Friday, February 22, 2013

Crude Settles Up; Gasoline Stronger Ahead of U.S. Data

Crude-oil futures prices settled higher Tuesday, while gasoline and heating oil prices were stronger on anticipation of tightening supplies.

Prices had stumbled Monday in a broad selloff that handed equities their first triple-digit loss of the year and swept through commodities markets. After oil's biggest fall in a month, the 1.6% loss Monday was seen as a buying opportunity, analysts said.

U.S. benchmark crude prices were pulled higher by strength in prices of refined products. Inventories of gasoline and distillate fuel [heating oil/diesel] are unusually low in the Northeast and are expected to tighten further as refiners reduce operations due to seasonal maintenance work on facilities.

"The market has a momentum of its own," said Gene McGillian, broker and analyst at Tradition Energy. "The rally is starting up again" on hopes of improving economic growth which will spur a rise in oil demand, he said.

"The fundamentals are the weak spot, but this market doesn't seem to want to trade down," Mr. McGillian said, adding that gains in demand will need to be apparent soon to sustain gains.

Monday's "hard selloff was simply a correction in a bull market that has yet to fully run its course," said Jim Ritterbusch, president of Ritterbusch & Associates, an advisory firm.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled 47 cents higher at $96.64 a barrel. ICE North Sea Brent crude oil settled 92 cents higher at $116.52 a barrel. Brent's premium to Nymex widened $19.88 a barrel, the highest level since Dec. 27.

Mr. Ritterbusch said Brent's premium to the U.S. benchmark continues to stretch because of snags on the Seaway pipeline, rather any fundamental tightness in Brent supplies.

Brent's premium to the U.S. benchmark price had been shrinking in recent weeks on the expectation that refiners in the U.S. Gulf region would need less imported crude oil of similar quality to Brent as the Seaway pipeline increased flows from the Midwest into the key refining hub. But operational problems have limited the volumes moving on the pipeline, allowing Brent to recover at the expense of the U.S. benchmark.

Analysts noted that Saudi Arabia, the world's biggest oil exporter, has scaled back its oil output by about 700,000 barrels a day since November and pumped just over 9 million barrels a day. That came amid forecasts that the world will need less oil from the Saudis and others in the Organization of the Petroleum Exporting Countries, as output from producers outside the group, led by the U.S., continues to grow.

Because of strong, persistent gains in Brent, "we feel that odds are high of some gradual uplift in Saudi production designed to restrict additional crude price gains," Mr. Ritterbusch said. Brent had topped $117 a barrel earlier Tuesday, a settlement at that level would be the highest since May 2012.

Analysts said the market is expected to take its near-term cues from the weekly U.S. oil inventory data.

A Dow Jones Newswires survey shows analysts expect data to show U.S. crude oil inventories rose by 2.9 million barrels in the week ended Friday while refiners trimmed operations relative to capacity by 0.1 percentage point.

Gasoline stocks are expected to rise by 900,000 barrels, while distillate stocks, comprising heating oil and diesel fuel, are expected to drop by 600,000 barrels.

The American Petroleum Institute, a trade group, releases its inventory data for Feb. 1 at 4:30 p.m. EDT Tuesday, while the more widely watched federal figures from the Energy Information Administration are due at 10:30 a.m. EDT Wednesday.

March-delivery heating oil futures settled at a 16-week high, gaining 3.73 cents, or 1.2%, to settle at $3.1913 a gallon.

Front-month reformulated gasoline prices rose 2.59 cents to settle at $3.0374 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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FMC Technologies, Sulzer Pumps Ink Deal for Subsea Industry

Sulzer Pumps Ltd. and FMC Technologies, Inc. have signed a long-term and exclusive collaboration agreement, which addresses the supply of pumps for subsea applications and the further development of pumping technology of Sulzer Pumps, reported FMC in a press release.

This partnership will meet the needs of FMC Technologies and the subsea exploration and production industry. Both companies aim to further leverage their collaboration on technology focusing on pumps from Sulzer Pumps, and subsea systems and advanced permanent magnet motor technology from FMC, reported the company.

"The signing of this long-term and exclusive collaboration agreement is a natural progression of the long-standing cooperation already in place between Sulzer Pumps and FMC Technologies," said Tore Halverson, senior vice president of Subsea Technologies, in a statement.

"We look forward to providing the subsea market and customers with best-in-class pumping technology for many years to come," added Kim Jackson, divisional president of Sulzer Pumps.

Sulzer, an establishment dating back to 1834, and FMC have developed, built and qualified a new, high-speed helicon-axial multiphase subsea boosting unit based on Sulzer Pumps' topside pump designs. The pump is driven by a permanent magnet motor that provides higher speeds, power and efficiency compared to conventional induction motors.

