Tag Archives: Oil

BP to slash thousands more jobs in face of oil downturn

LONDON (Reuters) – British oil and gas company BP announced plans on Tuesday to slash 5 percent of its global workforce in the face of a continued slump in oil prices.

It said it aims to reduce its global oil production, or upstream, headcount by 4,000 to 20,000 as it undergoes a $3.5 billion restructuring program. BP said its headcount totaled around 80,000 at the end of 2015.

With crude oil prices at 12-year lows of around $32 a barrel, the world’s biggest oil and gas producers are set to continue aggressively slashing spending this year as they face their longest period of investment cuts in decades.

“We want to simplify (our) structure and reduce costs without compromising safety. Globally, we expect the headcount in upstream to be below 20,000 by the end of the year,” a company spokesman said.

In the North Sea, he said BP planned to reduce headcount by 600 people over the next two years with most cuts likely in 2016.

BP shares, which have fallen by around 40 percent since the oil price began to slide in mid-2014, were up 1.2 percent at 1157 GMT compared with a 0.8 percent rise for the broader sector index.

Oil companies including Royal Dutch Shell and Chevron have already slashed tens of thousands jobs globally to deal with a near 75 percent drop in oil prices since June 2014 that has seen earnings collapse.

BP, which must also pay $20 billion in fines to resolve the deadly 2010 Gulf of Mexico spill, announced in October plans for a third round of spending cuts and said it would limit capital spending, or capex, to $17-19 billion a year through to 2017.

The company, which has already sold over $50 billion of assets in recent years in order to cover the spill costs, said it expected an additional $3-5 billion of divestments in 2016.

Fourth-quarter upstream earnings for oil majors are expected to fall by 84 percent from a year earlier and 48 percent from the previous quarter, according to analysts at Macquarie.

BP will report fourth quarter and full-year results for 2015 on Feb. 2.

(Reporting by Dmitry Zhdannikov; Editing by Jason Neely and Susan Fenton)

Four earthquakes strike Oklahoma, including another 4.7

Four more earthquakes struck Oklahoma on Monday, including one of magnitude 4.7.

That’s according to the United States Geological Survey’s earthquake data.

The magnitude 4.7 earthquake came at 3:49 a.m. Central Time, the USGS said. It was about five kilometers below the earth’s surface and was centered near Medford, close to the Kansas border.

The Associated Press said there were no immediate accounts of damage, but KWTV News 9 reported the quake was felt across Oklahoma and it shook some of the state’s residents awake.

The Tulsa World reported this morning’s earthquake tied for the largest one in the state since 2011. It was matched only by a magnitude 4.7 earthquake located near Cherokee on Nov. 19.

A trio of smaller earthquakes followed.

A magnitude 3.0 quake occurred at 5:50 a.m. near Edmond, according to the USGS. An hour later, there were magnitude 3.1 and 2.7 earthquakes within 40 minutes of each other near Perry.

More than 5,000 earthquakes have already been recorded in Oklahoma this year, according to NPR. The oil and gas industries in Oklahoma produce a lot of wastewater, which the USGS has linked to the rise in earthquakes. State officials have introduced measures to limit wastewater.

Oklahoma is a key component of the energy scene in the United States.

It houses what an NPR report called North America’s largest commercial crude oil storage center, holding approximately 54 million barrels of oil in tanks the size of airplane hangars.

The facility is located in Cushing. While an official told NPR that the Oklahoma quakes have not caused any issues yet, the tanks weren’t constructed with any kind of major earthquake in mind.

That’s because the swarm in earthquakes is a recent phenomenon.

The number of earthquakes began to trend upward in 2009, and a USGS report found a 50 percent increase in the state’s earthquake rate from October 2013 to its May 2014 publication.

The report also said that raised the odds that a magnitude 5.5 quake would hit Oklahoma. A magnitude 5.6 quake hit Prague in November 2011, which is the state’s biggest quake on record.

A USGS research geophysicist told NPR he’s spoken to the Department of Homeland Security about the Cushing oil tanks. NPR also reported that officials fear that any earthquake damage to the Cushing facility could have significant implications in the United States energy market.

Chinese Stocks Fall Short on Third Quarter, Oil prices Drop Below $50 a Barrel

According to a Reuters poll of 50 economists, China’s growth in the July-September shows that it has slowed to 6.8 percent; down from 7 percent in the second quarter. If this report is correct, this would reveal China’s weakest growth pace since 2009 when it fell to 6.2. percent in the first quarter.  

According to some news sources this is better than predicted given the unsurety of the market in the last few months. But China’s growth data is always watched and considered to be one of the main global barometer on the economy.  

