Better Fill up today

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With the Democrats wanting to raise taxes on the oil and gas industry, and cut tax breaks, more and more companies are reducing their Drilling budgets. Exxon is cutting way back on their Exploration and Drilling budgets. The liberals may get more tax dollars but the American People are going to pay the penalty in less supply and higher prices.

Chesapeake Energy cuts capital budget, production outlook

By Wallace Witkowski

Last update: 4:16 p.m. EDT Sept. 22, 2008

SAN FRANCISCO (MarketWatch) -- Chesapeake Energy Corp. said late Monday it is reducing its drilling capital expenditure budget for the remainder of 2008 until the end of 2010 by $3.2 billion, or by 17%, because of falling natural gas prices. Chesapeake said the cut is in response to a 50% fall in natural gas prices since June 30, and "concerns about the possibility of an emerging U.S. natural gas surplus in advance of increased demand from the U.S. transportation sector." Also, the company reduced its full-year 2008 production growth estimate to 18% from 21%, and its anticipated annual production growth forecasts in 2009 and 2010 to 16% from 19%.

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Nov-08 Crude settled at $106.61, down $2.76 on the day, Oct-08 Natural Gas setteld at $7.931, up $0.273 on the day.

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Nov-08 Crude is trading at $108.85, up $2.24, Oct-08 Natural  Gas is trading at $8.07, up $0.139

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Venzuela is one of our bigger suppliers, and they would like nothing more than to cut us off completely. The need for more domestic Cude supply and alterante fuels is getting more critical everyday.


Venezuela, China to Build Refineries, Boost Sales 

By Steve Bodzin and Wang Ying

Sept. 24 (Bloomberg) -- Venezuela, the world's fifth- largest oil exporter, and China plan to build refineries and boost oil shipments, said President Hugo Chavez, who is seeking to lessen dependence on the U.S.

The countries will sign agreements that will include building a refinery in block Junin 8 in the Orinoco Belt, South America's biggest oil area, Chavez said today in Beijing in a phone interview with Venezuelan state television. The accords will deepen cooperation between the two countries, he said.

Chavez, who is in China this week in a tour that includes Russia and Cuba, has sought closer ties with U.S. rivals. Earlier this month, Chavez expelled the U.S. ambassador to Caracas and signed an agreement with Russia's OAO Gazprom on offshore projects. China, the world's second-biggest oil user, needs fuel as it economy grows at a double-digit pace.

``China is short of oil and it has to extend cooperation with foreign countries,'' Xia Yishan, a senior research fellow with the China Institute of International Studies, said by phone in Beijing. ``The country will need to increase imports and expand overseas exploration to meet local demand.''

China's growth domestic product expanded 10.1 percent in the second quarter. Last year, its economy grew 11.9 percent, the quickest pace in 13 years. The nation will surpass the U.S. as the world's biggest energy consumer in five years, Jeremy Bentham, vice president of global business environment at Royal Dutch Shell Plc, said on Sept. 16.

Cabruta Refinery

China and Venezuela are continuing work on a previously announced refinery at Cabruta and both governments will sign several agreements later today, Chavez said, without providing details. Cabruta is located at the Latin American country's geographical center.

President Hu Jintao and Chavez will sign the agreement at a welcome ceremony at China's Great Hall of the People in central Beijing.

The two countries had agreed in May to build a refinery in China and create a joint venture to drill for oil in the Junin 4 area, where China National Petroleum Corp. has been quantifying and certifying reserves. Venezuela plans to export 1 million barrels of oil a day to China by 2011 or 2012, Chavez said then.

Trade between the nations will exceed $8 billion this year and Venezuela is currently shipping 331,000 barrels a day of oil and oil products to PetroChina Co., China's biggest oil company, said Chavez.

U.S. Sales

Bilateral trade in the first seven months reached $6.23 billion, compared with $5.9 billion for all of 2007, Foreign Ministry spokeswoman Jiang Yu said yesterday.

The Latin American nation supplies 4 percent of China's total oil imports, Jiang said.

