Last Week in World Oil:
- Oil prices inched up at the start of the week, buoyed by the effective implementation of the OPEC producer cuts. However, the rising prices have also encouraged rising production in the US, keeping gains in check along with stubbornly high US stockpile levels.
- The Brent crude benchmark, which forms the bulk of global oil trade, is being overhauled for the first time in a decade to account for declining production in the North Sea. Effective immediately, pricing agency Platts has added the Norwegian Troll crude grade to the basket of four British and one Norwegian crudes (Brent, Forties, Oseberg and Ekofisk) that form Brent to expand the physical volume of crude underpinning the benchmark, making it less vulnerable to manipulation.
Upstream & Midstream
- TransCanada has re-filed an application with Nebraska to route the proposed Keystone XL pipeline through the state. The original application was withdrawn after President Obama vetoed the pipeline project, but with a friendlier administration in the White House, this brings Keystone XL one step closer to implementation and operational reality.
- Iraq and Iran have agreed to explore the possibility of a pipeline linking the two nations, expanding export options for Kirkuk crude in northern Iraq as well as provide crude for the Abadan refinery in Iran. Currently Kirkuk crude is transported through Kurdish territory, complicating matters as the Kurds have interrupted Kirkuk transit in the past.
- Thirteen new onshore oil and gas rigs were added to the US rig count last week, offsetting a loss of three offshore rigs to bring the total active rig count up to 751. It is the fifth consecutive week of rises, leading to the EIA forecasting a rise in domestic oil output to 4.87 mbpd in March, which would be the fastest rise since October, underpinned by shale oil plays.
- The Ras Laffan Refinery 2, which began production in late 2016, will be geared towards producing aviation fuel, with a dedicated pipeline connecting it to the Doha International Airport expected to be completed in 2018. Ras Laffan 2 runs on condensate, with a capacity of 146 kb/d, and will also produce naphtha for petrochemical processing and ultra low-sulphur diesel for export to Europe.
Natural Gas and LNG
- Petronas and the government of British Columbia are offering an additional C$145 million to two First Nation groups that would allow a US$27 billion LNG project to go ahead. Federal approval for the project was given last September for the Pacific Northwest LNG, but additional amendments are proposed to quell environmental and native group opposition to the project. Politics is now also in the fray, with the opposition candidate for the BC premiership opposing the current site of the planned facility, with elections due in May 2017.
Last Week in Asian oil:
Upstream & Midstream
- Petronas may be selling a large minority stake in a prized upstream gas asset in Sarawak, to raise cash and cut development costs as the Malaysian state player seeks to improve its financials. Petronas will retain a majority stake in the SK316 offshore gas block, but up to 49% of the asset may be sold off. The block is currently home to the NC3 field, which feeds the LNG9 joint venture export project with JX Nippon, as well as the Kasawari field. Likely buyers would be Japanese and Korean gas importers.
- Chevron has secured an offshore permit in Western Australia for AUS$3 million, the first cash bid permit to be awarded since 2014. The cash bid permit was reintroduced to drive interest‘in mature areas or areas known to contain petroleum accumulations’, essentially a cost-effective way of driving interest in areas that have a high percentage of recoverable resources. The WA-526-P permit is in a gas-rich area of the Northern Carnarvon basin close to the Gorgon and Pluto LNG projects, and is the first success of a series of disappointing cash bid auction results.
Downstream & Shipping
- Thailand’s largest oil refiner ThaiOil set out its operational plans for 2017 last week, aiming to runs its 275 kb/d refinery at within 100-103% capacity with no major maintenance shutdowns planned. Productivity rates exceeding 100% are common in Thailand where official refinery capacity is underestimated, with the Sriracha refinery reaching rates of 108% last year, almost all of which was consumed domestically.
Natural Gas & LNG
- More LNG will be entering Singapore as natural gas contracts supplied via pipeline from Malaysia and Indonesia near expiration. To mitigate this, Shell and Pavilion Gas will deliver their first LNG cargoes to Singapore later this year, under contracts awarded in October 2016 for three years or a maximum of 1 million tons per year. Singapore will also be allowing for up to 10% of imports coming from the spot market, to even out supply and bolster its ambitions of becoming the LNG trading hub for Asia
- Weak LPG prices are boosting demand in South Korea. Traditionally used as a transport fuel, LPG consumption in South Korea has declined significantly since 2010 as vehicles switched to gasoline and diesel, leaving major importers SK Gas and E1 scrambling for new customers. With a glut in natural gas liquids leading to low prices and a recovery in consumer plastics strengthening Asian petrochemical margins, LPG demand has jumped, benefitting American exporters. In 2016, South Korea’s LPG demand rose to 9.4 million tons while imports jumped to 7 million tons, more than half of which was supplied by US Gulf exporters. LPG usage in petrochemicals more than doubled to 3.3 million tons.
- The Elk-Antelope LNG project in Papua New Guinea is now targeted at the end of 2018, a delay from its original date of late 2017. One of the largest undeveloped gas assets in Asia, the Elk and Antelope fields are operated by Total, partnering with InterOil on the LNG export project. The ExxonMobil acquisition of InterOil would have streamlined the natural gas scene in PNG, but some ownership quibbles have delayed the acquisition until the Supreme Court of Yukon confirmed that the sale could go ahead on Sunday.
