Maritime News

Paragon Shipping Inc. Transfer Listing on the New York Stock Exchange

maritime news — Fri, 12 Mar 2010 00:49:40 +0000

Paragon Shipping Inc., or the Company, a global shipping transportation company specializing in drybulk cargoes, announced yesterday that it is transferring the listing of its common stock to the New York Stock Exchange (”NYSE”).

The Company expects to begin trading on the NYSE on Wednesday, March 24,
2010, using its current symbol “PRGN”. The company will continue to
trade on the NASDAQ until the transfer is completed.

Commenting on this development, Michael Bodouroglou, Chairman and Chief
Executive Officer of Paragon Shipping, stated, “We are pleased to
announce that we shall be listing our common stock on the New York Stock
Exchange, one of the world’s premier stock exchanges. The New York
Stock Exchange is home to many international shipping companies and we
believe that by joining them we will increase Paragon’s visibility
within the investment community.”

“We are delighted that Paragon Shipping has chosen to transfer its
listing to the New York Stock Exchange,” said Ronald Kent, Executive
Vice President, Head of International Listings, at NYSE Euronext. “We
are looking forward to partnering with Paragon Shipping as the company
becomes part of NYSE Euronext’s growing US franchise of currently 32
shipping companies.”

Paragon Shipping Inc. is an Athens, Greece-based international shipping
company specializing in the transportation of drybulk cargoes. The
Company’s current fleet consists of eleven vessels with a total carrying
capacity of 719,483 dwt.

Source: Paragon Shipping Inc.

PSO signs MoU with KPT

maritime news — Fri, 12 Mar 2010 00:49:39 +0000

A Memorandum of Understanding (MoU) was signed between Pakistan State Oil (PSO) and Karachi Port Trust (KPT) to jointly undertake a study to connect Keamari with Port Qasim through a white oil pipeline.

The study would lead to a joint venture pipeline project between the two
organisations, which would result in a more effective and efficient
mechanism of meeting the energy demands of the nation.

While speaking at the occasion, MD PSO, Irfan Qureshi congratulated the
teams of PSO and KPT on this initiative and said, “the project is of
great strategic importance in terms of enhancing operational efficiency
at the ports. It is expected to facilitate smooth handling of HSD with
more security and flexibility.”

The present POL handling capacity of Keamari Port is about 24 million
metric tonnes, whereas, the FOTCO Jetty at Port Qasim has a designed
capacity of 9 million metric tonnes. It is expected that efficiency and
flexibility will increase manifold if these two ports are connected to
each other through integrated pipeline system.

On successful completion of the study, both organisations intend to
develop a joint venture partnership for operation of the new proposed
system. staff report

Source: Daily Times

BP Enters Deepwater Brazil and strengthens core portfolio

maritime news — Fri, 12 Mar 2010 00:49:28 +0000

BP today announced a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas

In a broad-ranging deal, BP will pay Devon Energy $7.0 billion in cash
for assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico.
These include interests in ten exploration blocks in Brazil, including
seven in the prolific Campos basin; a major portfolio of deepwater
exploration acreage and prospects in the US Gulf of Mexico; and an
interest in the BP-operated Azeri-Chirag-Gunashli (ACG) development in
the Caspian Sea, Azerbaijan.

In addition, BP will sell to Devon Energy a 50 per cent stake in BP’s
Kirby oil sands interests in Alberta, Canada, for $500 million. The
parties have agreed to form a 50/50 joint venture, operated by Devon, to
pursue the development of the interest. Devon will commit to fund an
additional $150 million of capital costs on BP’s behalf.

Completion of certain transfers will be subject to regulatory approvals
and other third party consents.

“This strategic opportunity fits well with BP’s operating strengths and
key interests around the world, offering us significant additional
long-term growth potential with an emphasis on high-margin oil,” said BP
group chief executive Tony Hayward. “As well as giving us a broad
portfolio of assets in the exciting Brazilian deepwater, it will
strengthen our position in the Gulf of Mexico, enhance our interests in
Azerbaijan and enable us to progress the development of Canadian
assets.”

