2014 June 6

The Master Resource Report 2014-06-06

Libyan exports

According to a report on Upstreamonline Libyan exports of crude oil could fall to zero.

Libya’s crude exports could fall to zero in days as the state oil company could be forced to divert the only remaining exports to the Zawiya refinery, which provides crucial gasoline to the country’s capital…..

The total loss of this high quality crude on the global export market needs to make up by other exporting countries, in particular other Opec members. However, since US demand for light crude has continued to fall this has allowed former US imports to flow to markets now unable to obtain the Libyan crude.

US coal production up

The EIA’s weekly estimate of US coal production shows an increase of 2.7% over last week and 2.3% over year-ago levels. The estimate for U.S. year-to-date coal production totaled 407.8 mmst, a slightly lower than the     comparable year-to-date coal production last year.


2014 May 30

The Master Resource Report 2014-05-30

Total pulls the plug on tar sands project

Due to the continued escalation of industry costs Total has stopped its Joslyn tar sands operation in Alberta, Canada. The $11 billion price tag cannot be supported by today’s oil prices around $100 per barrel.

“We are still in the cycle within this industry where cost inflation in general is going much faster than price adjustments. We know that there is a rebalancing that needs to be done.”

The Globe and Mail article however made it clear that some project expansions will continue either because they are beyond the point of no return or they are less expensive additions to existing operations.

US natural gas exports to Mexico

US natural gas exports to Mexico have doubled since 2009 and are expected to continue growing at least thru the end of the decade. This graph is from Thursday’s Today In Energy posted by the EIA. It shows what the Mexican energy ministry thinks their country’s imports will look like over the 15 years from 2012. Note that the LNG imports will flat line since the price of Pacific Basin LNG is expected to remain at a multiple of US sourced natural gas. This means other than domestic Mexican production there is little to hold back the demand for US natural gas.

Forecast Mexican nat gas imports from US

Click image for larger view


Note: Currently clients and advisors at Ravenna Capital Management hold positions in Total.



2014 May 16

The Master Resource Report 2014-05-16

Toyota ends battery and drivetrain supply deal with Tesla

Toyota announced this week that it will not be renewing its agreement with Tesla to supply batteries and the drivetrain for its RAV4 electric crossover vehicle. The RAV4 electric has sold poorly since its introduction.

According to a New York Times article “Toyota has increasingly signaled that it sees fuel cells as the most viable zero-emissions technology.” Toyota has previously indicated it plans to market a fuel cell sedan in California next year. The company believes that short comings of batteries can be overcome with fuel cells and the market for zero emission vehicles is still in its infancy.

IEA raises concern about supply in late 2014

In its latest Oil Market Report, the International Energy Agency (IEA) raises concerns about recent production growth not being adequate to match rising market demands. “Crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year,” the IEA said.

Global supplies rose 700 kb/d month-on-month to 92.1 mb/d in April, with roughly half of the increase stemming from OPEC producers. Global supplies were 820 kb/d higher than a year earlier, with non-OPEC annual output growth of 1.8 mb/d more than offsetting an OPEC crude oil decline of 960 kb/d.

Note that the IEA is reporting all liquids which includes biofuels and NGLs. For example the IEA estimate for global crude oil refinery throughput for the second quarter of 2014 is 76.2 million barrels per day. It is important to know what is being included or excluded when agencies like the IEA or EIA report production and consumption data.

IEA forecast from 1982

Here is what the IEA was forecasting 30 years ago.

New York Times: The I.E.A. study predicts that production by the Organization of Petroleum Exporting Countries will stay in the range of 23 million to 29 million barrels a day during the rest of this decade. But output in North America and the North Sea is likely to decline after 1985, it said, and the Soviet bloc will no longer be a net oil exporter, but will become a net importer of 2 million barrels a day by 1990. Oil demand in the developing world and in OPEC itself will grow, the report predicted.

Today Russia is the largest oil producer in the world surpassing Saudi Arabia. OPEC’s current production stands at 29.9 million barrels per day.

The United States will remain the West’s largest coal producer for the rest of the century, producing 65 percent of Western coal in the year 2000 and accounting for 70 percent of the expected growth of coal demand.

They clearly missed the rise of China and the issue of climate change was still on the horizon. What will today’s forecasts look like 30 years from now?


Note: Currently clients and advisors at Ravenna Capital Management do not hold positions in Tesla or Toyota.


2014 May 9

The Master Resource Report 2014-05-09

Honda is building homes???

Where else but in California would you have an auto manufacturing company build a house. In the state known for automobiles Honda has built a prototype home that would produce more energy than it consumes. Of course central to this energy-efficient home is Honda’s electric car.

The house features a huge 9.5 kilowatt solar array and a 10 kilowatt hour battery to store excess power. Honda’s home energy management system controls the integration of house and the electric Honda Fit the conveniently is in the garage. Even the concrete foundation is unconventional using a low carbon cement mix.

The video below by Honda walks thru the features of the house.

Note: Currently clients and advisors at Ravenna Capital Management do not hold positions in Honda.


2014 May 2

The Master Resource Report 2014-05-02

US natural gas storage begins spring build

The build of US natural gas storage picked up pace as expected last week with a storage build of 82 Bcf according to EIA data released Thursday. This brought storage to 981 Bcf which is 44.6% of last year’s level and 50.1% of the five year average. However, if the non-winter year of 2012 is stripped out of the five year data current storage levels more realistically reflect a level around 58% of the trailing average. While still down substantially this gives a much better benchmark for comparison than the distorted average including 2012 volumes which were  2,478 Bcf the first week of April 2012.

The 82 Bcf fill is well within our estimates for the week. The next four to six weeks will be crucial in bringing natural gas storage back towards more normalized levels. It will be interesting to follow the progress of the rebuild so stay tuned.

Bio-mass based diesel products set new US import record

While all the news in the petroleum industry is about the US exports of petroleum products (see this week’s report), crude oil and LNG the level of US imports of bio-mass based diesel has expanded sharply. The EIA released the data for 2013 today that showed imports now constitute roughly 70% of US bio-massed based diesel.

The United States imports two varieties of biomass-based diesel fuel—biodiesel and renewable diesel. Last year, total U.S. imports of these two varieties of biomass-based diesel fuel reached 525 million gallons, compared to 61 million gallons in 2012. Two principal factors drove the increase in U.S. biodiesel imports: growth in domestic biodiesel demand to satisfy renewable fuels targets, and increased access to biodiesel from other countries. As a result, the United States switched from being a net exporter of biomass-based diesel in 2012 to a net importer in 2013 by a wide margin.


 Stranded Assets Fossilised Revenues – Full 35 page report