Newly independent ConocoPhillips will expand in North America, CEO says

Fuel Fix ^ | May 9, 2012 | Simone Sebastian

[thackney]

In ConocoPhillips’ first shareholders meting since it unhitched its refinery business, new CEO Ryan Lance said he’s focused on further expanding the company’s position in North American shale and other unconventional fossil fuels.

Much of the $15 billion Lance plans to funnel into capital spending each year will target oil and natural gas operations in the United States and Canada. The Eagle Ford shale in south Texas, the Permian Basin in West Texas and the Bakken shale in North Dakota will be growth priorities, he said.

“With the land ownership and the infrastructure that we have in the United States, it allows our company to secure a position and start developing and rapidly exploiting the assets,” Lance said in a press conference following the shareholders meeting. “We are putting a significant amount of our capital investment in that area and generating very high returns.”

Lance takes the helm at the newly independent oil and gas exploration and production company with ambitious goals to expand production and maintain high dividends. Last week, ConocoPhillips’ refineries, pipelines and chemical plants spun off to form a separate company, Phillips 66.

The global oil and natural gas corporation currently produces about 1.6 million barrels of oil equivalent per day and plans to grow to 1.8 million by 2016, Lance told shareholders.

However, growth in North America will come from crude oil and natural gas liquids.

ConocoPhillips has scaled back its investment in dry natural gas, or methane, as the fuel’s domestic price has plummeted in recent months.

North American natural gas makes up about 24 percent of the company’s portfolio and Lance said its share will decline. However, Lance said he believes growing use of natural gas in power generation, to replace coal, will reignite demand for the fuel. The company is holding on to acreage in gassy areas so it can restart production if prices rebound.

“You don’t invest in North American natural gas today given the price,” Lance said. “But we do believe over the longer term, demand will pick u, prices will improve and then we have the optimality to start reinvesting in that business and ramping up the growth.”

[thackney]

Marathon spun off their refining about a year or so.

[Ben Ficklin]

Regarding the bringing up to standard aging refineries and aging power plants you need to understand "New Source Review", which was legislation passed by Congress in the late 70s.

On the surface it was very simple, a new plant(new source) is held to a higher enviro standard. But when there were expansions and updating it was all very unclear. Consequently, it was in and out of court so many times it is hard to keep up with. And having different presidents thru out the period made even more complicated. Because of this we see industry not building new refineries but expanding the size of their refineries and expanding their refineries as part of scheduled maintainance.

Eventually, in 2007, SCOTUS made what was considered the final decision regarding New Source Review. Everything was resolved. But Prez Bush didn't want to be the one to enforce it so he punted it next prez. He knew the enviros wouldn't sue him because he would be out of office before the case got to court.

Different companies handled it different ways. Some moved immediately to conform. Some waited until the next prez began to enforce. So when Obama comes in he can't move on New Source Review because Congress is taking up Cap and Trade and his EPA has to deal with CO2 first. But eventually he got around to it in 2010 and everyone is in the process of conforming, except Texas.

In Texas they knew in 2007 that they would be out of conformance when the feds got around to enforcing it, who ever the new prez might be in 2009. But in Texas they wanted to use it as a campaign issue against dem Houston mayor White who they knew would be running for Gov against Perry in 2010. So when Perry won the election Nov 2010 everyone thought that Texas would move to get in conformance, but Perry jumped even harder on the issue in Dec 2010, so everyone knew Perry would be running for Prez even though he didn't declare until the following August.

Anyway, Texas has the case tied up in court and they know that they will ultimately lose in court but they might be able to delay it for who knows how long. And that is irrelevant because almost all of the companies that Perry is supposedly protecting from the EPA have gone around Perry to deal directly with the EPA to get their permits in order. Even the infamously evil Koch Brothers refinery went around Perry to deal directly with EPA.

Its all politics as usual and the GOP is blowing smoke up your rearenski.

