Recent Legislation Mandates Additional Sales of U.S. Strategic Petroleum Reserve Crude Oil – Why?

 

While we are looking the other way, Congress is managing to sell off our strategic reserves. Why might I ask? While the recent boon in energy finds in the USA is great, it still needs to be refined. The recent hurricanes have caused shortages requiring a release. We are one terrorist away from possibly needing our reserves again. I include a list of recent releases. As if that was enough, keep this old post in mind.

U.S. giving away ownership and control of our Energy and refineries 

Yes, let’s put the USA at risk.

US omnibus bill mandates sale of 10 million barrels of government …

PlattsMar 21, 2018
The bill also calls for lowering the threshold where the US government can drawdown crude from its emergency stocks. Under the threshold, set in the Energy Policy and Conservation Act of 1975, the Department of Energy cannot take or sell crude from the SPR “if there are fewer than 350,000,000 barrels … then in February they were chipping away US mandates biggest non-emergency strategic oil sell-off ever

A little history on the stockpile:

The largest stockpile of government-owned emergency crude oil in the world, the SPR was established to help alleviate the effects of unexpected oil supply reductions. Located in four storage sites along the Gulf of Mexico, the SPR held more than 695 million barrels of crude oil at the beginning of 2017, or about 97% of its 713.5 million barrel design capacity. Prior to FY 2017 sales, the SPR inventory level had remained nearly constant for several years.

Source: U.S. Energy Information Administration, based on Strategic Petroleum Reserve. Note: Volumes sold in fiscal years 2017 through 2020 under the Bipartisan Budget Act of 2015 Section 404 are estimates based on projected prices of West Texas Intermediate crude oil in the February 2018 Short-Term Energy Outlook and Annual Energy Outlook 2018.

Previous releases:

2012 Hurricane Isaac Exchange  |  2008 Hurricanes Gustav and Ike Exchanges  |  2006 Ship Channel Closure Exchange  |  2006 Barge Accident Exchange  |  2005 Hurricane Katrina Exchange  |  2004 Hurricane Ivan Exchange  |  2002 Hurricane Lili Exchange  |  2000 Heating Oil Exchange  |  2000 Ship Channel Closure Exchange  | 1999 Maya Exchange  |  1996 Pipeline Blockage Exchange 

Non-Emergency Sales Although the Reserve was established to cushion oil markets during energy disruptions, non-emergency sales of oil from the Reserve can be authorized to respond to lesser supply disruptions or to raise revenues.

2011 IEA Coordinated Release  |  1996 Weeks Island Sale  |  1996-1997 Sales to Reduce the Federal Budget Deficit

Continued:

A previous Today in Energy article described the three bills enacted in 2015 and 2016 that collectively call for the sale of 149 million barrels in FY 2017 through FY 2025. Most of these sales set volumetric requirements, and revenues from those sales go to the U.S. Department of Treasury. A section of one of those bills—Section 404 of the Bipartisan Budget Act of 2015—included authorization for funding an SPR modernization program by selling up to $2 billion worth of SPR crude oil in FY 2017 through FY 2020. In that act, the sales are based on revenue targets that must be authorized by Congress.

Exchanges Agreements Oil can also be released from the Strategic Petroleum Reserve under exchange arrangements (similar to loans) with private companies.  Exchange contracts provide for a loan of crude oil to be repaid, in kind, within a date certain, with additional premium barrels (similar to interest).

 

For information resources:

H/T: Global Energy Post

U.S. EIA: Today in Energy

A previous Today in Energy article described the three bills enacted in 2015 and 2016 that collectively call for the sale of 149 million barrels in FY 2017 through FY 2025

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Natural Gas from Putin’s Russia has to be imported to New England

 

Earlier this year, New England had to import a cargo of Russian liquefied natural gas, even though it is located just a few hundred miles from one of the largest natural gas fields in the world.

So reads the caption. An excellent example of just what has been allowed to happen that puts Americans at risk by a few nitwits. There, I said it and I cut to the chase.

Even the Boston Globe opined that “Massachusetts’ reliance on imported gas from one of the world’s most threatened places is also a severe indictment of the state’s inward-looking environmental and climate policies.”

Better yet, the Jones Act precludes Americans helping out other Americans:

The U.S. has several LNG export facilities that are already operational or will come online in the coming years. Why can’t we ship American LNG to Boston?

