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Edwards sees threat to oil sands projects

Dave Ebner, Globe and Mail
BANFF – High costs will likely derail some projects in the oil sands, according to Murray Edwards, the reclusive vice-chairman of Canadian Natural Resources Ltd., one of many firms working in the overheated Fort McMurray region of Alberta.

It was the strongest public declaration yet from a senior industry executive that some projects may not go ahead as planned.

For projects on the drawing board — which is a long list including major ones from Petro-Canada, Total SA and Exxon Mobil Corp. — the challenge is huge, Mr. Edwards said yesterday, without pointing a finger at any one company.

“These projects, long term, need prices higher than $50 [U.S. a barrel],” Mr. Edwards told reporters…

“Given the current challenges we face . . . it is going to be difficult for the Canadian sector to deliver the forecast growth in oil sands volumes over the next 15 years,” Mr. Edwards said in his presentation to the conference. “Costs are accelerating to the point where you have to start wondering if projects are still economic.”
(22 Sep 2006)

Oil Companies are Split on Push by Nations for More Profits

Steve LeVine, Bhushan Bahree and Gregory L. White, Dow Jones Newswires from the Wall Street Journal via Rigzone
Oil-producing nations demanding contract concessions or seeking outright expropriations have created a split in the petroleum industry, with some companies insisting a contract is a contract and others saying they are willing to renegotiate some terms to reflect higher oil prices.

Oil companies have pushed back as developing countries have asked for a bigger share of what they regard as windfall profits from contracts negotiated during the days of $10-to-$20-a-barrel oil in the late 1990s. But senior executives of Chevron Corp. and France’s Total SA last week publicly said that they are ready to consider giving more of the profits to the countries.

Royal Dutch Shell PLC and Exxon Mobil Corp. are among the companies still adhering to the tough public posture toward changes in contract terms. They are rejecting suggestions by Moscow that they alter early 1990s contracts under which they obtained rights to natural-gas fields in Russia’s Far East. This week, Russia raised the pressure by revoking an environmental permit for Shell, threatening to halt the project.
(21 Sep 2006)

Hofmeister of Shell Oil podcast

City Club of Cleveland
Podcast of the forum held on August 25, 2006 featuring John Hofmeister, President, Shell Oil Company, U.S. Energy Security
(21 Sep 2006)
Interesting talk, the podcast for which has just been posted.

Suits Say U.S. Impeded Audits for Oil Leases

Edmund L. Andrews, NY Times
WASHINGTON, Sept. 20 – Four government auditors who monitor leases for oil and gas on federal property say the Interior Department suppressed their efforts to recover millions of dollars from companies they said were cheating the government.

The accusations, many of them in four lawsuits that were unsealed last week by federal judges in Oklahoma, represent a rare rebellion by government investigators against their own agency.

The auditors contend that they were blocked by their bosses from pursuing more than $30 million in fraudulent underpayments of royalties for oil produced in publicly owned waters in the Gulf of Mexico.

“The agency has lost its sense of mission, which is to protect American taxpayers,” said Bobby L. Maxwell, who was formerly in charge of Gulf of Mexico auditing. “These are assets that belong to the American public, and they are supposed to be used for things like education, public infrastructure and roadways.”

The lawsuits have surfaced as Democrats and Republicans alike are questioning the Bush administration’s willingness to challenge the oil and gas industry.
(21 Sep 2006)

House Democrats call for hearings on alleged Interior Department “pattern of corruption” and “collusion with oil companies”

Marc Strassman, Etopia Media
A group of House Democrats held a conference call today, Thursday, September 21, 2006 to announce their call for immediate congressional hearings and investigations into reported efforts by senior Interior Department officials to allow oil and gas companies to cheat American taxpayers out of royalty payments. Congressman Maurice Hinchey (D-NY), Congressman Ed Markey (D-MA), Congressman George Miller (D-CA), Congresswoman Carolyn Maloney (D-NY), and Congressman Jim Moran (D-VA) discussed three letters sent today to the House leadership, House Resources Committee Chairman Richard Pombo (R-CA), and House Appropriations Subcommittee on Interior Chairman Charles Taylor (R-NC), asking that oversight hearings be held on the matter before Congress adjourns for October.

The Congressmembers were pursuing an issue highlighted in an article in today’s New York Times entitled “Suits Say U.S. Impeded Audits for Oil Leases,” by Edmund L. Andrews, which documents charges by present and former auditors in the U.S. Department of the Interior that this federal agency has been aggressively looking out for the financial well-being of oil companies, specifically Shell Oil and the Kerr-McGee Corporation, rather than the interests of American taxpayers to whom these companies owe certain royalty payments for oil they’ve extracted from beneath “publicly owned waters in the Gulf of Mexico.”
(21 Sep 2006)

Factors That Pushed Oil Price Up Are Now Pushing It Down

Steven Mufson, Washington Post
No matter what theory oil analysts used to explain the spike in petroleum prices over the summer, this week those analysts were saying that those factors — geopolitics, supplies of refined products and hedge fund speculation — are working in reverse to drive prices down.

“The whole perception has shifted,” said Peter Fusaro, co-founder of the Energy Hedge Fund Center LLC, which tracks 520 energy hedge funds. Put the factors together, said oil consultant Philip K. Verleger Jr., and “you have a setup for one heck of a price washout.”

Oil traders, who once fretted that tensions between the United States and Iran would spill into oil markets, now discount the chances of any conflict. And as political anxieties have faded, the fundamentals of the market — a plateau in demand and rising oil inventories — have moved to the forefront.
(16 Sep 2006)
As others have pointed out, the approach of peak oil will mean increased price volatility; with little or no excess capacity to buffer the system, prices can spike upward and fall rapidly. The thing to keep in mind is the long-term trend, and not to be snookered by short-term variations caused by random events. -BA

$1.15 a Gallon? Leading Oil Industry Analyst Says Prices Could Plummet
Analyst predicts plunge in gas prices.
The Forest and the Trees — the Oil News Imbalance (The Oil Drum)

How Periodic Are the Oil Price Fluctuations?

Khebab, The Oil Drum
The amplitude of the big slide in oil prices from $75 to $61 was a little bit a surprise for everybody. I’m trying to answer the following question: is this big drop significant or simply a consequence of a very volatile market?

There are some cycles in oil price fluctuations. For instance, the seasonal fluctuations in oil demand or even the change of oil contract at the end of each month. On top of that, there is the usual chaos of geopolitical events, Hurricanes, etc.. The objective is to see if we can apply the Periodicity Transform in order to capture eventual cycles and get an idea of future oil market volatility
(22 Sep 2006)