Andy Inglis, BP’s chief executive of Exploration and Production, said:
“Through our entry into Brazil, BP will add a major position in another
attractive deepwater basin. Together with the additional new access in
the Gulf of Mexico, it further underlines our global position as the
leading deepwater international oil company.”

The deal will give BP a diverse and broad deepwater exploration acreage
position offshore Brazil with interests in eight licence blocks in the
Campos and Camamu-Almada basins, in water depths ranging from 330 to
9,100 feet (100-2,780 metres), as well as two onshore licences in the
Parnaiba basin. The Campos basin blocks include three discoveries –
Xerelete, pre-salt Wahoo and Itaipu – and the producing Polvo field.

In the US Gulf of Mexico deepwater, BP will gain a high quality
portfolio with interests in some 240 leases, with a particular focus on
the emerging Paleogene play in the ultra-deepwater. The addition of
Devon’s 30 per cent interest in the major Paleogene discovery Kaskida
will give BP a 100 per cent interest in the project. The assets also
include interests in four producing oil fields: Zia, Magnolia,
Merganser, and Nansen.

In Azerbaijan, acquisition of Devon’s 5.63 per cent stake in the ACG
development will increase BP’s operating interest in the fields to 39.77
per cent.

The undeveloped Kirby oil sands leases are in the south east of the
Athabasca region of Alberta, close to the Devon-operated Jackfish
development, which started production in 2007. Like Jackfish, the Kirby
oil sands are suitable for in situ development using steam-assisted
gravity drainage (SAGD). BP and Devon have agreed an initial appraisal
programme to assess the significant potential of the Kirby acreage and
to establish a long-term development plan. In addition to forming the
joint venture, BP and Devon have agreed to enter into a long-term heavy
crude off-take agreement for production from the Kirby development as
well as a portion of the production from some of Devon’s other oil sands
assets.

BP is currently undertaking a major investment programme at its Whiting,
Indiana, refinery, significantly increasing its capacity to process
heavy crudes such as Canadian heavy oil. The Whiting upgrade is planned
to come on-stream in 2012.

“Devon is an experienced operator in the Canadian oil sands with a
proven track record of in situ development and production,” said Inglis.
“We expect this transaction will accelerate the development of the
Kirby assets and, through the associated crude off-take agreement,
provide a secure source of Canadian heavy oil for our advantaged Whiting
refinery.”

On completion of the transaction, Devon’s employees in Brazil are
expected to join BP.

Source: BP

OPEC pumps 29.31 million barrels of oil per day in February

maritime news — Fri, 12 Mar 2010 00:49:27 +0000

The Organization of Petroleum Exporting Countries’ (OPEC) crude oil production rose to 29.31 million barrels per day (b/d) in February, an increase of 60,000 (b/d) from an estimated January level of 29.25 million b/d,

according to a just-released Platts survey of OPEC and oil industry
officials and analysts.Excluding Iraq, which does not participate in the
oil producing group’s production agreements, output from the 11 members
bound by quotas (OPEC-11) – under a 24.845 million b/d collective
target – dipped by 10,000 b/d to 26.75 million b/d in February.

Increases totalling 170,000 b/d from Angola, Iran, Iraq, Qatar, the
United Arab Emirates (UAE) and Venezuela were partly offset by decreases
totalling 110,000 b/d from Libya and Nigeria, the latter’s production
dropping by 100,000 b/d to 1.98 million b/d in February.

“With the price of oil at what many view to be a sweet spot now in the
upper $70 to $80 per barrel range, OPEC has little appetite or need to
make any changes at its upcoming March 17 meeting,” said John Kingston,
Platts director of news. “The one number that jumps out from the Platts
survey is the drop of 100,000 b/d in output from Nigeria, where a
fragile peace pact in the Niger Delta appears to be unravelling. After
several months of both rising production and rising optimism that the
worst was behind the country, the output drop in February looks like a
discouraging setback.”

The February estimates leave the OPEC-11 overproducing its ceiling by
1.905 million b/d, slightly increasing its rate of compliance to 54.64%
from January’s 54.4%.

Compliance with the 4.2 million b/d of cuts agreed in late 2008 peaked
at close to 82% in March last year but has been declining since last
April alongside a broad firming of oil prices.