Crude oil prices are also fell again at 3 percent on Monday and below $50 a barrel.    According to news sources, the signs that a nuclear deal will begin this year that will waive sanctions on Iranian oil are contributing to the already rollercoaster oil market.      

Bloomberg reports that Iranian oil minister Bijan Namdar Zanganeh announced that OPEC should manage the market by reducing the level of production and wants prices back to between $70 and $80 a barrel.    

West Texas Intermediate crude oil is lower by 1.1% at $46.73 a barrel.

Major Oil Find in Israel but Quality and Cost of Extraction Unknown

Israel is surrounded by countries loaded with oil bearing land. To find a sufficient amount of oil could mean a huge boost for her young oil production industry.

A company drilling for oil on the Golan Heights, close to the country’s border with Syria , claims they have found a significant amount of oil reserves. What they found looks to be 10 times larger than the average oil field worldwide.  This could  boost support of domestic demand but the quality, quantity and the cost involved for extraction is not known at this time.

Three drilling sites on the Golan have uncovered what is potentially billions of barrels of oil, enough to fulfill the Israeli market’s 270,000-barrel-per-day consumption for a very long time.

Chief geologist of Afek Oil and Gas, Yuval Bartov, said, “It’s a fantastic feeling. We came here thinking maybe yes or maybe no and now things are really happening!”

Since Israel’s founding, companies have drilled 530 exploratory wells in search for oil, but few of them have turned up commercially viable product, the Times of Israel reported. 

This find, however is already shadowed by the concerns regarding the war in Syria and the cost involved to protect the oil fields, domestic concerns as to the legality of Israel’s right to Golan Heights, as well as an ongoing struggle with environmental groups concerned over the effects the drilling will have on the land and the wildlife found there.  

The main site is close to the small town of Katzrin, which lies northeast of the northern shore of the fabled Sea of Galilee and is home to a wide range of special plants and wild animals, including major nature reserves such as Gamla, home to Israel’s largest population of Griffon vultures.

Major Companies to Cut Significant Amount of Jobs

Major companies, mostly located in the United States, are expecting to cut thousands of jobs within the next few years. These companies include: Whole Foods, Caterpillar, Chesapeake Energy, Hewlett-Packard Co., and Toshiba, along with supermarket giant, Wal-Mart Stores.

Reasons for the cuts have been attributed to a variety of reasons. Whole Foods reported to USA Today that they would be cutting 1,500 jobs within the next two months in order to lower prices for customers. The organic grocery store also announced that they would be trying to find other jobs within the company for those who were laid off.

Caterpillar, the heavy equipment manufacturer, said they would be cutting 10,000 jobs within the next three years. The job cuts come from a lack of projects for the company due to weakness in the energy and mining businesses worldwide, which affects the company greatly because their equipment is usually used for resource extraction and construction.

Another company that has been affected by the energy industry is Chesapeake Energy. Due to the high prices of oil and natural gas, the energy company is having to cut 750 workers, which is 15% of its workforce. Most of the job cuts will be in Oklahoma City, OK, where the company is based.

The technology business has also been affected by the recent world markets. Hewlett-Packard Company (HP) announced earlier this month that they would be cutting 33,300 jobs over the next three years due to falling demand. Another tech giant, Toshiba, also announced today that they would be cutting jobs as well due to a recent account scandal within the company. So far, Toshiba has not announced how many jobs would be cut, but that there would be restructuring within their company.

Even one of the biggest companies in the United States announced today that they would be cutting jobs. Wal-Mart Stores told Reuters that hundreds of people would be laid off at their headquarters in Arkansas. They expect fewer than 500 employees to lose their jobs. The job cuts were announced while the company struggles to shore up its profit margins, which have been weighted down by a $1 billion investment earlier this year to increase the wages of employees. So far this year, the stock for the world’s biggest retailer is down 26%.

CNN Money reported that the U.S. has cut more than 86,000 jobs due to falling oil prices.

Stocks Fall on Concerns over Oil Prices, Fed Minutes

The stock markets fell more than one percent under pressures from low oil prices and the uncertainly from the Federal Reserve over the raising of interest rates.

The Dow Jones Industrial Average (DJIA) was over 300 points lower Thursday after a 163 point drop on Wednesday.  The pace means the DJIA will have its worst day since losing 350 points on June 29th.

Markets around the world were impacted as well.

Japan’s Nikkei 225 falling 0.9%, the Hang Seng index in Hong Hong off 1.8%, the Shanghai composite in mainland China down 3.4%, Germany’s DAX off 2.3% and the CAC 40 in Paris off 2.1%.

“I think the oil and the geopolitical problems are the real problems for the market because we’re looking at lower global economic growth, and lower global growth is going to weigh on the U.S. as well,” Peter Cardillo, chief market economist at Rockwell Global Capital, told CNBC.

