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Aug 20, 2005 9:10:45 GMT -5
Post by Fusioner on Aug 20, 2005 9:10:45 GMT -5
www.foxnews.comAttack Drives Up Oil PricesLONDON — Oil climbed more than 3 percent Friday as rocket attacks in the Middle East and protests in Ecuador reminded the market how vulnerable supply lines are. Oil tumbled earlier this week on signs record crude prices were firing inflation and dampening company earnings. But news Friday that at least two missiles targeted, but missed, U.S. ships docked in Jordan's port of Aqaba (search)sent prices higher. Israel's city of Eilat was also hit. One Jordanian soldier was killed and another injured in the attack, in which al Qaeda was involved, security officials said. Jordan is not a crude oil exporter. "The knee jerk reaction to this sort of headline is to think of the Middle East as a powder keg," said Deborah White, senior energy analyst at SG Commodities in Paris. Concerns over low gasoline stocks in the world's biggest consumer the United States and a halt in Ecuador's oil exports had already set the market on a recovery track. U.S. crude settled up $2.08 at $65.35 a barrel. London Brent rose $1.96 to $64.36 a barrel. Iran's decision to press on with its nuclear program in defiance of the West was at the back of traders' minds. The move has put OPEC's second biggest producer at odds with the United Nations nuclear watchdog and at risk of sanctions. Prices have averaged over $53 a barrel this year. In 1980, the year after the Iranian revolution, prices averaged an inflation-adjusted $82 a barrel. While world crude oil inventories remain relatively robust, supply disruptions have traders on alert, including below-par production in India and the North Sea after outages last month. OPEC, pumping at its highest rate in a quarter century, has little spare capacity to make up any shortfalls. Ecuador worsened the lost supply by halting exports of about 144,000 barrels per day, most of which go to the U.S. West Coast, due to protests in Amazon provinces over the level of investment from foreign operators. The country is the second largest oil producer in South America. Ecuador's Economy Minister Magdelana Barreiro said the nation's oil output would return to normal only in November. Although the peak-demand U.S. driving season has only two weeks left to run, unusually low inventories of gasoline and a series of refinery glitches remain in focus. "Overall, the supply levels are tight and constantly bullish to the market," said Kazunaga Maeno, a risk management official with Mitsubishi Corp. in Tokyo. Top financial energy trader Goldman Sachs said on Thursday it expected crude oil to average around $60 a barrel in about five years, $15 above its previous forecast. Merrill Lynch hiked its long-term forecast by 40 percent on Friday, but said it expected only $42-a-barrel crude toward the end of this decade. It is interesting to note that someone like Merrill Lynch would predict $42 per barrel oil in 2010, when all the data I have... Easily located in the public domain, shows demand will outstrip supply, and Mideast issues will continue and are likely to get worse.
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Aug 21, 2005 20:19:55 GMT -5
Post by Fusioner on Aug 21, 2005 20:19:55 GMT -5
www.msnbc.msn.com/id/9025204/site/newsweek/New Perils at the PumpDetroit thought rising gas prices wouldn't affect consumers till the needle hit $3 a gallon. It was wrong. After a year of $2-a-gallon gas, we worry that it could pass $3 and approach the inflation-adjusted record. Analysts blame a combustible mix of Mideast instability, Chinese demand and overtaxed refineries. The result: accelerating inflation. The effect is most dire in Detroit, which still derives most of its profits from SUVs and pickups. The national average for a tank of gas is about $2.55. The Big Three always viewed $3-a-gallon gas as the threshold that would drive car buyers out of their guzzlers and into gas misers. But consumers have already started changing their habits. Even before this summer, sales of big SUVs were off significantly. Now Detroit is scrambling to re-engineer its lineup. Chrysler's new CEO, Tom LaSorda, is asking his engineers to look at sacrificing horsepower for mileage—once heresy in Motown. "No economist in the world ever predicted fuel prices like this," he says. This is a very interesting statement "No economist in the world ever predicted fuel prices like this"... Now it has been suggested in the mainstream media that the facts and figures presented at dieoff.com (scroll back) are pessimistic, and that reality in the oil markets, and the future of fossil fuels is not that bad... Yet dieoff.com clearly states at their site that economist do not understand this problem... They treat economics as about money, when in fact the economy is driven by energy... How far will a $100 bill take your car down the highway if you stuff it in your gas tank... And it is also interesting to note that burning a $1 bill releases the same amount of energy as burning a $100 bill. It seems pretty clear, the economist just don't get it. They do not see reality.
