[Synapsid]

ROCKMAN,
One other point:

"...and Washington State has been shipping oil out of its ports for decades..."

No oil is shipped out of Washington ports that I know of, only refined products. The proposals for crude-export terminals at Grays Harbor and Longview are the subjects of opposition that I mentioned in my first post.

[Keith_McClary]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')he only purpose of this thread is to point out the evolution of the movement and control dynamics of oil/NG. And if someone thinks a serious transformation of these dynamics isn’t well under way they aren’t paying very close attention to the world we’re living in IMHO.

[ROCKMAN]

Syn - I'm pretty sure you're correct. Sometimes I slip back and forth between "oil" and "product'." But that also seems to be the angle they're pushing to expand shipping more hydrocarbons out of the west coast: "It ain't oil...its refined products which won't be as damaging is spilled". You know: kinda like just being a little pregnant. LOL. That’s a big push going on in Canada right now.

Keith - I guess yes...much faster transitioning these days. A combination of advanced communications, transportation, globalization and financial leverage. Control is probably a big factor. More precisely a lack of control by a single minded power. Much like the Texas Rail Road Commission that had complete control over the price of oil about a half century ago. Most folks don't know that the TRRC had absolute control of how much oil was produced in Texas during any given month through their "allowable law". If the price of oil was getting too low they would order every well in Texas to be reduced X% next month. And since Texas was THE oil producer on the planet at that time the TRRC essentially set the price. IOW they were a much more effective cartel then OPEC: it had only one member...the TRRC. Thus no cheaters.

BTW the allowable law is still on the books and enforceable in the eyes of Texas. Today every month the TRRC commissioners vote on the allowable. But the allowable has been set at 100% since the early 70’s. But if for any reason they wanted to reduce the oil coming out of the ground in Texas by 50% they only have to so vote. Can’t imagine such circumstances but I imagine the feds would have something to say. LOL

[ROCKMAN]

So a future sift in the dynamics of NG distribution in North America with increased exports to Asia. And how soon will Canadian oil/refined products follow?

Reuters - Canadian regulators approved a 25-year liquefied natural gas export license on Wednesday for the Triton LNG project backed by AltaGas Ltd and Japan's Idemitsu Kosan Co, the latest in a number of planned liquefaction proposals for Canada's West Coast to receive the clearance. The National Energy Board said the Triton Project has been approved to liquefy and ship about 320 million cubic feet a day from a planned floating LNG facility whose site has not yet been chosen. The approval is the latest for the nascent industry, following applications from other projects such as the Kitimat LNG plant planned by Chevron Corp and Apache Corp. The projects are looking to take gas from Western Canada's massive shale fields to high-paying Asian markets. Eight planned LNG facilities have now been granted export licenses.

[ROCKMAN]

An odd bit of unintended consequences of the shift in oil transport dynamics via rail:

Reuters - Increasing use of railroads to ship crude oil could disrupt fertilizer cargo this spring as Midwest farmers prepare for planting, U.S. agriculture leaders warn, even as one railroad said on Monday it will take steps to ensure timely deliveries. The planting season is nearly at hand in states such as the Dakotas and Minnesota, where soybean, wheat and corn growers will lay millions of tonnes of fertilizers like nitrogen and potash that mostly arrive by train. Those supplies are not stockpiled near the fields and the farmers rely instead on steady deliveries by rail. "Since we don't store fertilizer, the next very few weeks are incredibly important for South Dakota farmers," said state Agriculture Secretary Lucas Lentsch.

But fertilizer cargo is being waylaid as railroads are clogged by trains carrying crude and other freight and that could ultimately jeopardize the fall crop, farmers have warned lawmakers and other officials. "If rails are too congested for fertilizer in the weeks ahead, the problem will solve itself because there won't be anything to harvest in the fall," said Dave Andresen of Full Circle Ag, a farm services company in South Dakota. BNSF Railway Co said on Monday it had assigned more locomotives and train crews to expedite fertilizer deliveries so nutrients can arrive at delivery points on time.