OPEC ministers meet in Vienna on March 17 to review the current
production agreement which has been in effect since January 2009.

That agreement has been rubber-stamped at several meetings over the past
year and, given remarks made by several ministers in recent weeks,
looks set to be renewed yet again at next week’s meeting.

International crude benchmarks are currently trading around the higher
end of the $70-$80/barrel (/b) range that Saudi Arabian oil minister Ali
Naimi has described as “ideal” and which OPEC appears to have adopted
as an unofficial target. For 2010 to date, the group’s basket of crudes
has averaged $74.77/b.

Source: Platts

OPEC sees danger of overproduction

maritime news — Fri, 12 Mar 2010 00:49:26 +0000

The Organization of the Petroleum Exporting Countries (OPEC) warned in a report released on Wednesday that its members might be pumping too much oil given the uncertain global economic outlook.

The cartel’s latest monthly market report came one week before the next
regular OPEC meeting in Vienna, where oil ministers are set to discuss
production levels.

OPEC’s supply exceeds demand by 1.5 million barrels per day (bpd), the
cartel’s experts calculated. One barrel equals 159 litres.

“Even taking into account the uncertainty regarding demand for OPEC
crude, current OPEC production is likely to exceed market needs,” the
report said, calling for “continued caution and close monitoring.”

The report signalled that “there is a necessity to urge a better
adherence to production quotas” at next week’s conference, said Carsten
Fritsch, an analyst at Commerzbank in Frankfurt.

But he added that OPEC members were unlikely to heed such calls, given
the current price level.

OPEC’s basket price has been on the rise in the past weeks, averaging
76.67 dollars per barrel so far this month.

With a combined monthly output of 26.8 million barrels per day (bpd) in
February, the 11 OPEC countries included in the group’s quota system
pumped nearly 2 million bpd more than their agreed production limit.

OPEC’s 12th member, Iraq, is not bound by a quota and added another 2.5
million bpd of crude oil to the cartel’s output.

A large share of the production increases in February came from Angola,
Iraq and Venezuela.

OPEC’s members produced 34 per cent of the world’s crude supplies in
February.

Source: DPA

Oil falls below $ 82 in Asian trade

maritime news — Fri, 12 Mar 2010 00:49:24 +0000

Global oil prices eased below $82 a barrel in Asian trade Thursday mainly on a strong dollar amid expectations for OPEC to keep pumping above quotas in the second quarter.

Light sweet crude for April delivery was seen trading at $81.61 a barrel
at 11.30 a.m Singapore time while Brent crude was at $80.06 a barrel at
the same time.

The black gold dropped for the second day on a stronger dollar and
concern that recent price gains outpaced demand growth in the U.S., the
world’s largest energy consumer.

Analysts also said expectations for OPEC to keep pumping above quotas in
the second quarter, pulling prices down from eight-week highs reached a
day earlier.

Falling fuel inventories in the United States and the first few weekly
gains in total demand in one-and-a-half years have bolstered the view
that the market will absorb ample supplies from Opec as Chinese imports
soar.

Ministers from the Organization of the Petroleum Exporting Countries
meet in Vienna on 17 March to discuss production policy.

On Wednesday, prices rebounded to end the session higher after
profit-taking had erased earlier gains from news that gasoline stocks in
the United States dropped unexpectedly.

U.S. light, sweet crude Oil Front Month Futures for April delivery rose
60 cents to settle at $82.09 a barrel while Brent crude rose 57 cents to
settle at $80.48 on the ICE futures exchange.

Output from the cartel is bloating US crude inventories. They have
climbed for the past six weeks, showing a 1.4-million-barrel gain to 343
million barrels in the week to 5 March, the Energy Information
Administration (EIA) said Wednesday.

Source: Commodity Online

NMDC forecast record profit for an increase in iron ore prices

maritime news — Fri, 12 Mar 2010 00:49:21 +0000

NMDC Ltd., Asia’s third-largest iron-ore producer by value, forecast a record profit for the next fiscal year as demand from construction and automobile companies boosts prices of the key steelmaking raw material.

