Energy Watchblog

Behind The Margins – Will Lower Gasoline Prices Threaten the Gulf Coast Refining Party?

<div class="separator" style="clear: both; text-align: left;"><span style="font-size: x-small;"><span rel="sioc:has_creator" style="background-color: white; font-family: Arial, Helvetica, sans-serif; line-height: 20.15625px;">Sandy Fielden (RBN Energy)</span><span style="background-color: white; font-family: Arial, Helvetica, sans-serif; line-height: 20.15625px;"> </span></span></div><div class="content clearfix" style="background-color: white; font-family: Arial, Helvetica, sans-serif; line-height: 20.15625px; margin: 0.5em 0px;"><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded">Recent third quarter earnings reports from US refiners have reflected lower refining margins squeezed by higher feedstock prices for inland crudes like West Texas Intermediate (WTI) rising to the same level as coastal crudes like Light Louisiana Sweet (LLS) while product prices stood still. In the past two weeks domestic crude prices have fallen below $100/Bbl in the face of a Gulf Coast supply glut. But despite lower crude costs, refinery margins have continued to weaken. The primary culprit has been sharply falling gasoline prices. Today we review what Gulf Coast refiners could do to improve margins.<br /><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">RBN Energy analysis of refining margins uses a simplified approach known as “crack spreads” to identify overall trends in refinery performance rather than getting into more complex refinery economics. Recall that the term “crack” does not refer to something a wayward crude trader might ingest in the bathroom but rather to breaking down or “cracking” crude oil. The term “spread” means the difference between the sales price of the refined products and the raw material cost of crude i.e. the refining margin. A 3-2-1 Crack spread for example approximates a refinery that produces two barrels of gasoline and one barrel of diesel for every three barrels of crude input. In other words the refinery yield is two-thirds gasoline, one-third diesel. </div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Back at the start of August we looked at how the NYMEX 3-2-1 crack spread (based on NYMEX futures contracts) cratered 56 percent between March and August this year (2013) after the NYMEX benchmark West Texas Intermediate (WTI) crude discount to Brent narrowed close to parity in July 2013. WTI prices had previously been discounted to Brent for almost three years as a result of crude supply disruption in the Midwest. The 3-2-1 crack spread was squeezed when rising WTI crude prices this year were not matched by refined product prices that stayed more or less static. As a result refiners paid more for their crude but didn’t get higher revenues from refined product sales - reducing their margins.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Two months ago in September we looked at the impact of the Syrian crisis on refining margins at the US Gulf Coast . Back then the threat of war caused international crude prices to increase temporarily, pulling US crude prices along with them but leaving product prices behind. That put further downward pressure on refinery margins – showing how refiners are frequently impacted by events beyond their control.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Any time that crude and refined product prices get out of whack – and it happens quite often - refiners experience volatile margins. Sometimes it works out in refiners’ favor. Over the past three years the WTI discount to Brent crude meant that refiners with access to lower priced “advantaged” crude (for example refineries in the Midwest) were able to enjoy very favorable margins, because generally speaking, product prices continued to be set higher by international markets even as crude feedstock prices for these refiners were discounted.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Back to the present and - as we discussed a couple of weeks ago, crude prices have come under pressure at the Gulf Coast as more supplies reach refineries there from US and Canadian producers and seasonal refinery maintenance reduces demand for feedstocks . But even as crude prices are falling, refinery margins are not responding positively. That is because refined product prices – particularly gasoline are falling faster than crude. And as we shall see, the resulting margin squeeze encourages those refiners that have the flexibility, to cut down their gasoline output and increase their diesel production.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Taking a look first at crude prices, the chart below shows WTI (green line) Gulf Coast benchmark Light Louisiana Sweet (LLS – red line) and international benchmark Brent (blue line) since the start of July 2013.  After increasing to over $110/Bbl in early September under the influence of international tensions in the Middle East, crude prices have fallen back below $100/Bbl. As we noted a moment ago an increasing surplus of light sweet crude supplies at the Gulf Coast has caused WTI and LLS prices to fall. Meanwhile Brent prices have become detached from the Gulf Coast market because supplies of imported light and medium sweet crude that use Brent based pricing are not currently needed to meet refinery needs. The two black dotted arrows on the chart show the divergence between Brent and WTI/LLS prices. The current supply surplus has caused crude inventories in the Gulf Coast region to increase by over 17 MMBbl from mid September to the beginning of November. LLS prices have fallen 13 percent from $110.63/Bbl on September 13, 2013 to $97.89/Bbl on November 8, 2013. WTI prices fell 13.6 percent over the same period from $108.21/Bbl on September 13 to $94.6/Bbl on November 8.</div><div style="font-size: 13px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8q3S97Or8ZAZ4xXPP-2RVdX_fSQVZLI4HQgriz9jbFmH-dM7BIUH0PLLPe9zLuA-8rclFVOfP0XyTW0Yc67Bwm2QcPiTFlSIfuoMGPDmNyLMMm9vDa6rfRCuQ3WD0GAZRJSY8HmRQwP_q/s1600/chart1_54.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8q3S97Or8ZAZ4xXPP-2RVdX_fSQVZLI4HQgriz9jbFmH-dM7BIUH0PLLPe9zLuA-8rclFVOfP0XyTW0Yc67Bwm2QcPiTFlSIfuoMGPDmNyLMMm9vDa6rfRCuQ3WD0GAZRJSY8HmRQwP_q/s1600/chart1_54.png" /></a></div><br /></div><div style="font-size: 13px; text-align: center;">Source: CME data from <a href="http://www.morningstarcommodity.com//" style="color: #005a8c; text-decoration: none;">Morningstar</a> (Click to Enlarge)</div><div style="font-size: 13px;">Next take a look at refined product prices for gasoline and diesel at the Gulf Coast. The chart below shows ultra low sulfur diesel (ULSD - green line) and reformulated gasoline (orange line) priced at the Gulf Coast since the start of July 2013. You can see that the price of diesel has remained relatively stable since the start of September while gasoline has fallen sharply (blue dotted circle). The strength of diesel prices results from continued strong demand for exports from the Gulf Coast, to Latin American and European markets. Also demand for heating oil (used primarily in the Northeast during the winter) is high at this time of year in the run up to winter. Because New York State now requires the use of lower sulfur spec heating oil, the demand for low sulfur diesel from Gulf Coast refineries is higher –underpinning ULSD prices.