Peak Oil Review – July 20

July 20, 2015

Quote of the Week

“For a brief, brave moment this year there was a sense the worst was over for the oil sector. This week, that feeling evaporated.”
Gregory Meyer, The Financial Times, July 17, 2015
1.  Oil and the Global Economy
2.  The Middle East & North Africa
3.  China
4.  Russia/Ukraine
5.  Greece
6.  The Briefs
1.  Oil and the Global Economy
While still volatile, oil prices continued to decline last week with New York futures closing at nearly a three-month low of $50.89 – down 3.5 percent for the week and 14 percent this month. In London oil futures followed a similar pattern with Brent also finishing at close to a three-month low of 57.10 – down 3.2 percent for the week and 10 percent this month.  This was the third consecutive weekly loss for oil futures.
Now-familiar global developments continued to pressure oil prices last week. There is still a major oversupply of oil which does not seem likely to go away for the next year or more. US crude inventories are 100 million barrels above normal for the time of year. Stocks at Cushing are reported as being up by 1 million barrels last week. Despite the 60 percent decline in the rig count, shale oil output has remained relatively stable in the US and any decline in production that is currently underway is not likely to be important given the size of the global oversupply. Shale oil producers have been remarkably resourceful in keeping production up mainly by fracking the backlog of thousands of wells that have already been drilled and only drilling new wells in the sweetest of the sweet spots.  The major reduction in wages and other costs that accompanied the decline in drilling has helped keep many producers in business. Wall Street has not yet lost is appetite for financing unprofitable oil companies; however there are signs that the era of wild optimism about the prospects for shale oil may be coming to an end.
We have relatively weak demand for oil lately and this has been capped by the bizarre developments surrounding the Chinese stock markets and by implication China’s economy. The White House just cut US estimated US GDP growth for 2015 from 3 percent to 2 percent and weak retail sales suggest slower economic growth ahead.  Whatever happens with the Greece situation is unlikely to do much for European oil demand in the short term nor is the current outlook for China’s stock markets and economy.
In recent weeks several respected observers have gone out on a limb and said 2015 might just be the year that global oil production reaches an all-time peak despite the current glut and falling prices. The world’s five largest oil producers, Saudi Arabia, Russia, US, China, and Canada are showing indications that their oil production may reach a peak this year – either temporary or all-time. In the last six months low oil prices have led to major reductions in oil company exploration and development budgets around the world. The results of these cuts will not have an impact on oil production for several years at which time demand will almost certainly be outrunning production and prices will be higher.
The drop in prices has led many countries that are dependent on oil and gas revenues to keep producing or, where possible, grow their production. Saudi Arabia is the best example, but Iraq, Iran, and the other Gulf Arab states are doing the same. In the short run, this is helping keep prices low. Some pessimists are talking about US oil falling into the $30s in the next year or so. Increasing global temperatures, which are setting new records, are having an impact on the Middle Eastern and South Asian oil consumption this summer. Those who can produce still more oil, to keep the air conditioning running and their people happy, do so.
For the next year or so all indications say there will be more oil supply than can be consumed. Although the Iran nuclear agreement is not yet a done deal and at best it will be six months or more before significant quantities of Iranian oil come onto the markets, current surpluses and weak prospects for additional demand suggest that the additional Iranian barrels will not be needed until next year to keep prices low.
US natural gas prices, which for many producers are well below the cost of production, have been trending upwards in the last two weeks as more US power producers switch from coal to natural gas and temperatures are forecast to rise in coming weeks. In the last two weeks, natural gas prices have climbed from $2.65 per million BTUs to an eight-week high of $2.87. Producers in the eastern shales are keeping up production, although the natural gas associated with oil production will naturally decline as shale oil production drops in the next few months.  The EIA reports that new gas pipelines from Pennsylvania to the eastern oil markets will be opening soon allowing more oil to be sent to markets.
