Commodity Corner: Crude Up on Weather Threat

- Commodity Corner: Crude Up on Weather Threat

Thursday, September 01, 2011
Rigzone Staff
by Saaniya Bangee

Despite shaky equities and a rising dollar, crude futures inched modestly higher Thursday on weather reports of a storm brewing in the Gulf of Mexico.

October oil added 12 cents to its final price tag, settling at $88.93 a barrel on the New York Mercantile Exchange. Oil traded as low as $88.21 a barrel after an earlier intraday peak of $89.90.

The National Hurricane Center reported an 80 percent chance that a tropical wave in the Gulf of Mexico could develop into a tropical cyclone within the next 48 hours. Oil majors such as Shell, ExxonMobil, BP, Anadarko and BP have evacuated nine platforms in the Gulf of Mexico and shut in nearly 80,000 barrels of oil production, according to the Bureau of Ocean Energy Management, Regulation and Enforcement. In addition, 127 million cubic feet per day of natural gas was also shut in.

In other forecasts, initial unemployment claims fell by 12,000 to 409,000 last week. Data reported by the Labor Department helped boost optimism about the economy.

Brent crude, which is used to price many international oil varieties, lost 56 cents to settle lower at $114.29 barrel on fresh concerns over Greece's debt problems. The intraday range for Brent was $113.89 to $115.31 a barrel on the ICE future exchange.

Natural gas for October delivery remained unchanged at $4.05 per thousand cubic feet Thursday.

Gasoline gained 1.64 cents for the first trading session for the October contract. Reformulated gasoline settled at $2.89 a gallon. Some East Coast refineries remain shut down due to Hurricane Irene. Prices fluctuated between $2.85 and $2.92 Thursday.

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Commodity Corner: Ben, Irene Contribute to Volatility

- Commodity Corner: Ben, Irene Contribute to Volatility

Friday, August 26, 2011
Rigzone Staff
by Matthew V. Veazey

The price of a barrel of light sweet crude oil experienced some volatility Friday before settling at $85.37, or just seven cents day-on-day.

The WTI fell as low as $82.95 after Federal Reserve Chairman Ben Bernanke, speaking at a symposium in Jackson Hole, Wyo., did not announce any Fed plans to launch a third round of quantitative easing. A "QE3" would be bullish for oil and other commodities because it would weaken the U.S. dollar.

Hurricane Irene's pending arrival along the East Coast did create upward momentum for the benchmark, however. The WTI peaked at $85.64 as investors weighed the possible effects the storm may have on refining infrastructure and gasoline supplies in the Mid-Atlantic and Northeast.

The Brent contract price also settled higher Friday, gaining 74 cents to end the day at $111.36 a barrel. It traded within a range from $109.38 to $111.65.

Despite Irene's potential impact on East Coast fuel supplies, reformulated gasoline lost four cents to settle at $2.93 a gallon. The U.S. Coast Guard's lack of a decision during floor trading to close New York Harbor prevented a bullish outcome Friday.

September gasoline peaked at $2.98 and bottomed out at $2.91 during the pre-storm session.

Natural gas for September delivery settled flat at $3.93 per thousand cubic feet. It fluctuated from $3.90 to $3.96.

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BOEMRE Reports Final Update on Tropical Storm Don

- BOEMRE Reports Final Update on Tropical Storm Don

Monday, August 01, 2011
BOEMRE

The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Hurricane Response Team is concluding its activities related to Tropical Storm Don.

This is the final update of evacuation and shut-in production statistics for Tropical Storm Don.

Based on data from offshore operator reports submitted as of 11:30 a.m. CDT today, none of the 617 manned production platforms in the Gulf of Mexico remain evacuated. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project’s duration.

None of the 62 rigs currently operating in the Gulf remain evacuated. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.

As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During the recent hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.

From operator reports, it is estimated that approximately 2.3 percent of the current oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 0.9 percent of the natural gas production in the Gulf of Mexico has been shut-in. The remaining shut-in production is not associated with any reported damage.

The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BOEMRE compares to historical production reports to ensure the estimates follow a logical pattern.

After the tropical storm passes, facilities are inspected. Once all standard checks have been completed, production from undamaged facilities is brought back on line immediately. Facilities sustaining damage may take longer to bring back on line. BOEMRE will no longer report Tropical Storm Don statistics.

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Commodity Corner: Oil Plunges on GDP Report

- Commodity Corner: Oil Plunges on GDP Report

Friday, July 29, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for September delivery lost nearly 2.4 percent Friday after the U.S. Department of Commerce estimated that the real gross domestic product (GDP) grew at an annual rate of only 1.3 percent in the second quarter of this year.

The WTI settled at $95.70 a barrel Friday, down $2.31 from the previous day, after the latest figures from the Commerce Department's Bureau of Economic Analysis (BEA) revealed disappointing real GDP figures for the first half of the year. Real GDP is the monetary value of goods and services produced by labor and property in the United States.