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Murkowski Report Offers 'Blueprint' for Future Energy Policymaking

U.S. Sen. Lisa Murkowski (R-Alaska) unveiled a report Monday offering a blueprint for the conversation about where energy and natural resource policies should go over the next few years.

In the report, Energy 20/20, A Vision for America's Energy Future, Murkowski offers recommendations on how to align federal energy policy with what Murkowski sees as a consensus that the United States should make energy abundant, affordable, clean, diverse and secure. These recommendations not only include oil and gas, but renewable resources as well.

Among these recommendations is for the United States to establish a national goal to produce enough additional oil, biofuels and synthetic fuels to become independent by 2020 of imports from the Organization of the Petroleum Exporting Countries (OPEC).

"The fulfillment of this commitment would support the creation of millions of well-paying jobs, increased federal revenues, reduction of U.S. budget and trade deficits, and help maintain affordable world energy prices," Murkowski noted.

The federal government can help achieve energy independence from OPEC by 2020 by:

Expediting federal permitting and reviewing decisions for energyNatural resources and related infrastructure projectsAllowing construction of the Keystone XL pipeline to move forwardRequiring the U.S. Department of the Interior outline plans for development of Outer Continental Shelf (OCS) resources to more accurately estimate available resources and set minimum production targets, taking into account necessary environmental requirements

"Although these targets would be set administratively, they should be achievable and binding," Murkowski commented in the report. "If and when actual production is projected to fall short of such targets, additional leasing, onshore or offshore, should be made available to compensate for the shortfall."

Murkowski also called for an expansion of OCS leasing to the eastern Gulf of Mexico and offshore Virginia, North Carolina, South Carolina and Georgia. Additionally, legislation should be passed for a consolidated offshore regulator, with a reaffirmed and strengthened statutory authority to develop offshore resources expeditiously through a certain and fair permitting process, while incentivizing safety and best environmental practices.

Additional amendments Murkowski calls for in the report concerning future oil and gas development include directing a share of revenues to participating offshore energy producing states – including offshore wind, tidal and wave generation – and establishing permanent revenue sharing for offshore development from leasing, bonus bids, rents, and royalty receipts at 27.5 percent with provision for direct partial payments to affected coastal communities.

The senator also called for the administration and its departments and agencies to reform the methods and processes through which energy policy is implemented and administered. This includes identifying impediments to federal oil and gas leasing and production. Specifically, the U.S. Department of the Interior must establish a review program and an accelerated auction schedule for previously and consistently nominated lease parcels that have yet to be put up for sale.

The National Petroleum Reserve-Alaska also must be immediately placed into full availability for oil and gas leasing, consistent with statutory designation.

"The reserve must be thoughtfully developed with roads, bridges and pipeline facilities that promote broad onshore development of the diffuse resource base, while simultaneously accommodating the transportation of oil and gas from offshore fields in the Chukchi Sea to the TransAlaska Pipeline System," Murkowski noted.

Murkowski also said that the benefits of the U.S. shale boom, and the jobs, higher wages and increased federal, state and local government tax revenues, should not be put at risk under a new federal regime for hydraulic fracturing that only makes it harder or impossible to produce U.S. shale resources.

"Particularly given the federal deficit, agencies should focus on directing limited resources where they are most needed and warranted, not where states are already effectively regulating and policing their activities," Murkowski commented.

New technology and studies continue to indicate that North America has a vast hydrocarbon base, with potential to substantially affect supply in world markets. Last year, the U.S. Energy Information Administration reported the United States to have 220.2 billion barrels of technically recoverable oil, or more than a century's worth of projected imports from the Organization of the Petroleum Exporting Countries. This figure does not include vast unconventional oil resources that will become commercially viable in the future.

"Abundant energy is possible, and there are already many signs of it becoming a reality as technological breakthroughs have lowered the cost of producing previously uneconomic supplies," Murkowski noted, adding that affordable energy is vital to U.S.
economic well-being, and a prudent balancing of energy production with proper standards for environmental regulation is more pressing than ever.

While the trend for oil production on state and private lands are quite positive – with approximately 96 percent of domestic oil production growth due to growth on state and private land – oil production on federal lands remained largely flat from 2003 through 2011, and sales of natural gas from federal lands fell by 31 percent. Of equal concern, the number of permits issued for onshore and offshore production on federal lands – a key indicator of future production – has also dropped significantly since the preceding administration.

"Our nation is too often hamstrung by burdensome regulations, delayed permits, and overzealous litigation," Murkowski commented. "This can render projects uneconomic by attrition and prevent timely, efficient and urgently needed investments in energy supply and conservation."