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">In contrast gasoline prices are falling because of continued weak domestic demand. Gasoline demand in the US fell by 3 percent between the end of August and mid October according to data from the Energy Information Administration (EIA). We have previously discussed falling US gasoline demand. Increased ethanol blending in gasoline to meet Renewable Fuel Standards and more efficient engines under CAFÉ regulations have reduced US consumption since 2005. Gasoline demand is traditionally weaker at the end of the summer driving season and Gulf Coast gasoline inventories remained high this fall. Early October inventories were essentially the same as those in late July because summer demand did not soak up supplies (source EIA). As a result gasoline prices at the Gulf Coast fell 22 percent from $2.96/gal on September 2<sup>nd</sup> 2013 to $2.32/gal on November 1, 2013 although in the past week falling gas prices at the pump have encouraged increased demand and a slight uptick in prices that you see at the end of the chart.</div><div style="font-size: 13px; text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/chart2_39.png?itok=XoWWtCqy" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/chart2_39.png?itok=IsMjI0Uc" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="font-size: 13px; text-align: center;">Source: CME data from <a href="http://www.morningstarcommodity.com//" style="color: #005a8c; text-decoration: none;">Morningstar</a> (Click to Enlarge)</div><div style="font-size: 13px;">In this situation where crude prices are down 13 percent and gasoline prices fell 22 percent, refining margins are once again under pressure. However, stronger diesel prices afford some hope that refiners can bolster their margins by increasing their output of diesel and reducing their output of gasoline. We can see how this works by looking at two crack spread calculations that reflect different gasoline output volumes. The chart below shows two Gulf Coast crack spreads calculated since July 2013 . The blue line on the chart is a 3-2-1 crack spread – modeling a refinery that processes 3 barrels of LLS crude to produce 2 barrels of gasoline and 1 barrel of diesel. That 3-2-1 crack spread represents a traditional US Gulf Coast complex refinery configuration designed to produce twice as much gasoline as diesel. The red line on the chart is a 2-1-1 crack spread modeling a refinery that processes 2 barrels of crude to produce one barrel of gasoline and one barrel of diesel. The 2-1-1 configuration matches gasoline and diesel output at 50 percent each. You can see that in the period since the start of September the 2-1-1 crack spread with less gasoline has been more profitable than the 3-2-1 with more gasoline (green circle). In fact between September 2 and November 1, 2013 the 2-1-1 crack spread averaged $3/Bbl higher than the 3-2-1. In other words reducing gasoline output at the expense of diesel increases the potential margin by $3/Bbl.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px; text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/chart3_14.png?itok=Y3yB4J0P" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/chart3_14.png?itok=x7BcJaCq" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="font-size: 13px; text-align: center;">Source: CME data from <a href="http://www.morningstarcommodity.com//" style="color: #005a8c; text-decoration: none;">Morningstar</a> (Click to Enlarge)</div><div style="font-size: 13px; text-align: center;"><br /></div><div style="font-size: 13px;">Easy enough to do that with our crack spread models but is it something that refiners are able to accomplish in practice?  The answer to that question is not so simple because refineries are complex operations that cannot be reconfigured overnight. Most complex Gulf Coast refineries that process light sweet crude were designed to meet market needs 10 years ago when US gasoline demand was growing and domestic demand for diesel was weaker. These refineries still produce more gasoline than diesel. Not surprisingly, when diesel demand and prices are stronger than gasoline - which is the situation today – those refinery configurations produce lower margins. And if those refiners produce more diesel then they get more unwanted gasoline along with it – adding to the downward pressure on gasoline prices.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">But refiners are not blind to these economics and they are responding by investing in processing units that produce more diesel. Back in July we covered investments by Valero and Marathon in hydrocracker units designed to bring their refinery production closer to a 50/50 gasoline/diesel output like a 2-1-1 crack. Expect to see more investments along these lines among Gulf Coast refiners with an eye to the strong diesel export market.</div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">However, as we have frequently detailed, the flood of new shale crude showing up at Gulf Coast refineries are very light – meaning that they contain a lot of gasoline components. These crudes do not have so many middle distillate components that are needed to produce diesel. So whatever refiners do to adjust their configuration to produce more diesel, they are still going to be left with a lot of gasoline range material. Since the US market demand for gasoline is static or falling, that material will likely have to be exported. If international and domestic demand for gasoline are both weak then gasoline prices will fall. Good news for US motorists but bad news for refiners. </div><div style="font-size: 13px;"><br /></div><div style="font-size: 13px;">Summing up, as Gulf Coast refiners get ready for the flood of new crude coming their way, the downward pressure on crude prices offers the prospect of improved refinery margins through lower feedstock costs. But that is not guaranteed because refining margins also depend on product prices staying higher as well. So far healthy demand at home and abroad for diesel has made that product quite profitable for Gulf Coast refiners. Gasoline margins are less robust and could threaten to spoil the refining party.</div></div></div></div></div>

Behind The Margins – Will Lower Gasoline Prices Threaten the Gulf Coast Refining Party?