2.  The Middle East & North Africa
Iran: Although it will be weeks before the nuclear agreement announced last week is ratified, the prospects look good. Iran’s supreme leader, the Ayatollah Khamenei, has blessed the deal but made it clear that in no way does it imply that Iran’s relations with the “Great Satan” and Israel are going to improve. Of course, the Ayatollah was on board with the agreement weeks ago or it never would have been signed and the rhetoric about relations with the US are mainly for hardline factions in his own government. One of the pillars of the current Iranian state is eternal enmity with the US and Israel. To erode this policy would be to endanger the basis of the Islamic government.
In the US there will be much posturing over the agreement, but in the end it will likely be ratified even if the President has to veto any bill to the contrary. Opponents of the agreement will come to understand that the US does not control all the sanctions on Iran, and the the rest of the world will lift them no matter what the US Congress does. This would leave a mostly sanction-free Iran to develop all the nuclear it wants while US relations with the rest of the world who believe the agreement is a good idea would only get worse. Much opposition to the agreement in the Congress has more to do with preventing an Obama foreign policy victory than ensuring the security of the US and Israel. What is rarely mentioned in all the furor is that Israel has a large stock of thermo-nuclear weapons and is quite capable of deterring any nuclear attack on its territory or completely destroying any opponent in the region at the first sign of a significant attack on its territory.
The question of how soon will Iran return to unrestricted exports and what will their impact be on oil prices is the issue of the day. Tanker trackers estimate that Tehran currently has some 40-50 million barrels of crude in floating storage that could be sold as soon as sanctions are lifted. One 2-million-barrel tanker has already started moving towards Asia.  Beyond the floating storage most observers say that Iran could probably increase exports by 500,000 b/d within six months and 1 million b/d within a year if it can find buyers in the current oil glut. Specialists, however, frequently raise the question of just how badly Iran’s oil fields have been damaged by lower production and lack of investment so it may take longer to revive and grow production.
Observers point out that Iran, like Iraq, still has large oil resources that remain untapped for geopolitical reasons and that back in the 1970s the country was producing some 6 million b/d of crude. They are saying that If the politics work out and if Tehran receives substantial assistance from foreign oil companies, it could be producing 6 million b/d again by the end of the decade.
Syria/Iraq: The fight against ISIL continues across the region. The US-backed Iraqi offensive to retake Ramadi does not seem to be making much progress. An ISIL suicide bomber set off a truck bomb north of Baghdad killing some 130 civilians and wounding another 170. Several other smaller bombs went off in Baghdad.  Outside organizations are confirming that ISIL used an unknown type of gas against Kurdish forces in Syria last June.  The fighting in Anbar and Syria, and the constant airstrikes are taking a heavy toll of ISIL fighters as the organization is ill-equipped to deal with large numbers of casualties. A recent report says that civilians are no longer allowed in or out of hospitals in Mosul as ISIL does not want word of the large numbers of casualties being treated in these hospitals to spread.
Iraq and the World Bank have signed an agreement for a $350 million loan to rebuild towns destroyed in the fighting. Given the course of this war, it is going to take a lot more than that. It has been very hot in Iraq this week with daytime highs on the order of 115o F.  In Basra persistent power failures have led to protests in which one demonstrator was killed in clashes with police.
Despite all the troubles, oil exports from southern Iraq are expected to average around 3 million b/d at least through August. Exports through Kurdistan continue, but fussing with Baghdad over who gets what revenues continues and there are reports of troubles with the export pipeline in Turkey
Libya: The usual turmoil continues. This Islamic State has kidnapped some more Christians. Tunisia is building a 500 kilometer trench along its border with Libya to keep its more radical citizens from running off to Libya to join the IS and then infiltrating back to shoot more European tourists.  Egypt reports that 64,000 of its citizens returned home from Libya to escape the turmoil since February. The loss of foreign workers is tearing large gaps in the Libyan economy. Many foreign oil workers have already bailed out.
The $64 billion Libyan sovereign wealth fund is back in the news. Nobody is quite sure who is in charge of the fund that dates back to the Gadhafi era. Both Libyan governments are trying to get to the money which is currently frozen in current accounts – unless, of course, somebody has managed to steal some of it in recent years.
