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To: CommanderCricket who wrote (166793)4/4/2012 6:16:24 PM
From: Bearcatbob
   of 185763
 
Lord - spare us from this one.

Bob

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To: CommanderCricket who wrote (166793)4/4/2012 6:32:42 PM
From: Triffin
   of 185763
 
"Some regard the idea as an innovative solution to climbing fuel prices, while others question whether an airline like Delta should take on such a capital-intensive business .... The Atlanta-based Delta “is the world’s largest commercial buyer of jet fuel,” said airline analyst Hunter Keay in a research note on Tuesday, adding that “crack spreads,” or the cost of turning crude oil into a product like jet fuel, “are hard to hedge, and even if [Delta] can obtain a consistent $0.05/gal cost advantage over the long run, it’s worth the risk."

LOL ..

Perhaps this is part of their "exit" strategy ..
"Exiting" from operating an airline that is !!

Warren Buffet famously quipped that a "capitalist" should
have "shot down" Wilbur and Orville Wright at Kitty Hawk, NC ..
Would have saved investors 10s of billions in losses since then ..

Triff ..

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From: Eric4/4/2012 7:25:19 PM
   of 185763
 
Peak Oil Review - April 2, 2012

Posted By Tom Whipple • on April 2, 2012

Download Full PDF

1. Oil and the Global Economy

NY oil began the week around $107 a barrel and closed Friday just below $103. Most of the drop came on Tuesday and Wednesday in response to the weekly stocks report which showed US crude inventories climbing by 7.1 million barrels. In London, where traders are less concerned about American inventories these days, oil fell from $125 a barrel on Monday to close at $122.88 on Friday. Reports that the US and the major EU countries were considering a release from their strategic reserves also contributed to the decline. For the 1st quarter, however, NY crude prices were up about 4.2 percent and London about 14 percent.

With talks between the Big Six and Iran over Tehran’s nuclear program due to start in about two weeks, the rhetoric and threats that have been a staple of the confrontation for the past year have been muted. Some are saying that all the talk of a release of strategic reserves (SPR) is simply an effort by the Obama administration to “jawbone” prices lower. Most observers, however, think that any release from the SPR will only affect oil prices briefly. In the Congress, the Republicans are attempting to tie any release from the SPR to promises of more drilling.

Wire service surveys shows that OPEC oil production in March reached its highest level since October 2008 with higher output from Libya and Iraq offsetting a drop of about 65,000 b/d in Iranian production.

While US economic data for the week was mixed, a positive spin increased optimism that demand could increase in the future and the equity markets rose. This news was offset by signs that China’s economy continues to slow. Prospects for the EU’s economic stability were improved with the announcement of a $1.2 trillion firewall.

In Washington, the EPA finally announced the rules that will limit CO2 emissions from power plants. If the rules, which face serious opposition by the Republicans in Congress and challenges in the courts, ever come into effect they are likely to trigger a significant switch from coal to natural gas as the fuel for generating electricity. The proposed rules would prevent the construction of new coal-fired plants unless they are built with very expensive equipment to contain carbon emissions.

As pressure mounts on the Obama Administration to do something about high gasoline costs, the government approved Shell’s plans to drill in shallow waters off Alaska as well as allowing seismic surveys off the US’s East Coast starting next year.

The major national gas leak that developed last week off the coast of Scotland once again reiterates the dangers involved in exploiting high pressure and temperature oil and gas deposits from deep beneath the sea. The North Sea leak will likely take six months and billions of dollars to contain. A series of leaks from deep-water Brazilian wells also emphasizes the troubles that are likely to become endemic as more and more of the world’s conventional oil production shifts to deepwater fields.

2. The Iranian confrontation

While awaiting the resumption of talks in about two weeks on Iran’s nuclear program, both sides are maneuvering for leverage. On Friday, President Obama released a statement saying that he was satisfied that the US could proceed with increased sanctions on Iran without raising oil prices by an unacceptable amount. A combination of increased production coupled with releases of SPR stocks is said to be sufficient to replace the 900,000 b/d or so of Iranian exports that the IEA estimates will be shut in by the sanctions.

Even Moscow joined the pressure on Tehran last week by announcing that Tehran was breaching UN resolutions by increasing the size of its nuclear program. Most observers interpret the Russian statement as a clear warning to Tehran that it is walking a tightrope and that continued intransigence could easily lead to a war with devastating consequences for the world’s economy.