Sandy Fielden (RBN Energy) Recent third quarter earnings reports from US refiners have reflected lower refining margins squeezed by higher...

Higher and Higher – A Better Forecast of Drilling Rig Productivity

<div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; color: #999999; font-family: Arial, Helvetica, sans-serif; font-size: xx-small; line-height: 20.15625px;">Sandy Fielden (RBN  Energy) </span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; color: #999999; font-family: Arial, Helvetica, sans-serif; font-size: xx-small; line-height: 20.15625px;"><br /></span></div><h1 class="title" id="page-title" style="background-color: white; font-family: Arial, Helvetica, sans-serif; line-height: 1.2em; margin: 0px auto; padding: 0px;"><span style="font-size: 13px; font-weight: normal; line-height: 20.15625px;">Last month the Energy Information Administration (EIA) debuted a new monthly report detailing oil and gas drilling productivity in six of the largest US production basins. Rather than just being an “after the fact” report telling us what happened in the past, the new report provides a forecast of oil and gas production for the current and next month out in each of the six basins. The initial report indicates that oil production will increase by roughly 60 Mb/d in these basins during November with gas production increasing by 0.4 Bcf/d. The report also highlights continued improvement in rig productivity. Today we begin a series interpreting the new drilling rig productivity data.</span></h1><div class="content-middle" style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13px; line-height: 20.15625px;"><div class="region region-content"><div class="block block-system" id="block-system-main" style="margin: 0px;"><div class="content"><div about="/higher-and-higher-a-better-forecast-of-drilling-rig-productivity" class="node node-article clearfix" id="node-691" style="border-bottom-color: rgb(187, 187, 187); border-bottom-style: solid; border-bottom-width: 1px; margin: 20px 0px; padding-bottom: 15px;" typeof="sioc:Item foaf:Document"><div class="content clearfix" style="margin: 0.5em 0px;"><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded">We have previously described rapidly increasing US natural gas production from shale as well as oil production from shale and other tight resources. Recent U.S. crude and gas growth has centered largely in a few key regions and has been driven by advances in the application of horizontal drilling and hydraulic fracturing technologies. The growth in production has been accompanied by improvements in drilling productivity - described in our six part series on drilling economics. In fact drilling productivity is driving domestic production to such an extent that the EIA has developed a new approach to measuring it.<br />The EIA Drilling Productivity Report (DPR) provides region-specific insights into rig efficiency, new well productivity, decline rates at previously existing wells, and overall production trends. The report covers six regions (see map below). In 2011-12, these six regions accounted for 90 percent of domestic oil production growth and virtually all domestic natural gas production growth.<br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZrJORPC_7WprB1v5lmne6ZZWsHpOh6kvHitcK2C0paru9fItc_e-4owrvGCmxJZjyEYFwMVMUO1CS57RQlaqAVebdM1PO5SO1CHBft8qrB7N3hsc334SO1hyphenhyphenk_H0rO9-5C1kBdvfZj5wS/s1600/map_17.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="196" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgZrJORPC_7WprB1v5lmne6ZZWsHpOh6kvHitcK2C0paru9fItc_e-4owrvGCmxJZjyEYFwMVMUO1CS57RQlaqAVebdM1PO5SO1CHBft8qrB7N3hsc334SO1hyphenhyphenk_H0rO9-5C1kBdvfZj5wS/s320/map_17.png" width="320" /></a></div><br /><div style="text-align: center;"></div><div style="text-align: center;">Source: EIA (Click to Enlarge)</div>The DPR estimates the current rate of growth or decline in production in each of these basins based on a number of indicators. These include the active rig count, drilling efficiency as well as the productivity of new wells, and production and depletion trends for previously producing wells. The data is intended to be more informative than traditional indicators such as simple oil and gas rig counts. The report also estimates rig productivity - a new measure that EIA has developed to better reflect continuing improvements in drilling rig efficiency. The rig productivity measure starts with an estimate of crude and natural gas output from new wells in a region during their first month in production. The rig productivity (calculated separately for oil and for gas) is the new well output divided by the number of drilling rigs in the region.<br /><br />We will look at some of the regional data in the report in future episodes in this series but this time we have compiled two tables that summarize the production and rig productivity data provided in the report.<br />Table #1 below shows a summary of the production forecast data in the initial report for October 2013. The table is divided into two parts – the top half is for oil and the bottom half is for gas. Taking the oil data first, there are 8 column headings – one each for the production basins, a total column (orange box) and a monthly change column (light blue box). For each basin the table has three months worth of data extracted from the DPR. The data shows estimated monthly oil production in Mb/d for each basin that the EIA forecast. The forecast is based on prior month well data published by State agencies, current and prior month well drilling counts and average production from new and existing wells. Because production data reported by states can be significantly lagged, DPR uses rig count data along with trends in drilling productivity to make estimates of oil and gas production where data are not yet available. Since existing EIA monthly production reports have a three month lag the information in the DPR is more current than previously available – although likely subject to adjustment. The DPR provides history back to 2007.<br /><div style="text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/table1_30.png?itok=kXB20XnY" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/table1_30.png?itok=2gAve1Eh" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="text-align: center;">Source: EIA and RBN Energy (Click to Enlarge)</div>The oil data shows that production in the Eagle Ford basin (red box) is expanding at a rate of over 25 Mb/d per month from 1045 Mb/d in September 2013 to 1093 Mb/d in November with Bakken production (brown box) expanding at similar rates, while the Permian basin is expanding more slowly (2 Mb/d per month – green box). The overall six-basin production estimate for November 2013 is 3.7 MMb/d (Total Oil column in the table) representing more than 50 percent of the latest published EIA total US crude production of ~7.5 MMb/d (July 2013). In the final column of the table we show the forecast monthly change in total production for all six basins, which is around 60 Mb/d for the latest three months in the DPR.<br /><br />The bottom half of Table #1 shows the identical summary for natural gas production in the six basins in MMcf/d. The total gas production in the six basins is expected to reach 34.2 Bcf/d in November – up 0.4 Bcf/d from October (Total Gas column). The two largest gas basins are the Marcellus (purple box) and the Haynesville (light green box) – with the former expected to produce 12.6 Bcf/d in November 2013 – just under double the Haynesville estimate of 6.6 Bcf/d (note the data in the table is in MMcf/d). Natural gas production in the Permian and Eagle Ford basins is higher than the Bakken because the former have more infrastructure to deliver associated gas from oil production to market .<br /><div style="text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/table2_10.png?itok=cHn1_RU6" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/table2_10.png?itok=iZIZgsiC" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="text-align: center;">Source: EIA and RBN Energy (Click to Enlarge)</div>Table #2 above is a summary of drilling rig productivity data for each of the six basins. The data is an estimate of new well production (during the first month of production) divided by the rig count. The layout of the table is similar to Table #1 with three months of data for each basin – oil at the top and gas at the bottom. The data shows that oil rig productivity is improving in all the basins except the Permian (dark green box) that is basically flat. Estimated Bakken rig productivity (brown box) jumped 23 Mb/d between October and November, but the average of all basins increased by only 7 Mb/d (blue shaded monthly change column). Estimated gas rig productivity increases in every basin except the Niobrara (pink box) in November. Marcellus rig productivity was up by 160 Mcf/d in November over October compared to the average for all 6 basins of 29 Bcf/d (purple box).<br />The new DPR report provides a compelling gauge of US oil and gas drilling productivity in a more timely form than we have previously had access to. The data shows production continues to increase in the main shale and tight oil basins. Much of the improvement is due to drilling efficiency and new well productivity, rather than an increase in the number of active rigs. In the next episode in this series we will look more closely at the data provided for specific basins as well as the impact of older declining production on the overall trends. </div></div></div></div></div></div></div></div></div>