One reason is an antiquated federal law from 1920 – the Jones Act – that prohibits cargoes from being transported between U.S. ports unless they are carried on American-flagged ships.

The stupid thing:

There are about 150,000 miles of oil pipelines and more than 1.5 million miles of natural gas pipelines in theUnited States. ALREADY! 

The U.S. Energy Information Administration recently announced that in 2017, for the first time since 1957, the U.S. exported more natural gas than it imported.

Yet, even as we become a global energy superpower, political barriers prevent us from maximizing the benefits of the shale revolution.

Earlier this year, New England — located just a few hundred miles from the Marcellus Shale, one of the world’s largest natural gas fields — was forced to import a cargo of Russian liquefied natural gas. This was necessary because anti-energy activists have convinced local elected leaders to block new energy infrastructure, including pipelines that could bring American gas to the region. This is making households in the Northeast more dependent on imported energy, and forcing them to pay among the highest energy bills in the country. More at Washington Examiner

 

Here are a couple of sites where one can find out pipeline locations down to the county.

Pipeline101 – Where-Are-Pipelines-Located

 

Interactive map of pipelines in the United States | American …

The National Pipeline Mapping System (NPMS) Public Viewer from the Pipeline and Hazardous Materials Safety Administration allows users to view pipelines and related information by individual county for the entire United States. The map includes: Gas and hazardous liquid pipelines.

Largest U.S. Refinery now belongs to Saudi Arabia

If we thought my earlier post U.S. giving away ownership and control of our Energy and refineries 

Saudi Aramco to target US refiners, chemical plants after Shell breakup CNBC. Ed: The intention? They are hurting with the price of gas now in the cellar. What a nice way to try to control prices.

The two companies signed a nonbinding letter of intent, a plan that would divide up Motiva’s refineries between them. The refineries have a combined capacity of 1.1 million barrels per day and are all located close to each other. The breakup will allow Saudi Aramco to take over the Port Arthur refinery and 26 distribution terminals, and Aramco will also hold onto the Motiva brand name. Shell will take over the other two refineries, Convent and Norco, both located in Louisiana. Shell said that it would operate the two refineries as one plant with a combined throughput of 500,000 barrels per day.

More USA Today

 

Keystone Pipeline – We have just been Grubbered

Why they are making the pipeline issue about jobs I have no idea.  It should be framed around the best ways to improve safety.  The oil is going to get there one way or the other. The environmental side is once again misguided. The rail vs pipeline impact weighs to using the pipeline. Add to this the impact on the lack of Rail capacity that is impacting farmers, timber and other commodities and once more we are being “Grubered”. Congrats go out to the Rockefellers, Bill Gates, and Warren Buffet as well, who stand to make Millions if not more by supporting Rail as opposed to the pipeline.

Why Do These Train Cars Carrying Oil Keep Blowing Up?

Early on the morning of July 6, 2013, a runaway freight train derailed in Lac-Mégantic, Quebec, setting off a series of massive explosions and inundating the town in flaming oil. The inferno destroyed the downtown area; 47 people died.

The 72-car train had been carrying nearly 2 million gallons of crude oil from North Dakota’s Bakken fields. While the recent surge in domestic oil production has raised concerns about fracking, less attention has been paid to the billions of gallons of petroleum crisscrossing the country in “virtual pipelines” running through neighbor­hoods and alongside waterways.
Chicago tonight

H/T: Mother Jones

The vote has election year resonance in the Louisiana Senate race, but for our purposes the pertinent question is: if the pipeline is built, what effect would it have on rail congestion in the northern Plains and Midwest?

Much of that congestion now is due to railroads shipping Bakken crude to terminals on the West Coast and East Coast.

He said, “Once Keystone is built, that will go in pipeline instead of having to run 14 100-car unit trains a day. So you can see it will help reduce congestion on the rails. … We need it so we can move other goods.”

Another Keystone XL supporter, Sen. John Thune, R-S.D., said in a Senate speech last week, “We have a rail crisis. We have been battling now for a long time with the limited capacity in rail and much of the oil moving out is going on rail. That makes it harder for us to get our agricultural commodities to the marketplace….”

He said the building of the Keystone XL would allow about 100,000 barrels a day of Bakken crude to move by pipeline “and therefore not on the rail car. That saves about a unit train a day, which is significant.”
Blogs Roll Call

Side note on Canadian National Railroad (CN) – Bill Gates is their biggest investor.

Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.
With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department. (Chuckle time)!

