"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".
- Papua New Guinea National Goals and Directive Principles
Saturday, 9 August 2014
By Avik Chowdhury - Disclosure • Aug 8, 2014 12:36 pm EDT ExxonMobil’s 2Q14 developments In May, 2014, ExxonMobil (XOM) disclosed that it acquired ~26,000 acres in the Midland Basin that would increase XOM’s capacity to increase oil and gas production. This includes horizontal drilling activity in Wolfcamp and Spraberry in the Permian Basin. Acquires more assets in the Permian XOM acquired the property from Linn Energy (or LINE) in exchange of its interest in the Hugoton gas field in Kansas and Oklahoma. The property’s current production capacity is 2,000 barrels of oil equivalent per day (or Boe/d). XOM also disclosed that with the new acquisition, XOM’s asset base in the Permian now totals 1.5 million acres and in excess of 90,000 net Boe/d. Starts LNG exports In May, 2014, XOM made its first shipment of liquefied natural gas (or LNG) from the PNG LNG project ahead of schedule. XOM’s PNG LNG project is an integrated development that includes gas production and processing facilities in Papua New Guinea PNG LNG is expected to produce ~9 trillion cubic feet of gas in next 30 years. The four major customers for the project’s output are China Petroleum and Chemical Corp.—or Sinopec, Tokyo Electric Power Co. Inc. (or TEPCO), Osaka Gas Co. Ltd., and CPC Corp. Taiwan. New ethane cracker construction In June, 2014, ExxonMobil Chemical Company, a subsidiary of XOM, disclosed that it started constructing an ethane cracker and an associated premium product facility in Texas. The steam cracker will have a capacity of up to 1.5 million tons per year and provide ethylene feedstock for downstream chemical processing. Production is expected to begin in 2017. Discovers gas in Argentina Also during 2Q14, XOM discovered oil and gas in an unconventional shale well in Argentina. The well flowed at an average rate of 770 barrels of oil a day in its first flow test. The well is now subject to further analysis before commercial production begins. Key exchange-traded funds (or ETFs) ExxonMobil (XOM) is a component of the Energy Select Sector SPDR (XLE) and the SPDR S&P 500 (SPY). Royal Dutch Shell (RDS.A) and Chevron Corporation (CVX) operate in the same industry as XOM. CVX is a component of XLE and SPY.
Tuesday, 5 August 2014
ExxonMobil has released its second quarter 2014 financial and operational results. Comments Commenting on the company’s performance, Chairman Rex W. Tillerson said: “ExxonMobil’s financial results were achieved through strong operational performance and portfolio management. We continue to enhance shareholder value by funding capital projects and delivering robust shareholder returns through dividends and share purchases. “Upstream production for the year remains in line with plans and we continue to add volumes from our high-quality development portfolio through assets such as the Papua New Guinea LNG project, which started up ahead of schedule during the quarter. “Second quarter 2014 earnings were US$ 8.8 billion, up 28% from the second quarter of 2013, reflecting strong operations and asset divestments. “Capital and exploration expenditures for the first half of 2014 were US$ 18.2 billion, down 17% from the first half of 2013. “Through the first half of 2014, the Corporation distributed US$ 11.7 billion to shareholders through dividends and share purchases to reduce shares outstanding.” Highlights •ExxonMobil shipped the first cargo of LNG from the PNG LNG project ahead of schedule. PNG LNG is expected to produce more than 9 trillion ft3 of gas over its estimated 30 years of operations. •Offshore Sakhalin Island in Russia, the 42,000 ton topsides of the Berkut platform were installed on the structure at the Arkutun-Dagi field. The platform will be the largest offshore oil and gas production platform in Russia. •Construction started on the ethane cracker at the Baytown, Texas, complex.
Sunday, 3 August 2014
Reuters Jul 29, 2014, 12.19AM IST MILAN: Asian spot liquefied natural gas (LNG) prices edged lower last week as buyers low-balled sellers amid ample supply from Papua New Guinea and Australia, while bets of a winter price pickup spurred some into floating storage plays. Spot LNG prices for September delivery slipped slightly to $10.50 per million British thermal units (mmBtu) last week, compared with $10.60 per mmBtu on the week ended July 18. "I think buyers are bidding around $10 for Sept delivery, perhaps up to $11 for October. So there may still be further downside, or we could have reached the floor," one trader said. As demand stayed thin, India's Gail last week launched a tender to buy up to eight LNG cargoes from Jan-Dec 2015, mainly unloading at its western Dabhol terminal. Given the year-ahead delivery dates, India's demand left spot markets unfazed. However, a three-cargo sell tender by Australia's North West Shelf for September and November loading added to supply-led bearish sentiment. A nose-dive in prices began in late February, accelerated through spring and early summer, and now appears to be bottoming out after notching up a 50 per cent drop. The lows have spurred hopes that the traditional pickup in Asia's winter LNG demand will trigger a substantial price rebound, even if it falls short of last winter levels when spot rates exceeded $20 per mmBtu. As a result, some traders have decided to park LNG on tankers and wait out the slump until prices recover later in winter, riding the fortunes of the seasonal price spread. Trading house Glencore is among those to have bet on a rebounding winter market as parts of multi-month storage play. Traders say it has leased an LNG tanker for the purpose of storing LNG purchased at cut-rate prices, awaiting a price surge once cold weather eats through high Asian inventories. A major European utility with an LNG trading desk has made the leap as well, traders said. Behind recent price drop's is the early startup of ExxonMobil's Papua New Guinea LNG export project, whose long-term supply commitments only kick-in from October, and which took advantage of a seamless commissioning process by pumping out spot cargoes. Those should begin to thin from October as long-term customers exercise offtake rights, though it is not clear if they will need it all. A mild winter that left Asian buyers sitting on full stockpiles, South Korean Kogas' last-minute scramble to deflect unwanted cargoes, and a spree of sell tenders from Indonesia to Qatar and Australia has made this a buyer's summer.