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Anthony Rizzo Players Can't Sit On Bench According to a report from the Chicago Sun-Times, the world-famous Anthony Rizzo Phrase "Zombie Rizzo" has been told to never be used again. Of course, this is not the first time that the Zombified Chicago Cubs' first baseman has made headlines this year. A year ago, "Rosebud" was the catchphrase that he coined for himself. Also, there is Anthony Rizzo Shirts that come in his name. Now that the Cubs are World Series Champions, Anthony Rizzo is on his way to superstardom. He is leading the World Series in several categories, including hits, runs, home runs, RBI's, OBP, and SLG. Also, he's on track for a staggering year in hits, RBI's, and total bases, all while being second in home runs.
The Cubs Phenom
This season the Chicago Cubs are over 3.5 million in earnings from the local broadcasts alone. The Cubs could lose a good deal of local revenue if they fail to get back to the World Series. But the local revenue is not the biggest factor in the Cub's success. A large part of their success comes from two of their most popular players, third baseman Kris Bryant and first baseman Anthony Rizzo. These two players are now the favorites to win the MVP awards this year, especially if the Cubs are able to stay on top of the wild card standings. A Look at Rizzo Anthony Rizzo is often compared to his college teammate Andrew McCutchen. Both players have performed well at the plate.
The wood pellet mill, that goes by the name of a wood pellet machine, or wood pellet press, is popular in lots of countries around the world. With all the expansion of "biomass energy", there are now various production technologies utilized to convert biomass into useable electricity and heat. The wood pellet machines are one of the typical machines that complete this task.
Wood pellet mills turn raw materials such as sawdust, straw, or wood into highly efficient biomass fuel. Concurrently, the entire process of converting these materials in a more dense energy form facilitates storage, transport, and make use of on the remainder of any value chain. Later on, you will find plans for biomass fuel to replace traditional fuels. Moreover, wood pellet machines supply the chances to start many different types of businesses.
What Is A Wood Pellet Mill?
Wood pellet machines are kinds of pellet machines to process raw materials including peanut shells, sawdust, leaves, straw, wood, plus more. Today the pellet mills can be purchased in different types. Both the main types include the ring die pellet mills as well as the flat die pellet mills. Wood pellet mills are designed for processing many different types of raw materials irrespective of size. The pellet size is very simple to customize with the use of a hammer mill.
The Benefits Of A Wood Pellet Mill
- The gearboxes are made of high-quality cast iron materials which provide excellent shock absorption and low noise. The wood pellet mills adopt a gear drive that makes a better efficiency in comparison with worm drive or belt drive. The gear drive setup really helps to prevent belt slippage while extending the lifespan in the belt drive.
- The equipment shell includes reinforced ribs and increased casting thickness, which significantly enhances the overall strength of those mills, preventing the breakage in the shell.
- The rollers and die are made of premium-quality alloy steel with 55-60HRC hardness.
- These mills adopt an appropriate wood-processing die-hole structure and die-hole compression ratio.
- The electric-control product is completely compliant with CE standard-os.
- The Emergency Stop button quickly shuts along the mill if you are up against an unexpected emergency.
How To Maintain A Wood Pellet Mill
- The belt tightness ought to be checked regularly. If it is now slack, it needs to be tightened immediately.
- The equipment should be situated in a nicely-ventilated area to ensure the temperature created by the motor can emit safely, to extend the lifespan of your machine.
- Before restarting the appliance, any remaining debris has to be cleared from the machine room to reduce starting resistance.
- Oil must be filled regularly to every bearing to market inter-lubricating.
- To ensure the cutter remains sharp, check this part regularly to prevent unnecessary damages for any other part.
- Regularly inspect the cutter screws, to make sure the bond involving the knife and blade remains strong.
- The machine should take a seat on an excellent foundation. Regular maintenance of your machine will prolong the complete lifespan of the machinery.
It was shaping up to yet another dull OPEC+ meeting. Cut and dry. Copy and paste. Rubber-stamping yet another monthly increase in production quotas by 432,000 b/d. Month after month of resisting pressure from the largest economies in the world to accelerate supply easing had inured markets to expectations of swift action by OPEC and its wider brethren in OPEC+.
And then, just two days before the meeting, chatter began that suggested something big was brewing. Whispers that Russia could be suspended made the rounds, an about-face for a group that has steadfastly avoided reference to the war in Ukraine, calling it a matter of politics not markets. If Russia was indeed removed from the production quotas, that would allow other OPEC+ producers to fill in the gap in volumes constrained internationally due to sanctions.
That didn’t happen. In fact, OPEC+ Joint Technical Committee commented that suspension of Russia’s quota was not discussed at all and not on the table. Instead, the JTC reduced its global oil demand forecast for 2022 by 200,000 b/d, expecting global oil demand to grow by 3.4 mmb/d this year instead with the downside being volatility linked to ‘geopolitical situations and Covid developments.’ Ordinarily, that would be a sign for OPEC+ to hold to its usual supply easing schedule. After all, the group has been claiming that oil markets have ‘been in balance’ for much of the first five months of 2022. Instead, the group surprised traders by announcing an increase in its monthly oil supply hike for July and August, adding 648,000 b/d each month for a 50% rise from the previous baseline.
