US Pipeline Explosions Shuts Down 1.7million BPD

LONDON - Just when tightening oil supplies across the world looked ready to experience some relief, with OPEC ministers to meet next week potentially to raise production, a pipeline explosion in the United States has cut critical supplies from Canada and sparked a jump in prices on Thursday.

Canadian company Enbridge (nyse: ENB - news - people ) has shut down four pipelines carrying crude oil to the United States after an explosion on Wednesday afternoon claimed the lives of two workers. The pipeline blast took place three miles from a terminal in Clearbrook, Minnesota, and the shutdown has effectively corked 1.7 million barrels' worth of oil per day.
The supply shock sparked a boost in oil futures. West Texas Intermediate for January delivery gained $3.63, or 4.0%, to $94.25 per barrel, while Brent crude for January delivery advanced $2.06, or 2.3%, to $91.87 per barrel, on the ICE futures exchange.

"This pipeline blast has caused a little bit of consternation simply because it is such an important pipeline," said Lawrence Poole, energy analyst with Global Insight. He said the affected lines contributed 20% of America's import requirement, adding: "In the short term, there is no doubt that it is going to add some pressure to oil futures."

Above story by Lionel Laurent,for more, go here.

Oil Surges Above $99 as Weaker Dollar Spurs Commodity Demand

Nov. 21 (Bloomberg) -- Crude oil rose above $99 a barrel for the first time in New York as a weakening U.S. dollar increased demand for commodities.

Oil, gold and silver gained as the dollar fell yesterday to a record low against the euro on speculation that the Federal Reserve will lower interest rates for a third time this year. Oil gained after Royal Dutch Shell Plc said a fire more than halved output from a 155,000 barrel-a-day oil-sands plant in Alberta, potentially cutting shipments to U.S. refineries.

``Oil has become a hedge for investors and the weaker U.S. dollar has contributed to the rise in gold and oil,'' said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore. ``The price strength in oil is also supported by the tight fundamentals.''

For more, go here.

NVDL: OPEC are saying $100 oil is cheap, particularly when one factors into it the fact that a large proportion of the oil price is made up of taxes. It's a well made point, but unfortunately, not one that makes it all better.

We're Saved: Brazil hopes huge oil discovery will propel it into big league

Brazil was celebrating one of the world's biggest oil discoveries of recent years yesterday, a huge deposit off the coastline of Rio de Janeiro, which officials claim will take it into the major league of the world's biggest energy powers.

The find at the Tupi field, about 155 miles off Rio, could yield a total of 8bn barrels of light crude and represent 40% of the oil ever found in Brazil.
Dilma Rousseff, chief of staff in the president's office and tipped as a possible successor, said the discovery could propel Brazil "to the level of Saudi Arabia and Venezuela".

"This has changed our reality," she said. "It is something that could contribute to Brazil moving from an intermediate nation in the petrol sector to another level."
The Correio Braziliense newspaper heralded the discovery with the headline God is Brazilian. The find could propel Brazil into the "first division of petrol producers and exporters", it added.

Oil experts said it was the biggest find anywhere in the world for at least seven years and would push Brazil's reserves into the global top 10 but comparisons to Saudi Arabia may be over-optimistic. Brazil's total reserves will rise to about 20bn barrels as a result of the discovery, compared with Saudi Arabia's 260bn, whose daily production is four times that of the Brazil.

The share price of Brazil's state oil company Petrobras, which owns 65% of the field, rose by about 14% after the announcement.
The price of the British BG Group, which owns a 25% stake, also rose.

"If confirmed, the recoverable volumes of oil and gas will lift significantly the quantity of existing oil in Brazilian basins, putting Brazil among the countries with big reserves of oil and gas," the company said.

It described the Tupi field as the first part of a new oil "frontier" which potentially stretched for some 500 miles along the Brazilian coastline.
According to Petrobras, Brazil has the 24th biggest oil reserves in the world. The company said the find could push South America's biggest country up to ninth place.

But analysts said the find would not immediately solve Brazil's energy crisis. The country's natural gas sector has been in trouble since May last year when the Bolivian president, Evo Morales, moved to nationalise his country's gas and oil fields, on which Brazil is heavily dependant.

Adriano Pires, an energy expert from the Brazilian centre of infrastructure, said while the discovery was important the government had "put on this [media] show to divert the focus of attention from the gas crisis and the critical situation of the Brazilian electricity sector".
"In the short term this does not solve in any way the energy problems the country is suffering from," he said.

Relief for global oil markets, which have soared in recent months to all time highs close to $100 a barrel, will not come in the near future. Full-scale production will not start for at least five years and getting the oil out will be expensive and difficult because it is so deep under the surface.

