WTI

[WAB]

Interesting problem in Alaska. The TAPS is already operating well below original design rates. If I remember correctly, the pour point of ANS is somewhere around 60’F. Shut the pipeline down and let it cool much below that and you have a 900 mile candle. Shutdown of the largest of the refineries in AK a number of years ago removed a significant heat injection source in Fairbanks. I sure hope the Cherry Point refinery is still pulling ANS to keep that system running!

 

[Wheels]

Alaskan oil produces some unique challenges.

Just keeping the oil moving and the permafrost frozen, at the same time, seems a herculean task.

 

[WAB]

I ran one of the oil refineries and two of the oil terminals in AK in a past life. The Fairbanks facility had the widest ambient temperature design spread I have ever seen, -60’F to +100’F. I actually saw it hit -60 and +99 during my tenure there. Running oil systems at -60’F is challenging to say the least.

 

[Wheels]

I had a couple of cousins who were heavy equipment operators on the pipeline. They kept their equipment running 24 hours a day without shutting it down for around 7-8 months of the year. Otherwise they wouldn't be able to get it started again. If I remember correct, an operator who shut off his equipment during the winter was subject to being fired.

 

[WAB]

Yep, it’s a different world both operationally and design criteria.

 

[375 Ruger Fan]

Interesting price history of oil. Negative price was truly historic.

 

[375 Ruger Fan]

Tensions in the GOM could ratchet up soon. Will Trump use the US Navy to blockage to turn around these tankers?

Venezuela's military to escort Iranian tankers bringing petrol

https://www.bbc.com/news/world-latin-america-52751224

The Venezuelan military will escort Iranian tankers delivering much-needed petrol to the country to prevent any attempt by the US to stop them.

Five vessels are on the high seas and are due to arrive in the coming days.

Venezuela's defence minister said they would be "welcomed" into its exclusive economic zone, which extends 370km (200 nautical miles) from its shores.

The US, which has imposed sanctions on Venezuela and Iran, is reportedly considering steps to
deter shipments.

The US-backed Venezuelan opposition leader, Juan Guaidó, said the need to import petrol highlighted the mismanagement of Venezuela's oil industry by President Nicolás Maduro's government.

Venezuela has the world's largest oil reserves, but production has plummeted in the last two decades and the country is in a deep economic crisis.

There have been severe shortages of petrol in recent weeks with people queuing for days to fill up their tanks.

The five Iranian tankers - Fortune, Forest, Petunia, Faxon and Clavel - are carrying about 1.5m barrels of fuel and passed through the Suez Canal earlier this month, according to shipping data on Refinitiv Eikon.

"When they enter our exclusive economic zone, they will be escorted by Bolivarian National Armed Forces boats and planes to welcome them in and thank the Iranian people for their solidarity and co-operation," Venezuelan Defence Minister Gen Vladimir Padrino said on state television on Tuesday.

Venezuela's permanent representative to the UN, Samuel Moncada, stressed that the tankers were "civilian vessels carrying vital goods for our people" and were "coming from a country that has engaged in legal trade with mine".

"In the midst of a pandemic, forbidding those vessels from reaching our ports would thus constitute a crime against humanity," he told the UN Security Council.

Iran has also warned that it will retaliate if the tankers are blocked.

A flotilla of US Navy and Coast Guard vessels is patrolling the Caribbean Sea on a mission to counter illicit drug trafficking. But US officials have not announced any plan to stop the Iranian tankers.

On Monday, the head of the US military's Southern Command, Admiral Craig Faller, said he was following the Iran's shipments to Venezuela "with concern", but played down the possibility of a confrontation.

"With respect to Venezuela, our focus has been to share intelligence, trying to figure out what Maduro and his cronies are up to," he said.

Earlier this month, President Donald Trump rebuffed suggestions the US was behind what appeared to have been a bungled attempt to overthrow Mr Maduro.

 

[Mr. Zorg]

Thanks for that bit of news. Amazing to me and previously unimaginable that Venezuela would need to purchase imported gasoline (petrol) from anywhere much less Iran. The US arm of PDVSA, Citgo, isn't even mentioned in that report, but the Citgo refineries are still producing gasoline AFAIK, as well as the Isla refinery on Curacao, previously operated by PDVSA as effectively another arm of the refining side of PDVSA. This shows just how badly the regimes there have run their domestic business into the ground, starting when the Papa Smurf of South America, Hugo Chavez, fired every PDVSA employee who went on strike as the laws were reshaped to literally make Chavez dictator for life. PDVSA didn't get where they are overnight, and they won't get in any better position from where they're at now overnight. Is this the rock bottom of PDVSA, or can they auger themselves any deeper?