The 1.3 percent figure for the second quarter, an advance estimate, failed to meet private-sector expectations of 1.8 percent, the Commerce Department stated. In addition, the BEA revised its first quarter real GDP figure downward from 1.9 percent to a paltry 0.4 percent.

"Today's first look at GDP in the second quarter confirms what we already knew: The economy isn't growing as fast as it needs to," Commerce Secretary Gary Locke said in a written statement. Locke also implied that the economic situation might improve if Congress and the Administration agree on a plan to increase the national debt by authorizing the federal government to raise its borrowing limit from the current $14.3 trillion. "And every day that we fail to act to lift the debt ceiling and inch closer to default, we threaten our economic progress and job creation," he warned.

Brent futures fell less dramatically Friday, ending the day 0.5 percent lower at $116.74 a barrel after fluctuating from $115.80 to $117.06. The WTI peaked at $97.39 and bottomed out at $94.95.

As of 4 p.m. Central Daylight Time Friday, the center of Tropical Storm Don was approaching the South Texas coast. The storm caused offshore operators to shut in approximately 6.2 percent of current natural gas production in the Gulf of Mexico, according to the Bureau of Ocean Energy Management. However, operators were already sending workers back to offshore installations as early as Friday morning.

Given the minimal impact of the storm offshore, along with an Energy Information Administration report that the country's natural gas inventories grew at a larger-than-expected rate last week, natural gas lost 2.2 percent Friday. The September contract price settled at $4.145 per thousand cubic feet.

Natural gas traded within a range from $4.14 to $4.23.

Gasoline for August delivery settled at $3.11 a gallon, down a penny from Thursday. The intraday range for gasoline spanned from $3.07 to $3.12.

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Tropical Storm Don to Make Landfall Late Friday

- Tropical Storm Don to Make Landfall Late Friday

Friday, July 29, 2011
Rigzone Staff

Tropical Storm Don, the fourth tropical storm in the Atlantic this season, is expected to make landfall late Friday or early Saturday, according to the National Hurricane Center.

At 0900 GMT, the storm was located 290 miles southeast of Corpus Christi, Texas, headed west-northwest near 14 mph. Maximum sustained winds were near 50 mph.

According to the Bureau of Ocean Energy Management (BOEMRE), approximately 6.8 percent of the current GOM oil production has been shut-in and 2.8 percent of the natural gas production.

According to BP, it is starting to send workers back to its oil and gas platforms in the GOM. There is no production impact at Mad Dog and Holstein as both facilities have been completing scheduled maintenance.

Along with majors Shell, Apache, Chevron, BP and BHP, Enbridge has also evacuated personnel from its West Cameron 509 platform.

Northern Natural Gas will shut-in production from its Matagorda Offshore Pipleline System in GOM.

Refineries such as Valero's 115,000-barrel-a-day-plant, ConocoPhillips' 247,000-barrel-a-day Sweeny refinery, Citgo's 165,000-barrel-a-day facility and Flint Hills Resources 300,000-barrel-a-day-plant are located in the storm's path, near Corpus Christi.

Tropical Storm Don isn't expected to become a hurricane.

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Gulf Weather System Upgraded to Tropical Storm Don

- Gulf Weather System Upgraded to Tropical Storm Don

Thursday, July 28, 2011
Rigzone Staff

The tropical disturbance that has been forming in the Gulf of Mexico has been upgraded to Tropical Storm Don. The National Hurricane Center reported that the storm is moving toward the west-northwest at approximately 10 mph and an increase in forward speed is expected through Friday. As of Thursday morning, the storm's location is approximately 495 miles east-southeast of Brownsville, Texas

Should the storm stay on its present track, its center would move through the southern and central Gulf of Mexico Thursday and approach the Texas coast on Friday. Maximum sustained winds remain near 40 mph and tropical storm force winds extend outward up to 45 miles from the center.

Oil companies have begun evacuating non-essential personnel from offshore installations in the path of the storm. Shell, Apache, Chevron, BP and BHP have said that while evacuations have started, production has not been impacted.

BP has evacuated non-essential personnel from the Atlantis, Mad Dog, and Holstein production facilities located in the southern Green Canyon area. Shell has begun securing well operations and evacuating personnel from the Perdido Spar, Auger platform and the Noble Danny Adkins ultra-deepwater semisub. BHP Billiton has evacuated non-essential personnel from Shenzi which is located in Green Canyon 609 and Neptune which is located in the Atwater Valley area.

Anadarko has evacuated approximately 185 employees and contractors from their Nansen, Boomvang, Gunnison, Red Hawk and Constitution spars as well as the Marco Polo facility in the western Gulf of Mexico. As a precaution, Anadarko is also shutting in production at these facilities.

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