Cuba Scrambles As Venezuela’s Oil Industry Collapses

As Venezuela’s oil industry goes down it flames, it’s looking like it may just take Cuba down with it. Venezuela, once the crude powerhouse of South and Central America, is no longer able to produce enough oil to sustain its own economy, much less those of other countries. Cuba is frantically drilling in search for new reserves and reaching out for new suppliers, but there is no guarantee they’ll be able to stabilize their oil income any time soon.

Cuba became dependent on Venezuelan oil in the 1990’s, when they were sold cut-price crude in exchange for the services of skilled laborers in order to bail them out of economic collapse in the wake of the fall of the Soviet Union. Currently, Cuba relies on foreign oil for more than two thirds of its daily consumption, with over 100,000 barrels of crude flowing from Venezuela every day for years. Now, quite suddenly, their dependence on Venezuelan oil has been forced to come to a bitter end.

In the midst of political unrest and economic devastation, Venezuela’s oil exports have plummeted by 40 percent in the last 3 years. During an export drought that lasted the better part of last year, the Cuban government has been combating the stemmed fuel flow with regular energy rationing. In an attempt to avoid blackouts, the government has ordered cuts in electricity and fuel consumption to most state-run companies and entities (a huge pool in a communist country) by 50 percent, resulting in workers hours slashed and access to vehicles severely restricted. This April, they also began restricting sales of premium gas to government officials and diplomats.

After this eight-month moratorium on exports to Cuba, Venezuela once again began to export light oil to Cuba and Curacao in March, but at a great cost to their own refineries. As of this month, the 187,000-barrel-per-day Puerto la Cruz refinery is running at just 16 percent of its capacity thanks to a deficit in light oil and a lack of maintenance in ill-funded refineries. With this unsustainable model and no sign of improvement in the country’s economy, Cuba is looking for new sources of crude, and quickly.

Cuba is currently probing for oils in its own offshore wells, with some hope for a vast untapped reserve, but so far they’ve run dry. In response, they’ve reached out to an old friend–Russia. Just last month, Russia exported its first shipment of oil to Cuba in decades. The tanker, carrying 250,000 barrels of Russian oil, was just the first installment of a total 1.9 million barrels to be sent by the Russian government-owned oil company Rosneft. It’s unknown if the deal is to be extended after the total is reached.

It is almost certain that Cuba’s weak economy will continue to need the aid, but the Russian government has made it clear that this is not a hand-out–there will be no more oil if Cuba doesn’t have the cash to back it up. Unlike Venezuela, who allowed Cuba to build up an unpaid tab for oil imports, Russia has announced that they will give no leniency to the cash-strapped nation.

If oil is found in Cuba, it will be a game-changer, but not necessarily for the Cubans. Australia-based Melbana Energy Ltd. has estimated that their Cuban assets contain as much as 637 million barrels of recoverable oil and the company is beginning an intensive two-well drilling campaign slated for 2018 with a budget of $30 million.

As Cuba desperately drills for new reserves and looks to Russia to replace the Venezuelan vacuum of low-cost crude, the future of the already-unstable communist country grows more and more uncertain. With no luck so far in their own probes, some of their most promising potential reserves owned by outside interests, and their Russian allies promising a swift cut-off if Cuba can’t pony up for oil imports, the poverty-stricken country may very well bankrupt themselves in the effort to power their nation.

Originally written for Oilprice.com: http://oilprice.com/Energy/Crude-Oil/Cuba-Scrambles-As-Venezuelas-Oil-Industry-Collapses.html

Is Big Oil’s Bet On Petrochemicals A Bust?

Thanks to the last years’ unstable crude markets, peak oil demand looming around the corner, rising use of renewable energy and electric vehicles, and flooded markets, big oil is looking to corner new markets and it has its sights set on plastics. Petrochemicals have a promising future, with need for plastics continuing to grow worldwide, but is it a business model built to last?