Prices of iron-ore lumps and fines may increase as much as 30 percent in
the year starting next month helping Hyderabad, India- based NMDC’s
profit exceed net income posted in the year ended March 31, Finance
Director S. Thiagarajan said, without giving numbers. Profit rose to
43.72 billion rupees ($962 million) in the last fiscal year, the
company’s highest ever.

Rising demand from automakers, including Maruti Suzuki India Ltd.,
builders and power projects helped boost steel consumption in the
world’s second-fastest growing major economy by 8.5 percent in the 10
months ended Jan. 31. India’s government plans to invest 1.74 trillion
rupees by March next year to upgrade the nation’s roads, ports and other
infrastructure, the finance minister said last month.

Long-term contract prices for iron-ore fines and lumps are expected to
rise 25 percent to 30 percent in the year starting April 1, Thiagarajan
said yesterday in a phone interview. NMDC’s production for the next
fiscal year is expected to increase as much as 20 percent to about 30
million tons, he said.

NMDC, the world’s third-largest mining company by value in the 36-member
Bloomberg Asia-Pacific Mining Index, has more than doubled in the past
12 months. The shares fell as much as 4.4 percent to 361 rupees and
traded at 375.80 rupees as of 12:37 p.m. today in Mumbai. The Bombay
Stock Exchange’s benchmark Sensitive Index rose 0.5 percent.

Annual Prices

The company, in which the government started selling shares today,
contracted annual iron-ore fines for domestic buyers at 1,936 rupees
($43) a ton and lumps at 3,000 rupees a ton for the year ending March
31. NMDC supplies 85 percent of its output to local consumers. It sells
the rest on contract to buyers in Japan and South Korea and through the
spot market to consumers in China.

Net income in the nine months to Dec. 31 fell 28 percent to 23.82
billion rupees from a year earlier as revenue and output declined
because of damage to a pipeline used to transport ore in May.

China’s demand for steel is driving iron ore consumption, Siddharth
Rungta, president of the trade body Federation of Indian Mineral
Industries, said last month. Iron ore prices may soar 60 percent this
year as the global economy recovers and steel consumption gains, Morgan
Stanley said. Order books are full at Baoshan Iron & Steel Co.,
China’s biggest publicly traded steelmaker, because of demand from
automakers, China International Capital Corp. said today.

China’s iron ore imports in January and February climbed 21 percent to
96.1 million metric tons as the nation’s $586 billion stimulus spending
boosted steel demand.

India’s government, which owns 98.38 percent shares in NMDC aims to sell
an 8.38 percent stake through a public offer that will end on March 12.
The shares are being offered at between 300 rupees to 350 rupees
apiece.

Source: Bloomberg

Coast Guard Air National Guard and the search for Skagway hikers alive Meade Glacier

maritime news — Fri, 12 Mar 2010 00:48:54 +0000

(coastguardnews) Coast Guard and Alaska Air National Guard helicopters crews found the
Skagway hiker around 3:30 p.m. Wednesday after four unsuccessful
attempts since Monday due to dense fog near Meade Glacier in the
Tongass National Forest east of Haines. Source

Weather factors are not present in ship collision

maritime news — Fri, 12 Mar 2010 00:48:53 +0000

(beaumontenterprise) By the time Eagle Otome’s bow cut across the middle of the
Sabine-Neches Waterway, the Dixie Vengeance’s leading barge had nowhere
to go but straight into the tanker’s massive orange hull, the towboat
captain testified Wednesday. Source

Obamas coastal zones proposed cause for concern

maritime news — Fri, 12 Mar 2010 00:48:52 +0000

(soundings) The Obama Administration has proposed using expanding zoning to coastal
and even some inland waters, which has raised concerns among fishermen
that their favorite fishing holes could soon be off limits. Source

Cape Haseotes goes Pro

maritime news — Fri, 12 Mar 2010 00:48:52 +0000

(cape cod times) B.J. Haseotes’ father, Byron, preached several things to his children
as they grew up in Southeastern Massachusetts and on Cape Cod. There
was family, business and fishing. Source

Turkish port terminal operations with automated APS technology

maritime news — Fri, 12 Mar 2010 00:48:50 +0000

Yilport Container Terminal and Port Operators Inc. is implementing APS container automation solutions at its facility in Gebze (near Istanbul), Turkey.

