key oil & natural gas headlines_Layout 1
Key Oil & Natural Gas Headlines at a Glance FOR
THE
WEEK
OF
AUGUST 17 - AUGUST 23, 2012
U.S. CRUDE OIL Chart #1
For the week ending Friday, August 17, 2012 as reported by the U.S. Energy Information Administration August 22, 2012
Crude Oil Inventories
U.S. Crude Oil Stocks
(see Chart #1)
Crude oil inventories decreased by 5.4 million from the previous week. At 360.7 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.
Crude Oil Imports Crude oil imports averaged 8.2 million barrels per day last week, down by 510 thousand barrels per day from the previous week. Over the last 4 weeks crude oil imports have averaged nearly 8.5 million barrels per day, 593 thousand barrels per day below the same four-week period last year. U.S. Crude Oil Domestic Production
Motor Gasoline Inventories Motor gasoline inventories decreased by 1.0 million from last week and are in the lower half of the average range.
Motor Gasoline Product Supplied Over the last 4 weeks, motor gasoline product supplied has averaged 9.0 million barrels per day, down by 1.7% from the same period last year.
Distillate Fuel Inventories Distillate fuel inventories increased by 1.0 million barrels last week and are below the lower limit of the average range for this time of year. Chart #2
Distillate Fuel Product Supplied
U.S. Liquid Fuels Consumption
Distillate fuel product supplied has averaged about 3.7 million barrels per day over the last four weeks, down by 4.4% from the same period last year.
Total Products Supplied Over the last four weeks, total products supplied have averaged 19.4 million barrels per day, down by 2.2% compared to a similar period last year.
Liquid Fuels Consumption
(see Chart #2)
The EIA’s Short-Term Energy Outlook chart: “U.S. Liquid Fuels Consumption” is updated monthly (next release September 11, 2012). Chart #3
Refineries U.S. refineries operated at 91.2% of their operable capacity last week.
West Texas Intermediate (WTI) Crude Oil Price
Daily Crude Oil & Petroleum Product Spot Prices January 2011 - Present
(see Chart #3)
WTI crude oil price was $96.00 per barrel on August 17, $3.06 more than last week’s price and $13.67 above a year ago.
Retail Gasoline Price The national average retail regular gasoline price increased to $3.744 per gallon on August 20, $0.023 per gallon more than last week and $0.163 above a year ago.
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GLOBAL CRUDE OIL
For the month of August 2012, as reported in the International Energy Agency’s (IEA) Oil Market Report (charts delayed by a month).
Global Oil Supply
(see Chart #4 and #5)
Global oil supply fell by 0.5 mb/d month on month (m-o-m) to 90.4 mb/d in June, with non-OPEC liquids production accounting for 75% of the decline. Compared to a year ago, global oil production stood 2.0 mb/d higher, all of which stemmed from increasing output of OPEC crude and NGLs.
Chart #5
Chart #4
OPEC Crude Oil Supply OPEC crude oil supplies fell by 0.1 mb/d in June to 31.8 mb/d. Angola and Iran posted the largest declines and offset near-record production of 10.15 mb/d from Saudi Arabia. Preliminary estimates for imports of Iranian oil are stand at 1.9 mb/d for June, around 0.5 mb/d below 4Q11 levels.
Global Oil Product Demand
(see Chart #6 and #7)
This month sees the roll-out of our detailed global demand forecast to 2013, and although an acceleration in growth is foreseen, the predicted pace of expansion remains relatively muted at 1.0 mb/d. Global oil product demand will average 90.9 mb/d for 2013, with non-OECD demand exceeding that for the OECD for the first time ever in 2Q13, a trend that is unlikely to be reversed. Non-OECD demand is forecast at 45.7 mb/d in 2013, 0.6 mb/d more than OECD demand.
Chart #6
Chart #7
BP Statistical Review of World Energy, June 2012 (Updated annually. Next update June 2013)
Oil Production by Region
(see Chart #8)
World oil production increased by 1.1 million b/d in 2011, with OPEC accounting for nearly all of the increase despite a 1.2 million b/d reduction in Libyan production. The U.S. had the largest growth in non-OPEC supply for a third consecutive year.
Oil Consumption by Region
(see Chart #9)
World oil consumption increased roughly 600,000 b/d. All of the net growth came from emerging economies in Asia, South & Central America, and the Middle East, offsetting declines in Europe and North America. Chart #8
Chart #9
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U.S. NATURAL GAS
For the week ending Friday, August 17, 2012 as reported by the U.S. Energy Information Administration August 23, 2012 Chart #10
Net Injection / Withdrawal The implied net injection from working gas was 47 Bcf as of Friday, August 17th.
Storage
Working Gas in Underground Storage Compared with 5-Year Average
(see Chart #10)
Working natural gas in storage increased to 3,308 Bcf as of Friday, August 17th. This represents an implied net injection of 47 Bcf from the previous week. This week’s injection was 6 Bcf below the 5-year (2007-2011) average injection of 53 Bcf, and 19 Bcf below last year’s injection of 66 Bcf. Since April 27, injections of working natural gas into underground storage have fallen short of both year-ago levels and the 5-year average, although stocks remain well above historical levels. Inventories are currently 423 Bcf (14.7 percent) greater than last year at this time and 357 Bcf (12.1 percent) greater than the 5-year average.