The US and EU sanctions program continues to make slow progress with Turkey announcing that it will reduce imports of Iranian oil by 10 percent in an effort to dodge tightening sanctions on Iran’s oil customers. South Korea also announced that it was working to reduce Iranian imports.

On the other side of the ledger, China rejected President Obama’s decision to move ahead with sanctions against countries buying Iranian oil saying that the US had no right to unilaterally punish other nations. While ostensibly on Iran’s side in the conflict, Beijing has already reduced its imports of Iranian oil. With the Saudis and the other Gulf producers clearly lined up against Tehran, Beijing must tread a very narrow path in this confrontation.

Also to Iran’s favor was the announcement that India and, to an unknown extent, Beijing will pay for Iranian oil through a combination of barter and local currencies. India is to pay for some 45 percent of its imports in rupees and the rest with food and manufactured goods. While this may solve an immediate problem, in the long run it will weaken Tehran’s ability to fund its military programs and further weaken Iran’s currency.

3. Gasoline

Despite the dip in crude prices last week, US gasoline prices continue to increase another 3 cents a gallon to a national average of $3.92, with many regions already well above $4. In Europe, gasoline prices have risen to new highs on supply worries going into the summer driving season. Austerity measures in Italy have boosted gasoline prices there to $9.17 a gallon — the highest in Europe. Gasoline and diesel consumption in Italy is down 9.6 percent in the first two months of 2012 and new car sales fell 18 percent. Despite the drop in consumption, Italian gas tax revenues are up 11 percent due to higher prices.

MasterCard reported on Tuesday that US gasoline demand was down 1.5 percent the previous week from the week before and was down 7 percent from the same week in 2011. The firm’s four-week moving average shows that US demand for gasoline has fallen for 53 straight weeks.

While surveys show that more than two-thirds of Americans disapprove of the way the President is handling gasoline prices, most do not blame him. US mainstream media seem to grasp that oil is a globally traded commodity in short supply and that the President can do little to reduce prices in the short term. The only holdouts to the idea that there is little the President can do seem to be Republican candidates for federal office who continue to insist that more domestic drilling will help the situation - all without saying just how long this will take to happen.

Americans under 40 are driving significantly less than 10 years ago. Among the unemployed in this age range, driving is down by 19 to 24 percent according to a recent survey, raising the question as to whether the American car culture is on the wane as younger Americans become more environmentally aware.

The loss of refining capacity in the Northeastern US continues to pressure prices. The EIA says the operating refinery capacity in the region is down to 1.2 million b/d from 1.6 last summer. There is still no word on the sale of the Philadelphia area Sunoco refinery which may be closed in July sending the region’s gasoline situation into crisis. The Oil Price Information Service is still forecasting that gasoline prices will peak somewhere between $4.05 and $4.25 a gallon in the next three months - unless, of course, there is some sort of supply disruption.

4. US pipelines

Last week two energy companies announced plans to build new pipelines that would move 850,000 barrels of crude per day from Canada to refineries along the US Gulf Coast by 2014. As the plan would use existing pipelines across the US border, the projects would not have the same State-Department-approval problems as the Keystone pipeline. It would, however, require approval from the Federal Energy Regulatory Commission and the Corps of Engineers and if built be a competitor to the Keystone pipeline which is still awaiting the results of environmental reviews.

The plan involves building a new pipeline from the Flanagan, Ill. oil depot to the one in Cushing, Okla. The Seaway pipeline which is to be reversed in June, thereby moving 150,000 b/d of crude to the Gulf coast and 400,000 b/d next year after a pump upgrade, would be joined by a new 450,000 b/d pipeline to be built in the same right-of-way. The Obama administration already supports this plan which should meet minimal objections.

The three-stage plan should drain the current oil surpluses from the Cushing depot, which has seen its storage capacity climb from 26 to 65 million barrels in the last seven years. The proposal would eventually allow a larger flow of Alberta tar sands oil and tight oil from North Dakota to the coast where it would fetch higher prices. The downside of this plan is that it would allow increased production of oil from Alberta and likely lead to higher oil prices in the Midwest as it would compete with imported oil from abroad. With the US already importing millions of barrels of oil each day, it is unlikely that any of the oil brought from Canada would ever be re-exported, as it would be considerably cheaper just to refine the oil along the coast and cut other imports.

Production from the Alberta sands and the Bakken Shale is expected to increase by some 2 million b/d by 2020 so there would eventually be a need for the proposed pipeline and the Keystone to move crude to coastal refineries if they are ever built.