Read at Turkish port automates terminal operations with new APS technology

Waterway efficiency at the click of a mouse, how AIS technology will benefit Marine Operations

maritime news — Fri, 12 Mar 2010 00:48:48 +0000

The 2005 Coast Guard mandate for commercial vessels to continuously transmit Automated Identification System (AIS) signals along US inland waterways and ports had been largely an issue of improving marine vessel information availability and dissemination of the information. Two years later, the regulation has produced a significant â?? albeit unintentional â?? opportunity for organisations like Valero to improve their maritime operations.

Read at Waterway efficiency at the click of a mouse: How AIS technology is benefiting marine operations

A third new Gottwald for the port of Paramaribo, Suriname

maritime news — Fri, 12 Mar 2010 00:48:36 +0000

Integra Port Services N.V. (IPS) has recently ordered another HMK 260 E from Gottwald Port Technology GmbH (Gottwald) for its operations within the public terminal in the river port of Paramaribo, Suriname.

Read at A third new Gottwald mobile harbour crane for Port of Paramaribo, Suriname

Shoreline survey shows an explosive can be found at UK port

maritime news — Thu, 11 Mar 2010 14:00:23 +0000

A survey vessel reported to Portland Coastguard what appeared to be a Second World War one ton parachute mine lying on the seabed in the middle of Portland Harbour, UK, on Tuesday.

Read at Shoreline survey yields an explosive find at UK port

APS Technology is expanding in Europe with Automated Marine Terminal Solutions

maritime news — Thu, 11 Mar 2010 14:00:11 +0000

Yilport Container Terminal and Port Operators Inc. is implementing APS container automation solutions at its facility in Gebze (near Istanbul), Turkey.

Read at APS Technology expands in Europe with Automated Marine Terminal solutions

Oil price rises to eight-week high, surging gasoline on fuel supply

maritime news — Thu, 11 Mar 2010 12:46:01 +0000

Crude oil rose to an eight-week high and gasoline surged after a government report showed that U.S. fuel supplies declined as demand climbed and refineries idled units.

Gasoline inventories dropped 2.96 million barrels to 229 million in the
week ended March 5, the Energy Department said. Total fuel consumption
increased 0.2 percent to 19.7 million barrels a day, the highest level
since August. Refinery operating rates fell for the first time in five
weeks.

“The big driver over the last few weeks has been gasoline, and that’s
backed up by today’s numbers,” said Richard Ilczyszyn, a Chicago-based
senior market strategist with Lind- Waldock, a division of MF Global
Ltd.

Crude oil for April delivery rose 60 cents, or 0.7 percent, to $82.09 a
barrel on the New York Mercantile Exchange, the highest settlement since
Jan. 11. Futures are up 80 percent from a year earlier.

Gasoline for April delivery climbed 2.48 cents, or 1.1 percent, to end
the session at $2.2851 a gallon in New York. Heating oil for April
delivery increased 2.64 cents, or 1.3 percent, to $2.1162.

The 17 analysts surveyed by Bloomberg News before the report’s release
were split over whether gasoline inventories increased or declined last
week.

Gasoline Consumption

Gasoline demand rose 1.2 percent to an average 8.99 million barrels a
day, the report showed. Consumption of the fuel peaks during the
so-called driving season, which lasts from the Memorial Day weekend in
late May to Labor Day in early September.

“Crude oil prices have shot up since January, which only means that
gasoline prices have to follow it higher as we go into the summer,”
Stephen Schork, president of consultant Schork Group Inc. in Villanova,
Pennsylvania, said today on Bloomberg Radio.

Prices in New York have climbed 13 percent from the Jan. 29 settlement
of $72.89.

Supplies of distillate fuel, a category that includes heating oil and
diesel, decreased 2.22 million barrels to 149.6 million. Stockpiles were
forecast to drop by 1 million barrels.

Refineries operated at 80.7 percent of capacity last week, down 1.1
percentage points from the previous week. Analysts forecast that there
would be no change.