Supply/Demand
Chart #11
Total Supply/Demand Balance (last 365 days)
(see Chart #11)
Total supply for the week was essentially unchanged, registering an overall increase of 0.2 percent, reflecting relatively flat dry gas production. Domestic weekly dry gas production rose 0.8 percent higher over the previous week’s volumes (and was 3.4 percent higher than the same period last year). Imports from Canada fell by 5.8 percent, as declines in shipments to the Northeast and Midwest offset a small increase in the West. For the week, imports from Canada stand close to year-ago volumes (up 0.5 percent). While liquefied natural gas (LNG) sendout rose 4.8 percent over last week, sendout volumes remain well below (36.7 percent) yearago levels. Total consumption for the report week registered an overall decrease, with lower power sector demand offsetting increases in residential/commercial and industrial sector demand. Domestic natural gas consumption declined by 5.1 percent from last week, driven by an 11.0 percent decrease in power sector consumption. Residential/commercial sector consumption finished the week up 4.5 percent, while industrial sector consumption rose relatively modestly (0.7 percent). Although down week-over-week, power sector consumption exceeded levels for the same week last year by 2.3 percent.
Natural Gas Spot Prices
(see Chart #12)
The Henry Hub day-ahead price registered a modest decrease for the week, dipping on Thursday and Friday before regaining ground on Monday and Tuesday, closing the week at $2.80 per MMBtu, down 0.7 percent. In the Northeast, cooler temperatures helped generate price decreases earlier this week, with a return to somewhat warmer temperatures boosting end-of-week prices in certain locations.
Temperatures
Chart #12
Natural Gas Spot Price (Henry Hub)
Chart #13
Average US Temperate (F)
(see Chart #13)
Temperatures during the storage report week were 0.7 degrees warmer than the 30-year normal temperature and 0.9 degrees warmer than the same period last year. Temperatures in the lower 48 States averaged 75.1 degrees, compared to 74.3 last year and the 30-year normal of 74.4. While overall temperatures were about a degree warmer than normal, temperatures varied somewhat across Census Divisions. The Pacific Census division in the West was particularly warm, averaging 7.0 degrees warmer than the 30-year normal. In the Midwest, temperatures in the West North Central and East North Central Census divisions were cool, averaging 4.0 and 3.9 degrees cooler, respectively, than the 30-year normal.
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GLOBAL NATURAL GAS
International Energy Outlook, September 2011 (updated annually) Chart #14
Change in World Natural Gas Production, 2008 - 2035 (see Chart #14)
Change in World Natural Gas Production
The largest production increases from 2008 to 2035 are projected for the Middle East (15.3 trillion cubic feet) and non-OECD Asia (11.8 trillion cubic feet). Iran and Qatar increase natural gas production by a combined 10.7 trillion cubic feet, or nearly one-fifth of the total increment in world gas production. A significant share of the increase is expected to come from a single offshore field, which is called North Field on the Qatari side and South Pars on the Iranian side.
(trillion cubic feet)
World Natural Gas Consumption, 2008 - 2035
(see Chart #15)
Natural gas is the world's fastest-growing fossil fuel, with consumption increasing at an average rate of 1.6 percent per year from 2008 to 2035. Growth in consumption occurs in every International Energy Outlook region and is most concentrated in non-OECD countries, where demand increases nearly three times as fast as in OECD countries.
Chart #15
World Natural Gas Consumption (trillion cubic feet)
BP Statistical Review of World Energy, June 2012 (Updated annually. Next update June 2013)
Natural Gas Production by Region (see Chart #16) World natural gas production increased by 3.1% in 2011. While the U.S. saw the largest national increase, the Middle East recorded the largest regional increment to production. Production growth in Russia and Turkmenistan was partly offset by a large decline in European production.
Natural Gas Consumption by Region (see Chart #17)
World natural gas consumption increased by 2.2%, with below-average growth in all regions but North America. The European Union experienced the sharpest decline in natural gas consumption (-9.9%) on record.