The discovery is also unlikely to divert Brazil from its development of biofuels. Brazil is the world's biggest producer of ethanol.

Emilio La Rovere, a biofuel expert from Rio's federal university, said that in the long term the discovery was unlikely to change Brazil's focus on alternative fuels such as ethanol.
"The fact that this big reserve has been discovered and that Brazil is starting to think about being a producer does not mean that Brazil will abandon this," he said. But, he said, in the short term the discovery might mean that there would not be "such a great urgency in the economic sense" in pursuing alternative fuels.

From Guardian.co.uk

NVDL: This illustrates just how collectively stupid we are. Right now, today, oil prices are snapping at the heels of $100. The Brazil field is a baby compared to the superbig saviours like Saudi's Ghawar and Mexico's Cantarell. It's NOT going to save us; it's not even going to be a blip.
And it's tiny compared to North Sea. It's our biggest find in 7 years. That says it all. What have we found in the last 27 years? And having just been discovered, by the time this field comes online, by the time it produces, several countries will have imploded, as their oil arteries contracted and turned to dust. Meanwhile OPEC recently stated, very magnanimously, they will consider increasing supply if there is a need. Er...did we miss something?

TIME: It's official: Peak oil is here and "the long emergency" has begun

This is a few days old, but nonetheless very much worth sharing:

When historians glance back at 2007 through the haze of their coal-fired stoves, they will mark this year as the onset of the Long Emergency – or whatever they choose to call the unraveling of industrial economies and the complex systems that constituted them. And if they retain any sense of humor – which is very likely since, as wise Sam Beckett once averred, nothing is funnier than unhappiness – they will chuckle at the assumptions that drove the doings and mental operations of those in charge back then (i.e. now).

These are the words of Jim Kunstler--sometime Rolling Stone writer, suburbia-hater, peak oil hardliner and author of the doom-enthusiast's bible, The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century. His blog post goes on and on and on, but the gist of it is this: Peak oil is now clearly upon us, so let the collapse of Western society begin.

Now I'm still mighty dubious of the second part (although I reserve the right to chuckle at my current assumptions as I forage for grubs 20 years hence), but the man is onto something about peak oil. I've just been reading through the coverage of and some of the presentations from the annual Oil & Money conference held in London earlier this week, and it's hard to come away with anything but the impression that world oil production--currently about 73 million barrels a day--is never going to go much higher than that.

Much of the talk was couched in terms of shortages in production capacity, petroleum engineers, etc. That is, not the actual supply of oil under the ground. So maybe this would be more a plateau than a peak. But with oil consumption in the developing world going up at 3% a year (it's more or less flat in the wealthy countries), even a plateau would mean higher and higher prices over time. You ready for that?

NVDL: It's going to start happening...a car is going to seem very unsexy, as our addiction to oil propels us towards the equivalent of a car wreck. How sexy is that?

Rising Demand for Oil Provokes New Energy Crisis (NYT)

Oil Likely at $100 This Week

By Gillian Wong, Associated Press Writer

SINGAPORE (AP) -- Oil prices rose Tuesday on expectations of further declines in U.S. crude oil stocks, fueling concerns that supplies may be inadequate going into the Northern Hemisphere winter.

Market participants expect the U.S. Energy Department on Wednesday to report that oil inventories fell last week, in part because of a suspension of output at Mexico's state oil company Petroleos Mexicanos, a major crude exporter to the United States.

Last week, crude futures jumped more than US$4 after figures showed a sharp, unexpected drop in U.S. crude inventories for the second week in a row.

"The oil market is really supported by the tight inventories in the U.S. market and the general expectations for the inventory report this week are that the crude inventories will likely fall," said Victor Shum of Purvin & Gertz in Singapore.

Analysts think some traders and investors will try to push oil prices to the psychologically important US$100 level this week. Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.

NVDL: Matt Simmons, author of Twilight in the Desert, and one time advisor to President Bush says the following:
If I was redoing Twilight in the Desert today, I'd sharpen the severity of the warning quite significantly.

Oil Drum: Peak Is Now

"PEAK oil is now", proclaims a hard-hitting study of global resources by the German-based Energy Watch Group.

Its predictions are dire: global oil output peaked in 2006 at 81 million barrels per day, will slide to 58 million bpd by 2020 and 39 million bpd by 2030.

NVDL: That's a chronic slide, a crash, and the world is unlikely to decelarate gently. It's likely to include stalling, sputtering, and the lobbing of the occasional nuclear warhead.

This is in sharp contrast to the International Energy Agency, which predicts 105 million bpd by 2020 and 116million by 2030, though offline, there is a growing view at the IEA that its projections are too optimistic.