Higher and Higher – A Better Forecast of Drilling Rig Productivity

Sandy Fielden (RBN Energy) Last month the Energy Information Administration (EIA) debuted a new monthly report detailing oil and gas drill...

Under Pressure – Natural Gas Prices Held in Check By Abundant Supplies

<div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">Sandy Fielden RBN 2013</span></div><div class="separator" style="clear: both; text-align: left;"><span style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">The CME natural gas futures market has been trading in a narrow 40 cent range between $3.40/MMBtu and $3.80/MMBtu since the end of the summer. The onset of winter and the first storage withdrawals last week (according to EIA) have done little to jump start prices. The prompt Henry Hub futures market closed at $3.702 yesterday (November 21, 2013). The dominating story remains increased supply from new production. Today we look at how supplies are weighing on spot prices and futures market speculation.</span></div><span style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;"><br /></span><br /><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">This year has been a pretty unexciting one for the natural gas market so far. CME NYMEX Henry Hub futures prices reached $4.40/MMBtu in April, which turned out to be their high of 2013 so far, after a colder than normal start to the year, before falling to a low of $3.25/MMBtu in August when summer temperatures did not increase demand significantly. Prices recovered to $3.82/MMBtu in October during an early cold spell but fell back to $3.44/MMBtu in November as milder weather returned – recovering to $3.70/MMBtu in the past week on colder forecast temperatures. But we have not seen the record low prices of 2012 when gas dipped close to $2/MMBtu and there has not been a sustained recovery above $4/MMBtu as many market analysts expected. Since the end of the summer prices have been stuck in a 40-cent range between $3.40/MMBtu and $3.80/MMBtu.<br /><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/table1_32.png?itok=fmnqW5af" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/table1_32.png?itok=U5c3gJP1" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;">Source: Bentek (Click to Enlarge)</div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">Looking at monthly supply/demand data from our friends at Bentek we can see that the dominant theme in the market remains growing supplies. The table above shows the month and year to date US supply/demand balance. Dry gas production in the US continues to increase – up by 1.2 Bcf/d to 65 Bcf/d in the year to October (dark blue circle) and another 2 Bcf/d so far in November to 67 Bcf/d (orange circle). As domestic production continues to grow – especially in the Northeast Marcellus basin, the natural gas distribution network is being rearranged to match new supplies to demand. In the national supply picture those changes show up in the 6.3 percent decline in Canadian imports versus 2012 (red circle) and the 37 percent reduction versus 2012 in LNG imports (dark green circle – “sendout” meaning sent inland from an import terminal). On the demand side, natural gas prices remained high enough relative to coal to discourage generators from large scale switching to natural gas . That coupled with a mild summer led to a 12 percent reduction in power burn versus 2012 (light blue circle). Nearly all of that reduced power burn demand this year (3 Bcf/d) was replaced by a 14.2 percent increase in residential and commercial demand in 2013 over 2012 (magenta circle). Despite much discussion of new industrial demand to suck up lower priced natural gas, the majority of these projects are still a few years away so industrial demand has been flat this year. Helping to soak up increased supplies have been exports across the border to Mexico, which continue to increase – up 11.9 percent this year over last and 15.1 percent so far in November 2013 (brown circle).<br /><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">The buoyant supply picture has kept the lid on the market’s price expectations. The futures market has also seen lower price expectations this year than in the recent past. The chart below shows CME natural gas futures data over the past four years. The blue line is a monthly average CME Henry Hub futures market close price from December 2010 to present. Shooting off from that underlying line are four forward curves for dates around November 19 in 2010 (brown line), 2011 (green line), 2012 (red line) and 2013 (orange line). Recall that forward curves represent current futures market sentiment about the value of forward deliveries – they are not a price forecast. Looking at the right hand end of the top and bottom curves, you can see that the high price on the November 2010 curve is $7.36/MMBtu (for December 2022 delivery) and the November 2013 high price is $1.42/MMBtu lower at $5.94 (for December 2025 delivery). These highest prices on the forward curve – usually the furthest point out into the future, have been getting lower every year for the past four years and they fell faster in 2013 than prior years (black dotted arrows on the chart). This means market sentiment that natural gas prices will increase in the future has become less bullish every year for the past four years – a trend that accelerated this year.