Inventories of crude oil rose 1.43 million barrels to 343 million. It
was the sixth straight gain and left stockpiles at the highest level
since August. Supplies were forecast to climb by 2 million barrels.

Chinese News

“Supplies were expected to rise 2 million barrels, so the
1.4-million-barrel gain is bullish,” said Sean Brodrick, a natural
resource analyst with Weiss Research in Jupiter, Florida. “Even more
bullish is the news from China where exports are surging and car sales
are up.”

Chinese exports climbed 46 percent in February from a year before after a
21 percent advance in January, the customs bureau reported on its Web
site today. The country’s passenger car sales rose 55 percent last month
from a year earlier, the China Association of Automobile Manufacturers
said yesterday. China is the world’s second-biggest oil-consuming
country after the U.S.

Oil also advanced after the Organization of Petroleum Exporting
Countries predicted members will need to produce more oil than
previously forecast. The 12-member group will need to pump 28.94 million
barrels a day to satisfy demand in 2010, according to a report today.
That’s about 190,000 barrels a day more than last month’s projection.

OPEC Meeting

OPEC will meet March 17 in Vienna to decide production quotas. Shokri
Ghanem, chairman of Libya’s National Oil Corp., said this week that “no
new decision” about production levels is expected at the meeting.
Projected demand levels are still “much less” than OPEC’s current
production, meaning stockpiles could increase, the group said today.

The dollar dropped against the euro as former European Commission
President Romano Prodi said that the worst of Greece’s financial crisis
is over and other nations in the region won’t follow in its path.

“For Greece, the problem is completely over,” said Prodi, who was also
Italian prime minister, in an interview in Shanghai today. “I don’t see
any other case now in Europe. I don’t think there is any reason to think
the euro system will collapse or will suffer greatly because of
Greece.”

The greenback traded at $1.3657 per euro, down 0.4 percent from $1.3602
yesterday. A weaker dollar bolsters the appeal of raw materials as an
alternative investment.

Brent Oil

Brent crude oil for April delivery rose 57 cents, or 0.7 percent, to end
the session at $80.48 a barrel on the London- based ICE Futures Europe
exchange. Today’s settlement was the highest since Jan. 11.

Oil volume on the Nymex was 727,611 contracts as of 3:27 p.m. in New
York. Volume totaled 651,267 contracts yesterday, 12 percent more than
the average of the past three months. Open interest was 1.35 million
contracts, the highest since Feb. 2.

The exchange has a one-business-day delay in reporting open interest and
full volume data.

Source: Bloomberg

Current trends in the oil industry affects business – Creating Interest

maritime news — Thu, 11 Mar 2010 12:46:01 +0000

In December of 2009, crude oil price movement could easily be distinguished by two quasi conflicting drift. The OPEC Reference Basket made a ricochet recovery backed by the optimistic economic outlook and extreme weather conditions in the Americas, Europe and colder parts of Asia.

This followed a two-month plunge in crude oil price. “The risky fixation
with a sudden spike in oil prices is that it often begets speculative
activity within the market. We have seen this a few years back when oil
prices were driven to mad levels. There was really nothing of economic
value or otherwise that could have brought such an explosive surge then
but speculators could not be troubled. We have seen a very similar trend
last December even if it was at a reduced scale,” Mathew Collier of
www.rothmanresearch.com commented, “With global oil demand estimated to
grow by 0.8mb/d this year we are sure to see more of these speculators
poaching on green territories.”

A recent study by foremost research firm www.rothmanresearch.com
highlights two companies of interest in the basic materials sector, BHP
Billiton Ltd. and RTI International Metals Inc.

Even if oil price fluctuations influence most sectors and industries
including the Industrial Metals & Minerals a recent decline in some
commodities prices has triggered a selling spree in Australian resources
stocks after a string of recent gains.

BHP Billiton Limited is a diversified natural resources company in
Australia, the Americas, and southern Africa. The company explores for
and produces crude petroleum oil and liquefied natural gas, minerals,
and metals. The company supplies these raw materials to interested
industries such as steel industries, and many more.