The increase will be divided proportionally across OPEC+, as has been since the landmark supply deal in spring 2020. Crucially this includes Russia, where the new quota will be a paper one, since Western sanctions means that any additional Russian crude is unlikely to make it to the market. And that too goes for other members that haven’t even met their previous lower quotas, including Iraq, Angola and Nigeria. The oil ministers know this and the market knows this. Which is why the surprise announcement didn’t budge crude prices by very much at all.
In fact, there are only two countries within OPEC+ that have enough spare capacity to be ramped up quickly. The United Arab Emirates, which was responsible for recent turmoil within the group by arguing for higher quotas should be happy. But it will be a measure of backtracking for the only other country in that position, Saudi Arabia. After publicly stating that it had ‘done all it can for the oil market’ and blaming a lack of refining capacity for high fuel prices, the Kingdom’s change of heart seems to be linked to some external pressure. But it could seemingly resist no more. But that spotlight on the UAE and Saudi Arabia will allow both to wrench some market share, as both countries have been long preparing to increase their production. Abu Dhabi recently made three sizable onshore oil discoveries at Bu Hasa, Onshore Block 3 and the Al Dhafra Petroleum Concession, that adds some 650 million barrels to its reserves, which would help lift the ceiling for oil production from 4 to 5 mmb/d by 2030. Meanwhile, Saudi Aramco is expected to contract over 30 offshore rigs in 2022 alone, targeting the Marjan and Zuluf fields to increase production from 12 to 13 mmb/d by 2027.
The UAE wants to ramp up, certainly. But does Saudi Arabia too? As the dominant power of OPEC, what Saudi Arabia wants it usually gets. The signals all along were that the Kingdom wanted to remain prudent. It is not that it cannot, there is about a million barrels per day of extra production capacity that Saudi Arabia can open up immediately but that it does not want to. Bringing those extra volume on means that spare capacity drops down to critical levels, eliminating options if extra crises emerge. One is already starting up again in Libya, where internal political discord for years has led to an on-off, stop-start rhythm in Libyan crude. If Saudi Arabia uses up all its spare capacity, oil prices could jump even higher if new emergencies emerge with no avenue to tackle them. That the Saudis have given in (slightly) must mean that political pressure is heating up. That the announcement was made at the OPEC+ meeting and not a summit between US and Saudi leaders must mean that a façade of independence must be maintained around the crucial decisions to raise supply quotas.
But that increase is not going to be enough, especially with Russia’s absence. Markets largely shrugged off the announcement, keeping Brent crude at US$120/b levels. Consumption is booming, as the world rushes to enjoy its first summer with a high degree of freedom since Covid-19 hit. Which is why global leaders are looking at other ways to tackle high energy prices and mitigate soaring inflation. In Germany, low-priced monthly public transport are intended to wean drivers off cars. In the UK, a windfall tax on energy companies should yield US$6 billion to be used for insulating consumers. And in the US, Joe Biden has been busy.
With the Permian Basin focusing on fiscal prudence instead of wanton drilling, US shale output has not responded to lucrative oil prices that way it used to. American rig counts are only inching up, with some shale basins even losing rigs. So the White House is trying more creative ways. Though the suggestion of an ‘oil consumer cartel’ as an analogue to OPEC by Italian Prime Minister Mario Draghi is likely dead on arrival, the US is looking to unlock supply and tame fuel prices through other ways. Regular releases from the US Strategic Petroleum Reserve has so far done little to bring prices down, but easing sanctions on Venezuelan crude that could be exported to the US and Europe, as well as working with the refining industry to restart recently idled refineries could. Inflation levels above 8% and gasoline prices at all-time highs could lead to a bloody outcome in this year’s midterm elections, and Joe Biden knows that.
But oil (and natural gas) supply/demand dynamics cannot truly start returning to normal as long as the war in Ukraine rages on. And the far-ranging sanctions impacting Russian energy exports will take even longer to be lifted depending on how the war goes. Yes, some Russian crude is making it to the market. China, for example, has been quietly refilling its petroleum reserves with Russian crude (at a discount, of course). India continues to buy from Moscow, as are smaller nations like Sri Lanka where an economic crisis limits options. Selling the crude is one thing, transporting it is another. With most international insurers blacklisting Russian shippers, Russian oil producers can still turn to local insurance and tankers from the once-derided state tanker firm Sovcomflot PJSC to deliver crude to the few customers they still have.
A 50% hike in OPEC’s monthly supply easing targets might seem like a lot. But it isn’t enough. Especially since actual production will fall short of that quota. The entire OPEC system, and the illusion of control it provides has broken down. Russian oil is still trickling out to global buyers but even if it returned in full, there is still not enough refining capacity to absorb those volumes. Doctors speak of long Covid symptoms in patients, and the world energy complex is experiencing long Covid, now with a touch with geopolitical germs as well. It’ll take a long time to recover, so brace yourselves.
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