With online shopping beginning to boom in China, there will be a huge demand for plastics used in product packaging and shipping materials, and you can guess that other developing countries will not be far behind. Even “green” alternatives, such as electric cars, need specialty plastics in their manufacturing.

According to numbers published by management consulting firm McKinsey & Co., they project an annual increased demand of 1.4 percent for oil in the petrochemical sector between now and 2050, which translates to about 60 percent of total projected increases for oil demand. This is a significant number, since oil demand for light-duty vehicles is expected to flatline or even decrease by 2025.

Big oil is trying to cash in, and quickly. Exxon Mobil, suffering from its high-cost assets in the oil sands of Canada, recently announced to shareholders that they’ll be investing about $20 billion in refineries, petrochemicals and other projects around the Gulf of Mexico.

In an attempt to compete with the Gulf Coast, where companies already have a head start in petrochemical production, the American Chemistry Council (ACC) proposes that Appalachia could be developed to compete for a top spot in domestic petrochemicals. In a plan presented on Capitol Hill last month, ACC would utilize low-cost natural gas production in Appalachia to produce chemicals. If greenlighted, ACC estimates that their development project would create 100,000 permanent jobs by 2025 and $2.9 billion annually in federal and local tax revenue.

Canadian petrochemical producers are calling for policy changes aimed at incentivizing investment in domestic petrochemical projects as projected demand continues to rise.

While investors are focused on major projects in the U.S., local producers claim that Canadian industries also have major petrochemical production potential.

Meanwhile, last month’s Asia Petrochemical Industry Conference (APIC) in Sapporo, Japan showed that alongside the U.S. the east is also undergoing major changes, with China and India at the forefront of the new petrochemicals landscape. In China, there is currently a major push toward developing petrochemical production, starting with seven ?refining and petrochemical bases along the coast from Dalian to Guangdong.

India is also aiming big, showcased by a major expansion of Reliance Industries’ massive Jamnagar petrochemical complex with a 1.5m tonne/year refinery due to be completed in the next few months and three more on the west coast of India using imported U.S. ethane.

The Middle East is also determined not to be left behind by oil’s next big production wave, but they’ve turned to the U.S. for help. Saudi Aramco, the world’s biggest oil producer, has partnered with U.S.-based Dow Chemical to develop the groundbreaking Sadara petrochemicals complex near Jubail, now nearing completion. Now they’ve also pledged to build two additional plants in Saudi Arabia. During President Trump’s recent visit to the Kingdom, Dow announced plans for a new plant built to manufacture a range of acrylic-based polymers for coatings and water-treatment applications.

Around the world there is a race to get into petrochemicals while the getting’s good, but there’s a significant risk to this strategy. Peak oil consumption is a continued threat, and many places in the world, as they move away from oil, are also making moves to cut down demand for plastic, one of the world’s biggest environmental pollutants.

The World Economic Forum, in conjunction with the United Nations, the Ellen MacArthur Foundation and McKinsey & Co., published numbers that suggest at least 8 million tons of plastics leak into the ocean annually by a conservative estimate. Because of this flood there are about 150 million tons of plastics pollution in the ocean today, and if the trend continues, by 2025 oceans would contain one ton of plastic for every three tons of fish. By 2050, fish would be outnumbered by plastic waste.

We’ve already seen plastic bag bans in progressive cities like San Francisco and Los Angeles, but it’s likely that stricter policies are in store. As environmental pollution due to plastics becomes a more serious problem, government policies around the world will surely ramp up in response.

Also, as recycling becomes more accessible worldwide, it could be a huge blow to the projected increased petrochemicals demand that big oil is banking on. McKinsey has released a study on peak oil demand that suggests that widespread recycling alone could eliminate one quarter of oil use from plastics. If we can even come close to that, big oil’s newest plan is sure to be a major disappointment.