Last week the Nebraska legislature approved a measure that would allow a study of how best to route the Keystone XL pipeline through the state. The Keystone proposal still has a ways to go and it is unlikely that there will be any major developments until after the November elections. In the meantime the new proposal should take some of the pressure off the Obama administration.

Quote of the week

  • “The decline of major conventional oil fields-coupled with the rapidly rising demand from countries like China and India-means the spare production capacity that once cushioned prices is melting away, ushering in an era of volatile market swings.”
      - Bryan Walsh, Time Magazine

      The Briefs (clips from recent Peak Oil News dailies are indicated by date and item #)

    • Exxon Mobil is no longer the world’s biggest publicly traded oil producer. For the first time, that distinction belongs to a 13-year-old Chinese company called PetroChina. (3/29, #8)
    • The EIA projects that coal consumption in the electric power sector for 2012 is expected to fall to less than 900 million tons, the lowest level since the 1990s, as more of the industry switches to natural gas. (3/31, #19)
    • Federal regulators approved power company Scana Corp.’s proposal to build two nuclear reactors with a partner in South Carolina at a cost of some $11 billion, the second such approval in two months after 30 years without an approval. (3/31, #21)
    • Exxon Mobil, ConocoPhillips, and BP agreed to pump light crude oil from a dormant Alaskan field and offer natural gas to Asian utilities in exchange for the right to retain leases the state sought to reclaim. (3/31, #24)
    • The Canadian government said it plans to streamline the environmental assessment process for major energy projects. Under its new budget proposal, Canadawill “implement responsible resource development and smart regulation for major economic projects, respecting provincial jurisdiction and maintaining the highest standards of environmental protection.” (3/31, #25)
    • The flare on the crippled North Sea oil platform at the center of a gas leak has extinguished itself but gas is still bubbling from the seabed, Total has confirmed. All workers were evacuated from the Elgin installation, 150 miles off Aberdeen, earlier in the week. (3/31, #26)
    • European finance ministers were warned that the underlying causes of the continent’s debt and banking crisis had yet to be resolved, as Spain, struggling to rein in its fiscal deficit, published its most austere budget since democracy returned after the Franco era. (3/31, #27)
    • Austerity measures introduced by Italian Prime Minister Mario Monti’s government have pushed Italian gas prices to the highest in Europe, an average of €1.82 per liter, or $9.17 per gallon, with taxes accounting for about 54 percent of the total. (3/31, #28)
    • The Nigerian National Petroleum Corporation (NNPC) says it has concluded plans to rehabilitate the three refineries in the country. (3/30, #9)
    • A US Senate vote to end $20 billion in federal subsidies to the largest oil and gas companies failed when it did not reach the required 60 votes for cloture. (3/30, #12)
    • A proposed 600,000-barrel-a-day oil pipeline that would run between Venezuela and Colombia would require $8 billion in investment. The pipeline would give Venezuela access to Colombia’s Pacific coast allowing for cheaper transport of crude to Asian markets. (3/30, #17)
    • Crude exports from Iraq’s semi-autonomous Kurdish region dropped to 50,000 barrels a day and may cease if the central government refuses to pay about $1.5 billion owed to producers. (3/27, #8) (3/28, #9)
    • The operator of Japan’s crippled Fukushima nuclear plant has said damage to one of the reactors is much worse than previously thought. A probe inserted into the reactor revealed lethal doses of radiation and that the level of cooling water inside was far lower than expected. (3/28, #13)
    • Japan’s Tokyo Electric Power Company has shut its last operating nuclear reactor, leaving the country with only one nuclear facility still operating. Tepco has shut down the number 6 reactor at its Kashiwazaki Kariwa plant, the world’s biggest nuclear power plant, raising concerns about a power shortage this summer. (3/26, #11)
    • Clashes have broken out in border areas between Sudan and South Sudan in what has been called the biggest confrontation since the countries split last July. South Sudan President Kiir said his forces had seized a key oil field - a claim denied by Sudan. (3/27, #10, #11)
    • In increasing numbers, major US freight carriers are acquiring heavy-duty natural gas-powered trucks. (3/27, #22)
    • Italy’s biggest oil and gas group Eni has made a new giant natural gas discovery offshore Mozambique which will boost the potential of the Mamba complex to 40 trillion cubic feet (tfc) of gas. After a first discovery last year, the Mamba fields in Mozambique have become Eni’s most valuable single project, confirming expectations that East Africa is set to emerge as a major gas exporter. (3/26, #8)
    • Suspected ex-militants bombed a crude oil pipeline belonging to Shell Nigeria. The bombers said they blew up the crude oil pipeline because of Federal Government’s refusal to create space for them in the amnesty program. (3/26, #9)
    • US oil and gas drillingactivity this week declined by 16 units to 1,968 total rigs working. The rig count for the week ended Mar. 23 was up by 230 rigs from the comparable period a year ago, Baker Hughes Inc. reported. (3/26, #14)
    • Scientists have estimated that minable supplies of phosphorus may not be sufficient to meet worldwide demand within decades. The situation could lead to higher food prices, famine and worse. (3/26, #19)
        http://www.aspousa.org/index.php/2012/04/peak-oil-review-april-2-2012/