<br /><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrIzF2qR27dyPR8wgDBfagzZ3ollItD2hPqUL2rLUzmFuP3Y6nZqGOQH9v6khn4ikxHzltefVDu0qM3twMsl0sy8Y3skd-pNsHCycZYJn-vBZDb4bOSu3z_8B5_zvEkXLBtYOhUsczwkfs/s1600/chart1_55.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="202" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrIzF2qR27dyPR8wgDBfagzZ3ollItD2hPqUL2rLUzmFuP3Y6nZqGOQH9v6khn4ikxHzltefVDu0qM3twMsl0sy8Y3skd-pNsHCycZYJn-vBZDb4bOSu3z_8B5_zvEkXLBtYOhUsczwkfs/s320/chart1_55.png" width="320" /></a></div><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;">Source: CME Data from <a href="http://www.morningstarcommodity.com//" style="color: #005a8c; text-decoration: none;">Morningstar</a> (Click to Enlarge)</div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">With spot and futures prices dampened by the rosy supply picture the natural gas futures market is losing its following among speculators. That follows a trend over the past few years where lower price volatility has discouraged physical trading. Low price volatility is also impacting futures transactions because speculators in financial markets are attracted to commodities with big price swings. With forward prices weaker and increased supply keeping the lid on volatility, opportunities for speculators to profit from sharp price moves are drying up. The chart below shows CME NYMEX prices (red line) and total open interest (blue shaded area) so far this year. Open interest is a measure of  “open” futures contracts i.e. contracts held for future sale or exercise. High open interest generally indicates increased speculation by financial players – hoping to profit from price volatility by holding open positions longer. The chart shows that between February and April 2013 there was a run up of open interest from 1.2 MM contracts to 1.6 MM contracts as speculators piled into the market expecting a strong recovery in gas prices this year. However, once prices began to fall and did not recover in the summer the open interest began to fall as speculators headed for the exits. Continued decline in open interest suggests that speculators do not have high hopes for a winter natural gas price spike this year.<br /><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;"><a class="colorbox colorbox-insert-image init-colorbox-processed cboxElement" href="http://www.rbnenergy.com/sites/default/files/styles/extra_large/public/field/image/chart2_40.png?itok=jV8YLUyU" style="color: #005a8c; text-decoration: none;"><img alt="" class="image-large" src="http://www.rbnenergy.com/sites/default/files/styles/large/public/field/image/chart2_40.png?itok=pk-LZizh" style="border: 0px;" typeof="foaf:Image" /></a></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px; text-align: center;">Source: CME Data from <a href="http://www.morningstarcommodity.com//" style="color: #005a8c; text-decoration: none;">Morningstar</a> (Click to Enlarge)<br /><br /></div><div style="background-color: white; font-family: Arial, Helvetica, sans-serif; font-size: 13.600000381469727px; line-height: 20.149999618530273px;">So far 2013 has not proven comforting for natural gas producers because prices stayed below $4/MMBtu for the most part. Increased production has kept the lid on prices. Power burn was down this year versus last and industrial consumption has yet to pick up significantly. Exports to Mexico remain the bright spot for demand. Supplies from Canada and LNG imports are being pushed out by increased domestic production. Lower price sentiment appears to be set in and the lower expectations of future prices as well as falling open interest suggest that financial markets do not expect a strong recovery in gas prices any time soon. That is good news for consumers of course and for those industrial project planners keeping their fingers crossed for continued low gas prices.</div>

Under Pressure – Natural Gas Prices Held in Check By Abundant Supplies

Sandy Fielden RBN 2013 The CME natural gas futures market has been trading in a narrow 40 cent range between $3.40/MMBtu and $3.80/MMBtu sin...