Supply lines have been snarled in part by clearing grain bins of the remainder of last year's crop and recovering from harsh winter weather. Barges ferrying dry fertilizer on the Mississippi River and into Minnesota have found some waterways frozen over for longer than normal, Greseth said. "The ice has some deliveries running a week, 10 days late," he said, but an increase in oil-by-rail traffic has also weighed on the train network.

Last week, farmers beseeched federal officials to make sure rail operators such as BNSF and Canadian Pacific Railway Co were giving them enough access to the tracks.The Surface Transportation Board, a regulatory agency that arbitrates rail disputes, has heard from farmers across the upper Midwest that a shortage of rail cars and delivery delays were endangering their livelihoods. BNSF executives have said service will improve in the years ahead along with investment and an expected uptick in farm, crude oil and other commodity shipments.

Too bad they can't ship fertilizer by pipeline like they can do oil

[ROCKMAN]

So why ship Eagle Ford production to Canada and not CA? A few twists to the dynamics of the story...especially why a Dem senator from La. doesn't like the idea:

Will Texas Ship Crude to California? - Until now, a U.S. policy, the Jones Act, made domestic shipping more expensive, as California imported oil from the Middle East, Ecuador and Alaska’s North Slope. If a shortage of qualifying ships can be overcome, Texas crude could become affordable on the West Coast as the highest domestic output creates a surplus of light oil while driving prices down. It always comes down to economics. Traditionally, Alaska had been the source for a huge chunk of California’s resources, and that’s still the case, but if you look at the economics, it’s significantly cheaper, both from the initial price per barrel, as well as transportation costs, to move Canadian Albertan crude or Texas crude.

With the lack of infrastructure from Texas to California, industry players are petitioning the government for a waiver of the Jones Act, a maritime act in place since the 30s, which demands for U.S.-flagged only vessels to transport goods between U.S. ports. This waiver would allow for domestic sweet crude to move economically between ports, displacing foreign sweet imports. So why does that La. Dem senator oppose the idea? Simple self-interest: she doesn't want La. refineries to have to compete with CA refineries for Texas oil.

A lack of Jones Act tankers is the problem. The EFS production, since it isn't being transported to a US port, doesn't require JA tankers. So how does the industry respond: The country’s second-largest natural gas pipeline operator, Kinder Morgan, recently announced a deal to buy APT New Intermediate Holdco LLC and State Class Tankers II LLC from private-equity firms Blackstone Group LP and Cerberus Capital Management LP for $962 million in cash. This deal will give Kinder Morgan five Jones Act tankers and four more under construction, with each able to carry 330,000 barrels, the company said in a Dec. 23 statement.

So since the gov't is protecting a very small segment of the American economy (domestic oil tankers which are selling at a premium... bet you wished you owned some of that stock, eh?) CA is forced to import foreign oil while we export EFS production to a foreign country. How does that scary line go: "We're from the government and are here to help you".

[Keith_McClary]

$this->bbcode_second_pass_quote('ROCKMAN', 'S')o since the gov't is protecting a very small segment of the American economy (domestic oil tankers which are selling at a premium... bet you wished you owned some of that stock, eh?) CA is forced to import foreign oil while we export EFS production to a foreign country. How does that scary line go: "We're from the government and are here to help you".

[ROCKMAN]

Adjustments to the dynamics of Russia NG exports were already underway prior to the Ukraine situation popping up. The current tensions are apparently expediting those changes:

Reuters - Turkey and Russia have agreed to raise the capacity of the Blue Stream pipeline {a relatively short subsea pipeline that “coincidentally” will begin rather close to the Crimean offshore NG reserves that Russia now has full access to}, which brings in Russian gas via the Black Sea, to 19 bcm annually from 16 bcm. Officials said Russia's recent annexation of Crimea had created a risk for Turkey, noting that 12.5 percent of its gas supplies pass through Ukraine via the Western pipeline.