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        From: Eric4/4/2012 7:29:55 PM
        1 Recommendation   of 185763
         
        From The Oil Drum:

        Does the U.S. Really Have More Oil than Saudi Arabia?

        Posted by Robert Rapier on April 4, 2012 - 11:16am
        Topic: Supply/Production

        Difference Between Oil Shale and Oil-Bearing Shale


        People are often confused about the overall extent of U.S. oil reserves. Some claim that the U.S. has hundreds of billions or even trillions of barrels of oil waiting to be produced if bureaucrats will simply stop blocking development. In fact, in a recent debate between Republican candidates contending for Gabrielle Giffords' recently vacated House seat, one candidate declared "We have more oil in this country than in Saudi Arabia." So, I thought it might be a good idea to elaborate a bit on U.S. oil resources.

        Oil production has been increasing in the U.S. for the past few years, primarily driven by expanding production from the Bakken Shale Formation in North Dakota and the Eagle Ford Shale in Texas. The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil. But when some people speak of hundreds of billions or trillions of barrels of U.S. oil, they are most likely talking about the oil shale in the Green River Formation in Colorado, Utah, and Wyoming. Since the shale in North Dakota and Texas is producing oil, some have assumed that the Green River Formation and its roughly 2 trillion barrels of oil resources will be developed next because they think it is a similar type of resource. But it is not.

        Although the oil in the Bakken and Eagle Ford is being extracted from shale formations, the term shale oil has been used for over 100 years to describe a very different resource. This has led some to confusion over the differences between current production in North Dakota and potential production in Colorado. The oil in the Bakken and Eagle Ford formations actually exists as oil, but the shale does not allow the oil to flow very well. This oil is properly called " tight oil", and advances in hydraulic fracturing (fracking) technology have allowed some of this oil to be economically produced. (For more details, I discuss resources, reserves, fracking, shale gas, and oil shale in some detail in my new book Power Plays: Energy Options in the Age of Peak Oil).

        The estimated amount of oil in place (the resource) varies widely, with some suggesting that there could be 400 billion barrels of oil in the Bakken. Because of advances in fracking technology, some of the resource has now been classified as reserves (the amount that can be technically and economically produced). However, the reserve is a very low fraction of the resource at 2 to 4 billion barrels (although some industry estimates put the recoverable amount as high as 20 billion barrels or so). For reference, the U.S. consumes a billion barrels of oil in about 52 days, and the world consumes a billion barrels in about 11 days.

        Like the Bakken, the Eagle Ford formation in Texas consists of oil (and natural gas) in tight formations that is being accessed via fracking. The amount of technically recoverable oil in the Eagle Ford is estimated by the U.S. Department of Energy to be 3.35 billion barrels of oil.

        Without a doubt, these two formations are a major factor in the current resurgence of U.S. oil production. But the Green River formation is the source of talk of those enormous oil resources -- larger than those of Saudi Arabia -- and it is a very different prospect than the tight oil being produced in North Dakota and Texas. The oil shale in the Green River looks like rock. Unlike the hydrocarbons in the tight oil formations, the oil shale (kerogen) consists of very heavy hydrocarbons that are solid. In that way, oil shale more resembles coal than oil. Oil shale is essentially oil that Mother Nature did not finish cooking, and thus to convert it into oil, heat has to be added. The energy requirements -- plus the fact that oil shale production requires a lot of water in a very dry environment -- have kept oil shale commercialization out of reach for over 100 years.

        Thus, while the U.S. might indeed have greater oil resources than Saudi Arabia, U.S. oil reserves (per the BP Statistical Review of World Energy) are only about 1/10th those of Saudi Arabia. The distinction is important.

