DW: US Should be Careful with Strategic Petroleum Reserve

Posted by Michelle Howard
Monday, May 05, 2014

Should Russia occupy more Ukrainian soil and sustain the already tense relations with the West, the U.S. government may decide to release crude from its Strategic Petroleum Reserve (SPR) – perhaps 500,000-700,000 barrels per day as suggested by the Financial Times. Such a move would undoubtedly hurt Moscow economically – not to mention several of the U.S.’ allies (notably Saudi Arabia) – as crude oil prices would probably drop below the $100 per barrel mark. But how would this affect the U.S.’ own oil production, especially the capital-heavy Gulf of Mexico? Would the White House be cutting off its nose to spite its face?
 


Unquestionably the sector that would feel the tightening purse strings most would be the deepwater U.S. Gulf of Mexico (GoM). Douglas-Westwood (DW) in their World Development Drilling & Production Forecast currently expect U.S. GoM liquids output to reach 1.65 million boe/d by 2020 due to a host of projects coming onstream before the end of the decade. An SPR release, however, would likely see the cancellation of seven significant subsea projects. This would see the number of subsea tree installations in water depths of over 1,000 metres drop 22% by the end of the decade from 329 in the high case (Brent price circa. $110) to 258 in the low case (Brent price below $100). The Mad Dog, Shenandoah and Buckskin projects would be amongst the list of victims. Such cancellations would see U.S. GoM daily liquids production finish the decade over half a million barrels a day lower than our high case scenario at some 1.14 million boe/d.


 
Ultimately, the U.S. must tread carefully in its pursuit of justice against Russia. The case outlined in this article could be repeated in other capital-heavy environments such as West Africa or Brazil and may risk alienating Saudi Arabia. The latter occurring would presumably result in OPEC cutting production in an effort to lift Brent crude above $100 per barrel, risking a tug of war with the U.S. over oil prices.
 

 

Maritime Reporter April 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Navy

Chinese Submarine to Pakistan: Raising Nuclear Tensions in South Asia

Pakistan, a country plagued by economic and political insecurity, to conclude the deal of eight conventional submarines during Chinese President Xi Jinping's visit to Islamabad on Monday (April 20),

'Make in India’ - the Newbuzzword in Indian Shipping Sector

The Prime Minister Narendra Modi's  'Make in India’ initiative offers a plethora of opportunities in the maritime sector, particularly in shipbuilding, with the

Newport News Shipbuilding Hosts Sen. Inhofe

Huntington Ingalls Industries (HII) today hosted Sen. James M. Inhofe, R-Okla., for a tour of the company's Newport News Shipbuilding division.   The senator,

Finance

Seaspan Takes Delivery of New Containership

Seaspan Corporation (SSW) has accepted delivery of a 14000 TEU containership, the YM Wellhead.    The new containership, which was constructed at Hyundai Heavy Industries Co.

'Make in India’ - the Newbuzzword in Indian Shipping Sector

The Prime Minister Narendra Modi's  'Make in India’ initiative offers a plethora of opportunities in the maritime sector, particularly in shipbuilding, with the

Baltic Index Perks up on Increased Rates for Bigger Vessels

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, edged higher on Thursday as rates for bigger vessels rose.

Energy

New CEO for Evergas

Evergas has appointed Steffen Jacobsen as CEO of the company as of 8 May 2015 Mr. Jacobsen joined Evergas 1 February 2015 as Vice President, Fleet after almost 35 years in Maersk.

Icebreakers Ordered for Neft’s Novy Port Project

Aker Arctic’s icebreaker design selected for Gazprom Neft’s Novy Port project   Aker Arctic and Vyborg Shipyard have confirmed a contract for the design of two

MacGregor's Pusnes bow loading systems for Suezmax Tankers

MacGregor, part of Cargotec, has secured contracts to supply Pusnes bow loading systems for three newbuild shuttle tankers intended for operations in Brazilian waters.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Pod Propulsion Port Authority Salvage Ship Electronics Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.5859 sec (2 req/sec)