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Aug 21, 2005 20:24:11 GMT -5
Post by Fusioner on Aug 21, 2005 20:24:11 GMT -5
www.msnbc.msn.com/id/9024768/site/newsweek/How to Escape the Oil TrapBoth Iran and Saudi Arabia are now awash in oil money, and no matter what the controls, some is surely getting to unsavory groups. Terror. Over the last three decades, Islamic extremism and violence have been funded from two countries, Saudi Arabia and Iran, not coincidentally the world's first and second largest oil exporters. Both countries are now awash in money and, no matter what the controls, some of this cash is surely getting to unsavory groups and individuals. I will not post all of this 2 page op/ed, but it is all worth reading... It sounds like honest truth to me
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Aug 22, 2005 21:12:21 GMT -5
Post by Fusioner on Aug 22, 2005 21:12:21 GMT -5
Gasoline: One of the best bargains aroundwww.msnbc.msn.com/id/8146652/This is what the government and oil companies told you back in JuneNEW YORK - U.S. drivers might feel like they’re being robbed at the gas pumps, but a gallon of gasoline may be one of the best bargains around... U.S. drivers will see gasoline prices at the pump rise during June, but could get a break in July and August, the government said Wednesday. The federal Energy Information Administration said retail gasoline prices will increase over the next few weeks to reach the agency’s projected June average of $2.16 a gallon. The EIA said gasoline prices “may stabilize and even decline slightly” during July and into August. www.msnbc.msn.com/id/8533441/Average price of a gallon of gas tops $2.60 Cost of fuel jumps 6 cents, sets new record high, government reports Do you see something fishy here???
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Aug 24, 2005 14:07:32 GMT -5
Post by Fusioner on Aug 24, 2005 14:07:32 GMT -5
www.msnbc.msn.com/id/5612507/Oil prices soar to record highCrude spikes to $67.15 a barrel on storm concerns, inventory data Now you see these storm concerns... An effect from Global Warming, are affecting commerce prices of the worlds energy suppyOil prices rose to a new high above $67 a barrel Wednesday on concerns about a storm that could enter the Gulf of Mexico later this week and a U.S. government report that showed a decline in domestic gasoline inventories. The storm fears also triggered a rally in natural gas futures.
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Aug 28, 2005 12:42:55 GMT -5
Post by Fusioner on Aug 28, 2005 12:42:55 GMT -5
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Aug 28, 2005 16:09:48 GMT -5
Post by Fusioner on Aug 28, 2005 16:09:48 GMT -5
Katrina Targeting U.S. Oil Operations news.yahoo.com/s/ap/20050828/ap_on_bi_ge/hurricane_katrina_oilNEW YORK - With crude oil prices already at record levels, a hurricane targeted the heart of America's oil and refinery operations Sunday, shutting down an estimated 1 million barrels of daily production and threatening to curtail refining activity in the region. Katrina, a Category 5 storm expected to strike near New Orleans early Monday, was churning through the Gulf of Mexico. The area is crucial to the nation's energy infrastructure — offshore oil and gas production, import terminals, pipeline networks and numerous refining operations throughout southern Louisiana and Mississippi. The hurricane followed a path similar to the one taken last September by Ivan, which caused heavy damage and reduced the region's output for months. Yet Katrina's 175-mph wind was fiercer. Oil companies have evacuated workers and closed at about 1 million barrels of daily production in the Gulf, but that amount could be higher because not every producer reports data, said Peter Beutel, an oil analyst with Cameron Hanover. "It's not looking real friendly here. This is unmitigated, bad news for consumers," he said. Gasoline prices could see the largest spikes because so many refineries in the region could be shut down by flooding, power outages, or both, energy analysts said. The U.S. has ample crude oil supplies, even if major hurricane destruction trims Gulf oil output and foreign imports, but refining capacity is extraordinarily tight. As a result, prices for gasoline, heating oil, jet fuel and other products have flirted with records and could go even higher this week. "If this thing knocks out significant quantities of refining capacity ... we're going to be in deep, dark trouble," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. The market has been on edge for months, with traders and speculators buying on the slightest fear. With Katrina, all those fears could be realized, Beutel said. "Basically I could spill a can of oil at my local gas station and you'd see the price of crude go up by $1 per barrel," he said, predicting futures would likely top $70 per barrel in coming sessions. Crude settled at $66.13 a barrel Friday on the New York Mercantile Exchange, down $1.36 after hitting $68 last week. In many ways, Katrina was expected to be inconsequential to the energy industry, with many traders selling on Friday as the storm moved across Florida and was seen as moving north and striking the Florida Panhandle as a tropical storm with little impact. That all changed Saturday, when the system gained power and charged west, directly into areas of offshore oil production. ChevronTexaco Corp. completed evacuations of all workers in the eastern and central Gulf of Mexico and nonessential workers in the western Gulf late Saturday, company spokesman Matt Carmichael said. Chevron has about 2,100 employees and contractors working in the Gulf, Carmichael said. Chevron will continue to produce 90 percent of its normal production by remote as long as weather cooperates, he said. The Louisiana Offshore Oil Port, which processes loads from tankers too large for mainland ports, evacuated all workers and stopped unloading ships on Saturday morning said Mark Bugg, the terminal's manager of scheduling. The LOOP, 20 miles offshore, is the nation's largest oil import terminal and handles 11 percent of U.S. oil imports. Royal Dutch-Shell Group evacuated more than 1,000 offshore workers by Saturday. Only those in the far west remained, the company said on its Web site. BP PLC and ExxonMobil Corp. also brought workers ashore Saturday. Shell estimated 420,000 barrels of oil and 1.35 million cubic feet of gas per day will be shut in at its central and eastern Gulf facilities. Exxon Mobil said it has ceased daily production of 3,000 barrels of oil and 50 million cubic feet of gas. Valero Energy Corp. evacuated all but a few workers at its 260,000-barrel-a-day St. Charles refinery on Saturday. Murphy Oil Corp. also shut down its 120,000-barrel-a-day Meraux, La., refinery, and Exxon Mobil Corp. planned to shut down its 183,000-barrel-a-day refinery in Chalmette, La. Motiva Enterprises, a joint venture of Royal Dutch Shell PLC and state-owned Saudi Arabian Oil Co., began implementing hurricane contingency plans at its 225,000-barrel-a-day Norco refinery on Saturday. Motiva also was exploring contingencies for its 235,000-barrel-a-day Convent refinery, about 45 miles west of New Orleans, Dow Jones Newswires reported.
