Norway to Open First New Oil, Gas Acreage Since 1994

OSLO - The Norwegian government will propose this week to open the southeastern Barents Sea for oil activity, the Ministry of Petroleum and Energy said Monday, the first new oil acreage in nearly two decades.

The government will present a proposal to the parliament Friday to open the previously disputed Barents Sea area near the Russian border, the ministry said. The three-party coalition government has a parliamentary majority.

"For the first time since 1994, we can now open a new area for petroleum activity and search for oil and gas in new, promising areas," said Minister of Petroleum and Energy Ola Borten Moe, calling it a "historical moment" for Norway.

According to the ministry, the opening process has been ongoing since the spring of 2011. Following 40 years of dispute, Norway and Russia agreed on a delineation deal in 2010. The areas that will be opened for drilling are in the southern part of the previously disputed area.

"The petroleum activity becomes more and more important for northern Norway. There is huge optimism in that part of the country," said Mr. Moe.

In February, the Norwegian Petroleum Directorate presented the results of seismic data gathering in the southeastern Barents Sea. The directorate said the Norwegian part of the area likely held 1.9 billion barrels of oil equivalent, most of it gas and about 15% crude oil. This equals slightly more than a year of Norway's total oil and gas output.

The ministry said those resources equaled about eight fields, which is the size of the Eni SpA operated Goliat oil field currently under development in the Barents Sea.

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Record Dolphin, Sea Turtle Deaths Since Gulf Spill

Apr 2, 2013 02:27 PM ET // by Jennifer Viegas . Discovery News

The Deepwater Horizon oil spill happened in the Gulf of Mexico nearly three years ago, but the estimated 4.9 million barrels of oil that it released are still killing dolphins, sea turtles and other marine life in record numbers, according to new research.

The report, “Restoring a Degraded Gulf of Mexico: Wildlife and Wetlands Three Years into the Gulf Oil Disaster,” found that dolphins were among the hardest hit animals. As of just earlier this year, infant dolphins were dying six times faster than they did before the spill. Scientists aren’t even yet sure of the extent of the massive spill, given that it was impossible to fully clean up the chemical-laden, carcinogenic oil.

Photos: Devastating Oil Spill Disasters

“Three years after the initial explosion, the impacts of the disaster continue to unfold,” Doug Inkley, senior scientist for the National Wildlife Federation and lead author of the report, said in a press release. “Dolphins are still dying in high numbers in the areas affected by oil. These ongoing deaths — particularly in an apex predator like the dolphin — are a strong indication that there is something amiss with the Gulf ecosystem.”

An infographic summarizes some of the findings.

The NWF also highlighted these findings:

* Dolphin deaths in the area affected by oil have remained above average every month since just before the spill began. (The infant dolphin data was gathered in January and February of 2013.)

* NOAA called the dolphin die-off “unprecedented” — a year ago. While NOAA is keeping many elements of its dolphin research confidential pending the conclusion of the ongoing trial, the agency has ruled out the most common causes of previous dolphin die-offs.

* More than 1,700 sea turtles were found stranded between May 2010 and November 2012 — the last date for which information is available. For comparison, on average about 240 sea turtles are stranded annually.

* A coral colony seven miles from the wellhead was badly damaged by oil. A recent laboratory study found that the mixture of oil and dispersant affected the ability of some coral species to build new parts of a reef.  Read the full article

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Brent-WTI Oil Futures Spread Narrowest Since July

U.S. oil prices are rising as supplies that had been bottled up in the middle of the country start to reach refiners.

On Tuesday, oil on the New York Mercantile Exchange, the U.S. benchmark, settled at $92.16 a barrel, up 11 cents, or 0.1%, since March 1. Over the same period, the price of Brent crude, used to set the value of the majority of the world's oil, is down $3.55, or 3.2%, at $107.48 a barrel. The gap between the two is at its narrowest since July.

The convergence of U.S. and global oil prices comes as new pipelines break through bottlenecks that had kept oil produced in North Dakota, Texas and other regions stuck in supply depots across the Midwest.

Last week, operators of the Longhorn pipeline reversed its flow to send oil from west Texas to refineries along the Gulf Coast, diverting it away from supply depots in the U.S. Midwest, where stockpiles are near record highs. Later this year, the newly-expanded Seaway Pipeline is set to increase oil shipments to the Gulf Coast. And rail transport of oil has more than doubled over the past year.

"They are getting oil out of there, by hook or by crook," said John Kilduff, founding partner of Again Capital LLC, a New York energy hedge fund. New rail links, coupled with recent pipeline changes, have "really transformed" U.S. transportation infrastructure, he said.

Analysts and traders say that recent progress in relieving the supply glut is starting to translate into a shift in oil futures.

Nymex futures traded at a roughly $15 discount to Brent on Tuesday, down from $21 a month ago. That's still wide by historical standards, as the two contracts traded within a few dollars of each other before surging U.S. production caused domestic stockpiles to swell starting in 2011.

U.S. oil trades at a discount to compensate buyers for the higher cost of sending crude oil to refineries by rail or truck.

Now, as new pipelines begin bringing oil in the middle of the U.S. to refineries along the Gulf Coast, stockpiles in Cushing, Okla., a transport hub, are slipping. Last week, supplies at Cushing fell to 49.3 million barrels, the lowest since December and down from a record 51.9 million barrels hit in January, according to the Energy Information Administration.