No news on the negotiations to form a unity government or on changes in oil production last week.
 Egypt:  Cairo is under siege in the Sinai with several attacks on security personnel in recent weeks and the destruction of an Egyptian naval vessel in the Mediterranean possibly by an anti-tank missile. Cairo has responded by tabling a harsh law forbidding journalists from publishing anything but the official version of terrorist attacks and recommending that all references to ISIL be as “slaughterers” or “assassins.” The primary danger in Sinai uprising is the threat to the Suez Canal which provides Egypt with much of its revenue and is used to transport oil cargoes to Europe. Now that ISIL has demonstrated that it can blow up a naval vessel in in Mediterranean, it may come to believe that an oil tanker in the canal might be a lucrative target.
Saudi Arabia/Yemen: The troubles in the Middle East seem to be moving towards Saudi Arabia, the heart of the world’s oil supply.  Last spring the Saudis decided to intervene in the Shiite-Sunni civil war in neighboring Yemen by bombing the Houthi Shiites and, collaterally, any Yemenis who happened to be around. The Saudis have not been much of a land power for decades, but their money and long military relationship with the US has bought them the latest in western airpower technology. We are now starting to see pushback from the intervention from Iran and its allies and more importantly ISIL who do not like kings in general and especially those who control Mecca.
Last week a suicide bomber blew himself up at a security checkpoint in Riyadh and over the weekend the Saudis announced the arrest of 431 people suspected as being part of an ISIL plot to stage attacks on mosques, security forces and diplomatic missions in the kingdom. The arrests apparently have been taking place for several months and were only announced on Saturday. The Saudis run very efficient security services and are ruthless in extracting information about plots from suspects. Al Qaeda and now ISIL have been plotting against the kingdom for decades and while they have many sympathizers among conservative Muslims, they have made little progress in organizing significant attacks. Unless the situation in Yemen gets much worse, there is no reason to believe the kingdom is threatened in the immediate future.
The new Saudi king, Salman, has become much more of an activist than his predecessors by reaching out to Russia, Hamas in Palestine and others in an effort to register displeasure with the lack of US engagement against Syria, and the nuclear agreement with Iran. The new rapprochement with Hamas is a sign that the movement has decided to distance itself from Iran.
Opec’s monthly oil market report released last week says that Saudi oil production hit a record 10.6 million b/d in June, an increase of 200,000 b/d over May. Some are noting that the Saudis are getting close to producing 11 million b/d a feat that has not been accomplished by any country since the demise of the Soviet Union. Another 400,000 b/d of Saudi oil is not going to do prices any good unless they burn it all themselves keeping cool.
Newly released information shows that Saudi crude exports slipped to a five-month low in May as newly opened local refineries used more of the 10.3 million b/d of domestic production and Chinese refineries took less oil due to spring maintenance schedules.  Saudi exports in May were 6.94 million b/d as compared to 7.64 million in April. Saudi refineries processed 2.4 million b/d in May up from 2.2 million in April. Exports are likely to drop further in the remainder of the summer as the Saudis traditionally burn large amounts of crude in their power plants to supply electricity for air conditioning. It is interesting to note that the Saudis have been forced to borrow some $4 billion in the past year as lower oil prices, increasing domestic oil consumption and the war in Yemen have combined to create budget shortfalls.
The new refining capacity is leaving the Saudis with a surfeit of diesel which they are trying to dump in the Asian markets. Some are expecting a price war with Asian competitors to result from all the new refining capacity which has opened in recent years.
The fighting goes on in Yemen. Last week Houthi rebels fired rockets at the Aden refinery setting some of it ablaze. The refinery no longer gets fresh oil supplies, but has 1.2 million tons of crude and products stored in its tanks. The loss of this fuel could trigger a major humanitarian crisis as it is what keeps the country’s water pumps working.