RTI International Metals, Inc. manufactures and supplies titanium mill
products in the United States and exports their products internationally
as well. It has three operational segments: Titanium Group, Fabrication
Group, and Distribution Group. They primarily produce complex
engineered parts and assemblies, as well as various other industrial and
consumer markets, to say the least. The company also provides
engineered, machined components, and systems for deepwater oil and gas
exploration and production infrastructure.

To learn more about other companies falling under the Industrial Metals
& Minerals industry log on to www.rothmanresearch.com for a free
research report, to help you make the right decision.

About Rothman Research

Rothman Research brings independent company and sector research
together, utilizing top financial advisors and investment tactics to
provide you with a clear picture of investment opportunities.

Source: CNN Money

Gas output in decline

maritime news — Thu, 11 Mar 2010 12:46:00 +0000

Natural gas production in Canada slipped four per cent last year, reflecting a continuing trend of declining volumes, but not an industry death knell, say observers.

There are huge resources available in Western Canada that just need time
and money to develop — unconventional resources such as shale gas and
tight gas plays, analyst Jeff Fetterly said.

“If people talk about the natural gas business in Canada being dead, I
beg to differ,” said Fetterly, with CIBC World Markets. “Certainly some
areas, such as shallow gas, are more challenging than others, but you
are seeing prolifi c plays like the Montney and Horn River emerging, and
we’re starting to see fringe plays like the Duvernay shale starting to
get more and more publicity.”

The development of unconventional gas has been a double-edged sword for
Canadian producers who welcome the new resource on a home turf
experiencing natural declines in a mature, conventional basin.

But south of the border, rapid development of lower-cost shale in Texas
and Louisiana, and a new pipeline opening volumes have led to abundant
supply and downward pressure on prices.

Natural gas futures fell to a three-month low Tuesday, closing at $4.516
US per million British thermal units on the New York Mercantile
Exchange.

The resource has dropped 19 per cent in value this year.

According to the National Energy Board, natural gas production fell to
15.19 billion cubic feet per day last year, down from a peak of 17 bcf
per day in 2007.

Exports to the United States — which takes nearly 60 per cent of
Canadian production — also have dropped, falling to 8.93 billion cubic
feet per day last year from a high of 10.4 bcf per day in 2007.

“The U.S. is serving more of their market from their own supply,” said
Paul Mortensen, team leader with the National Energy Board.

“They have been able to increase their supply and haven’t had the same
call on Canadian export volumes. If that were not the case and they
needed to make up supply with Canadian gas, the price would be higher
and more Canadian gas would be economic to develop.”

Production in Western Canada was fairly flat from 1999 to 2007, despite
increased drilling each year, then fell sharply last year with the
recession, Mortensen said.

“The one thing that could potentially change the trend is the
unconventional gas we’re seeing in northeastern British Columbia, where
you get more production per well,” he said. “Production could start to
stabilize but still at a lower level, and we haven’t seen it start to
stabilize yet.”

A decade ago, analysts were weighing the impact of natural declines and
growing domestic demand on Canadian exports to the United States, with
some warning about political repercussions if the drop were severe.

Prices were set to soar, and did for a few months in 2008 before the
credit crunch, global recession and accelerated production of shale gas
reserves south of the border shot down expectations.

Shipping gas into the U.S. isn’t as cheap as it once was, plus new
pipelines have flattened pricing and lowered desire for Canadian gas,
analysts noted.

The lower call for Canadian volumes hit producers from many sides,
including transportation. In November, TransCanada Corp. announced it
was boosting main-line tolls to cover reduced volumes coming out of
Western Canada.

“We’ve seen supply decline and a demand increase in Alberta, which has
left less (natural gas) available for export in 2009,” said chief
operating officer Russ Girling. “That drop was sharper than we
anticipated, so we had an under-collection.”

Tolls rose to $1.64 per gigajoule, from $1.19 per GJ, a substantial
increase on a resource selling at $4.50.

Both Mortensen and Fetterly agreed the industry likely won’t see a
return to 17 billion cubic feet per day production seen in 2007 or
totally offset natural declines.