“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-basedBerkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.” From: Bloomberg

The keystone pipeline is actually just one of several oil sands pipelines targeted by the Rockefeller Brother’s Fund. Ezra Levant calls it industrial sabotage and, based on their own Power Point, that certainly seems an apt description. H/T: Heritage  From Rockefeller Fund sabotages Keystone pipeline approval. The Rockefeller Brother’s Fund in a coordinated, 4-year, $28 million dollar campaign was on the march to defeat it.

US billionaire Warren Buffett has appeared singing and playing the ukulele on Chinese state television. The billionaire popped up on CCTV and wished the people of China “a happy new year.” The Lunar New Year of the Dragon begins at midnight on Sunday. “Your country has accomplished amazing things, and the best is yet to come,” Buffett told the broadcaster. The investor is well respected in China for his financial success

Vote Tally Count Keystone XL Pipeline passes UPDATE FAILS

Update: Here is the Senate vote. House vote at bottom of post

Nov 18 280 (59-41) Rejected On Passage of the Bill S. 2280

U.S. Senate Roll Call Votes 113th Congress – 2nd Session

Click on “blue” icons below for individual votes

as compiled through Senate LIS by the Senate Bill Clerk under the direction of the Secretary of the Senate

Vote Summary

Question: On Passage of the Bill (S.2280 )
Vote Number: 280 Vote Date: November 18, 2014, 05:55 PM
Required For Majority: 3/5 Vote Result: Bill Defeated
Measure Number: S. 2280
Measure Title: A bill to approve the Keystone XL Pipeline.
Vote Counts: YEAs 59
NAYs 41
Vote Summary By Senator Name By Vote Position By Home State

Update: Below is the House vote. 

Click on Blue Ayes  and Noes  for Individual votes below.

UPDATE:Below is the Gov Track link which breaks down votes by State and Name and much easier to view.

This was a vote to pass H.R. 5682.

https://www.govtrack.us/congress/votes/113-2014/h519

FINAL VOTE RESULTS FOR ROLL CALL 519(Republicans in roman; Democrats in italic; Independents underlined)

H R 5682      RECORDED VOTE      14-Nov-2014      12:52 PM
QUESTION:  On Passage
BILL TITLE: To approve the Keystone XL Pipeline

AYES NOES PRES NV
REPUBLICAN 221 1 11
DEMOCRATIC 31 161 9
INDEPENDENT
TOTALS 252 161 1 20

President Obama MOCKS Republicans For Having No Jobs Plan. Laughs At Keystone Pipeline 7/29/13

U.S. giving away ownership and control of our Energy and refineries

While we have been puffed up feeling good about our new energy finds, the continued eroding of its control and ownership has been slipping away. I first started reporting on the story when the major refineries closed in Philadelphia, once known as a major hub. What I found several years ago was chilling. We may have lots of oil, but  between the EPA bearing down, and the sale to foreign entities, mainly China, we have much to be concerned about, particularly our refineries.. First the update, then we take a look at the industry as a whole.

Aug 5 (Reuters) – Venezuelan state oil company PDVSA will sell North American unit Citgo Petroleum if it receives a good offer, Petroleum Minister Rafael Ramirez told reporters on Tuesday in what would be its biggest pullback ever from the U.S. refining market.

Citgo has three U.S. refineries with combined capacity of some 750,000 barrels per day. They are in Lemont, Illinois, Lake Charles, Louisiana, and Corpus Christi, Texas.

Separate from Citgo, PDVSA has a stake in the Chalmette refinery in Louisiana with Exxon Mobil. The Venezuelan company also owns the Merey Sweeny unit of the Sweeny, Texas, refinery with Phillips66, which was spun off from ConocoPhillips.

Ramirez did not directly address the possible sale of PDVSA’s other refining assets in the United States, although bankers have said Chalmette is for sale. Ed:(Anyone want to bet China will step up?) More over atReuters

I decided to scout around to see what was going on with our refineries and our energy specifically. Here is what I came up with in just a bit of time back in 2012.

The Philadelphia company, which owns two refineries in Pennsylvania, announced plans to sell those refineries and focus on its pipelines and retail gas stations that provide a steadier cash flow.

“We have made progress in increasing the efficiency of our refineries over the last several years, but given the unacceptable financial performance of these assets, it is clear that it is in the best interests of shareholders to exit this business,”

Sunoco’s refineries in Philadelphia and Marcus Hook, Pa., can process a combined 505,000 barrels of oil per day. If it cannot sell its refineries, the company will shut down its main processing units in July 2012.