Late last week, pro Saudi forces managed to drive the Houthi rebels out of Aden allowing some government ministers to return from Saudi Arabia. This development is the first victory that the pro-Saudi forces have managed to achieve in the fighting so far. Over the weekend the Houthis retaliated by shelling civilian areas north of Aden killing scores of civilians. All this does not seem to be going anywhere in the near future and the humanitarian crisis is growing as food, water, and fuel come into short supply.
3.  China
China has reached a turning point in its economic development which is likely to have major implications in its demand for oil in coming years. Wall Street has stopped believing in the Communist Party’s ability to manage its economy and orchestrate the transition from an export-oriented economy to one driven by satisfying domestic consumer demand. As more details of the government’s efforts to stem the stock market’s collapse emerge the magnitude of the effort has taken on unreal proportions. The government biggest state-owned banks provided the equivalent of $200 billion to prop up the market. In addition, an entity known as the China Securities Financial Corp. has been given access to some $483 billion to assist the effort. When this is added to the suspension of IPOs, the ban on selling large blocks of stock, threatening police visits to short sellers, and a suspension of trading for large numbers of listed shares, it is apparent that China no longer has anything resembling a free stock market where prices are determined by supply and demand.
Beijing’s announcement that the country had achieved its planned 7 percent growth in the 2nd quarter was met with widespread derision by the western press prompting Chinese state media to denounce the western press in return. Civil rights in China are fast being shut down and a new National Security Act is so loosely drafted that almost anything done or said can be deemed a crime.
The stock market debacle is a clear setback for Beijing’s plans for economic growth. But all this will take years to play out. For now, all we can say is that China’s economy shows few signs of revival.
China’s implied demand for oil jumped by 3.5 percent in June. The country consumed 10.56 million b/d  last month, up from 10.2 million in June of last year and 10.32 in May of 2015. The IEA expects China’s oil demand growth to grow by 3.2 percent this year which is generally in line with expected GDP growth. In June Chinese refineries processed 10.5 million b/d which was 3.3 percent more than a year ago.
June crude imports, however, were up by 7.5 percent to 7.2 million b/d which may have topped US imports for the month making China the world’s largest oil importer. The uncertainty is how one converts metric tons of oil to barrels. Some of these imports are going into China’s strategic reserve, however, as Beijing takes advantage of low prices and the global oil glut to build its emergency stocks. An analysis of how much oil China produces, imports, and processes in refineries suggest that the country added 41 million barrels to its reserves in the first five months of the year,
The stock market slump is killing new car sales in China with this year’s sales expected to be up by only 3 percent over 2014.
4. Russia/Ukraine
The Ukrainian situation was quiet last week, but falling oil prices are continuing to pressure Russia’s economy. Data released last week shows Moscow’s GDP contracting by 4.8 percent in June from a year earlier, considerably more than the 4 percent which had been forecast. It was the fifth consecutive month that its GDP contracted. As the economic situation worsens, many see foreign investors pulling out of the Russian economy despite the high interest and dividend rates attainable there.
Russian oil and condensate production may reach a new post-soviet high of 10.7 million b/d in 2015 according to a new Wood Mackenzie analysis. Much of this growth will come from higher levels of condensate production which is expected to increase by 50 percent between 2014 and 2018. Woods Mackenzie warns that Russia will have problems after 2020 when the withdrawal of foreign involvement in its oil industry due to the sanctions becomes fully effective.
In the meantime, Moscow’s efforts to revive the cold war in retaliation for the sanctions continue. President Putin has ordered the formation of a new military reserve force and will spend $800 million to bring electricity supplies to Crimea directly from Russia. The Russian government has launched an investigation as the whether Estonia, Latvia, and Lithuania were legally made into independent countries or should really be part of Russia.  All it takes is a few years of $100+ oil and some petro-state rulers go berserk with power.
5. Greece
It was a busy week in the history of Greece.  After an agreement early Monday that the Eurozone would provide another $89 billion in bailouts provided Greece makes some real reforms, Greece’s prime minister accepted the deal despite his election to office on an anti-austerity platform. Under threat of total collapse, Greece’s parliament accepted the deal. In the meantime, the IMF warned that Greece was such a basket case that unless its creditors wrote off much of its debts, it would become a continuing liability for the foreseeable future.
