened the possibility it may launch a first strike against North Korea.  US warships are already gathering around South Korea, joined by some Japanese battleships as well, while on the other sides, reports have come in that China is amassing as many as 150,000 troops along its North Korean border.

Crude oil promptly rose on the news about the Syrian missile attack. Considering that from the last 3 years of on-going conflict in Libya, northern Iraq and Yemen in which the market completely ignored any substantial risk to oil supply, the events last week seems to be taking a different perspective. The market appears to be considering real geopolitical risk arising from the new conflicts at play now. Regardless if nothing comes out of it in the ends.

Concerns are growing about the possible reversal of the Iranian nuclear agreement, which may result in a cut of Iranian supply. Where there was optimism of US – Russian relations is now looking the other way. The prospect that Donald Trump will remove trade sanctions on Russia is now looking more remote than ever. But more worrying is the situation in North Korea. A first strike on the part of the US could trigger a disproportionate retaliation by the belligerent nation, with South Korea caught in the crossfire. An important hub for oil and gas refining and trade in the region, most of South Korea’ important oil and gas facilities are in the safer southernmost part of the peninsula, but capital Seoul is less than 60km from the North Korea border. If North Korea has a nuclear-capable weapon, as is widely suspected, carnage could be unleashed, engulfing not just the Korean Peninsula, but Japan and China as well…

 

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Drain The Swamp, Not The Gulf

During the Presidential campaign, the current administration promised to “Drain the Swamp” – shorthand for cutting federal bureaucracy. Candidate, now President, Trump also promised to be more friendly to the traditional energy industry and has nominated cabinet members, undergoing confirmation hearings at the time of this writing, who give every indication of at least understanding the traditional energy industry and its significance to the country. Certainly his January pronouncements on the Keystone and Dakota pipeline are encouraging.

In its waning months, the outgoing administration unleashed a tidal wave of federal regulations, much of which is aimed at energy. For the offshore segment of the energy industry, part of that effort is an announced intention to change the way that the Bureau of Energy Management (BOEM) will calculate the amount of third-party bonding it will require as a condition of allowing companies operating in waters over the Outer Continental Shelf (OCS) to continue to own and operate their leases, platforms, pipelines and rights of way, easements and rights of use agreements. A good place to start draining the regulatory swamp might be this new procedure.

“Rulemaking” by federal agencies normally starts with a Notice of Proposed Rulemaking, which is published in the Federal Register, inviting “comments,” and then holding public hearings if necessary. However, where agencies such as BOEM want to “clarify” their rules, they have wide latitude to do so. On September 12, 2016, BOEM issued NTL No. 2016-N01, “Requiring Additional Security.” That NTL provides that…

 

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More Chinese crude oil imports coming from non-OPEC countries

hina is the world’s largest net importer of crude oil, and in recent years, China’s crude oil imports have increasingly come from countries outside the Organization of the Petroleum Exporting Countries (OPEC). While OPEC countries still made up most (57%) of China’s 7.6 million barrels per day (b/d) of crude oil imports in 2016, crude oil from non-OPEC countries made up 65% of the growth in China’s imports between 2012 and 2016. Leading non-OPEC suppliers included Russia (14% of total imports), Oman (9%), and Brazil (5%).

On an average annual basis, China’s crude oil imports increased by 2.2 million b/d between 2012 and 2016, and the non-OPEC countries’ share increased from 34% to 43% over the period. Market shares for China’s top three non-OPEC suppliers (Russia, Oman, and Brazil), all increased over these years. While still comparatively small as a share of China’s crude oil imports, imports from Brazil reached a record high of 0.6 million b/d in December 2016, and imports from the United Kingdom reached a high of 0.2 million b/d in February 2017…

 

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