Balancing Act---Sanctions, Venezuela, Trade War and Demand

[William Edwards + 708]

2 minutes ago, ceo_energemsier said:

I dont see a supply glut of any kind of crude. What will end up happening if any , supply glut occurs, will be transformed into a new product stream and business for many traders and producers... CRUDE OIL BLENDING. Heavy , high sulfur crudes will be blended with lighter sweeter, low sulfur crudes and condensates to achieve the desired feedstock properties to bring about the product slate properties for the low sulfur gasoils and fuels compliant with the IMO 2020.

At least you back up your guess with your wishful thinking. But you left out an important step. Tell us how blending removes sulfur from the system. Does it not just try to hide it by increasing the volume of oil over which it is spread? Mass balance is required! Specs are only part of the equation. Quantity is the other factor.

[ceo_energemsier + 1,818]

1 hour ago, William Edwards said:

You say "I would think the price is often subject to negotiation for large refining companies and the price might be set for 30 to 90 days and then renegotiated at regular intervals." Why guess? Let us review the facts of the situation. It may have been the way you supposed forty years ago, Osama, but the producers found a much simpler way to price oil in the eighties. They discovered a method that required neither work nor thought, even though it was terribly flawed. The financial industry convinced the producers that buying and selling contracts for promised future delivery by financial types with no oil knowledge was the same as selling oil loaded onto a tanker by oil experts. Since it required no effort to get a number for the price, the system provided an easy means for a crude price number each day, as long as the industry was happy using a price derived from futures contract trading instead of an oil sale arms-lenth transaction. Sounds the same if you can avoid thinking through the reality of the two entities. And you can be sure that the OPEC member country leaders did not think through that distinction. On top of that, they had the glorious media industry and the even more glorious consulting industry to join the chorus that "oil futures and real oil are that same thing", in spite of the fallacy of that statement. (For example, oil futures have a shelf-life measured in hours, days, weeks and months. Real oil has an indefinite shelf life. Compare selling bananas to selling gold. With gold you can wait.)

What is actually negotiated now between buyer and seller is a DIFFERENTIAL from a futures price quoted for the date of loading, not a $/B price for the oil loaded onto the boat. In reality, neither buyer nor seller, nor even the futures trader, knows ahead of time what the actual price is for the cargo to be purchased. Strange system! 

yes that is why just about all physical crude oil trades/cargoes are based on a certain relevant benchmark , specific to that grade /regional crude oil, for eg. Dubai mostly for the AG, Brent (DTD) for North Sea, WAF grades and crudes moving from the US to EU and Asia , among others such as TAPIS etc and the prices of actual previous cargoes loaded are averaged out for 3 days or 5 days based on the benchmark and publishing/posting authority such as Platts, Argus etc. centering on the day of actual loading.

[William Edwards + 708]

1 minute ago, ceo_energemsier said:

yes that is why just about all physical crude oil trades/cargoes are based on a certain relevant benchmark , specific to that grade /regional crude oil, for eg. Dubai mostly for the AG, Brent (DTD) for North Sea, WAF grades and crudes moving from the US to EU and Asia , among others such as TAPIS etc and the prices of actual previous cargoes loaded are averaged out for 3 days or 5 days based on the benchmark and publishing/posting authority such as Platts, Argus etc. centering on the day of actual loading.

Were you in the business back in the days when the negotiation was an actual price, not a  differential off of a floating number? A much more challenging system back then, but you knew what the price was for the transaction. Today's thoughtless and brainless method is much, much simpler, as is the case when one is unwilling to take any responsibility for his decisions. "I paid the same as everybody else" is sufficient justification for not sticking ones neck out. That is today's CEO's defense to his simple-minded, gullible stockholders.

[ceo_energemsier + 1,818]

2 minutes ago, William Edwards said:

At least you back up your guess with your wishful thinking. But you left out an important step. Tell us how blending removes sulfur from the system. Does it not just try to hide it by increasing the volume of oil over which it is spread? Mass balance is required! Specs are only part of the equation. Quantity is the other factor.

Blended crude oil with a better quality is easier to process and refine and giving higher yields of the desired end products. Now I suppose you are a chemical and process engineering expert as well , dictating that blending does not result in better quality and better yields on desired end products.

I left out the more technically challenging aspects of improving crude oil qualities beyond blending IE crude oil upgrading from a molecular level, using chemical engineering and other processes and very specific molecular and elemental removal of "undesirables", contaminants from a crude oil stream and improving its API gravity, lowering sulfur by just about almost if not 100% removing it in addition to removal of heavy metals, paraffins etc.

Aramco is and has been and will be investing a lot of $$$ in these various technologies to upgrade the crappiness of high sulfur crude oils.

Cleaner fuels with just about zero emissions is the wave of the future and most companies are jumping on that bandwagon.

That process starts with having a cleaner and better feedstock

 

_________________________________________________________________________________________

 

Behind Closed Doors Of Saudi Aramco’s Downstream R&D Center

HartEnergy.com took a tour of Saudi Aramco's downstream R&D headquarters and facilities in Dhahran and Ras Tanura. Here's an inside look at Aramco's ambitious plans for the sector.

DHAHRAN and RAS TANURA, Saudi Arabia—After mastering the upstream business, Saudi Aramco is setting its sights on the downstream sector. It revealed an ambitious plan to be one of the major players in the world, which is part of the company’s objective to be not only a fully integrated energy company, but also one of the major technology developers. It also envisions becoming an enabler and creator of new technologies.

Saudi Aramco expects organic growth through the establishment of “mega-integrated” refining and petrochemical plants in collaboration with major international oil and gas partners as well as the acquisition of a 70% stake in local firm SABIC, which is one of the major petrochemical players in the world. It also expects growth from the acquisition of Shell’s 50% stake in SASREF refinery joint venture in Saudi Arabia for US$631 million.