Some analysts, however, say that the movement by China last week to devalue the Yuan over two consecutive days is also impacting the market.

“There is heightened uncertainty that began with yuan devaluation last week, while overall China’s growth is slowing faster than thought. This is weighing on confidence,” Randy Frederick, managing director of trading & derivatives at Schwab Center for Financial Research, told CNBC.

(Update 8/20/1015 at 4:48PM CT: Since this story was originally reported the dow has dropped 2% and is currently at 358.04.)

Greece and China Create Small World Market Impact

The rejection of the Greek referendum and a massive stimulus action by China are not hitting all world markets as much as feared except in the area of oil.

U.S. crude oil fell over 7 percent to $52.53 a barrel, the lowest level since April.  Brent crude, the world standard, fell over 6 percent to $56.50.  The markets were hit with pressure from the Greek and Chinese situations plus Iran is preparing to flood the market after sanctions get lifted from a potential nuclear deal.

“Even without Greece, China’s stock market woes and Iran priming to hit the market with more barrels, the demand picture in oil has only been okay while the supply picture has been phenomenal,” said John Kilduff, partner at New York energy hedge fund Again Capital, told CNBC.  “With these number of bearish elements weighing on the market now, the only thing of support has been the seasonal demand in gasoline, and even that will be going away soon.”

American stock markets were down after the Greek “no” vote but not as much as feared by analysts.

The Dow ended the day down 47 points or 0.3%.  The S&P 500 as down 0.4% and Nasdaq was down 0.3%.

“There’s been no panic of any kind,” Paul Hickey, co-founder of Bespoke Investment Group told clients according USA Today. “The market remains faithful that the European Central Bank and other European institutions have done an adequate job firewalling the eurozone against Greece.”

The resignation of the Greek finance minister Monday is believed to have helped mute the impact of the Sunday referendum.

Pipeline Burst Sends Over 50,000 Gallons Of Oil Into Yellowstone River

A Bridger Pipeline Company pipeline burst in Montana has sent oil rushing into the Yellowstone River.

Montana governor Steve Bullock has declared a state of emergency because of the 50,400 gallons of oil that rushed into the river.  The river is a source of drinking water for many communities downriver of the spill.

Residents were told to avoid contact with the water which one citizen described as “smelling like pure diesel fuel.”

Officials in Dawson and Richland counties are providing bottled water for residents to use for cooking, drinking and other necessities.  The Environmental Protection Agency, Department of Health and Human Services and multiple state agencies are on the scene to assist as necessary.

Yellowstone River is the longest undammed river in the U.S.  The last time a spill tainted the water was 2011, when 42,000 gallons poured from an ExxonMobil pipeline.

OPEC Leader Vows To Not Cut Output

The de facto leader of OPEC has told the press production of oil will not be reduced even if the prices fall to $20 a barrel.

Ali al-Naimi, Saudi Arabia’s Oil Minister, is basically telling the world that the group is now focused on maintaining their market share in light of the U.S. shale oil boom.

“It is not in the interest of OPEC producers to cut their production, whatever the price is,” al-Naimi told the Middle East Economic Survey. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”

The most shocking comment from the man who is considered one of the most influential figures on the oil market was that the world may never see $100 a barrel oil again.

“We have entered a scary time for the oil market and for the next several years we are going to be dealing with a lot of volatility,” Jamie Webster, oil analyst with IHS Energy told the Financial Times. “Just about everything will be touched by this.”

Oil prices have tumbled almost 50 percent since June because of both a huge supply gain from U.S. shale output along with decreased demand in Europe and Asia.  The market dove more than a dollar after the comments from al-Naimi.

OPEC had been well known for cutting production when oil prices fall in an attempt to keep up profit margins.  When the U.S. was in the midst of recession in 2008, OPEC cut production to raise prices to make it harder on the U.S. during the economic downturn.

OPEC Collapsing Says Bank of America

The world’s oil market is o the verge of collapse according to experts at Bank of America.

The bank warned that the OPEC oil cartel has essentially collapsed and that prices will fall below $50 dollars a barrel.  The weakest oil producers will be run from the industry and power will consolidate into a handful of producers.

“The consequences are profound and long-lasting,“ bank commodity chief Francisco Blanch told the London Daily Telegraph.

The move could drive many American oil producers out of the business.  At least 15 percent are unable to cover costs at the current oil price level and experts say that when prices fall below $55 a barrel over half the American producers will be forced to shut down.

The benefit then comes to middle east powerhouses such as Saudi Arabia which have large cash reserves that can help them weather a prolonged decline in oil prices.

Bank of America’s competitor Citibank has posted an opposite view, saying American shale oil producers can withstand as low as $40 a barrel.