Chart #16
Chart #17
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This Week’s Headlines & Quotes (August 17 - August 23) S Despite Big Oil Finds, Petrobras Output Flatlines - Oil Daily (August 23) - Brazil’s state-controlled Petrobras has announced yet another big oil find in the country’s prolific subsalt play. However, the string of world-class discoveries, which began about six years ago, has not given the company's oil production much of a boost so far. S Total Sees Global Output Capacities Up 45 MMbpd by 2025-30 - Rigzone (August 22) - France’s Total SA expects global hydrocarbon production capacities to increase by 45 million barrels a day by 2025-30, notably in oil sands and deep offshore fields, French daily Le Monde reported, citing two Total senior executives. Part of the additional 45 million barrels per day capacities would come from oil sands providing 7 mb/d, Iraqi oil fields with 5 mb/d, Brazil's very deep offshore fields providing 3 to 4 mb/d, compact reservoirs in Northern America such as shale oil fields with 2 to 4 mb/d and fields being explored in Africa, Guiana, and the Arctic North, representing a potential of 2 to 5 mb/d of additional oil production. S Statoil Plans to Further Develop Gullfaks South - Rigzone (August 22) - Norwegian oil major Statoil announced Wednesday that it plans to further develop the Gullfaks South field in the Norwegian North Sea. Along with its partner Petoro, Statoil will invested some $1.4 billion (NOK 8.5 billion) in two new subsea structures as well as six more wells. The firms believe that this will boost recovery by approximately 65 million barrels of oil equivalent. S China's Oil Demand Rebounds, But Recovery Could Be Temporary - Energy Intelligence (August 21) - China's apparent oil demand rebounded in July, accelerating to its fastest rate in five months as falling product prices boosted domestic demand. But with the government having raised product prices again in August, this rebound may not continue. Crude imports rose again last month, but at a significantly slower clip, a signal that China could be cutting back its crude purchases for its strategic petroleum reserve. S Shell Plans At Least $1 Billion Per Year China Shale Gas Investment - Reuters (August 21) - Royal Dutch Shell plans to spend at least $1 billion a year exploiting China's potentially vast resources of shale gas, the firm's top China executive said, part of an aggressive strategy to expand in the world's biggest energy market. Shell in March secured China's first product sharing contract for shale gas, hoping that getting in early will allow it to be a big beneficiary from the sort of boom in shale that has transformed the U.S. energy market. Asked if the firm remained committed to a plan to invest $1 billion a year in China's shale gas over the coming few years, Lim Haw Kuang, Shell's top China executive, said in an interview: "Yes, yes and yes.” “If there has been an adjustment to that pledge, it could only be an upward revision," added Lim. China is estimated to hold the world's largest reserves of unconventional gas. S Oil Market Surplus Hinges on OPEC Cuts - Petroleum Intelligence Weekly (August 20) - Oil markets are likely to remain in surplus in the second half of this year, but the precise extent of that surplus will be determined by whatever cuts in production are made by Saudi Arabia and its OPEC allies in the Mideast Gulf. With oil inventory levels having seemingly dropped out of the equation, there are arguably three general criteria for the timing and magnitude of any cuts -- demand from refiners, crude prices and the state of the global economy, probably in that order. S
Saudi Arabia Oil Output Tops Russia in June - Bloomberg (August 19) - Saudi Arabia pumped crude at the highest level in more than three decades in June, overtaking Russia as the world’s largest oil producer during the month, according to the Joint Organization Data Initiative. The desert kingdom’s output rose 3 percent to 10.1 million barrels a day in June from May as it exported the most in a month since November 2005, according to statistics the government submitted to OPEC, according to the initiative known as JODI. Russia pumped 9.9 million barrels a day of crude oil in the same month.
S European Governments Ramp Up Strategic Oil Reserves - Reuters (August 17) - European governments are on a buying spree for crude oil and refined products, three agencies in control of strategic reserves said on Friday, in a drive to meet new European Union rules designed to mitigate the impact of a supply crisis. Belgium and the Netherlands have issued tenders to import a total of around 250,000 tonnes of diesel and gasoline for delivery in September and October, their agencies said. France's agency also said it bought around 267,000 tonnes of diesel in a June tender. The tenders are likely to support high fuel prices and could also help buoy Brent crude futures, already up nearly $10 since the start of August on Middle East tensions and limited North Sea supplies. State inventories have come into focus as speculation mounts that the United States and other Western governments may release stocks to dampen prices and prevent high energy costs from undermining sanctions against Iran. S Venezuela's Perla Field to Hit 300 MMcf/d by 2014 - Dow Jones Newswires (August 17) - Venezuelan state oil company Petroleos de Venezuela, or PdVSA, said Wednesday that it expects to reach its goal of producing 300 million cubic feet of natural gas a day at its large offshore Perla field by the fourth quarter of 2013. Located in Venezuela's Cardon IV bloc, Perla holds 16.3 trillion cubic feet of natural gas and is considered one of Latin America's largest fields. PdVSA signed a contract in December with Italy's Eni Spa and Spain's Repsol to develop the field. Production is seen rising fourfold to 1.2 billion cubic feet a day by 2019, which will be maintained until the end of the contract in 2036. S
Pemex Targets Output of 2.8 Million b/d in 2016 - Oil Daily (August 17) - Mexico’s state-owned Pemex aims to lift its crude oil production to 2.82 million barrels per day by 2016, an increase of 11% from current production of around 2.54 million b/d. It also is seeking to raise natural gas production by 4% over the same period.