Saudi Aramco also unveiled a very ambitious research and development (R&D) programs that seek to support the company drive to consolidate its downstream ambitions, as a key factor to success in the downstream sector is the technological advancement and superiority. This is part of the company ambitions to move from its traditional role as buyers and consumers of technology to its new global technology and R&D strategy.

Amer Ahmad Amer, chief technologist at Saudi Aramco’s R&D Center Fuel Technology Division, said that in 2020, Saudi Aramco aims to be a technology leader, emphasizing on high-impact technologies that typically involve long-range strategies.

“By 2020, our objective is to be technology enabler to be able to maximize the company’s income as well as driving a knowledge-based economy in the country,” Amer told HartEnergy.com during the visit that Saudi Aramco organized for Hart Energy to its headquarters and facilities in Dhahran and Ras Tanura.

“In terms of patents, Saudi Aramco was granted more than 317 patents in 2018, which places [it as] the second major player after Exxon Mobil, and we are working to become the number one in the next few years,” Amer continued.

Amer said that the company has dedicated R&D centers that covers the various segments of the company’s business. This includes EXPEC ARC, R&D Center, and Saudi Aramco Energy Venture, in addition to 8 R&D centers in various locations around the world.  While Expec Arc covers the up R&D activities related to the upstream sector and all activities that take place below surface, the R&D Center is in charge of the downstream sector and all activities that take place above surface.

The R&D Center covers six main domains including oil and gas treatment, refining and upgrading, chemicals, oil and gas network integrity, fuel technology and carbon management.
“The oil and gas treatment works on developing to enhance gases and crude oil-water desperation, and produced water treatment,” Amer said. “So far, we are working on various programs such as natural gas storage, has separation, crude oil water separation, produced water treatment and reuse.”

Carbon management is one of the key domains that Saudi Aramco invest heavily in new technologies to tackle carbon related issues. The objective is to develop low-carbon technologies to ensure sustainability of hydrocarbon use and optimization of Saudi Arabia energy mix.

“Our programs focus on energy efficient power generation, carbon capture and utilization, and renewables,” Amer said.

Meanwhile, the fuel technology domain currently works on programs such as passenger transport, commercial transport and low GHG fuels, with aim of promoting the development and adoption of cost effective and sustainable oil-based transport solutions.

While the R&D Center mainly focus on downstream programs, some of the programs also target challenges that are faced in upstream segment of the business, such as the oil and gas treatment programs, which mainly cover upstream business, with natural gas storage program cover both, in addition to chemical additives, sensing and monitoring, and nonmetallic material programs.

In the refining and upgrading, the company aims to develop conventional and unconventional technologies for upgrading crude and its fractions. Currently, the R&D Center’s teams work on diesel and gasoline maximization, unconventional upgrading, and molecular modeling.
Amer said that the chemical’s domain of the R&D Center seeks to develop technologies to increase the use of petroleum-based feedstock for chemicals and improve refinery-petrochemicals integration.

“Currently, we are working on crude to chemicals technology, intermediate streams conversion, alpha olefins technology and chemical additives,” he said.

The oil and gas network integrity works on R&D programs that aim to develop technologies to enhance integrity of pipelines and facilities. “Current programs that cover oil and gas network integrity works include corrosion prediction and modeling, sensing and monitoring and nonmetallic material program,” Amer added.

With the strong research capacity at the company’s disposal, Amer highlighted Saudi Aramco’s investments in oil to chemicals, enabling the company to capture the growth opportunity in this high-value sector. He noted that the company’s efforts are being made in the context that chemicals are expected to be the largest driver of global oil demand; and fundamental to capturing value in petrochemicals is integration. Leveraging feedstock advantage and reconfiguring the conventional refining approach, crude oil to chemicals technology can achieve a higher conversion rate—45% to 50% versus the industry average of 30%—to generate greater value across the hydrocarbon value chain.

Furthermore, Saudi Aramco’s pioneering crude oil to chemicals technology targets a 70% crude oil to chemicals conversion rate, which could be a game changer in the industry.

To achieve this objective, Saudi Aramco signed an agreement with CB&I and Chevron Lummus Global to accelerate, scale up, and commercialize Saudi Aramco’s Thermal Crude to Chemicals technology, shifting the average conversion rate from 45% to more than 70% by 2020, while working to reduce overall energy and capital intensity.

In addition to the ambitious R&D program, Saudi Aramco is modernizing its facilities and upgrading the quality of its products, such as the clean fuel project in Ras Tanura Refinery, as the company has been revamping its refineries to produce cleaner fuels, a trend at Middle Eastern refineries to target export markets with stricter environmental requirements. Abdullah Albagar, chief engineering officer at Ras Tanura Refinery said that the clean fuel project in Ras Tanura aims to produce products with less sulfur, to meet the EURO 5 specifications.

“The objective is to reduced the sulfur content in diesel to 10 bpm from current 500 bpm. We managed to move from 10,000 bpm to 500 bpm,” Albagar said during the visit to Ras Tanura refinery. “The clean fuel project includes isomerization, naphtha hydro-treatment, continuous catalytic reforming (CCR), interconnections, flare system and buildings. The project is set to be completed within two to three years.”

Albagar also said that the general turnaround of the Ras Tanura Refinery is seven years, with some units maintained every 5 years.

[ceo_energemsier + 1,818]

1 minute ago, William Edwards said:

Were you in the business back in the days when the negotiation was an actual price, not a  differential off of a floating number? A much more challenging system back then, but you knew what the price was for the transaction. Today's thoughtless and brainless method is much, much simpler, as is the case when one is unwilling to take any responsibility for his decisions. "I paid the same as everybody else" is sufficient justification for not sticking ones neck out. That is today's CEO's defense to his simple-minded, gullible stockholders.

 

1 minute ago, William Edwards said:

Were you in the business back in the days when the negotiation was an actual price, not a  differential off of a floating number? A much more challenging system back then, but you knew what the price was for the transaction. Today's thoughtless and brainless method is much, much simpler, as is the case when one is unwilling to take any responsibility for his decisions. "I paid the same as everybody else" is sufficient justification for not sticking ones neck out. That is today's CEO's defense to his simple-minded, gullible stockholders.

Been doing oil trade since before I could walk LOL

I believe oil trading (physical) is just as challenging as doing neurosurgery or cardiovascular surgery and there are a lot of arm chair want to be traders. Actual physical traders run the world literally and the paper traders have found themselves embedded deeply on the hard work of others to take financial gains (mostly)

[William Edwards + 708]

3 minutes ago, ceo_energemsier said:

Blended crude oil with a better quality is easier to process and refine and giving higher yields of the desired end products. Now I suppose you are a chemical and process engineering expert as well , dictating that blending does not result in better quality and better yields on desired end products.

I left out the more technically challenging aspects of improving crude oil qualities beyond blending IE crude oil upgrading from a molecular level, using chemical engineering and other processes and very specific molecular and elemental removal of "undesirables", contaminants from a crude oil stream and improving its API gravity, lowering sulfur by just about almost if not 100% removing it in addition to removal of heavy metals, paraffins etc.

Aramco is and has been and will be investing a lot of $$$ in these various technologies to upgrade the crappiness of high sulfur crude oils.

Cleaner fuels with just about zero emissions is the wave of the future and most companies are jumping on that bandwagon.

That process starts with having a cleaner and better feedstock

 

_________________________________________________________________________________________

 

Behind Closed Doors Of Saudi Aramco’s Downstream R&D Center

HartEnergy.com took a tour of Saudi Aramco's downstream R&D headquarters and facilities in Dhahran and Ras Tanura. Here's an inside look at Aramco's ambitious plans for the sector.

DHAHRAN and RAS TANURA, Saudi Arabia—After mastering the upstream business, Saudi Aramco is setting its sights on the downstream sector. It revealed an ambitious plan to be one of the major players in the world, which is part of the company’s objective to be not only a fully integrated energy company, but also one of the major technology developers. It also envisions becoming an enabler and creator of new technologies.

Saudi Aramco expects organic growth through the establishment of “mega-integrated” refining and petrochemical plants in collaboration with major international oil and gas partners as well as the acquisition of a 70% stake in local firm SABIC, which is one of the major petrochemical players in the world. It also expects growth from the acquisition of Shell’s 50% stake in SASREF refinery joint venture in Saudi Arabia for US$631 million.

Saudi Aramco also unveiled a very ambitious research and development (R&D) programs that seek to support the company drive to consolidate its downstream ambitions, as a key factor to success in the downstream sector is the technological advancement and superiority. This is part of the company ambitions to move from its traditional role as buyers and consumers of technology to its new global technology and R&D strategy.

Amer Ahmad Amer, chief technologist at Saudi Aramco’s R&D Center Fuel Technology Division, said that in 2020, Saudi Aramco aims to be a technology leader, emphasizing on high-impact technologies that typically involve long-range strategies.

“By 2020, our objective is to be technology enabler to be able to maximize the company’s income as well as driving a knowledge-based economy in the country,” Amer told HartEnergy.com during the visit that Saudi Aramco organized for Hart Energy to its headquarters and facilities in Dhahran and Ras Tanura.

“In terms of patents, Saudi Aramco was granted more than 317 patents in 2018, which places [it as] the second major player after Exxon Mobil, and we are working to become the number one in the next few years,” Amer continued.

Amer said that the company has dedicated R&D centers that covers the various segments of the company’s business. This includes EXPEC ARC, R&D Center, and Saudi Aramco Energy Venture, in addition to 8 R&D centers in various locations around the world.  While Expec Arc covers the up R&D activities related to the upstream sector and all activities that take place below surface, the R&D Center is in charge of the downstream sector and all activities that take place above surface.

The R&D Center covers six main domains including oil and gas treatment, refining and upgrading, chemicals, oil and gas network integrity, fuel technology and carbon management.
“The oil and gas treatment works on developing to enhance gases and crude oil-water desperation, and produced water treatment,” Amer said. “So far, we are working on various programs such as natural gas storage, has separation, crude oil water separation, produced water treatment and reuse.”

Carbon management is one of the key domains that Saudi Aramco invest heavily in new technologies to tackle carbon related issues. The objective is to develop low-carbon technologies to ensure sustainability of hydrocarbon use and optimization of Saudi Arabia energy mix.

“Our programs focus on energy efficient power generation, carbon capture and utilization, and renewables,” Amer said.

Meanwhile, the fuel technology domain currently works on programs such as passenger transport, commercial transport and low GHG fuels, with aim of promoting the development and adoption of cost effective and sustainable oil-based transport solutions.

While the R&D Center mainly focus on downstream programs, some of the programs also target challenges that are faced in upstream segment of the business, such as the oil and gas treatment programs, which mainly cover upstream business, with natural gas storage program cover both, in addition to chemical additives, sensing and monitoring, and nonmetallic material programs.

In the refining and upgrading, the company aims to develop conventional and unconventional technologies for upgrading crude and its fractions. Currently, the R&D Center’s teams work on diesel and gasoline maximization, unconventional upgrading, and molecular modeling.
Amer said that the chemical’s domain of the R&D Center seeks to develop technologies to increase the use of petroleum-based feedstock for chemicals and improve refinery-petrochemicals integration.

“Currently, we are working on crude to chemicals technology, intermediate streams conversion, alpha olefins technology and chemical additives,” he said.

The oil and gas network integrity works on R&D programs that aim to develop technologies to enhance integrity of pipelines and facilities. “Current programs that cover oil and gas network integrity works include corrosion prediction and modeling, sensing and monitoring and nonmetallic material program,” Amer added.

With the strong research capacity at the company’s disposal, Amer highlighted Saudi Aramco’s investments in oil to chemicals, enabling the company to capture the growth opportunity in this high-value sector. He noted that the company’s efforts are being made in the context that chemicals are expected to be the largest driver of global oil demand; and fundamental to capturing value in petrochemicals is integration. Leveraging feedstock advantage and reconfiguring the conventional refining approach, crude oil to chemicals technology can achieve a higher conversion rate—45% to 50% versus the industry average of 30%—to generate greater value across the hydrocarbon value chain.

Furthermore, Saudi Aramco’s pioneering crude oil to chemicals technology targets a 70% crude oil to chemicals conversion rate, which could be a game changer in the industry.

To achieve this objective, Saudi Aramco signed an agreement with CB&I and Chevron Lummus Global to accelerate, scale up, and commercialize Saudi Aramco’s Thermal Crude to Chemicals technology, shifting the average conversion rate from 45% to more than 70% by 2020, while working to reduce overall energy and capital intensity.

In addition to the ambitious R&D program, Saudi Aramco is modernizing its facilities and upgrading the quality of its products, such as the clean fuel project in Ras Tanura Refinery, as the company has been revamping its refineries to produce cleaner fuels, a trend at Middle Eastern refineries to target export markets with stricter environmental requirements. Abdullah Albagar, chief engineering officer at Ras Tanura Refinery said that the clean fuel project in Ras Tanura aims to produce products with less sulfur, to meet the EURO 5 specifications.

“The objective is to reduced the sulfur content in diesel to 10 bpm from current 500 bpm. We managed to move from 10,000 bpm to 500 bpm,” Albagar said during the visit to Ras Tanura refinery. “The clean fuel project includes isomerization, naphtha hydro-treatment, continuous catalytic reforming (CCR), interconnections, flare system and buildings. The project is set to be completed within two to three years.”

Albagar also said that the general turnaround of the Ras Tanura Refinery is seven years, with some units maintained every 5 years.

I suppose that I must apologize for my engineering and process experience and knowledge when trying to converse with a theorist, rather than having a practical discussion. But I have not yet found a means for circumventing the law of conservation of matter. If I need 100 barrels of low sulfur oil, I cannot get 100 barrels of such, and only 100 barrels of it, by blending high sulfur oil with low sulfur oil. The sulfur has to disappear, not be camouflaged. Now, recognizing that limitation, and further recognizing that it takes years and much capital to install facilities to remove sulfur from sour heavy crude, please explain again how you replace 3 million barrels a day of high sulfur oil with low sulfur oil between midnight Dec 31, 2019 and breakfast time Jan 1, 2020. You have eight hours, not three years. Can you say "Shut in the SURPLUS sour crude"?

[William Edwards + 708]

19 minutes ago, ceo_energemsier said:

 

Been doing oil trade since before I could walk LOL

I believe oil trading (physical) is just as challenging as doing neurosurgery or cardiovascular surgery and there are a lot of arm chair want to be traders. Actual physical traders run the world literally and the paper traders have found themselves embedded deeply on the hard work of others to take financial gains (mostly)

You replied "Been doing oil trade since before I could walk LOL" Date, please. I don't know your age. And when did you do your first tank blend?

[ceo_energemsier + 1,818]

Have been trading physical crude oil since the mid 70s . Tank blends about the same time

[William Edwards + 708]

3 minutes ago, ceo_energemsier said:

Have been trading physical crude oil since the mid 70s . Tank blends about the same time

Thanks. That puts it about the time that the world shifted from fixed posted crude prices to the current system of trading numbers. It was a different world before then.

[ceo_energemsier + 1,818]

5 minutes ago, William Edwards said:

Thanks. That puts it about the time that the world shifted from fixed posted crude prices to the current system of trading numbers. It was a different world before then.

I know about that fixed posted prices. I used to be part of contract negotiations then with the OPEC producers.

Over the years have enjoyed many OPEC meetings and individual members meetings for contract negotiations.

Mr. Yamani was the force behind KSA and Aramco in the day.

 

 

 

[William Edwards + 708]

10 minutes ago, ceo_energemsier said:

I know about that fixed posted prices. I used to be part of contract negotiations then with the OPEC producers.

Over the years have enjoyed many OPEC meetings and individual members meetings for contract negotiations.

Mr. Yamani was the force behind KSA and Aramco in the day.

 

 

 

Interesting. My first invitation to OPEC was from Yamani. A couple of years later Subroto commissioned me to present a plan to OPEC for restoring the price that Yamani had cratered. Soon after Nazer replaced Yamani, but no sound pricing plan was ever adopted. Thus, wild volatility remains and stable pricing remains elusive. That is the result of turning pricing over to the traders.

[ceo_energemsier + 1,818]

38 minutes ago, William Edwards said:

I suppose that I must apologize for my engineering and process experience and knowledge when trying to converse with a theorist, rather than having a practical discussion. But I have not yet found a means for circumventing the law of conservation of matter. If I need 100 barrels of low sulfur oil, I cannot get 100 barrels of such, and only 100 barrels of it, by blending high sulfur oil with low sulfur oil. The sulfur has to disappear, not be camouflaged. Now, recognizing that limitation, and further recognizing that it takes years and much capital to install facilities to remove sulfur from sour heavy crude, please explain again how you replace 3 million barrels a day of high sulfur oil with low sulfur oil between midnight Dec 31, 2019 and breakfast time Jan 1, 2020. You have eight hours, not three years. Can you say "Shut in the SURPLUS sour crude"?

Well, do you have a degree in chemical engineering and or process engineering? Have you managed/operated a refinery of any complexity or size? and or a crude blending facility to make statements that blending is basically a worthless process? that blending crude oils does not provide a certain desired feedstock to yield certain desired product slate?

Ofcourse it is not going to be a free ride to have ultra low sulfur diesel fuels and gasoils , but they have been mandated since the mid 90s at various percentages , nothing new.

Amazing how you want to do that sulfur removal overnight. The IMO 2020 was not just passed overnight. Companies have been investing in processes and technologies for decades. Some failed , some had a certain degree of success while others had a higher rate of success , and some have had very good success within the desired target range. It does take time and $$$ to find or create and develop these technologies to a successful commercial scale and stage. Please do tell how much $$$$$ have you invested in these technologies to save the world from the flood of sour crude? It may come as a rude awakening to your ego but the high sulphur crude oil is not going to die off and be shut off from the world markets. Blending, blending , blending of not just raw feedstocks but also of finished product slates is a viable and economical solution. Obviously you will reject this factual tidbit LOL

"

Why Blend

Crude/Fuel

Oils?

•

To upgrade or downgrade a product

•

To allow crude to meet benchmarks or transport specifications

•

To allow access to market for poor quality un-transportable crude

•

To meet sulphur specifications

 

 

Perhaps you will dismiss this as well as being nonsense! LOL

The Blend Challenge

• To blend a lower value, lower grade cr

ude oil with a higher value, higher grade

crude oil to a target parameter (for example sulfur content).

• To dynamically blend on-line (no room for error)

• To provide a consistent specific blended product at the lowest cost

• To reduce the traditional give away (over-blend insurance)

http://www.coqa-inc.org/docs/default-source/meeting-presentations/20121107-08_Stewart.pdf

https://www.digitalrefining.com/article/1000968,Advanced_solutions_for_efficient____crude_blending.html

 

 

"

Verleger does not mince words. As the rules take effect in 2020, oil prices will spike to $160 per barrel or higher. “Economic activity will slow and, in some places, grind to a halt. Food costs will climb as farmers, unable to pay for fuel, reduce plantings. Deliveries of goods and materials to factories and stores will slow or stop,” he argues. “Vehicle sales will plummet, especially those of gas-guzzling sport utility vehicles (SUVs). One or more major U.S. automakers will face bankruptcy, even closure. Housing foreclosures will surge in the United States, Europe, and other parts of the world. Millions will join the ranks of the unemployed as they did in 2008.”

However, a report from Columbia University’s Center on Global Energy Policy from earlier this year disputes this conclusion. Shippers switching over to low-sulfur fuels puts “the burden of innovation onto the refining industry,” the report says, “but it will likely prove a lesser challenge for refiners than is commonly understood.” That is because the fuels will be “fuel hybrids, the production of which will entail as much blending as actual refining.” Ultimately, the report concludes, “speculation about a product supply crunch underestimates the industry’s flexibility,” and ignores the potential for a reconfiguration of demand and the emergence of new types of blended fuel hybrids."

https://oilprice.com/Energy/Oil-Prices/The-Regulation-That-Could-Push-Oil-To-200.html

[ceo_energemsier + 1,818]

10 minutes ago, William Edwards said:

Interesting. My first invitation to OPEC was from Yamani. A couple of years later Subroto commissioned me to present a plan to OPEC for restoring the price that Yamani had cratered. Soon after Nazer replaced Yamani, but no sound pricing plan was ever adopted. Thus, wild volatility remains and stable pricing remains elusive. That is the result of turning pricing over to the traders.

I personally think Nazer was a disaster. Still do get the opportunity to have a sit down with Yamani in Geneve .

[Osama + 248]

2 hours ago, William Edwards said:

You say "I would think the price is often subject to negotiation for large refining companies and the price might be set for 30 to 90 days and then renegotiated at regular intervals." Why guess? Let us review the facts of the situation. It may have been the way you supposed forty years ago, Osama, but the producers found a much simpler way to price oil in the eighties. They discovered a method that required neither work nor thought, even though it was terribly flawed. The financial industry convinced the producers that buying and selling contracts for promised future delivery by financial types with no oil knowledge was the same as selling oil loaded onto a tanker by oil experts. Since it required no effort to get a number for the price, the system provided an easy means for a crude price number each day, as long as the industry was happy using a price derived from futures contract trading instead of an oil sale arms-lenth transaction. Sounds the same if you can avoid thinking through the reality of the two entities. And you can be sure that the OPEC member country leaders did not think through that distinction. On top of that, they had the glorious media industry and the even more glorious consulting industry to join the chorus that "oil futures and real oil are that same thing", in spite of the fallacy of that statement. (For example, oil futures have a shelf-life measured in hours, days, weeks and months. Real oil has an indefinite shelf life. Compare selling bananas to selling gold. With gold you can wait.)

What is actually negotiated now between buyer and seller is a DIFFERENTIAL from a futures price quoted for the date of loading, not a $/B price for the oil loaded onto the boat. In reality, neither buyer nor seller, nor even the futures trader, knows ahead of time what the actual price is for the cargo to be purchased. Strange system! 

Well, really a very strange system. But hey if it was not the case---how'd traders be making monies?!

[Osama + 248]

4 hours ago, D Coyne said:

Osama,

We can only guess.  So a producer would need to change their price and see what happens to demand.  If they have excess capacity that they would like to utilize they would gradually reduce their price and see how much demand for their oil increases, if they were close to maximum sustainable output they might gradually raise their price to see how much demand falls.

I would think the price is often subject to negotiation for large refining companies and the price might be set for 30 to 90 days and then renegotiated at regular intervals.  Smaller refiners would likely just take the posted price.

I see. I must confess that I am not that expert when it comes to pricing and am learning from this wonderful discussion being carried out here!!

[William Edwards + 708]

2 minutes ago, ceo_energemsier said:

I personally think Nazer was a disaster. Still do get the opportunity to have a sit down with Yamani in Geneve .

Yamani was the disaster. And he has still not clicked in to an understanding of pricing fundamentals and practical mechanisms. Possibly you can relate to this, but he is content with his current (deficient) state of understanding. If he knows it all, why think or listen?

[specinho + 440]

On 4/24/2019 at 9:30 PM, Jan van Eck said:

Then again, the Russians are big on "sponsoring" terrorism, just ask the Ukrainians.   Ask the Dutch, whose nationals were on that  airplane the Russians shot down with a missile.  Yet Russian oil and gas find their way to market in huge quantities. US efforts to disrupt that did not quite work out.  Nordstream II is an example. 

Pardon me........... not sure if these are correct but according to the newspaper:

1. the hassle in Ukraine was initiated by pro-Europe protestors................. "who was sponsoring" is of question but certainly not Russia??

2. That plane you mentioned was filled with Dutch scientists attending AIDS Conference somewhere if not mistaken......... Russia might have the least concern about that issue at the moment or no?? Without motivation.............. could it be a yearly military store room mulfunction?? Or could it be someone else's interest and let Russia took the blame?

3. Yes... of course...... China is just next door.......... What was US intention of doing so?? 

Edited April 30, 2019 by specinho

[ceo_energemsier + 1,818]

8 minutes ago, William Edwards said:

Yamani was the disaster. And he has still not clicked in to an understanding of pricing fundamentals and practical mechanisms. Possibly you can relate to this, but he is content with his current (deficient) state of understanding. If he knows it all, why think or listen?

Again a difference of opinion, I do have an appreciation of both of their personalities and what they did.

Seems like the contentment with peoples deficient state of understanding is pretty astounding, widespread and a common thread. and peoples rejection of listening  to anything else or any factual reasoning except their own rote "parrotology"  has gone viral.

[William Edwards + 708]

Just now, ceo_energemsier said:

Again a difference of opinion, I do have an appreciation of both of their personalities and what they did.

Seems like the contentment with peoples deficient state of understanding is pretty astounding, widespread and a common thread. and peoples rejection of listening  to anything else or any factual reasoning except their own rote "parrotology"  has gone viral.

We agree on your last assessment. If everyone cheers at what you say, you must be smart and right. Or the cheering section might be unbelievably dumb!

 

[William Edwards + 708]

24 minutes ago, ceo_energemsier said:

Well, do you have a degree in chemical engineering and or process engineering? Have you managed/operated a refinery of any complexity or size? and or a crude blending facility to make statements that blending is basically a worthless process? that blending crude oils does not provide a certain desired feedstock to yield certain desired product slate?

Ofcourse it is not going to be a free ride to have ultra low sulfur diesel fuels and gasoils , but they have been mandated since the mid 90s at various percentages , nothing new.

Amazing how you want to do that sulfur removal overnight. The IMO 2020 was not just passed overnight. Companies have been investing in processes and technologies for decades. Some failed , some had a certain degree of success while others had a higher rate of success , and some have had very good success within the desired target range. It does take time and $$$ to find or create and develop these technologies to a successful commercial scale and stage. Please do tell how much $$$$$ have you invested in these technologies to save the world from the flood of sour crude? It may come as a rude awakening to your ego but the high sulphur crude oil is not going to die off and be shut off from the world markets. Blending, blending , blending of not just raw feedstocks but also of finished product slates is a viable and economical solution. Obviously you will reject this factual tidbit LOL

"

Why Blend

Crude/Fuel

Oils?

•

To upgrade or downgrade a product

•

To allow crude to meet benchmarks or transport specifications

•

To allow access to market for poor quality un-transportable crude

•

To meet sulphur specifications

 

 

Perhaps you will dismiss this as well as being nonsense! LOL

The Blend Challenge

• To blend a lower value, lower grade cr

ude oil with a higher value, higher grade

crude oil to a target parameter (for example sulfur content).

• To dynamically blend on-line (no room for error)

• To provide a consistent specific blended product at the lowest cost

• To reduce the traditional give away (over-blend insurance)

http://www.coqa-inc.org/docs/default-source/meeting-presentations/20121107-08_Stewart.pdf

https://www.digitalrefining.com/article/1000968,Advanced_solutions_for_efficient____crude_blending.html

 

 

"

Verleger does not mince words. As the rules take effect in 2020, oil prices will spike to $160 per barrel or higher. “Economic activity will slow and, in some places, grind to a halt. Food costs will climb as farmers, unable to pay for fuel, reduce plantings. Deliveries of goods and materials to factories and stores will slow or stop,” he argues. “Vehicle sales will plummet, especially those of gas-guzzling sport utility vehicles (SUVs). One or more major U.S. automakers will face bankruptcy, even closure. Housing foreclosures will surge in the United States, Europe, and other parts of the world. Millions will join the ranks of the unemployed as they did in 2008.”

However, a report from Columbia University’s Center on Global Energy Policy from earlier this year disputes this conclusion. Shippers switching over to low-sulfur fuels puts “the burden of innovation onto the refining industry,” the report says, “but it will likely prove a lesser challenge for refiners than is commonly understood.” That is because the fuels will be “fuel hybrids, the production of which will entail as much blending as actual refining.” Ultimately, the report concludes, “speculation about a product supply crunch underestimates the industry’s flexibility,” and ignores the potential for a reconfiguration of demand and the emergence of new types of blended fuel hybrids."

https://oilprice.com/Energy/Oil-Prices/The-Regulation-That-Could-Push-Oil-To-200.html

You commented "Amazing how you want to do that sulfur removal overnight.". It was not I that mandated that overnight change, it was the IMO. And the fact that the sour crude producing industry has done nothing about that prospect, even with three years' warning, tells you all that you need to know about their competence. The system will adapt, but by lowering the price enough so that the sour crude resid, now classified as "garbage", is priced low enough to shut in senough production to eliminate the 13,000 T/D of sulfur that must disappear from the system. Wishful thinking, head in the sand, storage or blending will not solve the problem. The sulfur must disappear from the system.

Regarding your idea of blending it away, let us examine the "garbage" analogy. Just think how much expense NASA could save by using your blending method to dispose of urine on the Space Station, rather than expensive clean-up. Just blend it off with fresh drinking water!

[William Edwards + 708]

54 minutes ago, Osama said:

Well, really a very strange system. But hey if it was not the case---how'd traders be making monies?!

Yamani did the trading industry a big favor -- and the world economy a huge penalty -- when he stupidly converted from establishing a price floor to employing netback pricing.

Edited April 30, 2019 by William Edwards

[ceo_energemsier + 1,818]

27 minutes ago, William Edwards said:

You commented "Amazing how you want to do that sulfur removal overnight.". It was not I that mandated that overnight change, it was the IMO. And the fact that the sour crude producing industry has done nothing about that prospect, even with three years' warning, tells you all that you need to know about their competence. The system will adapt, but by lowering the price enough so that the sour crude resid, now classified as "garbage", is priced low enough to shut in senough production to eliminate the 13,000 T/D of sulfur that must disappear from the system. Wishful thinking, head in the sand, storage or blending will not solve the problem. The sulfur must disappear from the system.

Regarding your idea of blending it away, let us examine the "garbage" analogy. Just think how much expense NASA could save by using your blending method to dispose of urine on the Space Station, rather than expensive clean-up. Just blend it off with fresh drinking water!

Some in the industry may have thought oh they may get a pass, an extension and kicked the can down the road. But proactive companies, investors, innovators dont stop. Your analogy of mixing urine with water by NASA does not hold any water or piss , no pun intended or maybe intended .Comparing apples and oranges.

I posted two links which do show the rightful place of blending in the refining process and industry to meet certain goals of quality and specs and financial viability. If you are stuck in your own pit of quick sand over this blending issue........................... 
Blending is part of the overall solution to the problem not the ultimate solution. Even what you say is garbage , and I do agree that the bottom of the barrel is the waste , can be turned into pure liquid gold again with the right tech at the right price, and it has been done via upgrading and molecular rearrangement.

It seems that you refuse to accept anything that is not in agreement to your own thoughts and ideas, no matter how flawed some of those maybe. You complain a lot about just about everything, yet to put out any meaningful solutions? Going back to the issue of real crude oil physical trading price methodology what do you propose? and if it is so wonderful and will save and or make $$$ for both producers and consumers , how come no one has taken up that concept?  Pretty sure the world's biggest consumers would be lining up willing to pay your XXX,XXX,XXX.00 per day to save them and same with producers?

What is your solution for the garbage residuals and sour crude problems? what amount of $$ have you invested in any of the potential techs?

Lets see some potentially or even remotely potentially feasible solutions and I may even consider following up further to explore these opportunities.

 

Lot of Monday morning football quarterbacking and lot of arm chair petroleum industry wrangling ! Cheers 🍾

Edited April 30, 2019 by ceo_energemsier
typo

[William Edwards + 708]

12 minutes ago, ceo_energemsier said:

Some in the industry may have thought oh they may get a pass, an extension and kicked the can down the road. But proactive companies, investors, innovators dont stop. Your analogy of mixing urine with water by NASA does not hold any water or piss , no pun intended or maybe intended .Comparing apples and oranges.

I posted two links which do show the rightful place of blending in the refining process and industry to meet certain goals of quality and specs and financial viability. If you are stuck in your own pit of quick sand over this blending issue........................... 
Blending is part of the overall solution to the problem not the ultimate solution. Even what you say is garbage , and I do agree that the bottom of the barrel is the waste , can be turned into pure liquid gold again with the right tech at the right price, and it has been done via upgrading and molecular rearrangement.

It seems that you refuse to accept anything that is not in agreement to your own thoughts and ideas, no matter how flawed some of those maybe. You complain a lot about just about everything, yet to put out any meaningful solutions? Going back to the issue of real crude oil physical trading price methodology what do you propose? and if it is so wonderful and will save and or make $$$ for both producers and consumers , how come no one has taken up that concept?  Pretty sure the world's biggest consumers would be lining up willing to pay your XXX,XXX,XXX.00 per day to save them and same with producers?

What is your solution for the garbage residuals and sour crude problems? what amount of $$ have you invested in any of the potential techs?

Lets see some potentially or even remotely potentially feasible solutions and I may even consider following up further to explore these opportunities.

 

Lot of Monday morning football quarterbacking and lot of arm chair petroleum industry wrangling ! Cheers 🍾

Now that you have become nasty and more unreasonable, I think I will refrain from trying to be helpful. Obviously, like Yamani, you already know it all. The main reason that "successful" individuals hit the brick wall is that they refuse to learn. Do you see that person in the mirror? Yamani has not yet accepted his horrendous error. Have you accepted yours? Or possibly your performance has been perfect.

Yes, Yamani was presented with a sound, workable plan, devised by me and presented by Subroto. We do not know yet whether my plan would have worked. Yamanis's lack of understanding (or degree of self-sufficiency) prevented him from considering it. But that is a discussion for another time. I see no incentive on my part in trying to get through your own barrier of self-sufficiency. That is your problem, not mine.