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Aug 28, 2005 20:36:50 GMT -5
Post by Fusioner on Aug 28, 2005 20:36:50 GMT -5
www.msnbc.msn.com/id/5612507/Oil futures surge above $70 a barrelPrices up nearly $5 as Katrina forces oil producers to cut output. U.S. oil prices surged to a record above $70 a barrel on Monday as one of the country’s biggest storms tore through the U.S. Gulf of Mexico, forcing oil producers and refiners to shut down operations. U.S. crude oil futures soared nearly $5 a barrel in opening trade to touch a fresh peak of $70.80 a barrel, surpassing last week’s $68 high to the highest price since the New York Mercantile Exchange (NYMEX) began trading contracts in 1983. It later traded up $3.42 a barrel, 5.2 percent, at $69.55. Oil product and natural gas prices also shot higher to records, with gasoline soaring 10 percent to $2.13 a gallon and heating oil rocketing past $2 a gallon for the first time. Natural gas prices were up 20 percent. Prices leapt as Hurricane Katrina, the eleventh named storm of what is expected to be an unusually severe season, threatened to do lasting damage to the vital U.S. oil and refining region, further straining an industry that has struggled to keep up with two years of strongly rising oil demand. More than 40 percent of all U.S. Gulf of Mexico crude oil production was reported closed down as a result of the hurricane, with the total expected to rise significantly as more operators report affected production to the U.S. government on Monday. Katrina revved up to a maximum Category 5 hurricane at the weekend, far stronger than last year’s Hurricane Ivan, which tore up platforms and pipelines along a very similar path through the Gulf, disrupting oil production for months. The U.S. Gulf of Mexico normally pumps about 1.5 million barrels per day (bpd) of crude, a quarter of domestic output and equivalent to nearly 2 percent of global oil production. “This is certainly reminiscent of Ivan last year,” said David Thurtell, commodity strategist at the Commonwealth Bank of Australia. “We can expect two months of lost production, and coming in the peak demand period this is the worst possible news. The only way we can avoid yet higher prices is if President Bush releases supply from the Strategic Petroleum Reserve.” The administration has said in the past it would release oil from the 700-million-barrel SPR only during a serious supply disruption, but has never given further details. In New Orleans, hundreds of thousands of residents were advised to leave as Katrina was expected to make landfall near the low-lying Gulf Coast city around sunrise on Monday. Apart from the impact on crude production, dealers fear the storm will tighten supplies of consumer fuels. Gasoline stockpiles are already at the low end of their seasonal norm.
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Aug 29, 2005 2:07:12 GMT -5
Post by Fusioner on Aug 29, 2005 2:07:12 GMT -5
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Sept 27, 2005 17:09:48 GMT -5
Post by Fusioner on Sept 27, 2005 17:09:48 GMT -5
Sour Crude What is "Sour Crude"?... 75% of the worlds proven oil reserves are "sour" oil. The production of "sweet light crude" (priced about $67 a barrel today) is in decline already. Sour crude oil contains a large amount of sulfur and hydrogen compounds. It stinks with the smell of rotten eggs, and concentrated vapor is highly lethal. Sour oil is more difficult to refine and only 30-40% of the worlds refineries are presently equipped to use this feedstock. When the Saudi's announced a production increase, all the oil wells they took off the back burners and increased production from were "sour medium" and "sour heavy" grades. Prices remained high on light sweet crude oil because that is the feedstock most refineries are equipped for and are prepared to use. Sour crude is more dangerous to drill for, pump, store, and process. The fumes are highly toxic and there are a number of reported cases where well drillers or operators were present when toxic gas releases occured at wellsites and many died before respirators and higher technology drilling equipment were employed. Accidents still happen. Tankers that transport this crude must be vented. www.washtimes.com/business/20050313-114327-7447r.htmRefineries equipped to process sour crude increase profits. www.mees.com/postedarticles/oped/v48n14-5OD01.htmArticle on the Benchmark Dubai medium sour... Production levels, and alternates (the Dubai wells are fading, they have already peaked.) www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=INTERPRETATIONS&p_id=19778The potential for release of life threatening concentrations of hydrogen sulfide gas into the atmosphere where "sour" oil and gas operations are conducted is well known in the petroleum drilling, transporting and refining industries. msnbc.msn.com/id/6130083Saudi extra barrels wrong kind of crudeMost refiners can’t use sour, high-sulfur blendLONDON - The world’s oil refiners are unimpressed by Saudi Arabia’s boost to production capacity that would only swell supplies of sour, high-sulfur crude while they hanker for sweet oil. “Most refiners couldn’t take more sour if they tried,” said one refiner, who asked not to be named. .... She also cited the impact of Hurricane Ivan this month, which led to the shutting in of between 1.5 and 2 million barrels per day of relatively sophisticated U.S. coastal refining capacity, better equipped to cope with heavier crudes. www.osti.gov/energycitations/product.biblio.jsp?osti_id=54059781978 May 01According to a study of the Office