        Summarizing the Definitions

        To summarize, let's review the definitions for the important terms discussed here:

        Oil resource -- the total amount of oil in place, most of which typically can't be recovered

        Oil reserve -- the amount of oil that can be recovered economically with existing technology

        Oil shale -- sedimentary rock that contains solid hydrocarbons called kerogen (e.g., Green River Formation)

        Shale oil -- the oil that can be obtained by cooking kerogen

        Tight oil -- liquid hydrocarbons that are obtained by hydraulic fracturing of shale formations (e.g., Bakken Formation and Eagle Ford Formation)

        Conclusion: Resources are not Reserves, and Tight Oil isn't Shale Oil

        It is pretty clear that at current oil prices, developments in the tight oil formations will continue. It is not at all clear that even at $100 oil the shale in the Green River formation will be commercialized to produce oil, although a number of companies are working on it and will continue to do so. Oil shale is commercially produced in some countries like Estonia, but it is primarily just burned for power.

        In order to commercially convert the oil shale into oil, a more energy efficient method of producing it must be found (or, one would have to have extremely cheap energy and abundant water supplies to drive the process). I have heard from multiple industry sources that the energy return for producing oil from oil shale is around 4 to 1 (lower than for oil sands production), and that is before refining the oil to finished products. At this sort of energy return, oil sands will continue to be a more economical heavy oil option.

        Thus, my prediction is that despite having an oil shale resource that may indeed be far greater than the oil resources of Saudi Arabia (I don't think I have seen an estimate of Saudi's total oil resources), the reserve will continue to be close to zero for the foreseeable future because there are still many technical hurdles to overcome to realize a scalable, commercially viable process.

        Finally, I would say that if a commercially viable process for shale oil production from the Green River formation is developed, the environmental blowback will be enormous. The production of shale oil is more energy intensive (i.e., has higher carbon emissions) than for the oil sands, it has a high water requirement in a dry climate, and it is potentially a huge new source of carbon dioxide emissions. The environmental protests that would arise in response to a growing commercial shale oil operation would make the Keystone XL pipeline protests pale in comparison.


        Does the U.S. Really Have More Oil than Saudi Arabia? Share | Show without comments |

        PDF version

        Related articles (automatically generated) Is "shale oil" the answer to "peak oil"? (March 4, 2011)

        The Bakken Boom - A Modern-Day Gold Rush (December 12, 2011)
        Tech Talk: Oil Shale, a Future Source of Oil? (February 14, 2010)
        Unconventional Oil: Tar Sands and Shale Oil - EROI on the Web, Part 3 of 6 (April 15, 2008)
        Shhh is for oil shale (June 27, 2006)

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          JoulesBurn on April 3, 2012 - 5:44pm Permalink | Subthread | Comments top
          A distinction between the oil resources in the Bakken/Eagle Ford formations and the Green River oil shale certainly needs to be made, and I commend Robert for taking this on. One solution for dealing with the confusion and hype about this is to simply point out the difference with articles such as this. But because most people won't read such articles, Robert suggests that we stop calling oil in the Bakken et al "shale oil" because:

          The oil that is being produced from these shale formations is sometimes improperly referred to as shale oil.

          However, it is certainly proper to refer to this oil as "shale oil" because that is where the kerogen was baked into oil by natural processes and where it now lies. Now, one can argue on the basis of historical usage:

          Although the oil in the Bakken and Eagle Ford is being extracted from shale formations, the term shale oil has been used for over 100 years to describe a very different resource.

          True, "shale oil" has long been used to describe what you get when you bake the (e.g. Green River) oil shale to convert the kerogen within into oil. But the source of the confusion between the production potential of this "EZ-bake" shale oil and the natural slow-cook stuff is more likely the improper use of the term "oil shale" to describe the Green River rock, because there is really no oil there (yet). But rather than engage in an argument over logical semantics vs. historical usage, I will simply point out that the ship has already sailed. And it is not only the unwashed press that is calling a spade a spade, but also The Oil and Gas Journal:

          San Joaquin basin shale oil drawing more explorers

          The US Energy Information Administration has estimated that 64% of the shale oil resource in the US Lower 48 is in California and that San Joaquin is volumetrically the richest California shale basin, Solimar pointed out.

          and the EIA:




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          theoildrum.com

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          To: CommanderCricket who wrote (166793)4/4/2012 7:32:05 PM
          From: katytrader
          1 Recommendation   of 185763
           
          It's all in keeping with the times. We have people in Washington who know nothing about the energy business regularly making decisions on the business. To them, lowering fuel cost is a great idea and, with a little grease, DAL may be able to get a Federal subsidy. And it will make sense to numbers crunchers who know nothing about airlines or energy. After all, both businesses are capital-intensive.