Murkowski noted that President Obama and the new Congress should work together to renew energy and natural resource policies through "discrete bills" and targeted oversight that proceed from a shared understanding of the facts.

"The ongoing boom in American oil and gas production must be fundamental to our national energy policy," Murkowski commented. "We no longer should view energy policy from a perspective of scarcity, but rather, from a perspective of increasing abundance. With the right policies, abundant and affordable energy is achievable."

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com.

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EnQuest Approves Extension of Alma/Galia Project

North Sea-focused EnQuest announced Monday that it has approved an increase in the scope and specification for its Alma/Galia project, with the objective of extending field life as well as operating costs and enabling a potential second-phase development. The firm said the changes are expected to extend the life of its FPSO (floating production storage and offloading) vessel at the field by up to 15 years.

With the extended field life, gross 2P reserves there have been increased from 29 million barrels of oil equivalent to 34 million barrels of oil equivalent, according to estimates from Gaffney Cline. The improvements at the field are expected to increase the gross capital expenditure for the project by approximately $200 million.

The firm added that it has also approved the sanctioning of the next phase of the Thistle field's late life extension project. This was a result of the project qualifying for the Brown Field Allowances program, which was announced by the UK government in late 2012.

Meanwhile, EnQuest reported production for 2012 of 22,802 barrels of oil equivalent per day (boepd), which was in line with its guidance of between 20,000 and 24,000 boepd. The firm said the figure reflected good year-end production performances from all of EnQuest's fields.

EnQuest Chief Executive Amjad Bseisu commented in a statement:

"It is good to be able to report average production of 22,802 boepd for 2012, above the middle of the range of our guidance, which is a testament to the success of our drilling program and good reservoir management.

"First oil for the Alma/Galia project is still anticipated for Q4 2013. The first phase of the project is now expected to generate significantly greater returns than those foreseen at the time of sanction. The further increase to 34 million barrels of oil equivalent in gross 2P reserves for Alma/Galia represents a more attractive first phase development and, with the newly sanctioned improvements, more potential reserves with a second phase."

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Rigzone Crossword for Week of Jan. 28 - Feb. 1


More Trends, Graphs, and ChartsSorry, I could not read the content fromt this page.

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JKX Mobilizes Ukrainian Rig

Eastern Europe-focused JKX Oil & Gas announced Tuesday that it has mobilized the Skytop N75 rig to the Molchanovskoye field in the Ukraine for the horizontal recompletion of its M-166 Devonian sandstone oil well. The move is part of JKX's March restart of its in-field drilling and appraisal program on the Novo-Nikolaevskoye Complex.

The Skytop rig is then scheduled to move to the Elizavetovskoye license in June to spud the first of a planned five-well development drilling program. Drilling is also planned in 2013 on the Zaplavskoye license, following completion of processing and interpretation of additional 3D seismic data acquired last year.

JKX Chief Executive Dr Paul Davies commented in a company statement:

"We are pleased to recommence the in-fill drilling program on our core Ukrainian production licenses, the production from which currently underpins our group cash flow."

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PTTEP Aims to Operate Montara Field at 100% of Capacity by June

PTT Exploration and Production (PTTEP) confirmed Tuesday that it is aiming to start operations in the Montara field offshore Western Australia by end-March this year, with a ramp-up of production to 100 percent of capacity expected by end-June.

"Oil production from the Montara field will be in the range of 20,000 barrels of oil per day (bopd) to 23,000 bopd this year," a spokesperson from PTTEP told Rigzone.

The Montara Development Project (MDP) started with the drilling of production wells in March 2008. The installation of the well head platform jacket and topsides was being completed in August 2009. On Aug. 21, 2009, while drilling completion activities were underway, there was an uncontrolled release of gas, oil, condensate and water vapour from the H1 well.

A relief well successfully intersected the H1 well and briefly stopped the well release before the well fluids caught fire Nov. 1, 2009. The well release was stopped and the fire extinguished Nov. 3, 2009.

PTTEP started on replacement works on the project during end-2011 and early-2012. Three production wells and one gas injection well sited in the Montara field were also tied back and completed during the same period. Field development has since been continuing and has included the arrival on site of the Montara Venture floating production storage and offloading facility.

PTTEP noted Feb.1 that it is targeting a sales volume of 310,000 barrels of oil equivalent (boe) for this year, with the bulk of its increased oil sales to be derived from the start of commercial operations at the Montara field. PTTEP's sales volume for 2012 was at 275,923 barrels of oil equivalent. The spokesperson disclosed that PTTEP has already inked sales contracts based on its projected 2013 production from the Montara field.