Land Drilling Rig Outlook Appears ‘Positive’

<div class="separator" style="clear: both; text-align: center;"></div><div id="Article_Byline" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><span style="clear: left; float: left; font-size: small; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKs5oAAo5mTzqfZU4mtd8-1qyg3DQHBXIgu2HybAQANJf-K7_juS65Lr2rKyLH95ozHqUSl_wWwozqCgX-ambzvjAW7x-yMVbDb-RH8ofWx_ZFFaK9fLujEjFmXk-QGfseTjXCl_C2eFlu/s1600/shalegas.jpg" /> </span><br /><span style="font-size: small;">Demand for land drilling rigs is expected to increase 23% by 2017 with the greatest percentage of growth expected in Western Europe, according to a forecast released recently by Douglas-Westwood. </span><br /><br /><span style="font-size: small;">Although the region has a small number of rigs compared to other areas, anticipated unconventional action could spark a 63% increase in drilling rigs within the next five years. Currently, the Western European region has an estimated 115 capable drilling rigs, according to the report. Pushing the number higher is expected focus on shale reserves within the UK region.</span></div><div id="ArticleContent" style="background-color: white; float: left; font-family: Arial,Helvetica,sans-serif; line-height: 22px; margin-top: 15px; width: 550px;"><div class="articleBody" style="padding-bottom: 40px;"><span style="font-size: small;"><br /></span><span style="font-size: small;">Onshore shale gas basins in Western Europe are believed to hold 10.5 Tcm (72 Tcf) of technically recoverable resources, according to the US Energy Information Administration. About half of this amount is in France’s Paris and Southeast basins.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">“With many fields in the traditional producing regions of the world reaching maturity, unconventionals will account for an increasing proportion of future hydrocarbon production,” Hannah Lewendon, the report’s author, said in a prepared statement. “Deviated and horizontal drilling is likely to increase as a result of this, driving demand for higher specification rigs that are capable of such complex techniques.”</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">The report showed that deviated and horizontal wells currently represent 28% of the development wells worldwide. Around 31% of total wells are predicted to be nonvertical by 2017.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Overall, “the global fleet will need to increase by approximately 1,303 capable units to meet drilling demand,” according to the report. “Strong volume growth in North American, Asian, Eastern European, and former Soviet Union (FSU) markets is expected to drive the increase, although all other regions can expect to see increases in their fleet size through 2017.”</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Demand drivers include higher global production targets and the increasing complexity of well requirements as well as exploration in new regions and EOR in mature regions, the report said.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Rigs drilled onshore are forecast to increase 20% by 2017. The uptick in activity is unlike what the industry experienced in the previous five-year period, when an economic downturn resulted in a 3% drop in wells drilled. In North America the number of rigs drilled decreased 28% from 2008 to 2009, according to the report.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">In the next five years, however, North America’s capacity of 3,487 capable drilling rigs is predicted to increase by 11% as operators continue developing shale resources with activity nowadays focused more on oil than gas.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">“Growth in oil demand from advancing economies is expected to continue, and markets formerly inaccessible to western drilling contractors are allowing greater access,” Lewendon said. “Although the activity of international rig contractors is growing in some countries, markets with high rig counts including China, India,and Venezuela remain dominated by national oil companies’ operations.”</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Asia, which has an estimated 2,065 capable drilling rigs, could see a 13% increase within five years. Australasia, where the report said most rigs are designed for drilling at shallow depths, could experience a 22% increase. The region currently has about 364 capable drilling rigs.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Latin America, which has an estimated 835 drilling rigs, could have an 11% percent increase, according to the report.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">National oil companies also continue to dominate the majority of markets within the Middle East and North Africa region, but growing international contractor participation in the significant rig fleets of Iraq and Kuwait is likely to continue throughout the forecast period.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">The report showed the FSU and Eastern European regions combined have an estimated 2,073 capable drilling rigs. That amount could grow by 15% by 2017.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">“Despite the forecast growth, challenges remain including the political instability in the Middle East,” Lewendon said. “However, increasing difficulties here will only serve to shift drilling activities to more stable countries.”</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">The Middle East and North Africa regions, where “highly productive wells are invariably drilled by modern rig fleets in major markets including Saudi Arabia and Algeria,” has just more than 1,000 drilling rigs. This amountcould grow 6% by 2017.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Security also is of concern in Sub-Saharan Africa, the report noted. Despite the concerns, which also include rig mobility issues, the number of drilling rigs is predicted to jump by 38%. The region currently has 124 rigs.</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;">Douglas-Westwood called the outlook for growth “positive,” but pointed out obstacles. Maturing fields and new hydrocarbon resources will increase the demand for rigs capable of deviated drilling, the report said. “As [EOR] and fracturing techniques become more in demand, greater investment and addressing of environmental concerns will need to take place as the industry seeks to increase output from previously inaccessible reserves.”</span><br /><span style="font-size: small;"><br /></span><span style="font-size: small;"><i>Contact the author, Velda Addison, at <a href="mailto:vaddison@hartenergy.com" style="text-decoration: none;">vaddison@hartenergy.com</a>.</i></span></div></div>

Land Drilling Rig Outlook Appears ‘Positive’

Demand for land drilling rigs is expected to increase 23% by 2017 with the greatest percentage of growth expected in Western Europe, accor...