The move is one more step in a major transformation for U.S. refining. Marathon Oil Corp. and ConocoPhillips decided to distance themselves from refining, announcing plans earlier this year to spin off their downstream businesses. CNS News

Earlier, we have Valero:

Valero Energy, the top independent American refiner, is working to sell its remaining plants on the East Coast and in the Caribbean, The Wall Street Journal said Deal Book NY Times

Then we have this unpleasant business of China involved in Texas”

China stakes claim to S. Texas oil, gas

HOUSTON – State-owned Chinese energy giant CNOOC is buying a multibillion-dollar stake in 600,000 acres of South Texas oil and gas fields, potentially testing the political waters for further expansion into U.S. energy reserves.

With the announcement Monday that it would pay up to $2.2 billion for a one-third stake in Chesapeake Energy assets, CNOOC lays claim to a share of properties that eventually could produce up to half a million barrels a day of oil equivalent.

As part of the deal, the largest purchase of an interest in U.S. energy assets by a Chinese company, CNOOC has agreed to pay about $1.1 billion for a chunk of Chesapeake’s assets in the Eagle Ford, a broad oil and gas formation that runs largely from southwest of San Antonio to the Mexican border.

CNOOC also will provide up to $1.1 billion more to cover drilling costs.

The deal represents China’s second try at making a big move into the U.S. oil and gas market, following a failed bid five years ago to buy California-based Unocal Corp.

Intense political opposition over energy security concerns derailed that $18.4 billion deal. But analysts expect few political or regulatory hurdles to the CNOOC-Chesapeake deal. My San Antonio

Let us check out Wyoming:

China’s Niobrara Shale deal part of complex U.S. relationship

CHEYENNE — It’s more about greenbacks and less about the Red Menace.

China’s recent deal for assets and exploration in the Niobrara Shale should be viewed as part of a complex energy relationship between China, the United States and the rest of the world, some Wyoming energy experts say.

“It’s part of the mix. To me, that is the reality we’re working in, it’s a mutual dependency,” said Jean Garrison, director of international studies and professor of political science at the University of Wyoming. “These are people we’re going to be dealing with in a business setting.”

China’s $1.3 billion Niobara Shale deal with Oklahoma City-based Chesapeake Energy is just one of many cooperative deals recently inked between the country’s state-owned oil companies and businesses in the U.S., Canada, Australia and South America.

Mark Northam, director of UW’s School of Energy Resources, said he would be more concerned if Chinese state-owned firms tried to buy companies such as Chesapeake outright.

Read more: Trib Com News

Check out what Mexico and Citgo were up to decades ago, and who knew?

State-run Oil Company Mexico’s PEMEX Looking into Purchase of Oil Refineries in U.S.. By Carlos Navarro. The state-run oil company PEMEX is exploring the possibility  Repository UNM EDU

Between 1986 and 1989, PDVSA, through its subsidiary CITGO Petroleum Corporation, acquired the Lake Charles and Corpus Christi refineries in the USA with a refining capacity of 485,000 b/d. The investment was made to enhance the value of Venezuela’s heavy crudes which, with a high sulphur and metal content, had been selling at a considerable discount to light crudes. http://www.petroleumworld.com/sati10061201.htm

China Enters California Oil Market With 50% Purchase of Coastal Corp. Refinery

China agreed Wednesday to buy half of a Hercules, Calif., oil refinery in a move that will put Chinese crude oil into competition with Alaska and California oil. The investment is the first of its kind by China’s state-owned oil industry and mimics recent actions by several OPEC nations.

The joint venture with Coastal Corp. of Houston, owner of the small refinery in the San Francisco Bay Area, also signals a move by Coastal into California’s huge gasoline and convenience-store market, the U.S. company saidhttp://articles.latimes.com/1988-08-04/business/fi-10283_1_oil-markets

 Then we have Israel:

ALON USA acquired ownership of the Big Spring, Texas refinery in August 2000, when ALON Israel Oil Company Ltd. purchased the U.S. fuels marketing and refining assets of Atofina Petrochemicals, Inc. (FINA). The 70,000-barrels-per-day Big Spring refinery delivers products to our customers from Ft. Smith, Arkansas to Phoenix, Arizona via owned/operated and third-party pipelines. Alon USA

China and our Oil Leases

China’s state-owned energy firm just closed a deal to buy interests in four development leases on the American Outer Continental Shelf (OCS) in the Gulf of Mexico.