The German parliament then voted to help finance another bailout. On Monday, Greek banks will open again with emergency lines of credit coming from the ECB, but depositors will only be able to draw out 420 euros once a week instead of 60 a day. Capital controls will stay in place and money cannot be transferred out of the country. New value added taxes will be applied to food, public transport, and funerals.
Shortly, a new round of talks will begin to formulate a permanent settlement to the situation. Germany will be insisting on iron clad guarantees that Greece behave itself, start collecting taxes and behave as a modern European government should. These talks may or may not do any good.
While the Greek debt crisis may ultimately impact the world oil markets, it will be a long time before this plays out. That Greece went through the last few weeks without the problem spreading to the other weaker Eurozone economies is a good sign. By the time all this is over, the world is likely to go careening off into some new crisis.
6.  The Briefs
Embezzlement in Nigeria?  Newly released data suggest that some $84 billion in oil revenues are unaccounted for in the government’s Excess Crude Account between 2007 and 2014. State governors are outraged as much of the missing money was intended for distribution to lower level government entities. If these numbers are confirmed, which is doubtful as recent efforts by western auditors to examine the books was unsuccessful, this will be one for the record books. (7/18)
Nigeria collapsing. It’s been five months since government workers in southeastern Nigeria have been paid. With Nigeria’s finances shot by last year’s collapse in oil prices, they’re struggling with rent and shops are no longer willing to extend them the credit they need to buy basic items such as food and drinks. The cash crunch is undermining the prospects for the new administration of President Muhammadu Buhari, who described the Treasury last month as “virtually empty.” (7/13)
The US rig count resumed falling after two weeks of small increases. Rigs targeting oil in the US decreased by 7 to 638 the week before last and natural gas targeted rigs increased by 1 to 218. There really has been very little change in the past month as small increases and declines in the count normally occur as rigs are moved to new locations and brought back into production. (7/18)
A survey of recent oil train crashes in the US and Canada shows there have been 11 including the one two years ago in Quebec that killed 47 people. The most recent was last week in Montana that spilled 35,000 gallons of oil. Shipments of oil by rail have been dropping since last summer and have recently been running at around 14,000 carloads per month down from 16,000 at the peak. (7/18)
Government regulators are pressing US coal companies to prove that they can pay for the cost of cleaning up after they are finished mining. Regulators even in energy-friendly states such as Wyoming and West Virginia are stepping up oversight on coal companies amid concerns that taxpayers could be left on the hook for expensive cleanups if the companies go bankrupt. (7/18)
Oil company earnings.  Despite a partial price rebound in the second quarter, oil company earnings are expected to be weak. Oppenheimer predicts that oil company earnings will be the lowest in five years. (7/18)
Canada’s provinces reached an accord on Friday over an energy plan for the country by agreeing broadly to curb greenhouse gas emissions while also promoting the use of pipelines. The oil-producing province of Alberta originally conceived the strategy as a way to ensure that it could move its fuel to market. The plan was changed at the insistence of some of the provinces to reflect their desire to fight climate change. (7/18)
The Ukrainian government said Friday it was working to develop trade and economic deals with Kazakhstan including one to supply natural gas to Ukraine from Kazakhstan, Turkmenistan and Uzbekistan. Given that there is a lot of Russia between the two countries, a deal to get Azeri gas through Turkey would seem more feasible. (7/18)
A group of Muslim scholars have joined the Pope in saying that climate change poses a dire threat to mankind. The views of the scholars – some of the strongest yet expressed on climate from within the Muslim community – are contained in a draft declaration on climate change to be launched officially at a major Islamic symposium in Istanbul in mid-August.  (7/17)
Mexico waited 77 years to invite foreign oil producers back into the country. That was one year too many. With oil prices down by about half since last year, five of 38 potential bidders, including Glencore, Noble Energy, and even Mexico’s state-owned oil producer, pulled out. (7/14)


