Oil Industry Faces Volatility and Infrastructure Challenges

Strategic Insights -

US Strategic Petroleum Reserve (SPR) sale plans have drawn criticism from ExxonMobil's chief executive, Lee Raymond, who sees the move as an attempt to manipulate oil prices. Meanwhile, the US Department of Energy is looking to address natural gas infrastructure problems, and Enbridge Pipeline is expanding its capacity to meet rising demand. IntercontinentalExchange (Ice) has launched its electronic trading site for oil, and labour action in Latin America is causing concern about crude supplies.

Key Takeaways:

  • ExxonMobil's CEO, Lee Raymond, believes the SPR sale will increase oil price volatility, which could boost the company's profits in the third quarter.
  • The US Department of Energy is seeking bids for a $10mn research program to address the US' strained natural gas infrastructure, which requires over 38,000 miles of new transmission lines and 263,000 miles of distribution mains by 2015.
  • Enbridge Pipeline is expanding its capacity by 40,000 b/d, taking total capacity to 1.84mn b/d, in an effort to keep up with rising Canadian oil production.
  • IntercontinentalExchange (Ice) has launched its electronic trading site for oil, which will cover swaps and options trade of global crude and refined products.
  • Labour action in Latin America, including a pay dispute in Venezuela and a possible strike in Brazil, is adding to concerns about crude supplies.

Statistics:

  • The SPR sale will transfer 30mn barrels of oil from the US Strategic Petroleum Reserve.
  • The US Department of Energy's research program aims to address over 38,000 miles of new natural gas transmission lines and 263,000 miles of distribution mains by 2015.
  • Enbridge Pipeline's capacity will increase by 40,000 b/d, reaching a total of 1.84mn b/d.
  • IntercontinentalExchange (Ice) has secured commitments to conclude a minimum volume of trade through its electronic oil trading site from four major oil companies, including TotalFinaElf, BP, and Shell.

Sources:

  • Raymond blasts SPR sale, Oil & Gas Journal, [no date]
  • DOE looks at gas strains, Oil & Gas Journal, [no date]
  • Canadian pipeline sets expansion, Oil & Gas Journal, [no date]
  • Oil e-trading launch, Oil & Gas Journal, [no date]
  • Latin strikes add to crude worries, Oil & Gas Journal, [no date]
  • IntercontinentalExchange (Ice) official website, [no date]