"The spread is likely to continue to decline," according to Dominick Chirichella, analyst at the Energy Management Institute. In addition to falling Cushing stockpiles, maintenance work and unplanned outages have ended in the North Sea, he said, offering more supplies in the region where Brent's price is typically set.

Of course, some investors remain cautious about betting the spread will close anytime soon. Bill O'Grady, chief market strategist at Confluence Investment Management, which manages $1.7 billion, said it's not clear whether the latest pipelines and rail shipments will end the price disparity.

"Over the long run [the price gap] is going to close, we just don't have any indication on what the timing is going to be," he said, adding that his firm is betting on higher prices for both WTI and Brent.

Still, trading the so-called "Brent-WTI spread" has been one of the hottest wagers in the oil market. Many traders have bet on a steeper discount when the spread dropped towards $10 a barrel, then reversed their bets as the spread approached $20 a barrel.

Refiners are taking note. On Monday, Valero Energy Corp. said it won't try to sell its two California refineries. Instead, it is trying to bring in domestically-produced oil by rail, and is seeking permits to build a $30 million terminal at its Benicia refinery in northern California to take in 70,000 barrels a day of oil produced in the middle of the country.

Valero's move is the latest in the industry's turn to rail shipments. In 2012, 233,811 carloads of crude oil were shipped by rail, according to the Association of American Railroads, more than three times the 65,751 carloads in 2011.

Front-month April reformulated gasoline blendstock, or RBOB, settled 8.38 cents, or 2.7%, lower at $3.0451 a gallon. April heating oil settled 6.26 cents, or 2.1%, lower at $2.8641 a gallon.

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Crude Settles at Highest Level Since Mid-September

Crude-oil futures prices settled modestly higher Wednesday as gasoline-futures prices gained for a 10th straight day and the U.S. Federal Reserve voted to keep its low-interest-rate policy in place.

Crude shook off a bigger-than-expected increase in U.S. inventories in the latest week and a surprisingly weak report from the Commerce Department that showed U.S. gross domestic product declined by 0.1% in the fourth quarter, against expectations of a 1% rise. The GDP drop was the first decline in three-and-a-half years, and it briefly plunged crude into the red.

But the raucous rally in reformulated gasoline blendstock futures continued for a 10th day as gasoline inventories in the key Mid-Atlantic region remain about 15% below their five-year average level for this time of year. The Energy Information Administration reported that implied demand for gasoline and distillate fuel--diesel and heating oil--rose last week from recently depressed levels.

Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled up 37 cents at $97.94 a barrel, the highest level since Sept. 14. That date, nearly 20 weeks ago, was the last time Nymex crude traded to $100 a barrel. ICE Brent crude for March settled 54 cents higher, at $114.90 a barrel, the highest price since Oct. 16.

Gene McGillian, broker and analyst at Tradition Energy, said prices may soon test $100 a barrel, but strong signs of improving oil demand will be needed to keep further gains.

"The way we shrugged off the GDP figure and the near-6-million-barrel build in crude stocks, the market clearly has that level in its sites," he said. "The global economy is slowly improving, and energy demand needs to pick up with it."

Analysts said the Fed's continuing policy of market stimulus is a positive signal for the market. "That fact is, a lot of the rally that we've had in the energy market is because of the easy money policies we've seen from the world's central bank," Mr. McGillian said.

Petroleum products prices have rallied in recent days on expectations that heavy season refinery maintenance work this quarter will tighten inventories of refined products like gasoline and heating oil.

February-delivery contracts for reformulated gasoline blendstock settled 6.53 cents, or 2.2%, higher, at $3.0387 a gallon. The contract expires at Thursday's settlement. The penny-for-penny gain was the most since Nov. 9, while the percentage increase was the biggest since Dec. 26. Wednesday's price marked the highest-ever settlement price for gasoline during January, when prices are most often the weakest of the year. In 28 years of trading gasoline futures on the Nymex, the average front-month gasoline price during January has been the lowest for the year 10 times, more than any other month.

The RBOB contract has gained 33.21 cents, or 12.3%, in the past 10 days, which is the longest stretch of consecutive gains since July 2009.

Heating oil for February delivery settled 0.81 cent higher, at $3.1173 a gallon, the most since Oct. 19. The contract has gained 2% in the last three sessions and also expires at Thursday's settlement.

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Great Barrier Reef has lost half its corals since 1985, new study says

Australia’s Great Barrier Reef has lost more than half its coral cover since 1985, according to a new study published Monday. The loss has been spurred by a combination of factors including hurricanes, coral-eating starfish and coral bleaching.The paper, in the Proceedings of the National Academy of Sciences, is the most comprehensive survey of a reef system over such a long period. The researchers from the Australian Institute of Marine Science found that reef cover fell from 28 percent to 13.8 percent over the past 27 years, with two-thirds of the decline occurring since 1998.

The sobering findings highlighted how even the world’s most protected marine areas are under assault from natural forces and causes linked to the human activity that is resulting in climate change. The Great Barrier Reef is the world’s largest coral reef ecosystem, featuring nearly 3,000 individual reefs within 133,205 square miles. A third of the Great Barrier Reef Marine Park is off-limits to fishing and collecting.

“We are basically losing an ecosystem that is so iconic for Australia and the rest of the world,” said institute scientist Katharina E. Fabricius, one of the paper’s authors.

Storm damage accounted for 48 percent of the decline, scientists said, while crown-of-horns starfish contributed 42 percent. Coral bleaching, caused by warmer water, accounted for 10 percent of coral loss. Read more

 

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