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East Mediterranean Finds Reveal Area’s Gas Potential

<div id="ArticleToolBar" style="background-color: white; border-bottom-color: rgb(223, 223, 223); border-bottom-style: solid; border-bottom-width: 1px; border-top-color: rgb(223, 223, 223); border-top-style: solid; border-top-width: 1px; font-family: Arial, Helvetica, sans-serif; font-size: 8pt; line-height: 17px; margin: 0px 0px 10px; padding: 4px 0px;"><br /><div id="Article_Byline" style="color: #666666; float: left; font-size: 13px; margin-left: 3px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_40Nz8Rj2DQld2F5fKR_NFKffr_47nSWrDlhIsMOU6AD6oZTpa_0kUEr9hFTin9pu7KrXXGE2_Ybfv7c4oupDa8u4LzZYTgrjv8JbG4XK_GefiXiNggVLRa58a332PDLOAJfhJ_5rSLdk/s1600/Interperted-seabed-horizon_Eastern-Mediterranean-MegaProject330x327.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="317" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_40Nz8Rj2DQld2F5fKR_NFKffr_47nSWrDlhIsMOU6AD6oZTpa_0kUEr9hFTin9pu7KrXXGE2_Ybfv7c4oupDa8u4LzZYTgrjv8JbG4XK_GefiXiNggVLRa58a332PDLOAJfhJ_5rSLdk/s320/Interperted-seabed-horizon_Eastern-Mediterranean-MegaProject330x327.jpg" width="320" /></a></div><i style="color: #333333; font-size: 14px; line-height: 22px;">Despite its political concerns, the region has become an exploration hot spot. </i><span style="color: #333333; font-size: 14px; line-height: 22px;">Gas discoveries in the offshore Levant basin could change the energy supply dynamics in the Eastern Mediterranean region and spur natural gas exports in the near future, according to a new report.</span><br /><span style="color: #333333; font-size: 14px; line-height: 22px;">Reserve figures from countries in the region – Cyprus, Israel, Syria, Lebanon, Palestinian territories, and Jordan – are likely to change as more drilling takes place. Reserves from discoveries made since 1999 by Cyprus, Israel, and Palestine territories alone stand at more than 41.4 Tcf (1.17 Tcm), according to the US Energy Information Administration (EIA).</span></div></div><div id="ArticleContent" style="background-color: white; color: #333333; float: left; font-family: Arial, Helvetica, sans-serif; font-size: 14px; line-height: 22px; margin-top: 15px; width: 550px;"><div class="articleBody" style="padding-bottom: 40px;">In a global context, the region’s reserves do not even hit 1% of the world’s total proven oil and gas reserves, but the small region has become a hot spot following some big discoveries in recent months. The region also is a political hothouse and securing export routes will be a major challenge, especially with Syria’s current turmoil causing international concern.<br /><br /><b>Discoveries Offer Potential</b><br />“Uncertainty over the location and configuration of export infrastructure persists, but several proposals are making progress despite complications posed by regional security problems, territorial disputes, and macroeconomic uncertainty,” the EIA said.<br />“There have been a number of significant discoveries of natural gas in the Levant basin since 1999. Large fields in Cyprus and Israel contain most of the recently discovered natural gas reserves. Together the estimated recoverable reserves in these fields total more than 40.5 Tcf (1.15 Tcm) of gas.”<br />The main discoveries in the region are: Aphrodite in Cyprus with 7 Tcf (198.3 Bcm); Israel’s Tamar (10 Tcf/283.3 Bcm), Leviathan (18 Tcf/509.9 Bcm), Tanin (1.2 Tcf/33.9 Bcm), Karish (1.8 Tcf/50.9 Bcm), and Mari-B (1.5 Tcf/42.5 Bcm). Palestine also claims the Gaza Marine find (1 Tcf/28.3 Bcm) as its resource.<br />“A large share of the newly discovered energy resources will help meet domestic demand in the countries of the Eastern Mediterranean region, but there could be enough surplus natural gas to spur exports from Cyprus and Israel,” the report said.<br />“Determining how and where to export natural gas remains a topic of continued debate, with several proposed export routes competing for political and economic support.”<br /><b>Export Options</b><br />There are proposals, at different stages of development, to export gas via pipeline and as LNG from Cyprus and Israel.<br />A proposed LNG terminal in Cyprus already has started pre-FEED work and could start construction in 2015. Cyprus hopes to incorporate volumes from fields in offshore Israel into its plans, but Israel appears to prefer its own LNG facility at this stage, the EIA said.<br />Other natural gas export options include: a new pipeline from the Eastern Mediterranean to Crete, where the volumes could flow into the European grid; a new pipeline from the Eastern Mediterranean to Turkey; and the use of existing infrastructure to send volumes to Egypt for export via its LNG facilities.<br />“Several factors may influence how and when exports may come online: regional insecurity, such as the ongoing conflict in Syria and the recent unrest in Egypt; territorial disputes, such as that between Israel and Lebanon; and the status of economies in both potential exporting countries and destination markets like Europe and Asia,” the report said.<br /><b>Levant Basin Reserves</b><br />Extending across a large section of the offshore areas of the Eastern Mediterranean, the Levant basin is at the center of recent exploration activity in the region.<br />In a 2010 report, the US Geological Survey (USGS) estimated that the Levant basin has mean probable undiscovered oil resources of 1.7 Bbbl, natural gas resources of 122 Tcf (3.46 Tcm), and NGLs of 3.1 Bbbl.<br />“While the USGS estimates do not reflect the entirety of potential energy resources in the Eastern Mediterranean region, the resources of the Levant basin likely represent a large part of the overall resource base,” the EIA said.<br />“The USGS estimate of 1.7 Bbbl of oil, if discovered, would increase the region’s proved reserves by slightly less than 70%, while the 122 Tcf (3.5 Tcm) of natural gas represents more than six times the region’s current proved reserves.<br />“An additional 1.7 Bbbl of oil in the Levant basin would meet regional demand for roughly 20 years at current levels of consumption, while 122 Tcf (3.5 Tcm) of natural gas could meet current regional demand almost indefinitely.<br />“Nearly all the recent significant discoveries in the Levant basin were of natural gas, and, while offshore exploration may eventually yield recoverable quantities of oil, to date there have not been any commercially viable discoveries.”<br /><b>History And Politics</b><br />The oil and gas sector sprang into life in the Eastern Mediterranean around 80 years ago when oil exploration started in Syria following the successes in neighboring countries like Saudi Arabia.<br />Syria and Israel are also natural gas producers, although those sectors did not develop commercially until the 1980s in Syria and the mid-2000s in Israel. Jordan has had very low levels of production of oil and natural gas since the 1980s, and the country relies primarily on imports to meet internal demand.