of Oil and Gas of the U.S. Department of Energy, U.S. and Caribbean refineries must increase their capability for upgrading lower quality crude oils by about three times the rate of the past five years (1973-1977). The projections are based on the fact that the U.S. is rapidly depleting its reserves of ``sweet`` crude and will have to depend more and more on ``sour`` crude. The report estimates current supplies of sour crude in the OPEC nations 5.5 times those of sweet crude. Much of this oil is being imported by the U.S. from the OPEC nations although 70% of the U.S. refineries were originally equipped to refine sweet crude. High-sulfur crude will involve desulfurization processes and other techniques requiring increased investments in equipment. About 15% of OPEC crude oil reserves are sweet; in the U.S., sweet crude reserves have dropped to 42% of the total. www.hess.com/EHS/msds/Crude_Sour_6608A_Clr.pdfMaterial Data Sheet www.businessweek.com/magazine/content/04_46/b3908079.htmBusiness Week, Refining Sour Crude, Oil Supply www.econbrowser.com/archives/2005/08/sweet_and_sour.htmlSweet and sour crudeDifferences across grades of crude oil can tell us a lot about why oil prices have become so high.Not all the black gooey stuff that comes out of the ground is the same. Crude oil produced by different fields differs importantly in viscosity and sulfur content. The more viscous crudes (as measured by a lower API gravity) are called "heavier," and those with higher sulfur content are called "sour" (as opposed to low-sulfur "sweet" crude). The heavier and more sour the crude, the more difficult and expensive it is to turn into usable refined products. The price of oil you usually hear quoted (such as the recent highs of $67 a barrel) is the price of a light, sweet grade like West Texas Intermediate. The graph above shows the price differential (in dollars per barrel) for European Brent (a relatively light, sweet crude) over Mexican Maya (a heavier sour). The price premium for light sweets had typically been about $5 a barrel up until last summer, when it began rising quickly, now standing at triple its earlier value. To put the size of the current price spread in perspective, if the price of light, sweet crude had only risen as much (in dollars per barrel) as the heavy sour, the increase in the price of light, sweet crude during the last year would have been a third smaller than what we actually observed. One factor contributing to the dramatic increase in the price spread is a decrease in the supply of light, sweet crude. The higher quality crude supplies of course get used up first, so the world is now increasingly reliant on a lower quality product. The graph at the left reveals that every year over the last five years, the average API gravity of non-OPEC oil production has decreased (produced crude is increasingly "heavy") and the sulfur content has increased (crude is increasingly "sour"). Vital Trivia used data from OPEC's August Oil Market Report to calculate that global production of light, sweet crude actually declined between 2000 and 2004-- peak oil has already passed, at least as far as light, sweet crude is concerned. While supply of light, sweet crude has gone down, the demand has gone up. In January 2004, the U.S. EPA's Tier 2 low-sulfur gasoline regulations began to be implemented. This rule was announced by President Clinton on December 21, 1999, though the announcement gave the nation's refineries four years to develop plans to cope with the changes that have only recently begun to be implemented. A study by Deutsche Bank noted regulations to reduce fuel sulfur content also being implemented by Europe, Singapore, Philipines, Australia, China, and India. Harry Chernoff mentioned Japan and Canada as well, and noted that the easiest way to meet these standards is to start with a lighter, sweeter crude: These increasingly stringent standards would reduce the yield of gasoline and diesel per barrel of crude even if the quality of the crude inputs were not declining. Starting with heavier, sourer crudes means even lower yields of gasoline and diesel. The third critical ingredient is refining capacity. British Petroleum reported that global refinery capacity increased by 1.8 million barrels a day between 2001 and 2004, while global crude production was up 5.3 mbd. Moreover, not enough of this capacity is able to process the increasingly heavy and sour crude supplies. Chernoff again: The marginal refining capacity in the world cannot process heavy, sour crudes at all, let alone process these crudes into light, sweet products. Converting existing refining capacity to process heavy, sour crudes to produce light, sweet products is expensive and time-consuming. In the U.S., the conversion (for the refiners who are converting) is a multi-year, multi-billion-dollar project. Some refiners have elected to produce light, sweet products only from light, sweet crudes. Others have elected to retire refining capacity. In parts of the world that supply markets with only higher sulfur products or that have dropped out of the market to supply low-sulfur products, little or no conversion will take place and the demand will continue for the diminishing fraction of light, sweet crudes. Although the change in the price spread is pretty dramatic, the explanation is quite simple: (1) supply is down, (2) demand is up, and (3) the capital investments necessary to cope with facts (1) and (2) were not made. Government regulation in response to environmental concerns appears to have played an important role in both (2) and (3).