S Crude Oil Prices Peaked Early in 2012 - EIA (August 21) - Crude oil prices rose during the first quarter of 2012 as concerns about possible international supply disruptions pushed up petroleum prices. Prices then fell during the second quarter before turning sharply upward at the start of the third quarter. 5/
S Eagle Ford Natural Gas is Headed for Mexico – Major Pipeline Expansions Planned - Eagle Ford Sale website (August 21) Eagle Ford natural gas pipeline expansions are headed for Mexico. An $8 billion expansion of Mexican natural gas infrastructure is being pushed forward. The early focus is on industrial cities in the northern half of the country where a $3 billion expansion is planned. “Mexico has a unique opportunity, we have access to the world’s cheapest gas,” Mexican Energy Minister Jordy Herrera said of the U.S. supply in announcing the new pipeline plans earlier this year. “This is competitiveness for the industry of our country.” U.S. companies are lining up to help supply and construct the proposed Mexican infrastructure. Expect to see companies like Kinder Morgan reverse the direction of some of its current natural gas flows and expand pipelines into Mexico. The Eagle Ford currently produces almost 3 bcf/d, but that number could almost triple over the next five years. S Permian Basin Oil Output To Jump 60 Per Cent By 2016 - Reuters (August 20) - Crude oil production in the Permian basin -- a carbonate and sandstone prospect in Texas and New Mexico -- will rise by some 60 per cent to reach at least 1.82 million bbls per day by the end of 2016, energy consultancy Bentek said last week. Output will surpass existing pipeline capacity by early next year, Bentek added, while noting some one million bbls per day of new takeaway capacity is slated to come online by the end of 2014. The Permian's oil output has grown consistently since May 2011, some of which is from shale oil prospects, and the basin will host more oil drillers in the next five years, the Colorado-based consultancy said. The basin is among the largest and most active oil producing reserves in the United States and oil companies are revisiting old fields, armed with new technology such as horizontal drilling and hydraulic fracturing. S Qatar Petroleum-Exxon Venture Requests Permit to Export U.S. Natural Gas - The Wall Street Journal (August 17) Golden Pass Products LLC, a joint venture between Exxon Mobil Corp. and Qatar Petroleum, is asking federal authorities for permission to export large quantities of liquefied natural gas made in the U.S. from an existing terminal near the TexasLouisiana border, an executive said Friday. If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built near Port Arthur, Texas, to import natural gas into a facility capable of exporting 15.6 million tons of LNG per year, or approximately two billion cubic feet per day. The U.S. produces about 72 billion cubic feet of natural gas a day.
S Alberta Land Sale Produces $20.79 Million - Nickles Daily Oil Bulletin (August 23) - The Alberta government took in $20.79 million at its second of two land auctions held this month, the second lowest bonus total so far this calendar year at a single sale. This brings the year-to-date total to $806.91 million on 2.13 million hectares at an average price of $378.13. The Aug. 22 sale saw 85,767 hectares exchanging hands at an average price of $242.35. The lowest bonus total of the year so far was $17.66 million at the June 13 auction. S Athasbasca Hits Production Milestone with 500MM Bbls - Rigzone (August 20) - Shell, as operator of the Athabasca Oil Sands Project, on Monday announced that its oil sands operations have achieved the production milestone of 500 million barrels since production began in 2003. "This is a tremendous achievement for Shell's oils sands business," said John Abbott, Executive Vice President, Heavy Oil. "This milestone is the result of the hard work and dedication of many thousands of employees and contractors. The oil sands are a secure, reliable source of energy for North America and an economic engine which drives employment, training and business development across Canada and beyond.” S In Situ Oilsands Output Sets Record - Calgary Herald (August 17) - Non-mined bitumen production from Alberta’s oilsands regions hit a record high of 1.037 million barrels per day in June, according to a report from FirstEnergy Capital Corp. The monthly update from the Calgary investment firm notes that output — which is primarily from thermal projects but also includes cold-flow wells — rose nearly 190,000 bpd from the corresponding month in 2011 and was up 54,000 bpd from May (April’s output was also above one million bpd). Most of Alberta’s oilsands production comes from mining but thermal in situ production is expected to catch and outstrip mining by 2015, according to forecasts from the Canadian Association of Petroleum Producers. S Canada Leading Global M&A Market - Energy Intelligence (August 17) - Canada has stolen the limelight in the global M&A market, accounting for 28% of the US$62 billion worth of upstream deals announced in the first half of this year, a country record. And that doesn’t even include CNOOC’s landmark US$17.9 billion bid for Canadian Nexen. While depressed North American gas prices weigh on developments aimed at the domestic market, there has been a surge of interest in potential LNG export projects. Gas-hungry firms from Asia have led the buying so far, but integrated majors are looking to enter the fray. S B.C.'s August Land Sale Draws $8.34 Million - Nickles Daily Oil Bulletin (August 17) - After a stronger start to the year after a slow 2011, British Columbia has now fallen off of last year's pace as a result of weaker land sale revenue over the past five months. Over the first three months of 2012, the province attracted $80.68 million in bonus bids. But from April to August, roughly $15.19 million has come into provincial coffers. The August sale this week brought in $8.34 million on 15,157 hectares at an average of $549.95. Year-to-date, B.C. has collected $95.88 million in bonus revenue on 87,220 hectares at an average of $1,099.27.
For more information on the oil & gas industry please visit our website at: www.qwestfunds.com This report is made available by Qwest Investment Management Corp. ("Qwest") for information purposes only. This information is not intended to be, and should not to be construed, as investment advice. In addition, this information is not to be construed as an offer to sell, or solicitation for, or an offer to buy, any securities. The information is intended for residents of Canada only. Qwest has taken steps to ensure that the contents have been compiled or derived from sources believed reliable and contain information and opinions, which are accurate and complete. However, Qwest makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein and accepts no liability whatsoever for any loss arising from any use of or reliance on this information. Qwest is under no obligation to update or keep current the information contained herein.