Turkish gas demand has more than tripled since 2000 to almost 47 billion cubic meters, with further rises expected as both its economy and population grows. The country's total energy bill is around $60 billion annually. The issue of gas prices will be another priority for Turkey, which is dependent on imports for almost all its energy needs. "Following (today's) cabinet meeting, we will get together with Medvedev and discuss our request for a discount in person. The contracts we have so far provides a right to Turkey for a price revision," he said. Yildiz said Turkey will seek a new gas purchasing contract for Turkey's private sector at 'a reasonable price'. A potential re-routing of Russia's South Stream pipeline {a proposed route that will allow a large amount of Russian NG to bypass the Ukraine on the way to EU buyers} will also be discussed after Turkey said it was open to the possibility of letting the controversial conduit pass through its territory if Moscow made such a request. Yes: the same South Stream pipeline that NATO member Bulgaria complained about EU efforts to delay this line which would allow Bulgaria to completely bypass the Ukraine for its Russian NG supplies.

And another shift in the distribution dynamics of oil: Oil stored in tanks at Turkey's Mediterranean port of Ceyhan coming from Iraqi Kurdistan had reached 1.5 million barrels and that once the storage tanks were completely full, exports should start. "We would be in a position to send this oil to the world markets once the tanks are full. We can't keep this in tanks," said the Turkish govt. Turkey has allocated three storage tanks at the Ceyhan export outlet with a total capacity of 2.5 million barrels for oil coming from the Kurdistan Regional Government's pipeline, where oil started to flow last December. Baghdad and Arbil remain at loggerheads over the sharing and payment method for oil revenues, leaving the future of exports in limbo for now. A breakthrough before the Iraqi elections due on April 30 looks extremely unlikely, Turkish officials say. Separately, the Baghdad-controlled Iraq-Turkey pipeline, which has been pumping way below its 1.5 million bopd) of capacity, is in very bad shape due to persistent militant attacks.

{Hmm: Turkey wants a discount on Russian NG and the Kurds want to sell oil through a Turkish Black Sea port. The Black Sea which Russia dominates. Sounds like a basis for some reasonable horse trading IMHO}

[ROCKMAN]

I suppose it would appropriate to post stories about the dynamic movement of attitudes as well as fossil fuels. Now a significant demographic in New England is very much in favor of frac'ng. I imagine that if the POTUS finally approves the border crossing section of Keystone XL after the November elections he might justify it partially as being a good thing for union workers. And if it's good for the unions it must be good for the country:

Fracking Foes Cringe As Unions Back Drilling Boom: PITTSBURGH (AP) — After early complaints that out-of-state firms got the most jobs, some local construction trade workers and union members in Pennsylvania, Ohio and West Virginia say they're now benefiting in a big way from the Marcellus and Utica Shale oil and gas boom. That vocal support from blue-collar workers complicates efforts by environmentalists to limit the drilling process known as fracking. "The shale became a lifesaver and a lifeline for a lot of working families," said Dennis Martire, the mid-Atlantic regional manager for the Laborers' International Union, or LIUNA, which represents workers in numerous construction trades. Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours. Nationally, the Bureau of Labor Statistics says total employment in the nation's oil and gas industry rose from about 120,000 in early 2004 to about 208,000 last month. Less than 10 percent of full-time oil and gas industry workers are represented by unions. Alex Paris, head of a Pittsburgh-area contracting firm founded by his grandfather in 1928, said many of the jobs in the early years of the boom went to out-of-state workers, perhaps because the biggest drilling firms come from Texas and Oklahoma. Now there's been a shift to hiring local contractors that use union labor. "It has created more work for our business. There's jobs here for the first time in many, many years. Legitimate, good-paying jobs," Paris said of a region that was hit hard by the decline of the steel industry in the 1980s and '90s.

[Graeme]

I think Al Gore is right. The world is undergoing a moral crisis. Greed is good. Material positions are good. What if we all had a moral conscience and started looking after the Earth. Would we stop raping it? Stop moving oil from the Earth? Start installing solar panels? On the hand, maybe we actually prefer to go to literal hell.