Originally written for Oilprice.com: http://oilprice.com/Energy/Energy-General/Is-Big-Oils-Bet-On-Petrochemicals-A-Bust.html

The Dark Side Of The Oil Tech Boom

As artificial intelligence becomes ever more attainable and tech start-ups continue to divide and multiply, traditional oilfield research and development is going the way of the buffalo. Drilling is still an inexact and complex process, with high costs of labor and environmental damages. In the wake of the past years’ oil slump, energy industries are looking for ways to increase profits while making oil production easier and cheaper.

Though alternative energies continue to make gains, it’s still more cost efficient to drill and pump oil than to turn to renewables. But big oil is looking for ways to make it even cheaper, more efficient and with a smaller impact to the environment. In order to do this, they’re turning to tech.

Stabilizing profitability and margins is a major drive for big oil, pushing them away from traditional methods and toward innovation. In the near future, technologies like IIoT, artificial intelligence and wearables will cut operating costs, increase production efficiency, and refine asset management.

In today’s oil markets, simply increasing or decreasing pumping can no longer sufficiently control or compensate for variability in crude prices. This is where tech start-ups with attractively cost-efficient models come into play. Some of the major players include California-based Seven Lakes, Ground Metrics and Tachyus Corp, and Canadian start-ups DarkVision Technologies Inc. and Raptor Rig.

Seven Lakes initially developed their electromagnetic technology to detect explosives for the military, but their product is now being used to help accurately locate subterranean deposits of oil, gas and minerals and collect data from within wells. They measure tank capacity, pressure readings, choke sizes and more, allowing workers’ access to instantaneous and actionable numbers, minimizing downtime and production loss. This year the company was the recipient of the 2017 CIO 100, an annual award celebrating companies that exemplify the highest level of operational and strategic excellence in information technology. So far, Seven Lakes has helped their clients in the energy industry optimize more than 100,000 wells across the U.S.

Ground Metrics also has its fair share of accomplishments and accolades. Last month the company won international patents for their core sensor and source system, giving them a big leg up in the burgeoning oil tech industry thanks to their new eligibility to make direct bids with a number of major oil companies. The company’s sensor systems create resistivity data for oil, gas, and mining clients by taking images of entire fields, something never before possible. The scope allows operators to dramatically improve efficiency and production. Looking forward, Ground Metrics is currently working on the ability to instrument entire oilfields.

There’s a downside, however, to all this innovation. As energy industries become more and more efficient with the use of innovative technologies, the workforce shrinks as manpower becomes obsolete. For example, thanks to the New Jersey-based tech company Honeywell, companies are now using cloud technologies and mobile devices that allow for remote monitoring of oil fields, getting rid of the time-consuming and labor-intensive work of driving out to a field to check on equipment. On the ground, more automated drilling rigs could cut the number of work hours needed to finish a well by more than 30 percent according to an estimate by oilfield services company Schlumberger.
Despite these changes, oil jobs are actually making a comeback this year, as crude prices stabilize and the oil industry gets back to its feet. Just this week U.S. oil producers constructed eight new drilling rigs in fields stretching across West Texas, Colorado and North Dakota. This surge in drilling is bringing workers back into the oil patch after being laid off during the oil bust, when 1 in 3 oil field workers were left jobless in Texas. The comeback in U.S. drilling has revived more than 15,000 jobs just within rig crews. While these numbers are promising, however, it’s likely they won’t last.

Thanks to oilfield innovations, the job opportunities and profiles will likely change drastically in the coming years. Demand will grow for more educated, higher-skilled workers to operate these new technologies, but automation is sure to be a blow to the hundreds of thousands of blue-collar workers employed by oil and gas. Many are likely to find themselves jobless once again, just as they were getting back to work.