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THE
WEEK
OF
AUGUST 17 - AUGUST 23, 2012
U.S. CRUDE OIL Chart #1
For the week ending Friday, August 17, 2012 as reported by the U.S. Energy Information Administration August 22, 2012
Crude Oil Inventories
U.S. Crude Oil Stocks
(see Chart #1)
Crude oil inventories decreased by 5.4 million from the previous week. At 360.7 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year.
Crude Oil Imports Crude oil imports averaged 8.2 million barrels per day last week, down by 510 thousand barrels per day from the previous week. Over the last 4 weeks crude oil imports have averaged nearly 8.5 million barrels per day, 593 thousand barrels per day below the same four-week period last year. U.S. Crude Oil Domestic Production
Motor Gasoline Inventories Motor gasoline inventories decreased by 1.0 million from last week and are in the lower half of the average range.
Motor Gasoline Product Supplied Over the last 4 weeks, motor gasoline product supplied has averaged 9.0 million barrels per day, down by 1.7% from the same period last year.
Distillate Fuel Inventories Distillate fuel inventories increased by 1.0 million barrels last week and are below the lower limit of the average range for this time of year. Chart #2
Distillate Fuel Product Supplied
U.S. Liquid Fuels Consumption
Distillate fuel product supplied has averaged about 3.7 million barrels per day over the last four weeks, down by 4.4% from the same period last year.
Total Products Supplied Over the last four weeks, total products supplied have averaged 19.4 million barrels per day, down by 2.2% compared to a similar period last year.
Liquid Fuels Consumption
(see Chart #2)
The EIA’s Short-Term Energy Outlook chart: “U.S. Liquid Fuels Consumption” is updated monthly (next release September 11, 2012). Chart #3
Refineries U.S. refineries operated at 91.2% of their operable capacity last week.
West Texas Intermediate (WTI) Crude Oil Price
Daily Crude Oil & Petroleum Product Spot Prices January 2011 - Present
(see Chart #3)
WTI crude oil price was $96.00 per barrel on August 17, $3.06 more than last week’s price and $13.67 above a year ago.
Retail Gasoline Price The national average retail regular gasoline price increased to $3.744 per gallon on August 20, $0.023 per gallon more than last week and $0.163 above a year ago.
1/
GLOBAL CRUDE OIL
For the month of August 2012, as reported in the International Energy Agency’s (IEA) Oil Market Report (charts delayed by a month).
Global Oil Supply
(see Chart #4 and #5)
Global oil supply fell by 0.5 mb/d month on month (m-o-m) to 90.4 mb/d in June, with non-OPEC liquids production accounting for 75% of the decline. Compared to a year ago, global oil production stood 2.0 mb/d higher, all of which stemmed from increasing output of OPEC crude and NGLs.
Chart #5
Chart #4
OPEC Crude Oil Supply OPEC crude oil supplies fell by 0.1 mb/d in June to 31.8 mb/d. Angola and Iran posted the largest declines and offset near-record production of 10.15 mb/d from Saudi Arabia. Preliminary estimates for imports of Iranian oil are stand at 1.9 mb/d for June, around 0.5 mb/d below 4Q11 levels.
Global Oil Product Demand
(see Chart #6 and #7)
This month sees the roll-out of our detailed global demand forecast to 2013, and although an acceleration in growth is foreseen, the predicted pace of expansion remains relatively muted at 1.0 mb/d. Global oil product demand will average 90.9 mb/d for 2013, with non-OECD demand exceeding that for the OECD for the first time ever in 2Q13, a trend that is unlikely to be reversed. Non-OECD demand is forecast at 45.7 mb/d in 2013, 0.6 mb/d more than OECD demand.
Chart #6
Chart #7
BP Statistical Review of World Energy, June 2012 (Updated annually. Next update June 2013)
Oil Production by Region
(see Chart #8)
World oil production increased by 1.1 million b/d in 2011, with OPEC accounting for nearly all of the increase despite a 1.2 million b/d reduction in Libyan production. The U.S. had the largest growth in non-OPEC supply for a third consecutive year.
Oil Consumption by Region
(see Chart #9)
World oil consumption increased roughly 600,000 b/d. All of the net growth came from emerging economies in Asia, South & Central America, and the Middle East, offsetting declines in Europe and North America. Chart #8
Chart #9
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U.S. NATURAL GAS
For the week ending Friday, August 17, 2012 as reported by the U.S. Energy Information Administration August 23, 2012 Chart #10
Net Injection / Withdrawal The implied net injection from working gas was 47 Bcf as of Friday, August 17th.
