Roundup

In what is becoming a regular occurrence in that company, Mexican state-owned oil company PEMEX experienced another deadly explosion, this time in one of its petrochemical plants:

Four more people have been found dead after last week’s explosion at a petrochemical plant in southeastern Mexico, raising the death toll to 32, state oil giant Pemex and Mexican plastic pipe maker Mexichem said in a joint statement on Sunday.

The vinyl petrochemical plant in the Gulf coast state of Veracruz is a joint venture between Pemex’s petrochemical unit and majority owner Mexichem.

Pemex’s CEO has said that last week’s blast was caused by a leak but he did not how the leak had happened exactly.

It was the latest in a series of fatal accidents at the company.

Mexicans continue to be happy to pay this steep price to keep the company from reforming and letting “imperialist” foreigners in.  I wrote about the shambles that is PEMEX here.

Total’s Patrick Pouyanne once again takes time off from being CEO and confusing me over his company’s strategy to play blogger on LinkedIn, this time informing us which countries will be the key energy players in the future.  Lord only knows why Pouyanne feels the need to write articles telling us what is widely known and is adequately covered by dozens of other energy-focussed websites, blogs, and publications, but then I’ve always suspected he isn’t entirely sure what a CEO’s job entails.  Key quote:

While the profitability of offshore wind farms is still somewhat in question, notably because of the huge maintenance costs involved, onshore wind energy is now profitable without subsidies. Total has tested onshore wind power a few times in the past and intends to take a second look to see if this is an area in which it wants to invest.

So Total is shifting away from fossil fuels and seriously looking at wind farms.  Let’s see how that works out.  The following picture accompanies the article, no doubt to reinforce the point that Total takes diversity hiring very seriously:

14 women out of 25 people, 9 ethnic minorities, and 4 who look old enough to remember the last oil crash.  How many of these, do you suppose, are diverse enough in opinions to speak out against management-driven stupidity?

Via Ed Crooks of the FT, S&P have stripped ExxonMobil of their coveted AAA rating, with a key passage in their reasoning highlighted below:

One would expect that all the majors are facing the same problems.

This graph has been doing the rounds of social medial, comparing the crude oil production cost of various countries:

Those at the very top are probably okay because their economies are diverse enough to withstand a drop in oil production, although Norway might need to scale back its umpteen social welfare programs a bit.  Those near the bottom are probably okay because oil isn’t likely to stay rock-bottom for very long.  But those in the middle – particularly Angola and Nigeria – are pretty fucked.  I don’t know whether this graph represents the technical cost of oil production, or whether it includes the additional costs that come with doing business in these sort of countries.  In any case, these costs will almost certainly be under-represented in any calculation, and will likely only increase.

6 Responses to Roundup

  1. dearieme says:

    “While the profitability of offshore wind farms is still somewhat in question”: I’ll bet they’re not. I’ll bet they are ludicrous.

    “onshore wind energy is now profitable without subsidies”: balls.

  2. Rich Rostrom says:

    Venezuela is majorly screwed. Its oil is mostly heavy crude that sells at a discount, its operations have been grossly mismanaged for a decade, its investments in production have been pathetically inadequate, it owes huge sums to oilfield service companies that it can’t pay, and the rest of its economy has been all but ruined too.

    China is not screwed; it has a large economy and its oil production just replaces imports.

    However, this is very valuable information. What it tells us, basically, is that offshore production is generally high-cost and fracking isn’t cheap.

    One also wonders how this chart is affected by production cuts at high-cost producers…

  3. Mr. Barnes,

    You might be interested in my post below —

    Texas Fracking and the Death of Big Oil
    Posted by Trent Telenko on May 15th, 2016
    http://chicagoboyz.net/archives/52633.html

    Short form — There is a new oil well fracking technique that allows four years of high oil flow rate with another four years of declining output (vice the industry standard 2/2 fracks) that is driving the fracking backlog (Fracklog) drilling by American oil services firms like Halliburton.

  4. Kathy D says:

    I tend to agree with Rich R. Yes, offshore production is high-cost and fracking isn’t cheap. I also wonder how this data in this chart is effected by high-cost producers. With the price of a barrel of oil going up, help drilling resume with such a supply glut? Not much I’m thinking.

  5. Trent Telenko says:

    You might find this write up I made over on the chicagoboyz blog of interest —

    http://chicagoboyz.net/archives/52937.html

    It is being reported in various places that the US rig count jumped from NINE RIGS in mid-May to 325 last week and there was no change from 325 rigs this week. That is a 36 fold increase in rig count in a week!!

    Based on figures I’ve gotten from those in the industry, the range of production you can expect from those wells, depending on the geology, length of the laterals (6,000 to 8,000 feet) and the number of fracking stages (200′, 300′ or 400′) will result in initial barrel per day production of between 400 and 800 barrels a day per fracked well (with a very, very rare 1,300 barrel a day play from time to time). So we are looking at between 130,000 to 260,000 barrels a day of American oil fracking production arriving in the next few months.

    Compared to Saudi production, 130,000 to 260,000 barrels of oil a day represents between 1.3% and 2.5% of the Saudis’ daily oil flow. The number of DUCs activated to provide that production amount to 6.5% of the frack-log. And all that for what amounts to Zero “CAPEX” (capital expenditure), plus the operating expenses of worker wages, the rental price for existing, out of service, oil fracking rigs, and oil tanker trucks to move product to rail heads or oil pipelines.

  6. anon says:

    Interesting to see Washington DC listed amongst major oil producing nations. But, then, politicians were always an oily bunch.

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