 

Originally written for Oilprice.com: http://oilprice.com/Energy/Energy-General/The-Dark-Side-Of-The-Oil-Tech-Boom.html

10 Mexico City Museums that Should Be On Your Bucket List

It’s been said that Mexico City has the most museums of any city in the world, and after living here for a year I believe it. This city is a museum-lover’s paradise, with museums of all shapes, sizes, and devotions seemingly on every corner. It would be impossible to list them all, or even to list all the great ones, but these 10 are a great starting point. Especially now, during rainy season, I know that there’s nowhere I would rather be.


Casa del Lago

This tiny museum is located in the heart of the giant park known as Bosque Chapultepec, where many of Mexico City’s most prestigious museums are housed. Casa del Lago is not one of the most prestigious–in fact it’s tiny, little known, and little advertised. However, it’s the perfect place to go see local contemporary artists from this creative mecca in pristine natural surroundings away from the madding crowd.


Museo Jumex

This towering museum in the posh Polanco neighbourhood is an incredible wealth of contemporary art, featuring both local and international talent. As a bonus, it’s also right next to the beautiful Museo Soumaya, which features classical art for a bit of balance.


Museo de Antropologia

One of the two most famous museums in the country, this massive collection of cultural artefacts is a genuine treasure trove. You’ll need a full day (or 3) to see it all, but every room is an incredible window into the vast and rich history of Mexico. We recommend going during the week to avoid the formidable crowds.


Museo Frida Kahlo

This one, it might go without saying, is the other ultra-famous museum of Mexico. Frida’s little blue house is now graced daily by long lines of tourists eagerly waiting to see the way the visionary painter lived and worked. The museum doesn’t have a lot of her actual work, but it is a loving ode to the life of an extraordinary artist and revolutionary thinker.


El Centro de la Imagen

Located in a corner of the breathtaking national library, this public photo archive is an incredible space with an even more incredible collection. With both temporary and permanent photo exhibitions, this museum is an incredible gem for photography lovers.


Museo Dolores Olmedo

Those interested in seeing more of Frida Kahlo’s artwork will be blown away by the incredible collection of Dolores Olmedo, a close friend and benefactor of Frida and her husband Diego Rivera. This museum, located in the south of the city in beautiful Xochimilco, has amazing examples of paintings by Frida and Diego as well as a stunning collection of folk arts from around the country. If you’re not convinced yet, you should know that there are also peacocks freely wandering the grounds.


Originally written for the Happy Nomad: http://www.bambaexperience.com/blog/10-mexico-city-museums-that-should-be-on-your-bucket-list/

Asian Markets Poised to Take Lead of the Global Solar Industry

This week the UK smashed its previous solar power record, powering nearly a quarter of the nation with solar energy thanks to sunny skies and relatively low demand. At the same time, however, Britain’s biggest solar company Solarcentury is anticipating that for the first time the majority of its production won’t be coming from its own country, but from Latin America and the rest of Europe.

In response to dramatic subsidy cuts in the UK, the company invested heavily in outside markets, pouring £3bn into international projects. While 12,000 solar jobs have been lost in Britain since the government cut funding in 2015, Solarcentury has managed to hang on by going international, and now it appears that thanks to this globalized strategy they are beginning not just to survive, but to thrive.

In the last financial year, Solarcentury earned 85% of its revenue from production within the UK. This year, the company projects a complete turnaround, with 85% of revenue coming from international markets, especially in Europe and Latin America. The shift is an ironic twist as the UK continues to shatter its own solar production records in an industry that has grown from nearly nothing to 2GW of capacity in the last 7 years. In the summer of 2016 solar provided even more power than the UK’s coal-fired stations and in April of 2017 the nation celebrated its first ever full working day without coal.

The International Renewable Energy Agency (IREA) recently released a report that shows that solar is expanding rapidly around the world. While jobs in solar have decreased in the UK, Europe, and Japan, the global renewable energy sector grew 1.1% between 2015 and 2016, reaching 9.8 million jobs. Of these jobs, solar is by far the largest employer, with 3.1 million jobs, a 12% increase since 2015.

