Tom Kirkman

Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control

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1 hour ago, Zhong Lu said:

What's to stop them from doing a second attack? 

They probably shot their load and need time to lay low and regroup and plan. The over-investment in technology and people to prevent the next attack alone will drag the Saudis down a bit. This was probably beyond MbS's conception of feasible. When the Americans laid out Aramco it was for efficiency, things putting so much risk into key choke points were not a factor. Abqaiq is the mother of all GOSPs. Impressive to see, and I doubt there will ever be something done on it's scale again. There is probably enough redundancy to take out a quarter of it and still produce normally. If I was planning the next attack I'd pick a different choke point, there are no shortage of targets. A simple pumping station or two would more than likely be poorly defended and easier to hit. Abqaiq had the advantage of a large town next to it for insurgents to work out of. In the Al Queda attack of 2006 the Saudi guard force ran away, the odd Phillapino being heroic in fighting. Had that Al Qeada group been better trained and knew what to take out it would have been a disaster.

FYI, owning a drone is illegal there. I saw them, knew folks that owned them, but for obvious reasons were illegal. The attempt on MBS a year or so ago being an example as to why they are not allowed. He must sleep about as well as Stalin did. And if he treats his officer core half as badly, he's going to have a hell of a time building up a capable counter-resistance force. I bet heads roll over this. Literally, and figuratively.

I can't imagine the suspended state of belief in the Aramco command center as this was happening. Sometimes Inshall'ah is a bitch.

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(edited)

I have to ask a question, the facilities hit by the drone attack will affect crude processing by 7 mbpd and may affect 1.5 mbpd in production. If anything this shuould reduce demand by 5 mbpd . Am i right??

Edited by Ayush

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Probably this attack could spike the oil prices but on negative terms and this happened when industry is already gripped with too much geopolitical tension...

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(edited)

3 minutes ago, Tom Kirkman said:

Surprisingly good reporting from WSJ:

It went from 'hope to' restore production to 'will' in the links I saw, within a few hours. I thought WSJ was ok?

The first link was 'global economy doomed' literally, then second was 'nope, all ok'.

The above was first one.

Edited by DayTrader
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1 hour ago, Ayush said:

If anything this shuould reduce demand by 5 mbpd . Am i right??

'Demand' will be unchanged.

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(edited)

From local newspapers

https://www.arabnews.com/node/1554601/saudi-arabia

http://saudigazette.com.sa/article/577335/SAUDI-ARABIA/Saudi-halts-production-temporary-at-attacked-oil-plants-minister

appears nobody got hurt. 

Dr Anas AlHajji (must follow on Twitter) also speaks of redundancy in crude processing. 

Antimissile system behaved unPatriotic (pun intended)... perhaps Saudies should ask Israel for “Iron Dome” (I’m obviously kidding)

 

Edited by DanilKa
Typo
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This is the gas processing facility that blew up in Orla back in Dec 2015.  It processed 200mmcf/day which is small potatoes and it was supposed to be only three months to get back on line, it took almost 7 months and we flared the whole time.  The four big flares still going out there in the Saudi desert are reported to be GOSPs for Ghawar oil.  If they are out like this thing was then the production will be down a lot longer.  If they are just flaring until Abquiq resumes processing then maybe not as big a deal.

 

 

 

IMG_15901.jpg

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(edited)

7 hours ago, Tom Kirkman said:

Surprisingly good reporting from WSJ:

U.S. Blames Iran for Attack on Saudi Oil Facilities

20190915_133953.thumb.jpg.50a25656b2165bbc96c53947a5c8aeea.jpg

Summer Said one of their correspondents says otherwise.

West, Northwest is Iraq or Kuwait.

https://twitter.com/summer_said/status/1173186619068882944

A U.S. government assessment has determined that up to 15 structures at Abqaiq suffered damage from the strike on their west-northwest-facing sides. One person familiar with the damage at Abqaiq said it was “a wreck.” The person said production capacity was “heavily impacted.”

Edited by wrs
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Scale and potential consequences of this is mind boggling. 

Every time I’ve passed small storage facility in Dhahran (Aramco HQ), I remembered story of Saddam’s rocket landing there and my thoughts were “gee, I’ll need to get out of this place in a hurry if tension escalate; it’s a sitting duck for rocket attack”. 

With drones war become highly asymmetric - multimillion facility taken down by a toy costing less than 10k (speculation on my side). 

When security will be ramped up - no bird will stand a chance to fly over... 

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Looks to me like the cost to produce oil in KSA is going to be quite a bit higher as they pay for fixing this mess. The bigger hidden cost will be more security.