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Sept 27, 2005 18:32:15 GMT -5
Post by Fusioner on Sept 27, 2005 18:32:15 GMT -5
Valero got smacked in Katrina and Ritawashingtontimes.com/upi-breaking/20050425-080512-9131r.htmAnalysis: Valero digs in for Tier 2By Hil Anderson UNITED PRESS INTERNATIONAL Los Angeles, CA, Apr. 26 2005 (UPI) -- The fortuitous ability to buy low and sell high has paid off handsomely for Valero Energy, though the refining company has not exactly won the lottery. Bill Greehey, Valero's chairman, and his team have had to sink a lot of money into the upgrades needed to meet federal requirements for even lower sulfur contents in gasoline and diesel fuel. Known as Tier 2 fuels, the cleaner-burning compounds should do wonders for air quality, but they require heavy capital investments, particularly for companies that refine the sour, or high-sulfur varieties, of crude oil. "We're putting a lot of new hardware on line," Gary Arthur, Valero's senior vice president, told Wall Street analysts in an April 21 conference call. Valero's purchase of smaller refining rival Premcor came at a time when the San Antonio refiner was ensconced in the enviable position of producing gasoline with cheaper varieties of crude and selling it in a market that has reached dizzying and sustained highs. Valero has been aggressively adding refining capacity through smaller-company acquisitions and ambitious expansion, with an unblinking eye on sour crude volumes that are available at relative bargain prices, even as next year's deadline for lowering the sulfur content of gasoline and 2007's deadline for diesel loom. "This acquisition gives us the best geographic diversity among U.S. refiners with a presence in all of the major refining regions, which further increases our earnings stability," Greehey said in a statement Monday. "What's more, it complements our complex refining system and increases the amount of sour crude oil that we process." By bringing Premcor and its four eastern U.S. refineries into the fold, Valero now operates some 19 plants nationwide with the capacity to process 3.3 million barrels per day of crude, mostly sour, which it obtains at prices well under the futures posted on the New York Mercantile Exchange -- May NYMEX crude settled Monday at $54.57 per barrel. Most of the crude purchased by refiners on the open market is sold at a discount vs. West Texas Intermediate, which is the NYMEX benchmark, but sour crude for the past year has been particularly discounted because not every refinery has the ability to strip away the unwanted sulfur. "Seventy percent of the crudes we ran (in the first quarter) were sour crude that we purchased at sharp discounts to WTI," Greehey told the analysts, as he also announced record net income of $534 million for the quarter -- more than double the first quarter of 2004. "Clearly, the refining industry has entered a new era," Greehey said with an aplomb spiced with a note of giddiness. "As a result, we believe that we will continue to see higher highs and higher lows for both product margins and sour crude discounts in the future." Product margins basically equal the value of the fuel produced from a barrel of crude oil compared to the cost of that barrel of crude -- and lately the margins that Valero and other refiners of sour crude have been getting for their barrels have been magnificent. Valero had pegged the average margin for gasoline produced on the Gulf Coast at a whopping $11 per barrel during the first quarter and near $10 per barrel for all of 2005, a situation that is in large part due to being able to produce gasoline that sells wholesale for about $54 per barrel and is produced from sour crude -- Mexican Maya crude, for example -- that has had trouble getting above $45 this winter. "Fundamentals for the refining sector remain outstanding, particularly for those companies, like Valero, with sophisticated refining hardware capable of processing less expensive sour and heavier grades of crude," observed Ann Kohler, energy analyst for IRG Research in New York City. Greehey said he expected sour crude -- and Maya in particular -- to remain sharply discounted in the coming months, while the wholesale price of gasoline remains high enough to attract cargoes from overseas in order to meet U.S. gasoline and diesel demand, each of which continue to tick higher despite unpleasant pump prices. The National Petrochemical and Refiners Association estimates it will cost the U.S. refining sector $20 billion to meet Tier 2 requirements for gasoline and diesel. It is crunch time for the industry and no one is guaranteeing there won't be incidents of even tighter supplies if some plants can't meet the deadline. Valero took advantage of its influx of cash in recent years to pluck off Pemcor and add refining capacity at a price Greehey described as a fraction of what it would cost to build a new plant capable of meeting Tier 2 standards. "Refining capacity will get tighter," Greehey warned. "We've been spending all of our money meeting the environmental requirements." Greehey said the deal would not immediately increase the nation's refining capacity, but it would provide consumers with something of a safety net to ensure the Premcor plants are able to meet the Tier 2 deadlines without any interruptions. "Not only do we have the expertise, we also have a strong balance sheet, access to low-cost capital and good cash flow, which enables us to make the costly environmental investments and the capital investments necessary to continue increasing our refining capacity," Greehey said. --