“Prices will always be a huge governor in terms of how long it takes to
develop that supply and resource, and to bring it to market,” CIBC’s
Fetterly said. “But the resource is there, and the potential is there,
and I think it’s just a matter of time.”

CIBC has forecast pricing of $5.75 per mmBTU in 2010, with prices rising
to $6.50 next year. The board sees a mid-price case of $5.50 per mm BTU
this year, rising to $6 next year.

Source: Calgary Herald

Falling crude oil inventory and flattening WTI curve

maritime news — Thu, 11 Mar 2010 12:45:59 +0000

Falling inventory crude oil levels in Cushing, Oklahoma and normalisation of inventories in OECD Europe and Asia is underpining tighter crude oil timespreads not only in WTI but also in other global crude oil benchmarks,

according to an analysis by Bank of America-Merrill Lynch (BofAML).Crude
oil prices hovering near $80 levels is back to levels last seen at the
beginning of the year, but WTI forward curve is considerably flatter. It
will continue to flatten as global inventories draw towards normal
levels.

Refined products continue to be in oversuply with OECD North American
and European product inventories at seasonal high and distillate
overhang in Europe at record levels at about 410 million bbls last
month. Despite the flattening of the Brent crude oil curve, gasoil crack
spreads remain in steep contango (On the other hand, OECD Asian product
inventories are now back down to levels comparable to early 2008, when
the regional distillate market was experiencing extreme tightness,
BofAML analysis said. It is expected that Asia ex-Japan and the Middle
East will continue to spearhead crude and products demand growth.

With lower inventory levels around the NYMEX delivery point, spare
storage capacity has started to appear. As a result, the storagecosts
embedded into WTI timespreads have come down, helping the WTI curve to
flatten, BofAML analysis said.

Cushing crude oil stocks have come down by 5.7 mn bbls from their peak
seen on the last week of 2009 of 35.6 mn bbls. Even though they are
still relatively high, they are 11.7% lower than a year ago. Inventories
have been trending down this year at Cushing. Supply issues of 80,000
barrels per day (for February and March due to forced outages and
pipeline issues from Canada may be resolved soon but normalisation of
inventory will remain strong, the analysis added.

With demand in OECD economies still weak, Asian demand from China and
India is absorbing the excess barrels in the market and OPEC keeps on
sending its barrels eastwards. We still expect Asia ex-Japan and the
Middle East to continue to spearhead crude and products demand growth
going forward. Asian product inventories are now back to levels
comparable to January 2008 when the Asian distillate market was going
through extreme tightness. Distillate timespreads seem to be tightening,
following along the path of the already tight naphtha market in Asia.
Tighter distillate spreads together with weaker residual fuel
timespreads may be a sign of slightly higher refinery capacity
utilization in Asia. In fact, Chinese crude runs reached new record
highs in December, according to the IEA.

The overcapacity in global refining created during a period of
plummeting demand and record additons to new capacity will be
rationalised over a period of time. BofAML estimates about 1.4 million
b/d has already been shut in and an additional 2.3 million b/d is either
shut or planned/pending closure. More than two-thirds of the closures
are attributed to North America where gasoline dominates refining yields
and inventories continue to rise above seasonal averages. Such

Furthermore, on a forward demand basis, some product excesses are
gradually becoming more balanced, particularly with European distillate
days of demand coverage .According to the IEA, middle distillates
floating storage off Europe has also started to decline in early
February. This could contribute to a flatter gasoil curve going
forward.Moreover, according to IEA estimates, a considerable amount of
floating storage has been discharged over the last couple of months. If
this is indeed the case, the crude oil forward curve could flatten at an
even faster pace as the need to createthe price differential to make
expensive floating storage profitable goes away.

A earlier BofAML analysis pointed out that a surge in petrochem demand
and a steeply backwardated naphtha market suggest that, in the absence
of major external shocks, a cyclical recovery for the broader economy is
around the corner. Other refined products geared towards the cyclical
recovery in industrial production, such as kerosene and other
middledistillate fuels, should follow suit. Still, distillate crack
spreads are likely to struggle to move higher as long as the current
inventory overhang remains an issue.

Source: Commodity Online

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