Shale Oil Boom News

OPEC forecasters expect oil prices will rise by no more than $5 a barrel a year to reach $80 by 2020, with a slowing in rival non-OPEC production growth not enough to absorb the current oil glut, according to OPEC sources. The sources said the figures came from an updated mid-term strategy report discussed this week by representatives from the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, which has yet to be fully endorsed by OPEC ministers. The report forecasts that non-OPEC supply would amount to 58.2 million barrels per day by 2017, some 1 million barrels per day lower than in the previous forecast. That effectively…

Thousands of U.S. schools sit along rail corridors used to carry toxic substances such as crude oil and would be at risk in the event of a derailment, an environmental group said on Tuesday as it called for a temporary halt on oil trains. ForestEthics said its analysis of U.S. Department of Education data show nearly 15,000 schools with 5.7 million students sit inside the so-called 'blast zone', the one-mile area along railroad tracks the U.S. Department of Transportation (DoT) recommends be evacuated in case of crashes. The DoT moved in May to lower maximum speeds to 40 miles per hours in cities, phase out older tank cars that can puncture, have carriers use safer routes, and require better brakes after a string of accidents.

Nigeria's state oil company NNPC has banned 113 oil tankers from the country's waters, citing a directive from President Muhammadu Buhari, in what traders said could be part of efforts to crack down on illegal crude oil trading. The vessels, which include mainly VLCC crude oil tankers, are banned from calling at Nigerian crude oil terminals and also from Nigerian waters with immediate effect, said a letter circulated by NNPC, "pending a notice to the contrary by government". The letter, a copy of which was seen by Reuters and which gave no reason for the ban, was dated July 15. NNPC did not immediately respond to requests for comment. Since taking office in May, Buhari has been working to fulfil a campaign promise to tackle corruption, particularly in the oil industry.

GS Caltex to buy 920,000 barrels of West African crude; first West African shipment in almost a year. South Korea's GS Caltex Corp is set to receive its first shipment of West African crude in almost a year as the country looks to diversify supply away from the Middle East. The purchase will help soak up a glut of supply among West African producers, who have been hit as the U.S. shale oil boom curbs demand in what was once their main market and as OPEC Gulf states boost supply. Middle Eastern producers have raised their selling prices to Asia in recent months following solid demand in that region, prompting some buyers to try to broaden their sources of supply, with GS Caltex already turning to Mexico for crude.

Asian refiners shift towards cheaper Mideast oil, naphtha-trade; U.S. light oil exports to Asia only started 4 months ago. U.S. exports now going to Europe instead. An aggressive strategy by Mideast Gulf producers to exploit the lowest oil prices in five years to defend market share is showing signs of bearing fruit as U.S. crude exports to Asia grind to halt. Asian refineries have suspended imports of condensate, a light crude oil produced from the U.S. shale boom, just four months after they began in favour of cheaper Middle East grades, according to trade and industry sources. The suspension illustrates how competition between suppliers has heated up following a more than 40 percent decline in oil prices since June.

As the world’s economies search for sustainable, reliable, renewable energy sources, they are also more closely examining a range of fossil fuels to find the cleanest, least harmful of those to cut carbon emissions and improve air quality in the process. In the drive to cut carbon emissions, interest in liquefied natural gas (LNG) is growing. LNG is being looked at not only as fuel for generating electricity and heat, but also as a fuel for powering marine vessels, road vehicles and trains. With the recent development of abundant shale gas deposits in the United States, the LNG market is really set to take off. The common method for transporting natural gas worldwide is to liquefy it so it takes up less volume and can be transported in specialized LNG carrier vessels.

World oil demand growth is softening at a remarkable pace as the European and Chinese economies falter, the West's energy watchdog said on Thursday, while supplies grow steadily, particularly from North America. "The recent slowdown in demand growth is nothing short of remarkable," the International Energy Agency (IEA) said in its monthly report, revising down its oil demand growth projections for both 2014 and 2015. "While festering conflicts in Iraq and Libya show no sign of abating, their effect on global oil market balances and prices remains muted amid weakening oil demand growth and plentiful supply," it added. The IEA said demand growth in the second quarter of 2014 alone eased back to a near two-and-a-half year low.

The U.S. Energy Information Administration plans to release two reports in September examining some of the issues surrounding a potential end to the nation's decades-old ban on most crude oil exports, the EIA's chief said on Monday. Some lawmakers have pressed the EIA, the statistical arm of the Department of Energy, to provide analysis on the implications of relaxing or abolishing the ban, as debate over the future of the moratorium has intensified. The EIA's upcoming reports will focus on the impact to U.S. gasoline prices at the pump from changing domestic and global oil markets, and on the costs of building different types of crude oil refining units in the United States.

Exxon Mobil Corp is considering a multi-billion-dollar plan to expand its Beaumont, Texas, refinery into the country's largest, the first major refining investment of the U.S. shale oil boom, people with knowledge of the deliberations said. The expansion of the 344,600 barrel-per-day (bpd) Beaumont refinery, if carried out, would be completed by 2020 and potentially double its size with the addition of a third crude distillation unit (CDU), the sources said. More modest near-term projects to renew and expand so-called coking units to help refine more heavy crude already are under way, they said. If Exxon presses ahead, the investment would be a further indication that the American oil giant is breaking ranks with many of its big global rivals…

Rosneft and BP signed an agreement on Saturday to jointly explore for hard-to-recover oil in Russia, the first major deal for the state-run Russian oil company since the West imposed sanctions over Ukraine in March. Rosneft chief executive Igor Sechin, a close ally of President Vladimir Putin, has been targeted by U.S. sanctions along with some other members of Putin's so-called inner circle following Russia's annexation of Crimea from Ukraine in March. Western energy bosses saved the St Petersburg International Economic forum from a complete failure by effectively standing by Russia as heads of top banks and many other firms did not show up for fear of reprisals over the sanctions.

In general the floating production sector looks healthy and growth remains strong. But the sudden expansion of shale oil and tight oil production could disrupt the growth trajectory in the deepwater sector. The underlying drivers for deepwater development point toward continued sector growth. Spot and futures crude pricing is at levels supporting deepwater development. Oil demand keeps growing and there continues to be need for new future sources of oil. The threat of supply disruption from traditional sources remains, prompting oil companies to look at alternative sources. Activity in the deepwater sector is robust. More than 200 deepwater projects are in the planning stage that will likely require a floating production system for development.

The market continues to struggle, and Drewry's latest Tanker Insight report saw the Drewry Tanker Earnings Index suffer a further decline in February. Weak demand hammered freight rates on major routes, especially for the larger vessel segments. The impact of weak rates was amplified by high bunker prices, which, for some operators, again translated into negative earnings. Drewry’s Earnings Index for dirty tankers plunged by 66% to 14.2 during the month. This pulled the wider Tanker Earnings Index down by 52%. Weakness in eastern demand due to the Chinese New Year holidays kept chartering activity in the Arabian Gulf relatively quiet. Similarly, despite increased demand from the Caribbean, activity in West Africa declined.