          katytrader

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          To: Bearcatbob who wrote (166794)4/4/2012 8:26:06 PM
          From: Keith J
             of 185763
           
          Maybe they will go after KOG or SD next. It's just one step further back in the process. LOL

          :)

          KJ

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          From: CommanderCricket4/4/2012 8:36:04 PM
             of 185763
           
          BP Pursues Namibia Crude Amid No Known Discovery of Oil: Energy

          By Brian Swint and Eduard Gismatullin - Apr 4, 2012 7:00 PM

          BP Plc (BP/)’s push into Namibian oil makes it the only major producer expanding in the West African nation, where commercial crude deposits have never been found and the only gas field has sat idle since its discovery in 1974.

          BP last month became the largest shareholder in a block covering Namibia’s Nimrod offshore prospect, which may yield the third-biggest discovery of 2012, according to Morgan Stanley. A week earlier, the oil producer said it would buy into Serica Energy Plc (SQZ)’s licenses in the country.

          The company snapped up permits in neighboring Angola last year on a bet that West Africa’s coastal shelf may mirror that of Brazil across the Atlantic. Exploration off Namibia, where 14 wells have been drilled out of about 15,000 across West Africa, has so far focused on the Kudu gas field, still untapped since its discovery as the partners clash over prices for the fuel.

          BP’s entry into the region follows the withdrawal of Chevron Corp. and Royal Dutch Shell Plc from Kudu, and allies the company with explorers a fraction of its size.

          “BP has become very aggressive out here,” said Paul Welch, chief executive officer of Chariot Oil & Gas Ltd. (CHAR), a partner in the Nimrod prospect. “It’s become a hot area. If we make a discovery, it’ll be like Ghana after Jubilee.”

          Ghana Find Tullow Oil Plc (TLW)’s Jubilee discovery in Ghana in 2007 unlocked as many as 700 million barrels of reserves and opened a new oil province. The project prompted Exxon Mobil Corp. and Cnooc Ltd., China’s largest offshore oil producer, to bid for stakes in the field.

          “Majors have overlooked a number of the biggest basins in the world,” BP CEO Bob Dudley said in October. In February, he said BP’s focusing on exploration in Angola, the Gulf of Mexico and South America to counter falling output at older fields and expand reserves. The company declined to comment for this story.

          Namibia, a former German colony twice the size of that country, is the world’s fourth-largest uranium producer, and its diamond mines operated by De Beers produce the highest-quality gems. Ranking 129th globally in terms of gross domestic product per capita, the nation’s $13 billion economy is equivalent to only 60 percent of BP’s 2012 investment plans.

          “Namibia is one option that could open up a new basin” for BP, said Theepan Jothilingam, an analyst at Nomura Holdings Inc. in London. “In reality, none of the super-majors are there yet. There is this chase for new acreage.”

          Arcadia, Falkland Oil Smaller companies have snapped up this year’s two most prospective discoveries, according to Morgan Stanley. Closely held Arcadia Petroleum Ltd. is drilling at the Delta prospect off Namibia, while London-based Falkland Oil & Gas Ltd. is preparing to tap Loligo, southeast of the Falkland Islands.

          Petroleo Brasileiro SA, the operator of the Nimrod prospect, reduced its stake in the project last month, selling 20 percent to BP and retaining 30 percent.

          Nimrod’s chance of success is put at 24 percent by Chariot, showing a willingness by BP to drill long-shot prospects in untapped areas after many of the biggest finds in recent years went to its competitors. Petrobras (PETR4)’s Tupi field off Brazil, discovered in 2007, was the biggest discovery in the Americas in 30 years. Tullow’s Jubilee was West Africa’s largest offshore find in a decade.

          The waters running along the west coast of Africa may hold 75 billion barrels of resources, according to U.S. Geological Survey research from 2010 and 2011, which didn’t cover Namibia.

          Kudu Gas Namibia, sandwiched between Angola, South Africa and Botswana, has no proven oil reserves. Tullow and its partners at the Kudu field, which holds more than 1 trillion cubic feet of gas, plan to start pumping the fuel to generate power this year.

          “The Kudu project continues to be our highest priority,” Tullow Exploration Director Angus McCoss said March 14. “It’s a big development license and there is exploration potential still to be pursued in the future in Namibia.”

          Chariot is the third-largest holder of exploration acreage in the country after Brazil’s HRT Participacoes em Petroleo SA (HRTP3) and Canada’s Eco Atlantic Oil & Gas Inc. (EOG), according to the nation’s Mines and Energy Ministry.