Earth Day: Parents Concerned About The Planet For Future Generations – But Aren't Taking Action

$this->bbcode_second_pass_quote('', '2'),234 adults surveyed online between March 12 and 17, 2014 by The Harris Poll reveal that people are concerned about the environment - but may not be doing much about it.

And over 80 percent avoid labels like “green”, “conservationist” and “environmentalist”, which shows that environmental corporations have lost a lot of credibility among the public.

However, parents with younger kids are more concerned than childless people, though they are only slightly more likely to tell others to be more environmentally responsible. Women are more likely to indicate encouraging others to be more environmentally-friendly. 25% more women than men claim they are making more effort to be environmentally-conscious than they did a year ago.

Yet 67 percent of U.S. adults say the environment is more important than short term effects on the economy - apparently only when it is someone else's money, though. 80 percent say they look at green products but only 28 percent actually spend any extra. 15 percent will only buy green if it saves them money.

[ROCKMAN]

Interesting that one of the largest oil exporters on the planet is trying to add overseas reserves to their already huge domestic reserve base. So one oil exporter pushing their way into the production dynamics of another exporter. It’s almost as if they’ve been hanging around peakoil.com. LOL. Too bad the US govt has neither the interest nor ability to tie up foreign oil resources like the Chinese and Russian govts.

Reuters - Russian oil producer Rosneft may expand in the African countries of Angola and Mozambique. Rosneft said on Wednesday its delegation in Angola had discussed the possible participation of the Kremlin-controlled company in exploration and development projects there. The announcement came a day after Rosneft said it had also held talks over projects in Mozambique. Russia and Angola have recently strengthened ties. Russia's VTB Bank helped Angola raise $1 billion in 2012 in a private placement. Angola's ruling MPLA party was backed by the Soviet Union during a 27-year civil war which it won against U.S.-backed rebel group UNITA in 2002. {Hmm…the US backed the losers}. Long-serving President Jose Eduardo dos Santos studied in Moscow in the 1970s.

Rosneft declined to comment on why the company had increased its activity in the continent and particularly in Angola, Africa's biggest crude producer after Nigeria, which is seeking to raise output to 2 million bopd in 2015 from around 1.7 mbpd currently. On Wednesday, Rosneft said its delegation, headed by company vice-president Andrei Shishkin, flew to Angola earlier this week and met a number of officials, including oil minister Jose Maria Botelho de Vasconcelos and Francisco de Lemos Jose Maria, the head of state oil firm Sonangol.

[ROCKMAN]

Looks like the Russian are working seriously to shift the dynamics of NG sales from the EU to more friendly govts:

Reuters – The Yamal LNG project in Russia's Arctic has chosen Russian Sovkomflot, Japan's Mitsui OSK and Canada's Teekay LNG to build gas carriers worth $5 billion. The companies would build 16 LNG carriers. Russia's Novatek holds 60 percent in the $27 billion project. France's Total and Chinese company CNPC have 20 percent each. The project is slated to start producing gas in 2016 with a view to supplying 16.5 million tonnes of the tanker-shipped fuel in 2018. Novatek plans to ship its gas to Asia mostly via the Northern Sea Route as it brings estimated transportation costs down by two-thirds compared to the route via Europe.

[Keith_McClary]

Why Canada just pumps out cheap oil$this->bbcode_second_pass_quote('', '.')..
Refineries on the U.S. Gulf coast are running well below capacity as it is (capacity is at just under 18 million barrels per day, while demand sits at under 15 million) which makes the business case for a new, Canadian refinery even more flimsy. And gulf refineries are already calibrated to process Venezuelan oil, which is chemically very similar to Canadian oil.

"It’s a hugely complicated issue but at the moment, increasing Canadian refining capacity isn’t the best way to get top dollar for Canadian oil," Crowley says. "Pipelines make more sense."

Beyond the Gulf coast, Crowley notes that expanded pipeline access to the B.C. coast would allow shipping to Asia, where crude is very much in demand.

