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Producers - Apr 27

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Forties pipeline shutdown begins (Grangemouth)

Euan Mearns, The Oil Drum: Europe

• Grangemouth is now shutdown.
• Fuel shortages begin to bite.
• Much of North Sea oil and gas production is in the process of shutting down.
• The main stream media awakes...

Saturday morning and I wandered up to my local gasoline station to take some pictures of the chaos. There was no chaos. No queues. No restrictions - yet.

But with about half of UK oil and gas production closing down, who if anyone is to blame for this debacle? Ineos? The workers? The government? BP? Media indifference? I will be back with an analysis of systemic failure of the UK.

... Grangemouth lies at the end of the Forties oil pipeline system that gathers oil (and liquids) from oil and gas fields throughout a large area of the Central North Sea. Whilst Grangemouth processes around 200,000 bpd the pipeline system handles around 700,000 bpd and according to this CNN report, a BP spokesman has said they may have to shut down the whole pipeline system. With the global oil market and European gas market already stretched, the impact of this dispute may reverberate around the world.

Why Grangemouth is important

Grangemouth is much more that an oil refinery. Originally operated by BP, Grangemouth became an integral part of the Forties oil production, transportation, refining and export system. BP has since sold the Forties oil field to Apache corporation and the refinery to Ineos but it still operates the pipeline and a number of the oil and gas fields that feed into it.
(27 April 2008)
Contributor Norman Church writes:
Today we see the beginning of another dispute that will affect our fuel supplies.

The difference between this and the Fuel Price Protests of September 2000 is that were as then we did not shortage of the product, only logistical problems, this time were are going to be faced with a product shortage. The longer the shortage goes on, the bigger the problem. Question: It is anticipated that the Grangemouth strikers will return to work after 48 hours. So how long to restart the plant and what if the workers decide to have another strike, may be in two weeks time.

Protest in Mexico's Congress over Pemex oil bill ends

Héctor Tobar, Los Angeles Times
President Felipe Calderon's proposal to overhaul Mexico's oil industry has revealed a rift in the rival Democratic Revolution Party, with leaders arguing over how to respond to the initiative.

On Friday, after days of talks between party moderates and self-described "radicals," the PRD ended a two-week blockade of Congress that had prevented discussion of Calderon's proposed changes.

Legislators from the PRD and two smaller leftist parties had shut down both houses on April 10 by taking over the daises in both. The PRD's Andres Manuel Lopez Obrador called it an act of civil disobedience to defend the state-owned oil giant Pemex from what he says is a bid to privatize it.

But some PRD leaders had opposed the blockade. And by Friday, leaders from across the political spectrum had made it clear that they wanted an end to the standoff.
(26 April 2008)

Gas Goes Global

Peter McKenzie-Brown, Language Matters
Last year was awful for Canadian natural gas producers. Development and production costs were at record levels, yet the average Canadian price at AECO was $7.66 per thousand cubic feet - seventy-four cents lower than American producers received at Henry Hub. But then, as suddenly as they had ebbed, prices began to flow. At time of writing, spot prices for natural gas are much higher than their 2007 average, and climbing.

To a surprising degree, these changes reflect global changes in the natural gas business. Historically, natural gas has been a regional business, and North America continues to be somewhat isolated from gas developments elsewhere in the world. According to CEO Robin Mann of AJM Petroleum Consultants, North American markets are presently somewhat isolated from the situation. However, he has no doubt that “gas is becoming a global commodity. Whether we like it or not, we are going to be caught up in it” - and, probably, sooner than you think.

The globalization of the world’s natural gas industry is being driven by a combination of economic and geopolitical forces. For example, consider the world’s second-largest gas-consuming region, Europe.

... Europe’s mad scramble is one driver behind the globalization of gas. Another is rapidly growing gas demand in the developing world - another trend with geopolitical overtones. The author of a best-selling book (A Thousand Barrels per Second) recently issued in Japanese and Chinese translations, ARC Financial’s Peter Tertzakian used China to illustrate the shift.

Coal and oil have played themselves out as easily harnessed and accessible fuels in that country, he says, and the country has to diversify into other fuels. “China’s pattern of energy usage is following the pattern of all other already industrialized countries. First you dam up all your rivers, then you move on to coal, then you start using oil as a booster rocket for the economy. Once you’ve done that, increasing your use of those fuels becomes unsustainable and you have to make a rapid shift to alternative energies - and the alternatives for China and other industrializing countries are natural gas and nuclear energy.”

This article appears in the May issue of Oilweek
(25 April 2008)

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