          It’s a “promising new frontier of oil and gas,” said Gil Holzman, CEO of Eco Atlantic. New technology allows the company to “unlock its deepwater potential and gain a better geological understanding of the Atlantic off West Africa.”

          Holzman and Chariot’s Welch describe Namibia as investor- friendly, evidenced by the successful mining operations of companies such as Rio Tinto Plc and De Beers.

          Tapir, Nimrod Chariot is set to start drilling the Tapir South prospect in April, targeting 600 million barrels of resources. Nimrod, where it expects to drill this year, is prospecting about 5 billion barrels. The company also plans to explore blocks in northern Namibian waters, just south of discoveries in Angola.

          “This is a fairly effective way of entering a prospective area,” said Peter Hutton, an analyst at RBC Capital Markets in London. “Namibia was conspicuously absent from BP’s last exploration presentation. That’s probably because they didn’t want to highlight it to anyone else.”

          Cobalt International Energy Inc. (CIE) said Feb. 10 it found a 1,180-foot (360-meter) column of oil off Angola, sending the company’s shares up 33 percent that day and adding $3 billion to its market value. Parts of Africa’s Atlantic coastline may mirror the geology of Brazil, where billions of barrels of oil were discovered in the past decade under a layer of salt. BP bought Brazilian assets from Devon Energy Corp. for $3.2 billion in 2010 to break into offshore exploration in the country.

          Serica Surveys In Namibia, BP is footing the bill for seismic exploration at Serica’s blocks, paying an amount equal to Serica’s valuation just a couple of months ago, said Serica Chairman Tony Craven Walker. Serica is valued at about 57 million pounds ($91 million), compared with 44 million pounds in early February. It acquired the blocks in January after more than 18 months of talks with the government.

          “Some people say there’s nothing there, some say it looks like Brazil,” Craven Walker said in an interview in London. “If I were BP, I’d rather have this as an option than have to come in late.”

          To contact the reporters on this story: Brian Swint in London at bswint@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net.

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          To: katytrader who wrote (166798)4/4/2012 9:15:21 PM
          From: t4texas
          1 Recommendation   of 185763
           
          come on, delta. if you are thinking about buying a refinery (wtf), don't buy one that has to buy brent priced crude. buy one in the midwest -- if you must.

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          To: DELT1970 who wrote (165496)4/4/2012 9:18:43 PM
          From: Ed Ajootian
             of 185763
           
          Enerjex Resources (ENRJ.OB) -- This is an interesting little company that got created a little over a year ago when a private company managed by Robert (don't call me Bob) Watson Jr., the son of the CEO of Abraxas, reverse-merged into a company that had been operating in southeastern Kansas. This part of Kansas has very shallow production with little or no geologic risk, but the operating costs are very high on a boe basis. They also have a nice oil play going in Texas, that had been stymied by lack of frac service but I believe that is going to change soon with all the gas-directed rigs getting laid down.

          Since I'm a bit pressed for time I'll let Robert himself tell the Enerjex story, by linking a great and lengthy interview he did with Wall St. Transcript, see enerjexresources.com .

          The stock trades by appointment only but I believe the volume will pick up once they announce year-end reserves, which I expect to come out early next week. Here's what Robert had to say about the upcoming reserve report in his WS Transcript interview:

          Our new reserve report should incorporate Texas, and it will
          also incorporate everything that we did in 2011 with our existing assets.
          We have made some asset sales, some noncore asset sales, and we’ve
          also made significant investments in certain areas, for example, in the
          Rantoul Project that has increased from producing 30 barrels per day to
          130 barrels per day since the last reserve report was completed. There are
          a lot of changes but the way I would pitch the value component is that if
          we had $50 million of net asset value or NAV at the end of 2010, and you
          look at our market cap right now, it’s about $50 million, so we’re basically
          trading at our net asset value of our Kansas assets as of the end of
          2010. So in a way you can buy our stock now at the Kansas NAV a year
          ago, and that NAV doesn’t incorporate anything in Texas and it doesn’t
          incorporate any of the work we’ve done in Kansas, so it’s kind of an
          interesting value play from that perspective.

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          To: Bearcatbob who wrote (166791)4/4/2012 9:30:09 PM
          From: kingfisher
          9 Recommendations   of 185763
           
          The Keystone XL delay was a gift to Canada
          theglobeandmail.com
          Vladimir Putin spent much of 2008 in a dispute with Ukraine over the price of natural gas supplied by Gazprom, the state-owned Russian energy company. Negotiations culminated in early 2009, when, in a moment of brinkmanship, Mr. Putin briefly cut off supplies to Ukraine, through which Russia ships 80 per cent of its Europe-bound gas.


