Energy & Commodities

The Real Reason The U.S. Is Interested In Iran

The American obsession with Iran is about oil and natural gas. If these two resources had been absent, it is hard to imagine such an intense American focus on the country from the time of a U.S. Central Intelligence Agency-backed coup of Iran’s elected government in 1953 to today. The Foreign Policy magazine piece linked above is based on declassified CIA documents and summarizes the coup this way: “Known as Operation Ajax, the CIA plot was ultimately about oil.”

This should come as no surprise. Iran was an oil power back in 1953 and it remains one today. Iran is presumed to have the third largest oil reserves in the world and the second largest natural gas reserves. Even if the numbers cited are somewhat inflated, Iran’s reserves are not small, and the country is likely to play a large role in world energy markets for many years to come.

The recent escalation of tensions between the United States and Iran because of the U.S. assassination of a prominent, popular and by all accounts highly effective Iranian general will allow the advocates of war to trot out all manner of excuses for such a war: terrorism, regime change, the credibility of the United States, Iran’s nonexistent nuclear weapons, and the United States’ geostrategic posture vis-à-vis big power rivals such as Russia and China. (Does anyone really know what the last one means?) CLICK for complete article

How Clean Is Natural Gas?

When former Energy Secretary Ernest Moniz said in 2013 that the natural gas boom was helping America fight climate change, not everyone was convinced, with methane leaks cited as cause for concern. As it turns out, those concerns might be warranted, according to new research that takes a lot of the green out of our precious natural gas.

“My look at the evidence to date suggests that this [methane leaks] in no way eliminates the significant advantage of gas over coal for CO2 emissions,” Moniz insisted.

Fast-forward to 2019 where research from Stanford University found that the surge in natural gas use in many parts of the world has helped to drive carbon emissions to a record-high over the last two years. Now, we’re on track to break this record and this, according to the Stanford researchers, is because of gas.

On the face of it, all looks good.

Coal use is falling in all the major emitters—the United States, China, and the European Union—and renewables use is rising. Along with it, natural gas use is rising, too. The closer look taken by researchers at natural gas, however, shows that growth in its consumption globally was responsible for 60 percent of carbon emissions growth in the last few years…CLICK for complete article

The Infinite Energy Resource We’re Overlooking

Here’s fun fact: the world’s deepest manmade hole goes 15 kilometers into the ground. They stopped drilling at the 15th kilometer because it got too hot at the bottom of the hole. Welcome to geothermal energy, the reason most religions depict Hell as a place deep underground and the reason why we may succeed in building a clean energy future for the planet without turning it into a disco ball of solar panels.

Geothermal energy is, simply put, heat; heat that is generated from the decay of radioactive elements in the planet’s mantle. The amount of energy this heat translates into is stunning. According to the Union of Concerned Scientists, just 33,000 feet below the Earth’s surface there is 50,000 times more energy than the energy all the oil and gas in the world can produce. This energy can be harnessed and used for heating and power generation.

Of course, from a driller’s perspective, 33,000 feet, which is equal to 10 kilometers, is not exactly a small distance to drill. Yet it is not impossible as those engineers in the ‘80s demonstrated with their 15-km hole. We just need to develop the drilling technology….CLICK for complete article

Two Bullish Factors Pushing Oil Prices Higher

Oil prices were up on Tuesday as Washington agreed to delay the scheduled December 15th tariff hike on China. The impact of the OPEC+ production cut agreement on markets has also yet to wear off.

– The volume of natural gas that was vented or flared in the U.S. reached a record high 1.28 billion cubic feet per day (Bcf/d) in 2018.

– North Dakota and Texas alone accounted for 82 percent of all gas flared or vented.

– The pace of flaring surged by even more this year.

– Oil executives have referred to this problem as a “black eye” for the industry.

Market Movers

– Laredo Petroleum (NYSE: LPI) says it has closed a bolt-on acquisition of 4.475 contiguous net acres in Glasscock County, TX, for $65 million. LPI says the acquired acreage is located “in an area of high oil productivity with relevant offset wells indicating first year oil production 37% higher than expectations for legacy Laredo Wolfcamp drilling.”

– Kosmos Energy (NYSE: KOS) fell sharply on Monday, dragged down by the meltdown of Tullow Oil (LON: TLW). Tullow fell by 70 percent on Monday after reporting lower production guidance. Kosmos partners with Tullow in Ghana…CLICK for complete article

The Best Way To Invest In The Energy Sector In 2020

A record number of energy companies filing for bankruptcy coupled with poor performance by the industry in 2019 has made it incredibly hard to find investments in the energy space that can be considered safe or promising.

The industry’s favorite benchmark, the Energy Select Sector SPDR Fund, which tracks the price and yield performance of companies in the energy sector, has returned just 2.7% compared to the 24.2% produced by the S&P 500 year-to-date, easily one of the biggest laggards in the entire market.

But first, let’s look at some popular energy instruments that have turned quite risky for the average investor.

Snake oil bonds?

Many investors tend to turn to bonds when the stock markets become choppy.

Natural Gas Set To Fall Even Further

Slowing gas demand in China is set to pressure international gas prices further, adding to the burden of producers, some of whom already have to deal with excess supply.

Bloomberg quoted a researcher from China’s economic planning authority, who said at a BloombergNEF event in Shanghai that over the next five years, China’s demand for gas will slow down, especially in the liquefied natural gas department. The reasons for the slowdown will be economic: forecasters expect slower GDP growth in the world’s second-largest economy. Not last because of the continued trade war with the United States.

The Power of Siberia launched officially on Monday, with China’s and Russia’s presidents hailing the infrastructure as a cornerstone in bilateral relations. The two have a 30-year contract for gas supplies and these are bound to undermine Chinese LNG demand.

Domestic production will also take a chunk out of that particular gas demand segment as Beijing seeks to reduce its overwhelming reliance on imports. Tariffs on U.S. LNG imports will not help producers either….CLICK for complete article