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HPIn Brief

04.01.2012  | 

Keywords: [CERA] [shale gas] [Eni] [ExxonMobil] [diesel] [heating oil] [refinery] [Belgium]

Postcard from CERAWeek

The international availability of massive US shale gas resources could determine the fate of global gas prices over the next decade, said Paolo Scaroni, CEO of Italian oil and gas major Eni. Mr. Scaroni delivered the keynote address at the annual IHS CERAWeek energy conference, held March 5–9 in downtown Houston.

Mr. Scaroni bemoaned the global differences in sales prices for “the same stupid molecule” of natural gas, citing values of less than $3/MMBtu in the US compared with about $9 in European spot markets, $11 on European oil-linked contracts and $13 in Asia. The US is an island in gas terms, he explained, noting that the nation was set for at least the next decade.

“With recoverable gas resources and stronger gas markets across the ocean, there are many who think that the US might become a major exporter over the next decade,” Mr. Scaroni said. “But this is more complex than it sounds.”

For example, it remains to be seen whether US citizens, who slowly accepted the rationale of shale gas exploration for their own energy security, would be willing to export the gas, thereby benefiting the financial position of other countries.

On the whole, global gas demand is expected to grow by 2020. But the outlook on prices is murky, because supply remains unclear, given US marketplace uncertainties. As such, Mr. Scaroni said it can be difficult for companies to gauge the viability of large-scale gas projects.

Other key questions include the fate of nuclear power following the Japan disaster and whether gas-based fuels can gain traction within the transportation sector. On the other hand, growth in LNG trade should allow for at least some rebalancing in global prices. “Over the next decade, the key to the market is LNG,” Mr. Scaroni said.

In addition, the gap between US gas and oil prices should narrow, he observed. Scaroni noted that, based on calorific power, US gas trades at roughly 1⁄6 the price of oil—down from 1⁄2 in 2008. —Ben DuBose

ExxonMobil plans to invest approximately $185 billion over the next five years to develop new supplies of energy to meet expected growth in demand, CEO Rex W. Tillerson said in a recent presentation at the New York Stock Exchange. “During challenging times for the global economy, ExxonMobil continues to invest to deliver the energy needed to underpin economic recovery and growth,” Mr. Tillerson told investment analysts. He said that, even with significant efficiency gains, ExxonMobil expects global energy demand to increase by 30% by 2040, compared to 2010 levels. Demand for electricity will make natural gas the fastest-growing major energy source, and oil and natural gas are expected to meet 60% of energy needs over the next three decades. To help meet that demand, ExxonMobil is anticipating an investment profile of approximately $37 billion per year through 2016. A total of 21 major oil and gas projects will begin production between 2012 and 2014, he said.

Motiva Enterprises plans to convert all of its high-sulfur diesel heating oil (2,000 ppm) storage to ultra-low-sulfur diesel (ULSD) (15 ppm) at its Sewaren terminal in New Jersey. Motiva’s conversion aims to meet its customers’ needs under a new New York state mandate that all heating oil sold in the state be no more than 15 ppm sulfur by July 1, 2012. It will also allow the Motiva Sewaren refined products terminal with a capacity of more than 5 million bbl, to take deliveries of ULSD for New York Mercantile Exchange-based contracts via marine and pipeline. In addition to the conversion to ULSD heating oil, Motiva is undertaking a project to convert two tanks of heating oil storage to B100 biodiesel at the Sewaren terminal. With the addition of biodiesel tankage and improved rail logistics, Motiva Sewaren will be able to supply multiple blends of biodiesel to the Northeast over the truck rack, as well as via marine vessel.

Metso has acquired South Korean global valve technology and service company Valstone Controls Inc. The acquisition enables Metso to expand its offering for the oil and gas and power industries with globe valve technology that plays a key role in most critical processes with extreme pressures and temperatures, the company said. Valstone is a privately owned globe valve and service specialist company. Valstone has an established customer base in Korean engineering, procurement and construction (EPC) companies and in domestic South Korean petrochemical and power-generation industries. Metso said it further plans to develop partnerships with leading South Korean engineering, procurement and construction companies.

Petronas and BASF have taken the next steps in the development of the previously announced €1 billion investment that will expand their partnership in Malaysia, involving projects at their existing venture in Kuantan and at a new site within Petronas’ proposed refinery and petrochemical integrated development (RAPID) complex in Pengerang, Johor. These projects are to be implemented between 2015 and 2018. Under the terms of the recently signed agreement, the partners have agreed to form a new entity (BASF, 60%; Petronas, 40%) to jointly own, develop, construct and operate production facilities for isononanol, highly reactive polyisobutylene, non-ionic surfactants, and methanesulfonic acid, as well as plants for precursor materials. These world-scale facilities will become an integral part of Petronas’ RAPID project.

Oil trading and logistics company Gunvor Group has reached an agreement to buy the 107,500-bpd refinery that insolvent Swiss oil refiner Petroplus shut down in Antwerp, Belgium. Gunvor said in a statement that it expects the deal to close in the next month. Gunvor will retain all current workers, and will operate the refinery “on a long-term basis.” The company plans to restart the refinery immediately after the deal closes in late April. Petroplus began shutting down the Antwerp refinery in late December amid mounting credit woes. The Antwerp site also has a storage capacity of more than 1.2 million cubic meters. HP

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John Elphick

It would be nice if ExxonMobil invested $185 billion (or a substantial part of it) in clean energy of the future and not the environmentaly damaging carbon based energies of the 18th. century.

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