The deal, which requires approval of the U.S. government, is between Norway’s Statoil and China National Off-Shore Oil Corporation (CNOOC). This is the same CNOOC that would have bought Unocal four years ago for $18.5 billion but for pressure from Congress, according to The New York Times, quoting an energy industry trade publication.

Because it must be approved by the U.S. government, the Statoil/CNOOC deal puts President Obama and Ken Salazar, his Secretary of the Department of the Interior, which controls OCS leasing, in a difficult position.

UPDATE: Bishop says Obama policy aids foreign nations, not U.S.

Rep. Rob Bishop, R-UT, says the Statoil/CNOOC deal is indicative of the Obama administration’s failure to protect U.S. consumers from foreign nations seeking to tap into this country’s abundant energy resources:

“Unemployment will continue to exceed acceptable levels and the economy will continue to suffer until this administration reverses its anti-energy policy.  China and other foreign countries are gaining access to the abundant natural resources located in the American OCS, meanwhile an energy starved U.S. continues to experience the detrimental effects of Secretary Salazar’s decisions to place special-interests before the American people.  Since taking office this administration has made great strides in helping countries gain access to American energy resources, it’s just too bad the U.S. isn’t one of them

Read more at the Washington Examiner: Washington Examiner

BONUS INFO!  Just to make our heads spin.

Recall: Russians to Control Uranium Mines in Wyoming? – Yep, I posted this in 2010!

Russians to control Uranium mines in Wyoming:

Two uranium mines in Wyoming are on their way to control by a Russian company now that the Nuclear Regulatory Commission has approved transferring the mines’ licenses.

The NRC last week approved the license transfer to a Russian company known as ARMZ which expects to obtain a controlling interest in Canadian-owned Uranium One by year’s end. Uranium One holds the licenses for a proposed uranium mine and an existing uranium mine in northeast Wyoming.

The transfer raised concern from Wyoming’s congressional delegation, who said the uranium could in theory go overseas and serve against U.S. interests.

So who has the interests of the United States? Do not count on our government.

 

China’s Canada 15.1 billion oil deal dissed by Dems

The reaction of Pelosi and Schumer is a stunner, but why should I be surprised? These two now think that Canada should not cut their energy deal with China, after these fine folks block the Keystone pipeline. Is there anyone upstairs? What did they think was going to happen? Canada has been saying right along the oil was going our way or it was going West. Now we are going to pay China for Canadian oil. Great. The amazing thing is they have no concern about China buying up the U,S. oil supply. Here from an earlier post: China buying up U.S. Energy Supplies

CNOOC recently completed a 570 million dollar deal that gives it a one-third interest in huge oil and gas deposits in Colorado and Wyoming. The following is from Wyoming Energy News….

Chinese energy company Cnooc Ltd. has agreed to pay $570 million for a one-third interest in Chesapeake Energy Corp.’s 800,000 leased acres in northeast Colorado and southeast Wyoming. The acreage is in the Denver-Julesburg (DJ) and Powder River basins. Cnooc is China’s biggest offshore oil and natural gas producer.

In fact, according to a recent Business Insider article, this deal gives the Chinese government the right to a third of any new oil discovered by Chesapeake Energy in the entire region….

Now they are worried about Canada???

In a statement, Pelosi spokesperson Drew Hamill said:

This deal prompts great concern about the Chinese government’s continued attempts to use its state-owned enterprises to acquire global energy resources.

When President Barack Obama blocked the Keystone Pipeline, Republicans said the move would encourage Canada to pursue oil deals with China instead of the United States and cede a massive chunk of North American oil assets to the communist nation.

Now, with China’s state-run oil company CNOOC poised to cut a $15.1 billion deal–the largest ever foreign acquisition for a Chinese company–with Canadian oil company Nexen, Sen. Charles Schumer (D-NY) and Rep. Nancy Pelosi (D-CA) are in full backpedal mode.

In a draft letter to the Committee on Foreign Investment in the United States (CFIUS), Sen. Schumer writes:

I respectfully urge you, in your capacity as chairman of the Committee on Foreign Investment in the United States (CFIUS), to withhold approval of this transaction to ensure U.S. companies reciprocal treatment

H/T: Breitbart

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