So any way, over time and thru various court decisions issue was gradually

[Eva]

The oil companies didn’t need to go around Perry to bring their refineries into compliance. Perry was not trying to stop the refineries from voluntarily improving standards of protection. Many of the refineries were truly in need of improvement and the oil companies knew it. It was better to comply willingly than to wait for a disaster like the one at BP.

[Eva]

Who did Marathon sell their refineries, to?

[thackney]

Who did Marathon sell their refineries, to?

They did the same thing as ConocoPhillips. They did not sell them to someone else; they spun them off as a separate company to sink or swim on their own.

They are now Marathon Oil (NYSE:MRO) and Marathon Petroleum (NYSE: MPC). They are separate stocks with 100% separate employees and management.

http://www.marathon.com/

[Carriage Hill]

BF, I’d bet that 90%+ don’t know those facts. I’d also bet that if 0bummer gets another 4yrs, he’s going to direct the corrupt and criminal EPA - if he hasn’t already - to find a way to slow fracking way down or kill it completely, with either new BS regs, taxes, add’l permits; whatever.

[thackney]

Even the smallest Coastal Tankers are going to be a tight fit for passage through the new larger 3rd set of Panama Locks. The problem is the draft (depth).

The corresponding maximum dimensions for vessels that will transit these {new panama} locks are 366 meters LOA, 49 meters in beam and 15.2 meters in tropical freshwater (TFW) draft.

Dimensions for Future Lock Chambers and “New Panamax” Vessels
http://www.pancanal.com/common/maritime/advisories/2009/a-02-2009.pdf

Tanker Size

Class	Length	Beam	Draft	Overview
Coastal Tanker	205 m	29 m	16 m	Less than 50,000 dwt, mainly used for transportation of refined products (gasoline, gasoil).
Aframax	245 m	34 m	20 m	Approximately 80,000 dwt (Average Freight Rate Assessment).
Suezmax	285 m	45 m	23 m	Between 125,000 and 180,000 dwt, originally the maximum capacity of the Suez Canal.
VLCC	330 m	55 m	28 m	Very Large Crude Carrier. Up to around 320,000 dwt. Can be accommodated by the expanded dimensions of the Suez Canal. The most common length is in the range of 300 to 330 meters.
ULCC	415 m	63 m	35 m	Ultra Large Crude Carrier. Capacity exceeding 320,000 dwt. The largest tankers ever built have a deadweight of over 550,000 dwt.

Source: http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/tankers.html

[Ben Ficklin]

The key sentence I just read at EIA says: "However, while many larger tankers will be able to transit the canal after 2014, some ULCC's will still be unable to make the transit."

Source

Key phrase is "some will be unable" which infers that some will be able to transit. However I don't know how many "some" is nor do I know how many ULCC's there are or how many there are relative to other tankers

[thackney]

I like the EIA as a petroleum information source.

But without dimensions to reference, I have doubts about those very general statements.

Cheers.

[thackney]

Can you find a tanker with 100,000 DWT or larger with a draft at 15.2 or less meters?

It seems they are all in the +20 meter range.

http://www.marinedigital.com/en/mall/ship/index.asp?menu_code=ShipSaleList&Fcategory=4&Scategory=0&Tcategory=0

As for ULCC, there are not very many in the world. None of them will fit through the new Panama Locks.

http://www.aukevisser.nl/supertankers/id364.htm

On the list above of the world’s supertankers, including those now out of service, the smallest is the S.R Long Beach at 214,862 dwt. It had a draft of 19.7 meters.

http://vessel-ship.findthedata.org/l/35222/S-r-Long-Beach

I found the Prince William Sound with one of the shallowest drafts of 16.8 meters for 125,925 dwt.

http://vessel-ship.findthedata.org/l/25517/Prince-William-Sound

Can you find any supertanker, or any tanker of at least 100,000 dwt, that has a draft at 15.2 m or less?

http://vessel-ship.findthedata.org/

[Eye of Unk]

Price of gas in Alaska jumped .12 a gallon yesterday, its now $4.37 a gallon.
Fueled my truck at 5am it was $4.25, later in the day its up by 12 cents a gallon. Something is happening.