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Oil E&P Confront 53% Increase Over Past Two Years
Tom Fowler, Houston Chronicle via Rigzone
Oil exploration and production costs have climbed 53 percent in the past two years as prices for everything from drilling rigs to labor continue to surge, according to a new price index released Monday.
The Upstream Capital Costs Index, a compilation of nine items central to the oil and gas industry, has been on the rise since 2000, but it spiked sharply beginning in 2005, said Richard Ward, senior director of upstream research for Cambridge Energy Research Associates, which is holding its annual conference in Houston this week.
That means companies are getting less and less bang for the bucks they put into exploration and production, despite high commodity prices. And with oil well below last year’s $76.70 record — closing at $57.81 on Monday — companies may consider delaying, if not canceling, some projects.
(13 Feb 2007)
Belarus raises Russian oil transit fee more than 30%
RIA Novosti
Belarus will increase rates for the transit of Russian crude through its domestic pipeline network by more than 30% on average starting from February 15, the republican economics ministry said Thursday.
Belarusian pipeline operator Gomeltransneft Druzhba said it will raise tariffs by 35%, to $3.50 per metric ton of oil along the Unecha-Adamova Zastava route, and by 31.6%, to $1.50 for transit along the Unecha-Brody route. As a result, the average oil transit tariff will be $0.60 per ton for every 100 kilometers (60 miles), which corresponds to Russia’s domestic tariffs, the Belarusian economics ministry said.
The Druzhba (Friendship) pipeline extends for almost 2,000 kilometers (1,300 miles) across Belarusian territory and pumps on average up to 80 million tons of Russian oil per year to Germany, Poland and Ukraine. The previous transit tariffs were introduced in 1995, and have not been changed until now. ..
(15 Feb 2007)
Wisc. governor wants $1.50 per barrel oil tax
Scott Bauer, Seattle Times
MADISON, Wis. — Gov. Jim Doyle proposes taxing big oil companies more than $270 million over the next two years to help pay for the state’s transportation needs.
Doyle said the assessment will equate to $1.50 per barrel of oil sold in the state, and the companies would be prohibited from passing the tax on to customers at the pump. Violations carry a criminal penalty of up to six months in prison. ..
To ensure compliance, Doyle wants to give the state Department of Revenue the authority to audit the earnings of oil companies. If the department finds that the tax is resulting in higher fuel prices, the offending company would be subject to fines in the amount of the gains reaped by the price increase or up to six months in jail.
Doyle said he was confident the plan was legal and, given the penalties in place, he believed oil companies would not pass the charge along to customers at the pump. ..
(12 Feb 2007)
Price of oil heading into swoon: investment firm
Jon Harding, Financial Post
CALGARY — In a scenario that would have dire consequences for Canada’s oilsands sector, a New York investment firm yesterday said the price of oil is heading into a swoon that could take it as low as US$30 a barrel amid rising supplies and potentially a major selloff by the speculative investors who drove crude through the roof starting in 2004.
Sanford C. Bernstein & Co., a perennial bear in the face of the commodity’s sensational two-year rise, said in a report entitled “Energy investing: Beware the Ides of March” that oil prices could spend part of 2007 hovering between US$30 and US$35 a barrel.
(14 Feb 2007)
US OK’s new oil reserve site
Tom Doggett, Reuters
WASHINGTON, Feb 12 (Reuters) – U.S. Energy Secretary Sam Bodman will travel to Mississippi this week to officially approve a new site for the country’s emergency oil stockpile, the Energy Department said on Monday.
The department in December selected a group of salt domes in the southeastern Mississippi town of Richton to hold about 160 million barrels of oil as part of the government’s plan to expand the Strategic Petroleum Reserve, which aims to protect the country from supply disruptions. ..
In the short term, the department plans to buy about 11 million barrels of crude for the reserve this spring to replace a similar amount of oil it sold to refiners for about $600 million after Hurricane Katrina disrupted petroleum supplies in autumn 2005. ..The stockpile now holds about 689 million barrels of crude oil.
(12 Feb 2007)