The global solar boom is threatening to flood energy industries around the world, not just in Britain. As various markets around the world vie for leadership in soaring solar markets, the U.S. has announced this week that they are considering implementing emergency “safeguard” tariffs on solar imports according to a WTO filing.

As solar production has exploded in the last five years, prices have plummeted and large-scale producers like the U.S., China, and India are battling to dominate the field. The U.S. and India have each filed complaints with the WTO that the other is illegally discriminating against international solar imports, and this week’s announcement of safeguard tariffs is sure to fuel that fire.

While the UK’s own solar industry is struggling due to policy change and budget cuts, British accountancy firm Ernst & Young released a report this month showing that the U.S.’ ability to bring in  renewable energy investment has been similarly compromised by policy changes under the Trump Administration. A petition filed to the International Trade Commission (ITC) by solar panel manufacturer Suniva, Inc claims that the volume of solar imports in the U.S. rose by 51.6 percent between 2012 and 2016 and the value of imports grew by 62.8 percent, from $5.1 billion to $8.3 billion.

As the U.K. and U.S. cut subsidies and backpedal renewable-friendly policies, India has extended their capital subsidies and affordable loans for clean energy. This move is part of a greater effort to support Prime Minister Narendra Modi’s goal of raising renewable energy capacity by more than five-fold in the next five years as a part of the nation’s objective to fight climate change. India is currently the world’s third biggest greenhouse gas producer, after China and the U.S.

The U.S. and U.K.’s shift away from renewables has left China and India at the forefront of the solar industry, a market that will likely continue to skyrocket in the coming years. According to the International Renewable Energy Agency, solar’s shift to Asia has already begun on a large scale, with with 62% of global renewable energy jobs located in the continent.

Originally written for Oilprice.com (headline theirs): http://oilprice.com/Alternative-Energy/Solar-Energy/Asia-Aims-For-Total-Dominance-Of-Global-Solar-Industry.html

Private Drilling Begins in Mexico’s Vast Untapped Reserves

Five years after Mexican President Enrique Peña Nieto made campaign promises to open his country’s oil reserves to foreign interests, a private well been has drilled in Mexico for the first time in nearly 80 years. London’s Premier Oil Plc, Houston’s Talos Energy LLC and Mexico’s Sierra Oil & Gas began offshore drilling on the joint venture on Monday, according to a statement by Premier. It marks the first private exploration in Mexican waters since the country nationalized its oil industry in 1938.

The last time foreign interests invested in Mexican oil, it did not have a happy ending. Then-President Lázaro Cárdenas seized their assets, created the nationalized oil monopoly Pemex, and banished all foreign competitors. Now, nearly 80 years later, Mexico is re-opening its largely untapped, massive oil and gas reserves, and foreign companies are eagerly accepting the invitation.

The Zama-1 well is being installed in the Sureste Basin off the shores of Tabasco, and according to estimations in Premier’s report, contains between 100 million to 500 million barrels of crude oil. The three companies won the rights to begin drilling back in 2015 when Mexico opened their oil reserves to foreign auction. This is sure to be the first of many such ventures, as companies from Malaysia, China, Norway, the U.K., France and the U.S. also won rights to drill in Mexico’s first international deep-water offshore auction back in December, which awarded rights to 14 oil exploration areas in the Gulf of Mexico.

Elaine Reynolds, an analyst for Edison Investment Research Ltd., said that all eyes will be on Zama-1 as it begins production. “As the first non-Pemex well to be drilled since the opening up of Mexican waters as part of the country’s energy reform process, this well will be keenly watched by the industry.” Drilling is expected to be completed within 90 days, with a price tag of $16 million fronted by Premier.

Mexico is hoping that revolutionizing their oil industry by opening it up to the global market and private interests will revitalize what has been a long slump in oil production. They estimate that the move will bring in an estimated $40 billion in investments to push Mexican oil to full production capacity over the next 35 to 50 years, as much as 900,000 barrels a day.