          While this muscle-flexing may have given Moscow a short-term political boost, the incident signalled to Europe the danger of depending on Russia for its gas supplies. Europe has since worked to diversify its energy sources, including potentially restarting nuclear facilities and increasing the amount of imported gas from Norway and the Caspian. Major European oil and gas companies (including Shell, BP, Total, Statoil, BG and Repsol) have all since invested tens of billions of dollars in U.S. shale gas, in part to learn techniques for developing that resource in Europe.

          The results are clear: Ukraine has pledged to reduce Russian gas imports by two-thirds, and the European Union as a whole reduced Russian gas imports by 30 per cent last year. In other words, Mr. Putin’s political grandstanding backfired – it has actually made Europe more energy independent.

          U.S. President Barack Obama’s decision to delay, for a second time, approval of the Keystone XL pipeline has become his Putin moment.

          For most of the previous 80 years, Canada and the United States enjoyed a mutually beneficial supplier-customer relationship. In 2011, Canada supplied the U.S. with 2.1 million barrels of oil and 8.9 billion cubic feet of gas a day, making Canada the largest source of imported U.S. oil and gas.


          Keystone XL was designed to further strengthen the Canada-U.S. relationship by shipping bitumen from Alberta’s oil sands to Gulf Coast refineries for upgrading. It received Canada’s National Energy Board approval in March of 2010, and South Dakota Public Utilities Commission approval in February of 2010. Later that year, the Environmental Protection Agency said that, with proper safeguards, the pipeline would present “no significant impact” on most resources.

          Since Mr. Obama’s decision, the Canadian government and private enterprise have been doing what any supplier would do when it discovers that a customer is not reliable – they are working to diversify their market. Fortunately for Canada, Asia is more than willing to step in. Prime Minister Stephen Harper went to China in February to encourage Chinese investment in the oil sector. He has declared that regulatory approval for Northern Gateway, a proposed oil sands pipeline to the West Coast, is a national priority.

          Asia has responded enthusiastically. Since Mr. Obama first raised concern about Keystone in September, the pace of Asian investment in the Canadian energy sector has increased. In October, Sinopec announced it was acquiring Daylight Energy for $2.1-billion. In February, Mitsubishi invested $2.9-billion in a joint venture with Encana on its B.C. gas assets. Both are looking at the potential to ship gas to B.C. for the Asian liquefied natural gas market. In January, PetroChina expanded its oil sands investments by acquiring, for $680-million, additional oil sands assets from Athabasca Oil Sands Corp. In February, PetroChina acquired a 20-per-cent interest in Shell’s Groundbirch asset for an undisclosed amount. Sinopec is also a major investor in the Canadian oil sands market and an investor in the Gateway pipeline.

          In addition to diversifying away from its unreliable customer, Canada will get two additional benefits of forging a relationship with Asia.

          First, Canada will get better oil prices. Canadian oil currently sells at a discount to world markets due to lack of capacity out of the U.S. Midwest at Cushing, Okla. In 2011, this discount between West Texas Intermediate and Brent cost producers amounted to $4.6-billion, according to oil consultant Peter Tertzakian. Keystone XL would help to alleviate this bottleneck. Canada has awakened to the fact that it does not need to be a price taker, dependent on internal U.S. price dynamics. According to a December report by oil consultant Wood Mackenzie, Canadian producers will lose $8-billion in revenue a year by 2020 if U.S. bottlenecks are not loosened.


          Second, Canada will get cheap capital. As Canada shifts its focus away from the U.S. to Asia, the Canadian oil and gas industry is getting access to lower cost Asian capital. With more than $134-billion in oil sands projects under construction or about to start, Canada needs to find investment dollars with the lowest investment hurdle rate.

          Perhaps sensing his foolishness, Mr. Obama recently welcomed TransCanada’s proposal to build the southern leg of Keystone XL. Unfortunately, his actions may be too little, too late. Even with the likely eventual approval of Keystone XL in 2013, Mr. Obama will be closing the barn door after the horses are gone. He has clearly given Canada (and China) a wonderful gift.

          Adam Waterous is vice-chairman, head of Scotiabank Global Investment Banking, and president and head of Scotia Waterous, the oil-and-gas mergers and acquisitions division of Scotiabank’s Global Banking and Markets division.

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