 

[Newboomer]

Sounds kind of strange that a bib oil producer like Venezuela would be importing. I wonder what else might be in those ships.

 

[Red Leg]

Sounds kind of strange that a bib oil producer like Venezuela would be importing. I wonder what else might be in those ships.

Additional copies of "Das Kapital" translated into Spanish.

 

[Mr. Zorg]

Sounds kind of strange that a bib oil producer like Venezuela would be importing. I wonder what else might be in those ships.

It's a definite sign the PDVSA refineries have been run into the ground along with the exploration and production segment. I don't think the recent inability to keep electric power generation and distribution system helps the refining and product distribution segments. The refineries do not go from shut down to semi-steady-state operation like flipping a switch. The reverse can be done but it certainly incurs increased risks to have to go into emergency shutdown of a single process unit, much less a refinery the size of the PDVSA Paraguana refining complex.

https://en.m.wikipedia.org/wiki/PDVSA

Soldiers had been assigned to try to keep the exploration and production segment up & running a while back, I hadn't heard of any such strategy in the PDVSA refineries and shudder to think about the sharply increased potential for really extreme industrial accidents that would bring.

There are few, if any business outside Venezuela that will deal with PDVSA to sell spare parts, trained specialty maintenance and repair specialists, and so on for quite some time now. A crucial point in time involved arrest and imprisonment of Venezuelan nationals dealing with or employed by Chevron a while back, on charges of treason, for refusing to sign illegal contracts IIRC.

 

[375 Ruger Fan]

Let's see, in August 2020, oil prices went negative on the futures market. Now natural gas is trading as historically high numbers:

Natural Gas Soars to $1,250 in Central U.S. on Supply Paralysis​

Natural Gas Soars to $1,250 in Central U.S. on Supply Paralysis

(Bloomberg) -- There’s no sign yet of a pause in the dramatic rally in natural gas prices across the central U.S., where spot rates have now breached the $1,000 mark, more than 100 times their level just a week earlier.Prices for immediate delivery are skyrocketing as consumers scramble to find...

finance.yahoo.com

(Bloomberg) -- There’s no sign yet of a pause in the dramatic rally in natural gas prices across the central U.S., where spot rates have now breached the $1,000 mark, more than 100 times their level just a week earlier.

Prices for immediate delivery are skyrocketing as consumers scramble to find additional supply. U.S. production has fallen to a four-year low, causing a shortage that has left millions of homes and business in the dark and forced food giant Cargill Inc. to halt production at three of its meat processing plants in Texas.

Supply for next-day delivery at the Oneok Gas Transportation hub in Oklahoma traded at $1,250 per million British thermal units on Wednesday, according to David Hoy, a trader at Dynasty Power in Calgary. That’s up from $999 on Tuesday, and just $9 a week ago.


At the Henry Hub in Louisiana, the delivery benchmark for futures in New York, spot gas traded at $20 or higher on Wednesday morning, according to two traders. That compares with a settlement of $16.13 on Tuesday and just $3.73 a week ago.

Gas production has plummeted by a fifth as frigid weather triggers blackouts and causes liquids to freeze inside pipes, forcing wells and processing plants to shut. The cold blast has also disrupted liquefied natural gas exports as terminals take units offline to reduce their power and gas demand in response to emergency declarations. Producers may still take a few weeks to fully restore supplies due to equipment damage caused by freezes, according to Charles Nevle, senior director for North American gas at IHS Markit.

“It could be into March before we see production return to pre-event levels,” Nevle said.

Price movements have been more modest in the much more liquid futures market in New York. Gas for March delivery settled up 2.9% at $3.219 per million British thermal units on the New York Mercantile Exchange, extending this week’s gains to 11%. The spread between March and April futures -- essentially a bet on how well supplied the market will be at the end of heating season-- rose to the highest since November.

Still, gains are being capped by concerns that prices above $3 will cause production to come back quickly and stronger once weather conditions improve, said Brayton Tom, a senior risk manager for energy at StoneX Group Inc. The drop in LNG exports has also weighed on prices, he said.