Storage
Working Gas in Underground Storage Compared with 5-Year Average
(see Chart #10)
Working natural gas in storage increased to 3,308 Bcf as of Friday, August 17th. This represents an implied net injection of 47 Bcf from the previous week. This week’s injection was 6 Bcf below the 5-year (2007-2011) average injection of 53 Bcf, and 19 Bcf below last year’s injection of 66 Bcf. Since April 27, injections of working natural gas into underground storage have fallen short of both year-ago levels and the 5-year average, although stocks remain well above historical levels. Inventories are currently 423 Bcf (14.7 percent) greater than last year at this time and 357 Bcf (12.1 percent) greater than the 5-year average.
Supply/Demand
Chart #11
Total Supply/Demand Balance (last 365 days)
(see Chart #11)
Total supply for the week was essentially unchanged, registering an overall increase of 0.2 percent, reflecting relatively flat dry gas production. Domestic weekly dry gas production rose 0.8 percent higher over the previous week’s volumes (and was 3.4 percent higher than the same period last year). Imports from Canada fell by 5.8 percent, as declines in shipments to the Northeast and Midwest offset a small increase in the West. For the week, imports from Canada stand close to year-ago volumes (up 0.5 percent). While liquefied natural gas (LNG) sendout rose 4.8 percent over last week, sendout volumes remain well below (36.7 percent) yearago levels. Total consumption for the report week registered an overall decrease, with lower power sector demand offsetting increases in residential/commercial and industrial sector demand. Domestic natural gas consumption declined by 5.1 percent from last week, driven by an 11.0 percent decrease in power sector consumption. Residential/commercial sector consumption finished the week up 4.5 percent, while industrial sector consumption rose relatively modestly (0.7 percent). Although down week-over-week, power sector consumption exceeded levels for the same week last year by 2.3 percent.
Natural Gas Spot Prices
(see Chart #12)
The Henry Hub day-ahead price registered a modest decrease for the week, dipping on Thursday and Friday before regaining ground on Monday and Tuesday, closing the week at $2.80 per MMBtu, down 0.7 percent. In the Northeast, cooler temperatures helped generate price decreases earlier this week, with a return to somewhat warmer temperatures boosting end-of-week prices in certain locations.
Temperatures
Chart #12
Natural Gas Spot Price (Henry Hub)
Chart #13
Average US Temperate (F)
(see Chart #13)
Temperatures during the storage report week were 0.7 degrees warmer than the 30-year normal temperature and 0.9 degrees warmer than the same period last year. Temperatures in the lower 48 States averaged 75.1 degrees, compared to 74.3 last year and the 30-year normal of 74.4. While overall temperatures were about a degree warmer than normal, temperatures varied somewhat across Census Divisions. The Pacific Census division in the West was particularly warm, averaging 7.0 degrees warmer than the 30-year normal. In the Midwest, temperatures in the West North Central and East North Central Census divisions were cool, averaging 4.0 and 3.9 degrees cooler, respectively, than the 30-year normal.
3/
GLOBAL NATURAL GAS
International Energy Outlook, September 2011 (updated annually) Chart #14
Change in World Natural Gas Production, 2008 - 2035 (see Chart #14)
Change in World Natural Gas Production
The largest production increases from 2008 to 2035 are projected for the Middle East (15.3 trillion cubic feet) and non-OECD Asia (11.8 trillion cubic feet). Iran and Qatar increase natural gas production by a combined 10.7 trillion cubic feet, or nearly one-fifth of the total increment in world gas production. A significant share of the increase is expected to come from a single offshore field, which is called North Field on the Qatari side and South Pars on the Iranian side.
(trillion cubic feet)
World Natural Gas Consumption, 2008 - 2035
(see Chart #15)
Natural gas is the world's fastest-growing fossil fuel, with consumption increasing at an average rate of 1.6 percent per year from 2008 to 2035. Growth in consumption occurs in every International Energy Outlook region and is most concentrated in non-OECD countries, where demand increases nearly three times as fast as in OECD countries.
Chart #15
World Natural Gas Consumption (trillion cubic feet)
BP Statistical Review of World Energy, June 2012 (Updated annually. Next update June 2013)
Natural Gas Production by Region (see Chart #16) World natural gas production increased by 3.1% in 2011. While the U.S. saw the largest national increase, the Middle East recorded the largest regional increment to production. Production growth in Russia and Turkmenistan was partly offset by a large decline in European production.
Natural Gas Consumption by Region (see Chart #17)
World natural gas consumption increased by 2.2%, with below-average growth in all regions but North America. The European Union experienced the sharpest decline in natural gas consumption (-9.9%) on record.