Saturday, 2 August 2014
Oil Search announced that as part of the PNG LNG project, ExxonMobil is drilling nine development wells on the Hides field at the Papua New Guinea site. Six wells (two each from Wellpads B, C and D) have been completed, while drilling is ongoing on two wells at Wellpad G and on the produced water disposal (PWD) well. The first of the two Wellpad G development wells has now reached total depth. The well encountered the gas-bearing Toro reservoir and will be completed as a producer, as planned. PNG LNG project The PNG LNG Project is a 6.9 million tpa integrated LNG project operated by ExxonMobil PNG. The gas will be sourced from the Hides, Angore and Juha gas fields and from associated gas in the Kutubu, Agogo, Moran and Gobe Main oil fields. Adapted from press release by Katie Woodward Published on 23/06/2014
Conventional wisdom says that liquefied natural gas (LNG) is a “can’t lose” proposition. After all, natural gas is plentiful. And liquefying it for transport – to countries that are willing to pay through the nose for it – seems like a no-brainer. Everyone wants in on the game, too. When I spoke about natural gas at a conference in Vancouver recently, those at the event showed a level of interest in LNG that bordered on obsession. If you’ve been following the story as closely as I have, however, you know that LNG’s prospects aren’t nearly as rosy as everyone thinks. Here’s why. The Tightrope Walk of Doom During the most recent winter season in Asia, LNG prices topped $20 per million British thermal units (mmbtu), causing suppliers to salivate at the prospects for the rest of the year. Fast forward to today, though, and prices have sunk to $10 per mmbtu. That’s a 50% haircut, thanks to slack demand during the summer and new facilities coming on line. Now traders are parking LNG on tankers, sitting idle at ports in the hope of a rebound in prices. What U.S. investors are failing to realize is that LNG is already up and running in the rest of the world – and pricing trends are pointing lower over time, not higher. Granted, weather events can boost prices. As evidenced by the 50% drop in prices during the summer season, however, weather can send LNG prices crashing just as easily. Making matters worse, the trend is towards more LNG production in the coming years, not less. Exxon Mobil (XOM), for instance, just started up a new LNG facility in Papua, New Guinea – which will further add to supply. And if one weather event can cause a near 50% drop in prices, an oversupply situation could seriously dent profits in the future. Especially with LNG’s major buyers beginning to bow out… Will Prices Take Another Hit? South Korea and Japan are two major Asian buyers of LNG. Yet their LNG addiction is waning… Consider, South Korea stockpiled LNG while its nuclear plants were offline as a result of a safety scandal. The country has since restarted the nuclear plants, though, which reduces demand for LNG. Japan has been the primary driver of the demand for LNG since the Fukushima disaster shut down its nuclear facilities. Yet it has also brought many reactors back on line, and a cooler-than-expected summer has led to less demand, as well. As a result, many LNG traders are being hit with losses. LNG contracts are usually at fixed prices for the majority of supply, about 80% in most cases. But the remaining 20% is bought and sold by these countries on the spot market – and that’s what determines day-to-day prices for traders and those wishing to buy on the open market. It’s the spot market that should really worry investors in LNG companies. The thinking that LNG is somehow less vulnerable to price shocks than any other commodity is misplaced, and uncertainty will be part and parcel of this “new” market, as well. Now, much like the dry natural gas sector, there will be little in the way of supply shortages as many new facilities come on line in the next few years. So the key will be to focus on producers, which are able to lock up long-term supply contracts at higher prices. For now, companies that have already secured (and are delivering) the product, some of which was locked in at higher prices from last year, are in the driver’s seat. British Petroleum (BP) is one such company. Bottom line: The future issues may not lie on the supply side for LNG, which is where most of the attention is focused, but on the demand side. That may have been overstated, and the recent price move is a good indication that this business is far from a slam dunk. And “the chase” continues, Karim Rahemtulla