Sen. Murkowski warns of winter fuel problems


Washington, DC�Frank Murkowski (R-Alas.), the Senate Energy Committee chairman, last week warned the Clinton administration it needs to remedy US energy supply problems.

Murkowski said, "The recent price spikes and dislocations we have seen, and the others we know we will see soon, are like 'canaries in a coal mine'�they are the early warning signs of a system that is reaching its breaking point. I think the Midwest [gasoline price problem] is just part of an overall energy delivery system in the US that has deteriorated to an unhealthy level."

Murkowski spoke during a Senate Energy and Natural Resources Committee hearing on US gasoline supply problems Thursday. Government and industry officials testified.

The Alaska senator said, "I think we are heading for serious problems after years of neglect. Last winter, Northeast heating oil prices hit the roof when cold weather caused supply problems which couldn't be offset by imported heating oil with a higher sulfur content.

"There is a coming price shock for consumers this winter when they start using natural gas. Even though demand has skyrocketed for this fuel, supply has remained constant. Prices for natural gas are reaching historic highs and storage, which is usually high during the summer months, is extremely low this summer.

"Since 50% of Americans heat their home with natural gas, the Northeast's heating oil problems last year may look like a picnic compared to the howling we will hear this winter."

EIA concerned
John Cook, director of the Energy Information Administration's petroleum division, echoed those concerns. He said distillate stocks remain well below normal.

"Even with a typical inventory build this summer, we likely will enter the winter heating season with lower-than-normal stocks. Strong gasoline and diesel demand this summer will effectively limit heating oil stock building as refinery production is used to meet consumption."

Cook said, "Partly for the same reasons, natural gas has yet to show signs of building adequate inventories ahead of next winter.

"Not only does this mean industrial and utility consumption of more distillate this winter," said Cook, "it suggests utilities may use more distillate this summer to meet peak cooling needs, if natural gas prices remain high through the summer months. This could further reduce distillate stock building, resulting in very low distillate inventories before winter begins."

Cook said the gasoline problems may not be over yet either.

"Midwest stocks are recovering, but East Coast gasoline stocks at the end of June were 8% below their 5-year average, with reformulated gasoline 13% below average. California gasoline stocks were 6% below average.

�Consumers are not expected to reduce consumption much in the short term. As we enter the peak gasoline season, refiners will be pushed to just meet demand. With low stocks and refineries operating at very high levels, supply disruptions could trigger another price run-up."

Industry confident
Red Cavaney, American Petroleum Institute president, said there is no cause for alarm yet about winter fuel supplies.

He said diesel fuel and home heating oil inventories are 8% below average nationally because refiners have been meting summer demand for gasoline rather than building distillate inventories.

He said, "Five months remain for these inventories to build before the beginning of the heating season, and more than 90% of the home heating oil is shipped directly from refineries to consumers�it does not come from inventories.

"In addition, the industry has shown it is able to produce substantial amounts of distillate when the need arises. Accordingly, summertime distillate inventories are not necessarily a significant indicator of fuel availability once the season begins."

Cavaney noted that severe weather, not low inventories, was the principal reason for last winter's home heating oil supply problems in the Northeast.

Related Articles

PwC: Chemicals industry M&A activity in 2014 reached 10-year high

02/19/2015 Mergers and acquisitions (M&A) activity in the US chemicals business ramped up substantially in 2014, recording the highest volume in a decade ...

Marathon revises down budget by 20%

02/19/2015

Marathon Oil Corp., Houston, has reduced its capital, investment, and exploration budget for 2015 by another 20% to $3.5 billion.

MARKET WATCH: NYMEX crude oil prices drop before weekly inventory report

02/19/2015 US light, sweet crude oil prices for March delivery settled down more than $1/bbl on the New York market Feb. 18 awaiting the government’s weekly r...

Murkowski, Heitkamp lead Senate call for crude exports to Mexico

02/18/2015 US Sens. Lisa Murkowski (R-Alas.) and Heidi Heitkamp (D-ND) led a coalition asking US Sec. of Commerce Penny Pritzker in a Feb. 18 letter to encour...

Pemex cuts budget by $4 billion

02/18/2015 The board of Petroleos Mexicanos (Pemex) has approved a $4-billion budget reduction for 2015, an 11.5% decrease compared with the previous expendit...

US should rework Azerbaijan relations carefully, House panel told

02/18/2015 The US should pursue relations with Azerbaijan that recognize its strategic importance as an energy supplier to countries farther west but do not i...

Pemex lets contract for Salamanca refinery amid budget cuts

02/18/2015 Mexico’s Petroleos Mexicanos (Pemex), through a contractor, has let a contract to SENER Ingeniería y Sistemas SA, Mexico City, a division of SENER ...

Magnum Hunter slashes budget by 75%

02/18/2015 Magnum Hunter Resources Corp., Houston, plans a $100 million upstream capital expenditure budget for 2015, down from the $400 the company planned f...

Gulf Coast Western buys interest in Smackover acreage in South Alabama

02/18/2015 Gulf Coast Western LLC (GCW), Dallas, has acquired a large working interest in a block of leases covering 29,000 acres in Conecuh and Covington cou...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected