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Oil and Gas Roundup — July 24

July 24, 2018
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

WTI entering a renaissance as a global benchmark

The NYMEX Light Sweet Crude Oil (WTI) futures contract set new record highs in both volume and open interest in 2018.  Open interest surged to a record 2.7 million lots in May 2018, while average trading volume was 1.34 million contracts per day in the first six months of 2018, up 14% over the same period in 2017.

The WTI futures contract is enjoying a renaissance in the global marketplace, and WTI has re-established itself as the price discovery leader in the crude oil market.  Two key drivers have propelled the WTI futures contract into its renewed status as the global benchmark:  1.)  Export growth; and 2.) record U.S. oil production.

U.S. crude oil exports more than triples in June 2018 compared to one year ago, to average 2.4 million b/d. The growth in exports has been transformative for the U.S. crude oil market. 

Houston has become a major export hub, and new infrastructure has been constructed to process the growing export volumes.  These infrastructure changes have transformed the U.S. into the marginal supplier of oil to the world.

U.S. crude oil production has risen substantially from 5.1 million barrels per day (b/d) in January 2009 to 10.9[1]  million b/d in June 2018.  In its latest short-term energy outlook, the U.S. Energy Information Administration (EIA) predicts oil production to hit a new record high in 2019 of 11.8 million b/d.

Read more at CME Group.

New York City climate lawsuit dismissed

A U.S. judge on Thursday dismissed a lawsuit by New York City seeking to hold major oil companies liable for climate change caused by carbon emissions from burning fossil fuels.

In dismissing the city’s claims against Chevron Corp, BP Plc, ConocoPhillips, Exxon Mobil Corp and Royal Dutch Shell Plc, U.S. District Judge John Keenan in Manhattan said climate change must be addressed through federal regulation and foreign policy.

“Climate change is a fact of life, as is not contested by Defendants,” he wrote. “But the serious problems caused thereby are not for the judiciary to ameliorate. Global warming and solutions thereto must be addressed by the two other branches of government.”

Seth Stein, a spokesman for New York City Mayor Bill de Blasio, said the city planned to appeal the decision.

“The mayor believes big polluters must be held accountable for their contributions to climate change and the damage it will cause New York City,” Stein said.

The city sued the oil companies in January and announced it intended to divest fossil fuel investments from its $189 billion public pension funds over the next five years.

Read more at Reuters.

Intelligent drones push the boundaries of oil and gas inspection

Drones are not new to industry or the oil and gas sector. They have been used by companies that are offering full-service video, or to capture survey photographs for some time.  

However, Renner Vaughn, director of oil and gas at commercial drone operator, Cape, believes that there is a major gap between what companies are hoping for and achieving in the use of drones.

“What we’ve done at Cape, is bring the user drones together with aerial telepresence, our technology, to give experts that visibility they need in real time,” Vaughn said. “Instead of hiring a company to go out and perform the survey for you, I'm trying to coach them on what to see and what’s important in terms of the asset inspection. How about let the experts take over and do it themselves in real time? That’s what we are bringing to the industry in a very early stage of drone usage.”

In this age of heavy focus on operational efficiency, companies are losing a lot of time and money on manual inspection tasks and responding to incidents and alarms that have come in through the DCS or the SCADA system.

It takes time to get out to the field and investigate the issue and then they may not have the expertise to diagnose the issue quickly. “What if they could put a drone in the air and quickly get the expert to the site virtually over a live video feed connection?” Vaughn added.

Read more at Forbes.

U.S. refiners boost purchases of CPC Blend to record as prices drop

U.S. refiners will import a record monthly volume of crude from the Caspian region in July after snapping up the cargoes when prices reached near six-year lows, according to market sources and Thomson Reuters shipping data.

The unusually large volume of crude is one of many changes in the international oil trade caused by a flood of U.S. shale oil headed overseas.

Record exports of crude from the United States to Europe and Asia have pushed down the price of comparable oil, such as the crude produced near the Caspian in Kazakhstan and Russia. That oil is pumped through the CPC pipeline and loaded in the Mediterranean.
U.S. East Coast refiners, which rely on crude imports, have bought most of the 3.7 million barrels of CPC crude that will reach the United States in July, according to the Thomson Reuters data.

The East Coast refiners have limited access to the oil produced in the shale fields hundreds of miles away in Texas or North Dakota. They buy additional crude from West Africa, Middle East and Europe.

Read more at Reuters.
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