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Sept 28, 2005 0:33:32 GMT -5
Post by Fusioner on Sept 28, 2005 0:33:32 GMT -5
news.yahoo.com/s/krwashbureau/20050926/ts_krwashbureau/_wea_storms_bushBush urges fuel conservation with Rita's impact worse than thought WASHINGTON - President Bush on Monday urged Americans to cut back on car trips amid warnings that the energy disruption from Hurricane Rita could be worse than initially thought. Although Rita spared massive refineries and chemical complexes in the Houston area, the first reports about damage to offshore production of crude oil and natural gas were grim. "The early indication is that at least as many rigs are going to be impacted from Rita as Katrina. Rita went through an area of the gulf where there simply were more mobile offshore rigs," said David Kent, owner and editor of Rigzone.com, a Web site devoted to offshore oil production. "Rita cooled off once she got to shore, but she was churning out there for a while pretty viciously." Offshore production across the entire U.S. Gulf of Mexico remained closed Monday, meaning a fifth of the nation's oil production has been shutdown since Thursday. Even before oil workers evacuated offshore rigs in advance of Rita last week, Hurricane Katrina had knocked out 56 percent of Gulf oil production. On-shore refineries also took a hit. The Energy Department said Monday that Katrina and Rita together had cut the nation's refining capacity by 25 percent. Even when energy companies restart their Texas and Louisiana facilities, at least 10 percent of U.S. refining capacity will remain idle for weeks or months. Bush issued his call for conservation after receiving a briefing on the energy outlook. He urged Americans to avoid unnecessary car trips and encouraged federal workers to use public transportation or join car pools. He directed federal agencies to curtail nonessential travel and to conserve electricity during peak hours when possible. Bush also signaled that he's ready to tap the federal government's emergency oil reserves for the second time this month to boost energy supplies. The average price of unleaded fuel rose to $2.80 a gallon on Monday, up from $2.75 on Sunday, according to AAA. A year ago, a gallon of unleaded gas cost $1.89. "We can all pitch in by being better conservers of energy," Bush said during a visit to the Energy Department. "People just need to realize that the storms have caused disruption." Bush's call for conservation, reminiscent of President Jimmy Carter's plea for energy restraint in the late 1970s, was a striking shift in emphasis for a president who's tended to focus more on boosting production. Bush sought to reassure Americans that he's well aware of their pain at the pump. The president plans to travel to Beaumont and Port Arthur, Texas, on Wednesday to get a better assessment of the damage to Gulf Coast refineries and other energy facilities. Many of the steps that Bush outlined Monday were already in place for Katrina. The Energy Department has drawn down at least 13.2 million barrels of crude oil from the government's Strategic Petroleum Reserve to keep oil flowing to refiners. Bush said he's willing to draw down more for Rita, if necessary. Oil company executives were still tallying up the damage from the back-to-back storms. The two hurricanes slammed into a region that supplies about 20 percent of the nation's oil production and about 45 percent of its refining capacity. On Monday, the nation's largest pipeline operator, Colonial Pipeline Co., confirmed it was shipping gasoline from its Houston facilities to the southeastern United States at only 55 percent of capacity. Chevron reported that its Typhoon deepwater drilling platform, which is in 2,000 feet of water, broke from its mooring and suffered severe damage. Diamond Offshore Drilling, Global Santa Fe and Rowan Companies, all offshore drillers, also reported that rigs have disappeared or have been damaged. In other developments Monday, ConocoPhillips confirmed that its Lake Charles, La., refinery, which has a capacity of 239,000 barrels per day, sustained wind damage. It didn't immediately say whether the damage would render the facility inoperable for weeks, as is the case for Rita-damaged refineries in Port Arthur, Texas. The lack of new refineries has long been a drag in the nation's energy supply network. To encourage the construction of new refineries, Bush and Republicans in Congress are pushing legislation to provide incentives such as special government-backed insurance. The House Committee on Resources will start work Wednesday on legislation designed to make it easier for state governors and legislatures to authorize offshore oil and natural gas exploration and production. Some consumer groups have accused oil companies of deliberately restricting refining capacity to keep gasoline prices high. "They know when they make less gasoline, they make more money," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, a Los Angeles-based group that frequently battles oil companies in court.