[ROCKMAN]

Keith - And as simplistic as it may sound perhaps it's important for some folks to understand that oil producers don't generate profits by refining oil...they just sell oil. And refineries don't make profits producing or shipping oil...they just refine it to create their cash flow. The producers will sell to whoever they net the biggest price from. Refiners will build/expand refineries if the can buy enough oil at the right price for a long enough period.

If refineries aren't building/expanding capacity in Canada then it's because there's an insufficient profit potential in their estimation. Not really anymore complicated then that.

[ROCKMAN]

This story could have been stick under a variety of threads. But let's focus on whose NG might be exported...like maybe New England consumers. A side note: once this long term (20 - 30 years) or signed they can be very difficult to cancel even by the US gov't...would violate international trade rules. So whether the US produces more NG than it consumes the contracted LNG will still be shipped overseas. Thus the movement dynamic fits:

(Reuters) - Williams Partners LP said Friday it plans to expand part of its Transco pipeline to deliver natural gas to Cheniere Energy Partners LP's Sabine liquefied natural gas export facility under construction in Louisiana. Williams Partners, which is majority owned by Williams Cos Inc, said the project will cost about $300 million with a planned in service date in early 2017, subject to government approvals.

Sabine is the only LNG export facility under construction in the United States and is expected to enter service in late 2015. There are however more than a dozen other companies seeking federal approvals to build LNG export facilities in the United States. The push towards LNG has been bolstered by a surge in U.S. shale gas production expected to allow the country to become an net exporter of gas in 2018. Williams said a binding open season to gauge additional market interest in its so-called Gulf Trace expansion of Transco is scheduled to end on May 8. Williams said the 1.2 million dekatherms per day Gulf Trace expansion will add "a very large, long-term market commitment in an area of Transco`s system that is seeing decreased utilization due to changing gas supply patterns in the United States."

The Sabine project is supported by long-term contacts with several LNG off-take shippers and is expected to provide LNG for export to diverse markets overseas, Williams said. The Gulf Trace project will make Transco`s production area mainline and southwest Louisiana lateral systems bi-directional from Station 65 in St. Helena Parish, Louisiana to Cameron Parish, Louisiana, Williams said. Williams also said it plans to add about 3.4 million dekatherms of gas transportation capacity by 2017 from northeast supplies to growth markets with mainline expansions that include the Dalton Expansion Project, Atlantic Sunrise, Leidy Southeast, Virginia Southside and others. In a separate release, Williams said the U.S. Federal Energy Regulatory Commission (FERC) has approved its application to construct and operate Transco`s Mobile Bay South III Expansion project, which would provide additional gas transportation capacity to growing markets in the Southeast by the spring of 2015.

{On case you don't get the implication of the above paragraph: I've mention before the subtle and not well advertised plan to not only divert NG shipments from the NE to southern consumers and LNG exporters but also provide for shipment of New England NG southward. This being done to accommodate both southern growth and supply LNG export contracts.}

Williams said Transco is already the nation's largest-volume interstate gas pipeline system delivering gas through its 10,200-mile pipeline network whose mainline extends nearly 1,800 miles between South Texas and New York City.

[ROCKMAN]

More potential movement of a lot of NG out of Canada. Thanks goodness they US has so much surplus NG we don't have to worry about Asia taking "our Canadian" NG. BTW if you weren't familiar with Canadian NG:

At 18.3 billion cubic feet per day in 2011, Canada was the fourth-largest producer of natural gas in the world. Its proven reserves were 58.2 trillion cubic feet at the close of 2006. A large portion of Canada's gas is exported to the United States: in 2006, 9.9 billion cubic feet per day. Or about $16 billion per year.

[ROCKMAN]

Couldn't find the original protest on the Russian Arctic platform but it works here from the stand point that while many criticize Russia for drilling in the Arctic but it's the EU paying the Russians to do it. The dynamics of PO are driving the "environmentally sensitive" Europeans to support Russian Arctic activities. And if that means arresting/restraining Green Peace protestors then so be it.