We have heard the claims that it's only $2-10/bbl to produce oil over there. Well if you look at the infrastructure being used, that's very expensive stuff and if much of it is destroyed, the replacement cost will be quite a bit higher. The low prices they have been getting for oil lately aren't allowing them to build a surplus capital buffer and their inventory is the lowest since 2008. If they have delivery contracts at fixed prices, they are screwed.

I personally think this stuff is going to cost them double or triple what it cost to originally build because they will want it in short order. However, most of the stuff they use in these GOSPs is custom made, i.e. long lead times. If that is the case, look for a loss of 3mmbbl/day for 6 months to a year.

Then secondly, what is the risk to all the oil infrastructure out there if KSA decides to retaliate? Same story, having to repair it will cost more money and lot's more time.
 

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On 9/14/2019 at 7:52 AM, John Foote said:

Abqaiq is one heck of a facility. The is quite an extensive expat community there as well. 

If Abqaiq goes off line for more than hours or a few days, the tankers will quit leaving Rastanura. 

Sad, but I suppose inevitable this would happen. Too much violence against Yemen for too long. KSA is a country where there more people of Yemenis descent than Sauds. The only way the Houthis could do such a thing would be support on the ground. 

The Yemenis or their descendants , primarily are in the South Western part of the KSA, Asir region, Abha, Najran, Gizan but they were fairly spread to many other parts of KSA, and were later mostly displaced by Egyptians because of their higher education levels , who went on to take teaching, professorial positions, drs, engineers etc (however some of their degrees could be called into question LOL). However , in the 80s and 90s they were also a major labor force that were small bizz (shops, gas stations, cafes) operators. In those days, you coldnt throw a 50 halala coin without hitting a Yemeni. It was that they mostly owned and or operated all your corner stores, gas stations, little cafes and food joints.

I remember going in the souks and the "farmers markets" in the Southern region and see the folks walking around with their holsters and rifles and even AKs and their Khanjars.

 

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Since this occurred on the weekend when the commodity markets are closed there is great anticipation that these attacks will cause the price of crude oil to go up.  As a result, I am filling my gasoline tank before Monday since this price has not changed locally yet from a few days. 

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4 hours ago, wrs said:

Then secondly, what is the risk to all the oil infrastructure out there if KSA decides to retaliate? Same story, having to repair it will cost more money and lot's more time.

Allegedly, attack in THE retaliation for KSA war in Yemen (which some see as a proxy war of Iran). I sure hope cold heads will prevail, else we are looking at all-encompassing ME conflict with potential to escalate into WW3. 

Don’t underestimate Aramco’s resources and ability to build and fix things. I really doubt we’ll see 3MM x 6-12 Month disruption. 

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On 9/14/2019 at 10:15 AM, wrs said:

Look at this post from back in may at platts

https://blogs.platts.com/2019/05/20/us-war-iran-unlikely-oil-markets/

 

Abqaiq could be the Achilles’ heel of Saudi Arabia’s oil industry.

Located in the kingdom’s eastern province, the facility filters impurities such as sulfur and gas from around 7 million b/d of crude. This is roughly equal to the country’s entire exports and a volume of readily available crude that is impossible to replace easily.

Destroy it and experts fear an uncontrollable panic would grip oil markets and the global economy.

Saudi Arabia’s enemies also know it. Al Qaeda terrorists went for the jugular in 2006, but were unsuccessful in an attack on the plant.

Since then, the Saudi authorities have beefed up their defenses around Abqaiq to fortress-like proportions with what is effectively a private army guarding the facility. In the wake of the Jihadi attack, state-run Aramco insisted Abqaiq was not critical to its operations, but experts still aren’t convinced.

“If the oil market has a beating heart, it is Abqaiq,” warns McNally.

The importance of this facility is to remove hydrogen sulfide (H2S) gas from the crude oil since this gas is deadly.  They call this sweetening the crude oil but the crude oil is still sour crude oil (+0.50% S.)  Also, the fire being put out is one thing, while assessing and repairing the damage are two other things that can take much longer.

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57 minutes ago, DanilKa said:

Allegedly, attack in THE retaliation for KSA war in Yemen (which some see as a proxy war of Iran). I sure hope cold heads will prevail, else we are looking at all-encompassing ME conflict with potential to escalate into WW3. 

Don’t underestimate Aramco’s resources and ability to build and fix things. I really doubt we’ll see 3MM x 6-12 Month disruption. 

Check out the pictures of the damage to two different sites.  There are 17 distinct impact points on critical infrastructure.  There are probably five spheroids hit and four or five stabilizer columns out 18 at abquiq.  This damage looks like months to fix but I don't know how much production it would inhibit.