Most of the U.S. should see normal temperatures next week as the cold blast covering Central America is expected to recede, private forecaster Commodity Weather Group said in a report Wednesday.

 

[Hank2211]

Let's see, in August 2020, oil prices went negative on the futures market. Now natural gas is trading as historically high numbers:

Natural Gas Soars to $1,250 in Central U.S. on Supply Paralysis​

Natural Gas Soars to $1,250 in Central U.S. on Supply Paralysis

(Bloomberg) -- There’s no sign yet of a pause in the dramatic rally in natural gas prices across the central U.S., where spot rates have now breached the $1,000 mark, more than 100 times their level just a week earlier.Prices for immediate delivery are skyrocketing as consumers scramble to find...

finance.yahoo.com

(Bloomberg) -- There’s no sign yet of a pause in the dramatic rally in natural gas prices across the central U.S., where spot rates have now breached the $1,000 mark, more than 100 times their level just a week earlier.

Prices for immediate delivery are skyrocketing as consumers scramble to find additional supply. U.S. production has fallen to a four-year low, causing a shortage that has left millions of homes and business in the dark and forced food giant Cargill Inc. to halt production at three of its meat processing plants in Texas.

Supply for next-day delivery at the Oneok Gas Transportation hub in Oklahoma traded at $1,250 per million British thermal units on Wednesday, according to David Hoy, a trader at Dynasty Power in Calgary. That’s up from $999 on Tuesday, and just $9 a week ago.


At the Henry Hub in Louisiana, the delivery benchmark for futures in New York, spot gas traded at $20 or higher on Wednesday morning, according to two traders. That compares with a settlement of $16.13 on Tuesday and just $3.73 a week ago.

Gas production has plummeted by a fifth as frigid weather triggers blackouts and causes liquids to freeze inside pipes, forcing wells and processing plants to shut. The cold blast has also disrupted liquefied natural gas exports as terminals take units offline to reduce their power and gas demand in response to emergency declarations. Producers may still take a few weeks to fully restore supplies due to equipment damage caused by freezes, according to Charles Nevle, senior director for North American gas at IHS Markit.

“It could be into March before we see production return to pre-event levels,” Nevle said.

Price movements have been more modest in the much more liquid futures market in New York. Gas for March delivery settled up 2.9% at $3.219 per million British thermal units on the New York Mercantile Exchange, extending this week’s gains to 11%. The spread between March and April futures -- essentially a bet on how well supplied the market will be at the end of heating season-- rose to the highest since November.

Still, gains are being capped by concerns that prices above $3 will cause production to come back quickly and stronger once weather conditions improve, said Brayton Tom, a senior risk manager for energy at StoneX Group Inc. The drop in LNG exports has also weighed on prices, he said.

Most of the U.S. should see normal temperatures next week as the cold blast covering Central America is expected to recede, private forecaster Commodity Weather Group said in a report Wednesday.

I expect very little nat gas is actually traded at these prices - the spot market is for those who haven’t lined up longer term supplies or otherwise need some gas right now. Very few utilities which use natural gas would be comfortable letting the price ride on the spot market. Having said that, these prices do point out something that many people conveniently forget - our power grid is far more dependent on oil and gas than they would care to admit.

 

[Newboomer]

I expect very little nat gas is actually traded at these prices - the spot market is for those who haven’t lined up longer term supplies or otherwise need some gas right now. Very few utilities which use natural gas would be comfortable letting the price ride on the spot market. Having said that, these prices do point out something that many people conveniently forget - our power grid is far more dependent on oil and gas than they would care to admit.

Well, score one for the demented ass in the White House. Wonder what he'll come up with next to continue ruining the country.

 

[Philip Glass]

I expect very little nat gas is actually traded at these prices - the spot market is for those who haven’t lined up longer term supplies or otherwise need some gas right now. Very few utilities which use natural gas would be comfortable letting the price ride on the spot market. Having said that, these prices do point out something that many people conveniently forget - our power grid is far more dependent on oil and gas than they would care to admit.

Problem is contract or no contract everything is frozen and NO Nat Gas is available so for immediate delivery, for those who can deliver these prices have skyrocketed. We have an antiquated electric grid inTX, too much frozen wind and solar power, and no incentive system to pay extra to those Nat Gas suppliers who invest in their system to make it weather proof. Tough situation for sure.