ResiliencePublished on Resilience (http://www.resilience.org)
Peak oil notes - Jan 17Published by ASPO-USA on 2013-01-17
Original article: http://aspousa.org/wp-content/files/ponotes130117.pdf by Tom Whipple
An unexpected drop in the US crude inventory resulted in NY oil futures closing 96 cents higher on Wednesday at $94.24. Much of the inventory decline was due to a drop in Gulf Coast imports which remain volatile after refineries delayed taking shipments to avoid inventory taxes levied at the New Year. A new wave of cold weather is hitting the northeastern US and is likely to increase the demand for heating oil and natural gas. A terrorist attack on an Algerian natural gas facility, in which some 40 hostages including US citizens were taken, contributed to the price rise.
The reopening of the newly renovated to 400,000 b/d Seaway pipeline after a two-week shutdown that will drain oil away from the Cushing, Okla. storage facility to Gulf Coast refineries only took place last Friday. Cushing inventories continued to rise to a record 51.8 million barrels in this week’s stocks report, but are expected to fall in coming weeks which should result in higher NY prices as the WTI/Brent spread closes. Brent closed 31 cents a barrel higher on Wednesday at $110.61. US domestic oil production last week climbed slightly to 7.04 million b/d, highest in 20 years.
US gasoline inventories climbed for the eighth straight week and are now at the highest level for this time of year since data collection began 23 years ago. Distillate stocks nationwide are at five year lows for this time of the year as large amounts of distillates are being exported primarily to Latin America.
The usual turmoil in the Middle East continues with millions of Syrians displaced from their homes and bombs continuing to go off in Iraq. The Saudis are saying that their recent cut in production was in response to a drop in demand and not an effort to raise prices. The Saudis have three new refineries under construction, which when completed in 2017 could reduce Saudi crude exports by about 1.2 million b/d.
Production from North Dakota’s Bakken shale slipped in November for the first time in 18 months after drillers removed some 30 rigs from the state. The North Dakota government tried to put a positive spin on the development by talking about snow in November and new more efficient drilling rigs. Outside observers, however, have noted that the initial productivity of newly drilled Bakken wells has been dropping; indicting that the best sites have already been drilled and that the rate of production increases may start to slow.
Total Oil announced that they will halt making new investments in US dry shale gas as it simply is not profitable at today’s prices.
Attention is starting to turn to California’s Monterey Shale as the next big oil boom. Drillers, of course, will have to get around the environmentally minded people living on top of the shale deposit which runs roughly from Los Angeles to San Francisco.
The US government issued a draft of its 1200 page quadrennial National Climate Assessment which predicts that all sorts of dire things are about to happen. The study states flat out that climate changes in the last half-century are due predominantly to the burning of fossil fuel.
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