 

SPhereoids18XYAAj9i1.jpg

SPHereoids7WsAEW9uJ.jpg

oilfieldoAA9ojL.jpg

oilfield4AAr8Ub.jpg

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(edited)

If those are rocket impact points, this was some fairly high tech gear used, each impact zone is almost  identical. Could the Houthis really carry out this kind of precision without help. JB gets fired and this happens shortly after, MP better get his big boy pants on. If nothing is done by POTUS against Iran then the writing is on the wall for MBS and Co.

The fact that MBS discovered that US Secretary of State Mike Pompeo had almost certainly met in Baghdad with Iranian Foreign Minister Javad Zarif at the end of the first week of May 2019 seemed to be the final straw. MBS believed that the Trump Administration was negotiating to strike a deal with Iran which would leave Saudi Arabia out in the cold. He immediately began working with the Crown Prince of Abu Dhabi, his close friend, Sheikh Mohammed bin Zayed Al Nahyan (aka MBZ), to find another ally which could protect them against Iran. They chose the PRC and Russia, as Yossef Bodansky outlined in his August 12, 2019, report, “The Dawn of the Chinese Gulf”.

A week or so ago:

https://oilprice.com/Geopolitics/Middle-East/Is-The-Hottest-Conflict-In-The-Middle-East-Coming-To-An-End.htmlScreen Shot 2019-09-15 at 18.43.09.png

Edited by James Regan
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ZeroHedge:

Declassified Satellite Images Reveal It Would Take "Months" To Fix Saudi Oil Facility

And there it is, moments before oil markets open: upon the US release of declassified satellite images showing precision strikes on critical spheroids at the world's largest oil processing facility at Abqaiq one market analyst alarmingly writes,

"We think this is a months fix, not days/weeks. Oil going up even higher."

 

sat1ar.jpg

This after reports just before the satellite photos were released commonly said a minimum of "weeks" would pass before full Saudi Aramco production capacity comes back online. 

They appear to show approximately 17 points of impact on key infrastructure at the site after Yemeni Houthis claimed a successful drone strike of up to ten unmanned aerial vehicles with explosives.   ...

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(edited)

Weirdly I am not shorting for a bit. Biggest move in Brent since 1991 apparently.

Edited by DayTrader

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ZeroHedge:

Could Be "Weeks" Before Aramco Restores Full Production Capacity As Specter Of $100 Oil Looms

... Hours into the daylight hours of Saturday even after Saudi authorities and state media claimed the fires were "under control", skeptics analyzing local photos as well as satellite imagery said it wasn't the case that the facilities had blazes under control as fast as they claimed.  ...

Screenshot_20190916-063400_Brave.thumb.jpg.3fd14a79b10ae3ac6e1b279111d8702a.jpg

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(edited)

Part of my family in Russia will now get a relief- end of austerity policy. Russia can now plan a higher breakeven price in budget not 40 $. So I hope my grandmother will get her pension index up a little so we wont have to send her money. 

World oil producers and frackers can increase oil production thanks to brave Houthi.

Edited by Tomasz

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1 hour ago, wrs said:

Check out the pictures of the damage to two different sites.  There are 17 distinct impact points on critical infrastructure.  There are probably five spheroids hit and four or five stabilizer columns out 18 at abquiq.  This damage looks like months to fix but I don't know how much production it would inhibit.

Good intel, thanks. 

We’ll know about processing impact on production shortly (48 hrs, as per Amin Nasser)

crude is up $6-7 

Oil Price Live!
http://www.oilpricewidget.com/

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3 minutes ago, Tomasz said:

Part of my family in Russia get a relief- end of austerity policy. Russia can now plan a higher breakeven price in budget not 40 $. So I hope my grandmother will get her pension index up a little so we wont have to sell her money.

I wouldn’t count on that even if oil is over $100 - toxic mix of cleptocracy and cacistocracy is ruling the country... 

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(edited)

14 minutes ago, Tom Kirkman said:

skeptics analyzing local photos as well as satellite imagery said it wasn't the case that the facilities had blazes under control as fast as they claimed.  ...

Told ya :)    - First post ''world's gonna end'' , second one was ''Ooh, nope, all good'' , within hours, and this was before we knew scope of the damage. I don't believe a word they say. I believe photos. 

Edited by DayTrader
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59 minutes ago, James Regan said:

html

 

1 hour ago, wrs said:

Check out the pictures of the damage to two different sites.  There are 17 distinct impact points on critical infrastructure.  There are probably five spheroids hit and four or five stabilizer columns out 18 at abquiq.  This damage looks like months to fix but I don't know how much production it would inhibit.

 

SPhereoids18XYAAj9i1.jpg

SPHereoids7WsAEW9uJ.jpg

oilfieldoAA9ojL.jpg

oilfield4AAr8Ub.jpg

Gee, those impact points looks oddly symmetrical for a drones strikes... roughly west side

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