Chart #16
Chart #17
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This Week’s Headlines & Quotes (August 17 - August 23) S Despite Big Oil Finds, Petrobras Output Flatlines - Oil Daily (August 23) - Brazil’s state-controlled Petrobras has announced yet another big oil find in the country’s prolific subsalt play. However, the string of world-class discoveries, which began about six years ago, has not given the company's oil production much of a boost so far. S Total Sees Global Output Capacities Up 45 MMbpd by 2025-30 - Rigzone (August 22) - France’s Total SA expects global hydrocarbon production capacities to increase by 45 million barrels a day by 2025-30, notably in oil sands and deep offshore fields, French daily Le Monde reported, citing two Total senior executives. Part of the additional 45 million barrels per day capacities would come from oil sands providing 7 mb/d, Iraqi oil fields with 5 mb/d, Brazil's very deep offshore fields providing 3 to 4 mb/d, compact reservoirs in Northern America such as shale oil fields with 2 to 4 mb/d and fields being explored in Africa, Guiana, and the Arctic North, representing a potential of 2 to 5 mb/d of additional oil production. S Statoil Plans to Further Develop Gullfaks South - Rigzone (August 22) - Norwegian oil major Statoil announced Wednesday that it plans to further develop the Gullfaks South field in the Norwegian North Sea. Along with its partner Petoro, Statoil will invested some $1.4 billion (NOK 8.5 billion) in two new subsea structures as well as six more wells. The firms believe that this will boost recovery by approximately 65 million barrels of oil equivalent. S China's Oil Demand Rebounds, But Recovery Could Be Temporary - Energy Intelligence (August 21) - China's apparent oil demand rebounded in July, accelerating to its fastest rate in five months as falling product prices boosted domestic demand. But with the government having raised product prices again in August, this rebound may not continue. Crude imports rose again last month, but at a significantly slower clip, a signal that China could be cutting back its crude purchases for its strategic petroleum reserve. S Shell Plans At Least $1 Billion Per Year China Shale Gas Investment - Reuters (August 21) - Royal Dutch Shell plans to spend at least $1 billion a year exploiting China's potentially vast resources of shale gas, the firm's top China executive said, part of an aggressive strategy to expand in the world's biggest energy market. Shell in March secured China's first product sharing contract for shale gas, hoping that getting in early will allow it to be a big beneficiary from the sort of boom in shale that has transformed the U.S. energy market. Asked if the firm remained committed to a plan to invest $1 billion a year in China's shale gas over the coming few years, Lim Haw Kuang, Shell's top China executive, said in an interview: "Yes, yes and yes.” “If there has been an adjustment to that pledge, it could only be an upward revision," added Lim. China is estimated to hold the world's largest reserves of unconventional gas. S Oil Market Surplus Hinges on OPEC Cuts - Petroleum Intelligence Weekly (August 20) - Oil markets are likely to remain in surplus in the second half of this year, but the precise extent of that surplus will be determined by whatever cuts in production are made by Saudi Arabia and its OPEC allies in the Mideast Gulf. With oil inventory levels having seemingly dropped out of the equation, there are arguably three general criteria for the timing and magnitude of any cuts -- demand from refiners, crude prices and the state of the global economy, probably in that order. S
Saudi Arabia Oil Output Tops Russia in June - Bloomberg (August 19) - Saudi Arabia pumped crude at the highest level in more than three decades in June, overtaking Russia as the world’s largest oil producer during the month, according to the Joint Organization Data Initiative. The desert kingdom’s output rose 3 percent to 10.1 million barrels a day in June from May as it exported the most in a month since November 2005, according to statistics the government submitted to OPEC, according to the initiative known as JODI. Russia pumped 9.9 million barrels a day of crude oil in the same month.
S European Governments Ramp Up Strategic Oil Reserves - Reuters (August 17) - European governments are on a buying spree for crude oil and refined products, three agencies in control of strategic reserves said on Friday, in a drive to meet new European Union rules designed to mitigate the impact of a supply crisis. Belgium and the Netherlands have issued tenders to import a total of around 250,000 tonnes of diesel and gasoline for delivery in September and October, their agencies said. France's agency also said it bought around 267,000 tonnes of diesel in a June tender. The tenders are likely to support high fuel prices and could also help buoy Brent crude futures, already up nearly $10 since the start of August on Middle East tensions and limited North Sea supplies. State inventories have come into focus as speculation mounts that the United States and other Western governments may release stocks to dampen prices and prevent high energy costs from undermining sanctions against Iran. S Venezuela's Perla Field to Hit 300 MMcf/d by 2014 - Dow Jones Newswires (August 17) - Venezuelan state oil company Petroleos de Venezuela, or PdVSA, said Wednesday that it expects to reach its goal of producing 300 million cubic feet of natural gas a day at its large offshore Perla field by the fourth quarter of 2013. Located in Venezuela's Cardon IV bloc, Perla holds 16.3 trillion cubic feet of natural gas and is considered one of Latin America's largest fields. PdVSA signed a contract in December with Italy's Eni Spa and Spain's Repsol to develop the field. Production is seen rising fourfold to 1.2 billion cubic feet a day by 2019, which will be maintained until the end of the contract in 2036. S
Pemex Targets Output of 2.8 Million b/d in 2016 - Oil Daily (August 17) - Mexico’s state-owned Pemex aims to lift its crude oil production to 2.82 million barrels per day by 2016, an increase of 11% from current production of around 2.54 million b/d. It also is seeking to raise natural gas production by 4% over the same period.