Reuters – Dutch police stormed a Greenpeace ship on Thursday to prevent environmental activists blocking delivery of the first oil from Russia's new Arctic drilling platform reaching port in Rotterdam. The Rainbow Warrior was crewed by the activists who were detained last year by Russia in the Arctic, the campaign group said. Greenpeace is opposed to drilling in the Arctic Sea which it says risks causing a catastrophe in a fragile ecosystem. Police said the activists had reneged on an agreement they had made with harbour authorities not to interfere physically with the ship during their protest. A Reuters photographer said activists had draped banners saying "No Arctic Oil" from the Russian vessel. "The Russian ship is very big, about 250 metres long, and there are safety concerns when you try and stop it mooring," Rotterdam police spokesman Roland Ekkers said. He said the activists had been detained in a room on the Rainbow Warrior until it docked, when the captain was arrested. The oil-tanker Mikhail Ulyanov entered the harbour unhindered, and moored at about 0915 GMT.

[ROCKMAN]

In this case it might be better characterized as the non-movement of fossil fuels. Folks expecting a flood of Brazil oil on the global market may have a long time to wait to see that happen...if it ever actually does happen. Think of it a potential ELM on steroids: not only is Brazil going to consume more oil internally they may greatly limit its export:

Reuters - Brazil's oil regulator the ANP won't recommend the sale of new production-sharing contracts in the country's promising offshore "subsalt" region until at least 2016, the agency's chief told Reuters on Friday. The agency will also recommend that Brazil wait until 2015 to sell traditional concession contracts for less-promising oil exploration rights in other parts of the country, Magda Chambriard, the ANP's general director said. The subsalt region off the coast of Rio de Janeiro is home to giant new offshore oil discoveries trapped far beneath the seabed by a layer of salt. It is also home to 80 percent of Brazil's current output. Under a 2010 law, all future exploration in the region, known as the Subsalt Polygon will be done on production-sharing contracts with the Brazilian government rather than concessions.

[sparky]

.
Good thread , hydrocarbons have some value locally but the gravy is in sending it to some customers
for decade the critical point was the Suez canal , there was some pyrotechnics about it
then with increasing volume it was the cape of good hope and the Malacca straits
Ormuz is an old favorite ,
since the British withdrew the watch there was taken by the US based mostly on Diego Garcia
more recently central command relocated in Bahrain
China edginess about the South China sea has a crude oil transit component
central Asia pipelinenistan is the new "great game "
while Europe suffered a sharp defeat with the Nabucco pipeline failure
they are now picking nits with Russia on the South Stream ,
asking that half the capacity be open to other producers
something that the Russians do not want on the ground that since they are building it and paying for it
they will decide how ,who , what and when it is open to others .

for a long time it was crude tankers , now increasingly it is pipeline and NG either piped or liquefied
behind the technical and financial there is the diplomats with armies and navies hovering in the background

[ROCKMAN]

Sparky - Yes. While the rule (the king that owns the gold makes the Golden Rule) is still working but it's not absolute control: the "gold" still needs to be moved to the buyers and others have a degree of control over this situation. Can't move the "gold" over Bridge B if the guy who one that bridge has demands that must be met. Also, when the king needs foreign funds to mine his gold then a measure of control is also lost.

And that's why I started this thread as a supplement to westexas' ELM factor. In then end how the net energy distribution plays out will be as important as how much energy is exported IMHO. The easy example is the Canadian oil sands: many in the US project a happy future of that resource supplying US demand. But even as that "gold" production increases there's no guarantee that it won't end up going to other markets. Though at the moment it may seem like it that isn't US "gold" sitting north of our border. Other then by outbidding other buyers we can't control where it ends up. And right now the Canadians are very anxious to open the bidding up. And if the US gov't starts complaining about that production heading elsewhere more than a few Canadian politicians will likely bring up the delay in the Keystone XL permit.