Category: Oil and Gas business

The average price for the Organization of Petroleum Exporting Countries’ basket of 13 reference crudes

The geological theory developed to explain observations that interactions of the brittle plates of the lithosphere with each other and with the softer underlying asthenosphere lead to large-scale changes in the Earth. The theory of plate tectonics initially stemmed from observations of the shapes of the continents, particularly South America and Africa, which fit together like pieces in a jigsaw puzzle and have similar rocks and fossils despite being separated by a modern ocean.

Area of sea which extends 12 nautical miles from a nation’s coastline and over which the adjoining coastal state claims territorial rights

There are two modes of transportation for inter-regional trade: tankers and pipelines. Tankers have made global (intercontinental) transport of oil possible, and they are low cost, efficient, and extremely flexible.  Pipelines, on the other hand, are the mode of choice for transcontinental oil movements. Not all tanker trade routes use the same size ship. Each route usually has one size that is the clear economic winner, based on voyage length, port and canal constraints and volume.   Thus, crude exports from the Middle East — high volumes that travel long distances — are moved mainly by Very Large Crude Carriers (VLCC’s) typically carrying over 2 million barrels of oil on every voyage.  The VLCC’s economies of scale outweigh the constraints imposed: they are too large for all the ports in the United States except the Louisiana Offshore Oil Port.  Thus, they must have some or all of their cargo transferred to smaller vessels, either at sea (lightering) or at an offshore port (transshipment).  In contrast, ships out of the Caribbean and South America are routinely smaller and enter ports in the United States directly.  Because of such ship size differences, a long voyage can sometimes be cheaper on a per barrel basis than a short one. Pipelines are critical for landlocked crudes and also complement tankers at certain key locations by relieving bottlenecks or providing shortcuts.  The only inter-regional trade that currently relies solely on pipelines is crude from Russia to Europe.  Export pipelines are also needed for production from the Caspian Sea region, where the protracted commercial and political debate illustrates the greatest negative for pipelines crossing national boundaries: their political vulnerability. Pipelines come into their own in intra-regional trade.  They are the primary option for transcontinental transportation, because they are at least an order of magnitude cheaper than any alternative such as rail, barge, or road, and because political vulnerability is a small or non-existent issue within a nation’s border or between neighbors such as the United States and Canada.  (Pipelines are also an important oil transport mode in mainland Europe, although the system is much smaller, matching the shorter distances). The development of large diameter pipelines during World War II allowed the development of the vast pipeline network in North America that moves crude oil and product within Canada, from Canada into the United States, and within the United States.  Domestically, the 200,000 miles of pipelines account for about two-thirds of all the oil shipments, when adjusted for volume and distance. 

Tectonics is the study of crustal deformation and structural behavior. Plate Tectonics is the deformation and structural behavior of crustal plates

An agreement regarding use of terminals, such as where a company for instance locks up an LNG’s terminal’s entire import capacity or shares capacity with third parties. Some of the basics of terminal use agreements for LNG include agreement regarding vessel berthing and unloading, LNG storage, regasification of LNG, transportation to redelivery point (with gas redelivery on a commingled stream basis). Some key TUA issues include: Scheduling of vessel berthing and gas offtake, especially if owner is also a terminal user, inventory management (including effects of using larger vessels), Commingled quality, remedies for owner’s failure to provide services, use it or lose it enforcement and secondary trading > > >

Rock-deforming processes and resulting structures that occur over large sections of the lithosphere

Fee to be paid by LNG shippers for the use of a regasification terminal. Fees in 2002 were around $0.40 mmbtu and in 2008 are around $0.70 mmbtu in Europe. Main reason for the increase in the tariff is the higher cost of building the terminals due to higher steel prices, higher storage costs and the generally higher price tag on terminals