Chavez, who took office in 1999, has repeatedly threatened to cut off oil sales to the U.S., alleging its government has attempted to assassinate or overthrow him. The U.S. buys about two-thirds of Venezuela's daily exports of 2 million barrels.

``China-Venezuela relations are normal state-to-state relations, not based on ideology, and are not targeted against any third party,'' said Jiang.

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In my opinion, of lot of the cutbacks in spending by the industry is due to the rhetoric coming out of Obama and the Democrats, threats of higher taxes, reducing tax incentives and the Democrats philosyphy of taking more control of business.

Chesapeake sees other companies cutting gas spending

Tue Sep 23, 2008 12:15pm EDT

NEW YORK, Sept 23 (Reuters) - Chesapeake Energy Co (CHK.N: Quote, Profile, Research, Stock Buzz), which has cut its spending on natural gas well drilling, expects other energy producers to begin reducing exploration spending in coming months.

"While we may be the first, we will certainly not be the last," Chief Executive Aubrey McClendon said during a conference call on Tuesday.

On Monday, Chesapeake, which says it is now the largest U.S. natural gas producer, announced it had cut its capital expenditure for drilling 17 percent through 2010, trimming its forecast for gas production growth.

Natural gas producers had ramped up exploration and production activities during the first half of the year, when natural gas futures NGc1 prices nearly doubled, reaching a peak at $13.69 per thousand British thermal units in early July.

Since then, natural gas futures have slipped more than 40 percent to trade at about $8. When that price goes below $7.50, production at many wells becomes uneconomical, McClendon said.

"If those prices stay out there for very long the industry will have to restrict its capital expenditures," he said.

The number of rigs drilling natural gas is likely to drop by 200 to 400 in the coming six months as companies pare back spending on rigs that were hired when gas prices were rising, he added.

A total of 2,018 rigs were drilling for oil and gas in the United States, oilfield services company Baker Hughes said in its most recent weekly report.

Chesapeake's shares were flat at $40.89 on Tuesday on the New York Stock Exchange, outperforming the Standard & Poor's Energy index , which was down 1.2 percent

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Nov-08 Crude Oil settled at $105.73, down $0.88 on the day, Oct-08 Natural Gas settled at $7.679, down $0.252 on the day.

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More reason we need to get started drilling now in the OCS and ANWR. We need to get  a Gas Pipeline from the North Slope to the lower 48 states. There is so much that can be done but with the Democrats in control of both houses, it is an uphill battle.


Russia Seeks Greater Control on Crude Prices (Update1)

By Lyubov Pronina

Sept. 25 (Bloomberg) -- Russia, the world's largest energy supplier, wants greater control over oil prices as it seeks a stronger say in the global economy, Energy Minister Sergei Shmatko said.

The Energy Ministry is working on a set of measures, including the development of ``reserve'' fields that can be used to increase or decrease national oil output quickly, and will present them to members of the Organization of Petroleum Exporting Countries at a meeting in Algeria in December, Shmatko said today.

``There has to be a Russian factor'' in determining world oil prices, ``and maybe not just one,'' Shmatko told reporters in Petropavlovsk-Kamchatsky, the capital of the Far East Kamchatka region. Shmatko is traveling with President Dmitry Medvedev on a weeklong tour of remote regions to assess their economic potential.

Oil production in Russia, the largest exporter of the fuel after Saudi Arabia, is declining for the first time in a decade as companies struggle with costs and maturing fields. The government is granting tax breaks to producers to encourage development of fields in remote regions.

At the same time, price volatility is making it harder for companies to plan capital expenditures for expansion. The price of Urals crude, Russia's main export blend, has fallen 30 percent since July 4, when it reached a record high of $142.94 a barrel.

With such ``rollercoaster'' swings, Russia must take measures to better influence price performance, including some that ``may be unexpected,'' Shmatko said.

Medvedev sent Deputy Prime Minister Igor Sechin to OPEC's meeting in Vienna on Sept. 10 to forge closer ties with the producer group and offer to sign a memorandum of understanding. Sechin, who is also chairman of OAO Rosneft, the country's biggest oil producer, said at the time that ``extensive cooperation with OPEC is one of Russia's priorities.''

OPEC's Secretary General Abdalla el-Badri on Sept. 10 said he would further discuss details of the memorandum suggested by Russia at a petroleum conference that he would attend in Moscow on Oct. 22.

Russia has been an observer at OPEC meetings for 10 years. The organization controls more than 40 percent of the world's oil supply. Its membership will drop to 12 from 13 in 2009 after Indonesia decided to quit the group because it became a net oil importer.

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Nov-08 Crude is trading at $104.70, down $1.03 and Oct-08 Natural Gas is trading at $7.65, down $0.029

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Nov-08 crude settled at $108.02, up $2.29 on the day the back months were up in the $2.50 range as well. Oct-08 Natural Gas settled at $7.724 , up $0.045 on the day.

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Crude Oil Declines on Concern U.S. Bailout Plan May Be Delayed

By Grant Smith and Christian Schmollinger

Sept. 26 (Bloomberg) -- Crude oil fell after a Congressional plan to rescue the financial industry was delayed, adding to concern that economic growth in the world's biggest energy consumer is under threat.

Negotiations on the $700 billion rescue of the U.S. financial system stalled as House Republicans rejected the plan and left it to congressional leaders to hammer out a compromise to calm markets. Average consumption of U.S. oil products for the past four weeks was down 6.6 percent from last year, the Energy Department said Sept. 24.

``This bailout package is very much needed to prevent a bigger credit crunch and economic deterioration,'' said Jochen Hitzfeld, an analyst at UniCredit Markets & Investment Banking in Munich. ``If it's thrown out the window we'll see a much bigger fall in oil prices.''

Crude oil for November delivery fell as much as $3.77, or 3.5 percent, to $104.25 a barrel in electronic trading on the New York Mercantile Exchange. It was at $105.38 a barrel at 11:44 a.m. London time.

Total SA, Europe's third-largest oil company, restored power to its Port Arthur refinery in Texas following Hurricane Ike and plans to restart the plant, the Houston Chronicle reported. About 41 percent of oil production in the Gulf of Mexico remains shut following this summer's storms, the Minerals Managements Service said.

Gasoline Demand

Prices may extend their 28 percent decline from the July 11 record of $147.27 a barrel next week, according to a Bloomberg survey. Fourteen of 29 analysts surveyed by Bloomberg News, or 48 percent, said prices will decrease through Oct. 3.

Oil is headed for a 0.8 percent weekly increase despite having posted a record one-day gain on Sept. 22, when investors rushed to cover short positions before the October contract's expiry. The financial crisis and plans for its solution have since kept prices within a $4 range.

Sales of new homes in the U.S. fell in August to a 17-year low, Commerce Department data showed yesterday, while orders for U.S. durable goods declined more than twice as much as forecast.

Gasoline demand averaged 9 million barrels a day in the past four weeks, down 3.4 percent from the same period last year, the Energy Department report showed. Gasoline inventories dropped 5.9 million barrels to 178.7 million barrels, the lowest since 1967. Supply levels prior to 1990 were reported on a monthly basis.

Brent crude oil for November settlement fell as much as $3.40, or 3.2 percent, to $101.20 a barrel on London's ICE Futures Europe exchange. It was at $102.25 a barrel at 10:21 a.m. London time.

OPEC continues to export large volumes of oil as it may take time for the group to cut back output to its quota.

OPEC's daily shipments of oil will increase 2.2 percent in the four weeks to Oct. 11, according to data from industry consultant Oil Movements released yesterday.

The Organization of Petroleum Exporting Countries will load 24.75 million barrels a day in the period, compared with 24.21 million barrels a day shipped in the four weeks ended Sept. 13, the Halifax, England-based consultant said.


Last Updated: September 26, 2008 07:03 EDT