My gracious suggestion is that, in the future, you restrict your magnificent ideas and solutions to those that comply with the law of conservation of matter --- and timimg. That is the first check-point. And that is the basis that I rejected your proposed solution to the 2020 garbage problem. But please notice that I also presented a solution -- sour crude shut-in!

And even though I have twenty years more experience than you, I am still learning. You might consider that remote possibility for yourself.

[ceo_energemsier + 1,818]

45 minutes ago, William Edwards said:

You commented "Amazing how you want to do that sulfur removal overnight.". It was not I that mandated that overnight change, it was the IMO. And the fact that the sour crude producing industry has done nothing about that prospect, even with three years' warning, tells you all that you need to know about their competence. The system will adapt, but by lowering the price enough so that the sour crude resid, now classified as "garbage", is priced low enough to shut in senough production to eliminate the 13,000 T/D of sulfur that must disappear from the system. Wishful thinking, head in the sand, storage or blending will not solve the problem. The sulfur must disappear from the system.

Regarding your idea of blending it away, let us examine the "garbage" analogy. Just think how much expense NASA could save by using your blending method to dispose of urine on the Space Station, rather than expensive clean-up. Just blend it off with fresh drinking water!

Oh wow, the big , bad B word again......... BLENDING!

IS Trafigura according to your "proven" thoughts is BIG GARBAGE peddler?

This blend testing by SK and Trafigura also shows a topic of this discussion, replacement of potential lost Iranian barrels as well.

______________________________

 

Commodities

April 29, 2019 / 12:07 AM / a day ago

Trafigura ships its first-ever West Texas Light cargo: source

Trafigura ships first cargo of West Texas Light. Trafigura shipped the first-ever cargo of West Texas Light (WTL), a new blend that is differentiated from West Texas Intermediate (WTI). WTL is a blend of light and ultralight oil, and it is an outgrowth of the booming supply of ultralight oil in the Permian. South Korea took the first shipment as it looks to replace condensate imports from Iran. 

NEW YORK (Reuters) - Trafigura exported its first-ever cargo of U.S. West Texas Light (WTL) oil last month, according to a source familiar with the matter, sending the shipment to South Korea, which has been testing this oil as a replacement for Iranian barrels.

Reuters reported earlier this month that South Korea has been testing WTL, a super-light oil, as a possible substitute for Iranian condensate as it seeks alternatives for those shipments after Washington reimposed sanctions on the Middle Eastern nation.

Trafigura, one of the largest exporters of U.S. crude, sold the cargo in March, the source said last week, asking not to be named. The company declined to comment.

South Korean refiners SK Energy and Hyundai Oilbank earlier this year turned away two cargoes of condensate produced in the Eagle Ford shale region due to quality concerns.

 

Both refiners declined to comment on whether they had purchased the Trafigura shipment.

WTL is a relatively new stream of oil produced in the western Permian basin with an API gravity - a measure of oil density - of about 44-50 degrees. That is similar to condensate, an extremely light oil which mostly occurs as a byproduct of natural gas production.

The grade has only become available for export over the past three months after pipeline companies required shippers to segregate WTL within the lines, market sources said.

The size of Trafigura’s shipment was unclear.

 

South Korea’s refiners are big users of Iranian condensate for producing petrochemicals. The U.S. decision to not renew exemptions to sanctions, granted last year to buyers of Iranian oil, has South Korea scrambling to source that feedstock.

The country is one of the largest importers of U.S. oil, averaging nearly 167,000 barrels per day (bpd) in 2018, according to Reuters calculations based on data from state-run Korean National Oil Corp. Its first-quarter U.S. oil imports averaged roughly 323,090 bpd, nearly five times higher than about 64,960 bpd from a year earlier.

[ceo_energemsier + 1,818]

1 minute ago, William Edwards said:

Now that you have become nasty and more unreasonable, I think I will refrain from trying to be helpful. Obviously, like Yamani, you already know it all. The main reason that "successful" individuals hit the brick wall is that they refuse to learn. Do you see that person in the mirror? Yamani has not yet accepted his horrendous error. Have you accepted yours? Or possibly your performance has been perfect.

Yes, Yamani was presented with a sound, workable plan, devised by me and presented by Subroto. We do not know yet whether my plan would have worked. Yamanis's lack of understanding (or degree of self-sufficiency) prevented him from considering it. But that is a discussion for another time. I see no incentive on my part in trying to get through your own barrier of self-sufficiency. That is your problem, not mine.

My gracious suggestion is that, in the future, you restrict your magnificent ideas and solutions to those that comply with the law of conservation of matter --- and timimg. That is the first check-point. And that is the basis that I rejected your proposed solution to the 2020 garbage problem. But please notice that I also presented a solution -- sour crude shut-in!

And even though I have twenty years more experience than you, I am still learning. You might consider that remote possibility for yourself.

People learn from mistakes and failures and improve themselves. If my questioning your intent and purposes of the various comments that I see being just negative on this forum is considered nasty, then I guess I will take that with a shot of Grey Goose!

I ask you to put forth meaningful, viable alternatives and solutions, and you have failed to provide any. But the rant goes on , I have seen your comments to numerous people , very condescending and uncalled for. You reject anything and everything that does not fall in with your own perceived and preconceived notions and biases.

Shutting down of a very productive and useful stream of resources (sour crude) is not a solution. It is akin to sticking your head in the sand, I believe you have used those words elsewhere in this thread. Or, one suffers from seasonal allergies, your solution, stop breathing?

I am open to learning each and everyday... so please do enlighten me with your ideas of meaningful viable solutions? 🍾