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Sept 28, 2005 1:52:15 GMT -5
Post by Fusioner on Sept 28, 2005 1:52:15 GMT -5
news.yahoo.com/s/latimests/20050927/ts_latimes/bushurgingconservationseekstoboostfuelsupplyBush, Urging Conservation, Seeks to Boost Fuel Supply WASHINGTON — President Bush on Monday urged Americans to drive less and embrace conservation more in the wake of hurricanes Katrina and Rita, and he said he would work with Congress to enact incentives for energy production and refinery construction. The president also said that he was directing federal agencies to reduce energy consumption and that he would release oil from the Strategic Petroleum Reserve as needed to ease the shortages and price increases caused by the hurricanes. In Congress, Republican leaders prepared to move ahead with legislation that would provide tax breaks to spur refinery construction and expansion; they also said they would consider other measures left out of a major energy bill Bush signed into law in August. The developments underscore the extent to which Katrina and Rita have reconfigured the legislative agendas of the White House and Congress and the breadth of the storms' effect on a domestic petroleum market that is increasingly sensitive to supply disruptions. One measure would allow companies to write off, in the first year of operation, the cost of building a refinery, rebuilding one destroyed by Katrina or installing equipment in an existing facility to increase overall output by 5% or more. Any energy legislation also was expected to include White House proposals to make former military bases available as sites for refineries and to streamline the issuing of permits for new or expanded refineries. More immediately, the White House said the Department of Homeland Security would extend a waiver, begun after Katrina, of a federal law called the Jones Act so that foreign-flag ships could temporarily transport fuel from one U.S. port to another. And the Environmental Protection Agency was extending waivers relaxing gasoline blending rules and diesel fuel restrictions. Environmental groups said Monday that they were gearing up to fight a possible effort to roll back protection rules. Frank O'Donnell, president of Clean Air Watch, said Republican leaders were "racing faster than a hurricane to smash through alleged environmental barriers before anyone realizes what they are up to." In remarks reminiscent of Jimmy Carter's 1977 appeal to Americans to turn down their thermostats, Bush said Monday that everyone had a role to play in responding to the back-to-back storms, which have hampered offshore oil production, refinery operations and fuel distribution in the Gulf Coast region. "We can all pitch in … by being better conservers of energy," Bush said after hearing a briefing at the Energy Department. "I mean, people just need to recognize that the storms have caused disruption and that if they're able to maybe not drive … on a trip that's not essential, that would be helpful." The president said he was ordering agencies in the executive branch to cut back on fuel consumption. Federal employees were being told to curtail nonessential travel, increase use of carpools and mass transit and reduce electricity use during peak hours, he said, "as a way for the federal government to lead when it comes to conservation." Asked whether Bush — who today takes his seventh trip to the Gulf Coast since Katrina struck in late August — would curtail his own travel to the area, White House spokesman Scott McClellan said: "It's important for the president of the United States to travel to the region and get firsthand accounts of the operations and to provide comfort and support to those who have been affected…. That's an important responsibility of the president of the United States." Bush said the storms had called particular attention to the need to increase refining capacity in the U.S. He noted that no new refineries had been built since the 1970s and said excessive federal regulation had discouraged oil companies from expanding existing plants. In addition to a lack of new construction, refining capacity has been affected by other factors. Years of heavy financial losses and a wave of mergers have wiped out many refineries, leaving the industry with only 148 fuel-making plants today, down from a peak of 324 in 1981. In the last decade, the industry has largely offset the lost production by expanding existing plants. At the same time, refiners have spent money in recent years to comply with more-stringent environmental regulations. They have not increased production enough to keep up with the swelling demand for gasoline, diesel, jet fuel and other petroleum products. Critics such as Jamie Court, president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights, have contended that the industry resisted expansion because keeping supplies tight boosted profits. "The answer is not more carrots for the industry, like gutting environmental laws and immunizing companies for the harm they cause, but sticks, such as forcing companies to invest in beefing up refining capacity when it is needed," Court said. In Congress, Republican leaders said they had not decided whether to draft another comprehensive energy bill or try to attach provisions aimed at building more refineries to a package of hurricane relief measures. Even before Katrina hit, knocking out a good chunk of the nation's oil refineries and driving up prices at the pump, lawmakers were getting an earful from constituents about high fuel costs. But it appeared that the hurricanes might have whipped up a favorable political climate for industry-backed initiatives that did not make it into the energy bill approved this year. High gas prices also have emboldened pro-production lawmakers to make a push to open up coastal waters to new drilling. Such efforts appeared unlikely to win White House support. "We have repeatedly reaffirmed our pledge to support the existing moratoria based on deference to the wishes of the states to determine what activities take place off their coasts," White House spokeswoman Dana Perino said. D.J. Peterson, lead author of think tank Rand Corp.'s 2003 report on the state of refining, cautioned against rushing into new laws to fix the refinery shortfall. "You're in a period after a significant event, and people are scrambling for solutions," Peterson said. "What our research points out is that this is the result of long-term trends, and you can't necessarily untangle them overnight, or with simple policy fixes."