S Crude Oil Prices Peaked Early in 2012 - EIA (August 21) - Crude oil prices rose during the first quarter of 2012 as concerns about possible international supply disruptions pushed up petroleum prices. Prices then fell during the second quarter before turning sharply upward at the start of the third quarter. 5/
S Eagle Ford Natural Gas is Headed for Mexico – Major Pipeline Expansions Planned - Eagle Ford Sale website (August 21) Eagle Ford natural gas pipeline expansions are headed for Mexico. An $8 billion expansion of Mexican natural gas infrastructure is being pushed forward. The early focus is on industrial cities in the northern half of the country where a $3 billion expansion is planned. “Mexico has a unique opportunity, we have access to the world’s cheapest gas,” Mexican Energy Minister Jordy Herrera said of the U.S. supply in announcing the new pipeline plans earlier this year. “This is competitiveness for the industry of our country.” U.S. companies are lining up to help supply and construct the proposed Mexican infrastructure. Expect to see companies like Kinder Morgan reverse the direction of some of its current natural gas flows and expand pipelines into Mexico. The Eagle Ford currently produces almost 3 bcf/d, but that number could almost triple over the next five years. S Permian Basin Oil Output To Jump 60 Per Cent By 2016 - Reuters (August 20) - Crude oil production in the Permian basin -- a carbonate and sandstone prospect in Texas and New Mexico -- will rise by some 60 per cent to reach at least 1.82 million bbls per day by the end of 2016, energy consultancy Bentek said last week. Output will surpass existing pipeline capacity by early next year, Bentek added, while noting some one million bbls per day of new takeaway capacity is slated to come online by the end of 2014. The Permian's oil output has grown consistently since May 2011, some of which is from shale oil prospects, and the basin will host more oil drillers in the next five years, the Colorado-based consultancy said. The basin is among the largest and most active oil producing reserves in the United States and oil companies are revisiting old fields, armed with new technology such as horizontal drilling and hydraulic fracturing. S Qatar Petroleum-Exxon Venture Requests Permit to Export U.S. Natural Gas - The Wall Street Journal (August 17) Golden Pass Products LLC, a joint venture between Exxon Mobil Corp. and Qatar Petroleum, is asking federal authorities for permission to export large quantities of liquefied natural gas made in the U.S. from an existing terminal near the TexasLouisiana border, an executive said Friday. If permission is granted, Exxon, the biggest natural-gas producer in the country, and its partner would spend $10 billion converting a recently finished terminal built near Port Arthur, Texas, to import natural gas into a facility capable of exporting 15.6 million tons of LNG per year, or approximately two billion cubic feet per day. The U.S. produces about 72 billion cubic feet of natural gas a day.
S Alberta Land Sale Produces $20.79 Million - Nickles Daily Oil Bulletin (August 23) - The Alberta government took in $20.79 million at its second of two land auctions held this month, the second lowest bonus total so far this calendar year at a single sale. This brings the year-to-date total to $806.91 million on 2.13 million hectares at an average price of $378.13. The Aug. 22 sale saw 85,767 hectares exchanging hands at an average price of $242.35. The lowest bonus total of the year so far was $17.66 million at the June 13 auction. S Athasbasca Hits Production Milestone with 500MM Bbls - Rigzone (August 20) - Shell, as operator of the Athabasca Oil Sands Project, on Monday announced that its oil sands operations have achieved the production milestone of 500 million barrels since production began in 2003. "This is a tremendous achievement for Shell's oils sands business," said John Abbott, Executive Vice President, Heavy Oil. "This milestone is the result of the hard work and dedication of many thousands of employees and contractors. The oil sands are a secure, reliable source of energy for North America and an economic engine which drives employment, training and business development across Canada and beyond.” S In Situ Oilsands Output Sets Record - Calgary Herald (August 17) - Non-mined bitumen production from Alberta’s oilsands regions hit a record high of 1.037 million barrels per day in June, according to a report from FirstEnergy Capital Corp. The monthly update from the Calgary investment firm notes that output — which is primarily from thermal projects but also includes cold-flow wells — rose nearly 190,000 bpd from the corresponding month in 2011 and was up 54,000 bpd from May (April’s output was also above one million bpd). Most of Alberta’s oilsands production comes from mining but thermal in situ production is expected to catch and outstrip mining by 2015, according to forecasts from the Canadian Association of Petroleum Producers. S Canada Leading Global M&A Market - Energy Intelligence (August 17) - Canada has stolen the limelight in the global M&A market, accounting for 28% of the US$62 billion worth of upstream deals announced in the first half of this year, a country record. And that doesn’t even include CNOOC’s landmark US$17.9 billion bid for Canadian Nexen. While depressed North American gas prices weigh on developments aimed at the domestic market, there has been a surge of interest in potential LNG export projects. Gas-hungry firms from Asia have led the buying so far, but integrated majors are looking to enter the fray. S B.C.'s August Land Sale Draws $8.34 Million - Nickles Daily Oil Bulletin (August 17) - After a stronger start to the year after a slow 2011, British Columbia has now fallen off of last year's pace as a result of weaker land sale revenue over the past five months. Over the first three months of 2012, the province attracted $80.68 million in bonus bids. But from April to August, roughly $15.19 million has come into provincial coffers. The August sale this week brought in $8.34 million on 15,157 hectares at an average of $549.95. Year-to-date, B.C. has collected $95.88 million in bonus revenue on 87,220 hectares at an average of $1,099.27.
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