Mexico’s Auction. International energy producers that sat out Mexico’s historic oilfield auction this week will be among the fiercest competitors for potentially massive deepwater prospects that go up for sale as soon as next month. Unlike Wednesday’s government auction, which involved 14 close-to-shore fields holding at most a few hundred million barrels of crude each, the auction in August includes more promising geologic structures, close to US waters where some of the most significant discoveries in the last t5 years have been made. (7/17)
BHP Billiton’s write down of its US shale assets by $2.8 billion last week may be too small. The company values the assets at $24 billion which is nearly twice what some US analysts believe the properties are worth. (7/17)
ConocoPhillips increased its dividend from 73 to 74 cents, but made major, but unannounced,  cuts in its deepwater spending program in the Gulf of Mexico including terminating the contract on a deepwater drill ship. Last December, the company announced it was cutting its capital expenditures by 20 percent to $13.5 billion as compared with 2014. (7/17)
Silt, which is increasingly filling US waterways and ports, potentially could limit US LNG exports if it is not dredged soon, a top US Department of Energy official warned. It is a federal responsibility to dredge the channels, but this is increasingly difficult under sequestration and budget caps. DOE has approved 9.9 bcfd of LNG export capacity. If all of that gets built, it would bring us close to Qatar, which is the world’s largest LNG exporter. (7/17)
The technically recoverable resources of the Utica shale play are larger than previously thought, according to a study from West Virginia University.  The study found that the Utica play contains technically recoverable resources of 782 trillion cubic feet (Tcf) of natural gas and around 1.9 billion barrels of oil. That’s higher than the U.S. Geological Survey’s 2012 estimate of technically recoverable resources at 38 Tcf of gas and 940 million barrels of oil. (7/17)
Big US oil refiners along the Gulf of Mexico, which have led an almost charmed life for the past five years, may have to brace themselves for leaner times in the months ahead, according to a Reuters analysis of refining capacity and and export data.  Key customers in Latin America, where about half of U.S. fuel exports go, are poised to import less as they finish refinery projects while an expected contraction in regional economic activity saps demand. (7/17)
Fracking in UK. The British government boasted of its environmental track record Thursday, saying it was taking steps toward excluding some areas from hydraulic fracturing. “The United Kingdom has one of the best track records in the world when it comes to protecting our environment while also developing our industries – and we’ve brought that experience to bear on the shale gas protections,” Energy Minister Andrea Leadsom said. (7/17)
Argentina likely will continue to import natural gas supplies to meet peak demand, even as its production from large shale and tight gas resources grows in the next two decades.  It would not be economically viable to install production and transport infrastructure to meet peak demand in winter, due to the high cost of maintaining excess capacity simply to have it available for up to 90 days of the year.  “It is cheaper to import LNG, than to build infrastructure and drill wells to meet peak demand,” said the Argentine Institute of Oil and Gas president Ernesto Lopez Anadon. (7/16)
Saudi Arabia has turned itself into a major power of refined fuels, offering customers millions of barrels of diesel and potentially triggering a price war with Asian competitors as its exports feed into a glut. (7/16)
Ban oil from the tar sands. Michigan’s Department of Environmental Quality’s Petroleum Pipeline Task Force issued a report that recommended that heavy crude from the oil sands be kept out of an Enbridge Inc. pipeline that crosses the Mackinac Straits between Lakes Huron and Michigan.  The 545-mile, 30-in. line from Superior, Wis., to Sarnia, Ont. was built in 1953. (7/16)
Natural gas made Qatar’s citizens the richest in the world within a generation. Even with bigger fuel reserves, Iran will struggle to follow its neighbor’s path. Iran’s own production is consumed by a population of 78 million and an oil industry that injects gas into fields to boost productivity. Qatar, with a population of 2.3 million, now ranks second only to Russia in gas exports, generating about $86 billion last year.  Iran holds 18 percent of the world’s gas and yet accounts for less than 1 percent of trade. (7/15)