The MDP, at its maximum level, can produce 35,000 bopd.

Quintella has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at quintella.koh@rigzone.com.

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Statoil Issued with Safety Order over Heimdal Leak

Norway's Petroleum Safety Authority has issued Statoil with an order to implement a number of measures on its Heimdal field platform after the PSA conducted its own investigation into a gas leak on the HMP1 platform in May 2012.

Describing the leak, which occurred in connection with the testing of two emergency shutdown valves, as "among the most serious gas discharges on the Norwegian shelf in several years", the PSA said it has ordered Statoil to:

Identify the causes why the improvement measures implemented in Statoil did not have the necessary effect on Heimdal.Ensure that the improvement measures have the necessary effect on Heimdal and present a plan for the work that is necessary to achieve this.Confirm that there are no similar conditions that indicate an inadequate effect of the aforementioned measures on Statoil's other facilities.

The deadline to comply with the order is March 1 2013, said the PSA.

Statoil itself acknowledged the leak was "serious" in October, when it announced it had submitted an internal investigation report to the PSA. According to the company, the leak lasted for four minutes and emitted around 3,500 kilograms of gas.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Crude Settles Up; Gasoline Stronger Ahead of U.S. Data

Crude-oil futures prices settled higher Tuesday, while gasoline and heating oil prices were stronger on anticipation of tightening supplies.

Prices had stumbled Monday in a broad selloff that handed equities their first triple-digit loss of the year and swept through commodities markets. After oil's biggest fall in a month, the 1.6% loss Monday was seen as a buying opportunity, analysts said.

U.S. benchmark crude prices were pulled higher by strength in prices of refined products. Inventories of gasoline and distillate fuel [heating oil/diesel] are unusually low in the Northeast and are expected to tighten further as refiners reduce operations due to seasonal maintenance work on facilities.

"The market has a momentum of its own," said Gene McGillian, broker and analyst at Tradition Energy. "The rally is starting up again" on hopes of improving economic growth which will spur a rise in oil demand, he said.

"The fundamentals are the weak spot, but this market doesn't seem to want to trade down," Mr. McGillian said, adding that gains in demand will need to be apparent soon to sustain gains.

Monday's "hard selloff was simply a correction in a bull market that has yet to fully run its course," said Jim Ritterbusch, president of Ritterbusch & Associates, an advisory firm.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled 47 cents higher at $96.64 a barrel. ICE North Sea Brent crude oil settled 92 cents higher at $116.52 a barrel. Brent's premium to Nymex widened $19.88 a barrel, the highest level since Dec. 27.

Mr. Ritterbusch said Brent's premium to the U.S. benchmark continues to stretch because of snags on the Seaway pipeline, rather any fundamental tightness in Brent supplies.

Brent's premium to the U.S. benchmark price had been shrinking in recent weeks on the expectation that refiners in the U.S. Gulf region would need less imported crude oil of similar quality to Brent as the Seaway pipeline increased flows from the Midwest into the key refining hub. But operational problems have limited the volumes moving on the pipeline, allowing Brent to recover at the expense of the U.S. benchmark.

Analysts noted that Saudi Arabia, the world's biggest oil exporter, has scaled back its oil output by about 700,000 barrels a day since November and pumped just over 9 million barrels a day. That came amid forecasts that the world will need less oil from the Saudis and others in the Organization of the Petroleum Exporting Countries, as output from producers outside the group, led by the U.S., continues to grow.

Because of strong, persistent gains in Brent, "we feel that odds are high of some gradual uplift in Saudi production designed to restrict additional crude price gains," Mr. Ritterbusch said. Brent had topped $117 a barrel earlier Tuesday, a settlement at that level would be the highest since May 2012.

Analysts said the market is expected to take its near-term cues from the weekly U.S. oil inventory data.

A Dow Jones Newswires survey shows analysts expect data to show U.S. crude oil inventories rose by 2.9 million barrels in the week ended Friday while refiners trimmed operations relative to capacity by 0.1 percentage point.

Gasoline stocks are expected to rise by 900,000 barrels, while distillate stocks, comprising heating oil and diesel fuel, are expected to drop by 600,000 barrels.

The American Petroleum Institute, a trade group, releases its inventory data for Feb. 1 at 4:30 p.m. EDT Tuesday, while the more widely watched federal figures from the Energy Information Administration are due at 10:30 a.m. EDT Wednesday.

March-delivery heating oil futures settled at a 16-week high, gaining 3.73 cents, or 1.2%, to settle at $3.1913 a gallon.

Front-month reformulated gasoline prices rose 2.59 cents to settle at $3.0374 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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