<br />In Cyprus, Lebanon, and the Palestinian territories oil exploration and development is still in their infancy; however, each is keen to capitalize on successful offshore exploration in the Levant basin to develop their own domestic natural gas reserves.<br />“Today, there is considerable focus on exploration and new projects, but international transit remains a key policy consideration of several Eastern Mediterranean countries. As the region continues to discover and develop hydrocarbon resources, the pressure to increase its role as an important energy hub is likely to increase,” the EIA said.<br /><b>Geology</b><br />The Eastern Mediterranean region includes eight significant basins: Cyprus, Eratosthenes High, Latakia, Levant, Judea, Nile Delta, Western Arabian Province, and Zagros Province.<br />The majority of the historical hydrocarbon production has taken place in the Nile Delta, Western Arabian Province, and Zagros Province.<br />Most of the Nile Delta basin lies within Egypt’s territorial waters, although there is a small area under Cypriot control. To date, there have not been any significant discoveries in the Cypriot territory, although much of Egypt’s offshore oil and gas production comes from the area.<br />The Western Arabian Province basin covers large parts of Jordan and Syria and extends into Iraq, Saudi Arabia, and Turkey. Most of Jordan’s fields and many of Syria’s are in the Western Arabian Province.<br />The Zagros Province basin extends from Turkey in the north, through Iraq and Iran, terminating in the Gulf of Oman in the south. Several of Syria’s largest fields are part of the Zagros Province basin, but the vast majority of fields in this basin are in other countries, including Iraq, Iran, and Saudi Arabia.<br />“While the Western Arabian and Zagros province basins account for most of the historical hydrocarbon production in the region, most of the focus today is on the Levant basin due to the recent discoveries,” the EIA report said.<br /><div class="MsoNormal"><b><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Recent gas discoveries in Levant basin</span></b></div><table border="1" cellpadding="0" cellspacing="0" class="MsoTableMediumList2Accent1" style="border-collapse: collapse; border: none; width: 84%px;"><tbody><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Country</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Discovery date</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Field name</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Estimated recoverable reserves</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Year of first production</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Cyprus</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2011</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Aphrodite</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">7 Tcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2017</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Israel</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">1999</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Noa</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">40 Bcf</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2012</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2000</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Mari-B</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">1.5 Tcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2004</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2009</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Dalit</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">500 Bcf</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2013</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2009</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Tamar</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">10 Tcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2013</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2010</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Leviathan</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">18 Tcf</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2016</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2011</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Dolphin</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">80 Bcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">unknown</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2012</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Shimshon</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">300 Bcf</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">unknown</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2012</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Tanin</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">1.2 Tcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">unknown</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><br /></div></td><td style="border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2013</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Karish</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">1.8 Tcf</span></div></td><td style="border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">unknown</span></div></td></tr><tr><td nowrap="nowrap" style="border: none; padding: 0in 5.4pt; width: 75.625px;" valign="top" width="19%"><div class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Palestine</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 79.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">2000</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Gaza Marine</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">1 Tcf</span></div></td><td style="background-color: #d3dfee; background-position: initial initial; background-repeat: initial initial; border: none; padding: 0in 5.4pt; width: 78.625px;" valign="top" width="20%"><div align="center" class="MsoNormal" style="text-align: center;"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">unknown</span></div></td></tr></tbody></table><div class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><i>Source: EIA</i></span><br /><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><i><br /></i></span><a href="http://www.epmag.com/Exploration/East-Mediterranean-Finds-Reveal-Areas-Gas-Potential_121800" style="font-family: Times; font-size: medium; line-height: normal;">East Mediterranean Finds Reveal Area’s Gas Potential</a> - Full Article</div></div></div>

East Mediterranean Finds Reveal Area’s Gas Potential

Despite its political concerns, the region has become an exploration hot spot. Gas discoveries in the offshore Levant basin could change th...