Pipeline problems in Turkey. As the Kurdistan Regional Government (KRG) pushes to increase oil exports to Turkey, it faces not only political and legal complications from its disputes with Baghdad, but also operational problems with the Turkish pipeline that carries oil to the Mediterranean port of Ceyhan.  Pipeline outages on the Turkish side of the border have prevented about $509 million worth of Iraqi oil from being sold through the first half of this year. (7/15)
Diluting crude. Venezuelan state-run oil company PDVSA has bought two 1-million barrel cargoes of Nigerian crude from Royal Dutch Shell in the past month to be used as diluents for its extra heavy crude.  Venezuela, which has the world’s largest crude reserves, began importing a variety of crudes for the first time last year, using them to dilute its very heavy grades in order to reduce costs and create better blends for customers. (7/15)
Sabine Bankrupt. Sabine Oil & Gas, the Houston-based exploration and production company that merged with Forest Oil last year, filed for bankruptcy amid falling oil prices. Sabine had about $2.5 billion in assets and about $2.9 billion in liabilities as of May 31, according to Chapter 11 filings in bankruptcy court in New York. (7/15)
North Sea. Low oil prices have tightened the screws on Britain’s North Sea oil fields, forcing operators to cease production earlier than planned. For years North Sea producers have delayed expensive decommissioning projects, but with oil prices halving over the last 12 months, some companies are faced with the unenviable choice of operating at a loss or bringing decommissioning forwards. (7/15)
Suncor Energy has launched a pilot project to replace the high-pressure steam used to extract bitumen from oil sands with radio frequency technology developed by U.S. defense contractor Harris Corporation. Canada’s largest oil and gas company, which produces 440,000 barrels per day from Alberta’s oil sands, said the technology could significantly reduce costs, greenhouse gas emissions and water usage. (7/15)
Crude production for the entire OPEC 12 was up 283,000 barrels per day in June to 31,378,000 bpd. But that was after May production had been revised up by 120,000 bpd. So counting May’s revisions and June’s numbers, OPEC production was up 403,000 bpd from what was originally reported last month. (7/14)
Military purge in Nigeria. Nigeria ’s new president, Muhammadu Buhari, dismissed all of his country’s top military officials on Monday after weeks of mounting violence in which Boko Haram fighters have killed hundreds of civilians. The Nigerian military’s handling of Boko Haram’s bloody six-year uprising has been widely seen as dismal. It has been faulted not only for failing to stem the extremist group’s murderous rampages, but also for making the situation worse through widespread human rights violations. (7/14)
A new pumping station has increased the capacity of the massive project bringing water from the Yangtze River north to Beijing, just as the city’s water demand soars under a heat wave. Huinanzhuang, a major pumping station on the middle route of the south-to-north water diversion project, went into operation on Monday, pushing up the water inflow of the route from 24 to 38 cubic meters per second. (7/14)
Exxon wins in New Jersey. A judge rejected an attempt by environmental activists and a state lawmaker to intervene in New Jersey Gov. Chris Christie’s decision to settle a contamination case with Exxon Mobil for $225 million. The environmental groups say the proposed $225 million settlement doesn’t cover the damage caused by Exxon’s refineries to an area spanning more than 1,500 acres of wetlands, meadows and waterways near Bayonne. The state initially sought $8.9 billion from Exxon. (7/14)

The US generated more of its electricity from gas than from coal for the first time ever in April — in a sign of how the shale boom is putting mounting pressure on the country’s mining industry. Plunging prices for natural gas, which have fallen alongside oil since last summer, led to it being used to generate 31 per cent of America’s electricity in April, while coal contributed 30 per cent. This was the first month in US history that gas-fired electricity generation surpassed coal-fired generation. (7/13)x

Tom Whipple

Tom Whipple is one of the most highly respected analysts of peak oil issues in the United States. A retired 30-year CIA analyst who has been following the peak oil story since 1999, Tom is the editor of the long-running Energy Bulletin (formerly "Peak Oil News" and "Peak Oil Review"). Tom has degrees from Rice University and the London School of Economics.  

Tags: China, Greece, Oil, ukraine