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Oil
Sept 28, 2005 17:56:29 GMT -5
Post by Fusioner on Sept 28, 2005 17:56:29 GMT -5
www.cnn.com/money/2005/09/28/news/economy/rita_rigs/index.htmnews.ft.com/cms/s/034a384e-2f8a-11da-8b51-00000e2511c8.htmlReport: Rigs take record hit from RitaDamaged, lost rigs used for exploration may delay discovery of new global oil supplies, paper says. Rita causes record damage to oil rigs By Carola Hoyos in London, Sheila McNulty in Houston and Thomas Catan in Johannesburg Published: September 27 2005 20:14 | Last updated: September 28 2005 08:38 Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show. Oil prices eased on Wednesday over concerns that demand for crude would be hit by the continued shutdown of refineries. US crude fell 27 cents to $64.80 a barrel by 06:444 GMT after losing 75 cents on Tuesday. ODS-Petrodata, which provides market intelligence to the offshore oil and natural gas industry, said it expected a shortage of rigs in the US Gulf this year. “Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita,” said Tom Marsh of ODS-Petrodata. “The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity.” Ken Sill of Credit Suisse First Boston said: “Early reports indicate numerous rigs are missing, destroyed or have suffered serious damage and several companies have yet to report. Rita may set an all-time record.” The US Coast Guard said nine semisubmersible rigs had broken free from their moorings and were adrift. This damage could not have come at a worse time for oil companies and consumers. US crude futures on Monday fell 37 cents to $65.45 a barrel in midday trading in New York as refineries that were evacuated before the onset of Rita returned to operation. Earlier in the day, Ali Naimi, Saudi Arabia's oil minister, said the market had not taken up the 2m barrels a day of spare capacity the Organisation of the Petroleum Exporting Countries offered last week. Speaking in Johannesburg, he blamed high oil prices on a lack of industry infrastructure, including rigs and refineries, rather than oil reserves. Rigs, which are movable and are used for exploration and development, were in short supply before hurricanes Katrina and Rita blew through the US Gulf in late August and September. High oil prices and the desperate search for new oil supplies needed to meet rampant demand from the US and China have made rigs difficult to find and expensive to hire. Rigs cost $90m-$550m to construct, depending on how sophisticated the structure and how deep the water in which it will drill. A rig ordered today is unlikely to be ready before 2008 or 2009, analysts said. As a sign of just how precious rigs are becoming to the market, Anadarko, the biggest US independent oil company, this week set a record by committing to a rig six years in advance; commitments in the past were made months ahead of time rather than years. Initial reports from companies are ominous. Global Santa Fe reported it could not find two of its rigs. Rowan Companies reported four rigs damaged, with two having moved, one losing its “legs” and the fourth presumed sunk. Noble has four rigs adrift, with two run aground one into a ChevronTexaco platform.
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Oil
Sept 29, 2005 2:26:33 GMT -5
Post by Fusioner on Sept 29, 2005 2:26:33 GMT -5
news.yahoo.com/s/huffpost/20050928/cm_huffpost/008018David Sirota Wed Sep 28, 6:06 PM ET America's Energy Solution Is Right Under Us...Literally Whenever there is an energy crisis and high gas prices, we get the same tired old prescriptions that haven't done anything to address the problem. We get calls to suspend gas taxes - with no explanation of how we're supposed to maintain roads without gas tax revenue. We get calls for more tax breaks to the oil/gas profiteers who are making record profits. We get demands to loosen environmental restrictions on drilling, as if there is simply an infinte supply of drillable domestic petroleum (there isn't). What we never get, however, is serious investment in new, well-known technologies that could start weaning America off foreign oil. Case in point is the Bush administration's unwillingness to show some leadership on coal-to-oil technology. Right now, America has billions of tons of coal that could be quickly and cleanly converted into fuel - fuel that burns far more cleanly than any used today. The process used to convert the coal, called Fischer-Tropsch, has been around since the 1920s, and has been used by countries who (for various political/economic reasons) can't import oil. The reason why Fischer-Tropsch hasn't been used more widely over the years is because it is only profitable when crude oil prices go above about $35 a barrel. But now, with oil above $60, few think it will ever go back down below the Fischer-Tropsch profit point. That means America has a golden (but as-yet-untapped) opportunity to use its own resources to both improve the environment with a cleaner fuel, and get us off foreign oil. Additionally, the process produces hydrogen that can be stored as fuel for a future hydrogen economy when that technology develops, and it creates electricity as a byproduct. This is no pie-in-the-sky idea. As the Financial Times reports, America's biggest economic competitor, China, is poised to begin massive investments in this coal-to-oil technology, ultimately giving it a leg up on America if we don't act. To be sure, coal-to-oil isn't perfect in that it ultimately creates a combustible fuel. Again, however, it is far better than what we have today because it produces a cleaner-burning fuel than any used today. It is also true that coal-to-oil would require a significant investment of resources. But those resources would be well spent because there's a lot in it for Americans beyond just bringing down energy prices, getting America off foreign oil, creating a cleaner burning fuel, and creating thousands of jobs here at home (as if those wasn't enough). Taxpayers actually own much of the coal that can be used for this process. With political leaders dedicated to protecting taxpayers interests (as opposed to only the oil industry's interests), taxpayers could be cut into the massive profits that a coal-to-oil system would create. In Montana alone, the state and federal government own 115 billion tons of recoverable coal. That amount of coal could produce almost 200 billion barrels of fuel, and a big chunk of the revenues from that fuel would be the taxpayers' - money that could address America's pressing health care, education and homeland security challenges. With no leadership from the White House on energy, and with both parties joining hands to pass the unproductive energy bill, it is going to be up to the states to pioneer new energy investments in not only coal-to-oil technology, but ethanol, wind power, wave power, and other alternative energies. But the bottom line is clear - unless political leaders stop proposing the same policies that got us to this energy crisis and start boldly pressing forward in new directions, America will be at a serious economic disadvantage in the years to come.
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