Within weeks of President Peña Nieto’s August 2014 announcement that Mexico was opening their oil industry to the private sector, the U.S. Energy Information Administration boosted Mexico’s oil and gas projections by 25 percent. As foreign interest in Mexico’s vast untapped reserves began pouring in, the EIA readjusted by a whopping 75 percent.

In the years between those projections and this week’s drilling of Zama-1, development has faced some serious speed bumps, with the global crash of crude prices after OPEC flooded the market in November 2014 and major policy reform needed to reverse 8 decades of public oil in Mexico. But now, as the market is recovering and development is finally beginning to get underway, a black gold rush is sure to follow.

The International Frontier Resources Corporation, a Canada-based oil development company, estimated that untapped Mexican reserves could aggregate as much as 115 billion barrels. According to the CIA’s 2016 World Factbook, Mexico has less than 10 billion barrels of proven reserves, meaning that if the IFRC’s estimates are correct, Mexico’s new proven reserves would skyrocket to 125 billion barrels, more than the United States, the UAE, Russia, and Kuwait.

It must be noted that not everyone is excited about the new influx of industry money and drilling developments. There has been widespread backlash from environmental groups including Greenpeace, who have expressed concern over exploitation of Mexico’s natural resources and loudly criticized the UK for investing $1bn in Pemex and other fossil fuel companies. There is also great concern about the embrace of oil instead of a step towards more renewable resources in Mexico, home to some of the worst air pollution in the world.

As part of the push for foreign investors, in January, Mexico also removed fuel subsidies to make the market more attractive to private companies and combat the plummeting peso. The result, however, has been an enormous increase in gas prices and even less support on the ground for Mexico’s new investor-friendly policies.

Despite public outcry, however, 125 billion barrels is a number that will not be ignored. Zama-1 may be the first private drilling experiment in 80 years, but it will certainly not be the last.

 

Originally written for Oilprice.com: http://oilprice.com/Energy/Crude-Oil/Can-Private-Investment-Turn-Mexicos-Ailing-Oil-Industry-Around.html

A Week in Prague

I knew little to nothing about the Czech Republic before I arrived, other than a few foggy details from when I was assigned Milan Kundera’s The Unbearable Lightness of Being in high school. The very first thing that made an impression after landing at the Prague Airport is how ridiculously beautiful their money is, each bill like a neo-baroque work of art. As we pulled out of the airport and into the capital city, I realized that the Czech Republic didn’t just give extra-special attention to the currency, but absolutely every aesthetic aspect of their breathtaking nation. Nearly every single thing in Prague looks ripped out of the pages of a fairytale storybook.

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As we passed something that looked remarkably like every castle in every Disney movie, I fell deeply and swiftly in love with Prague. Opulently decorated steeples dot the skyline and ornate Gothic bridges span the sparkling central river. The city streets, narrow and cobblestoned, are lined with an enchanting mixture of medieval and postmodern architecture. I never wanted to leave–and all this was before I had even tried the beer.

 

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Czech food, while hearty and great for a hangover (coincidence? I think not), is not particularly memorable, unless you’re a huge fan of gravy-covered foods in varying shades of brown. But the beer–the BEER! In every shop, every hole-in-the-wall pub, every cafe and restaurant, there is an unbelievable selection of local, delicious and amazingly affordable brews. I recommend the pilsner–all 900 of them.

Due to the Czech Republic’s history behind the Iron Curtain, their economy still has not caught up with much of Europe. While this still poses some financial strife to the locals, it also makes it a great travel destination for those tight on cash. Hostels, meals, and libations are all extremely affordable, which is probably why I never managed to leave my bed before noon during my stay.

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Prague is not just pretty buildings and beer, it’s also an incredibly historical and culturally-rich city with no end of amazing museums, monuments, and galleries. It’s also not all beautiful. If you explore outside of the tourist districts, you’ll find some fascinating and decidedly stark communist-era architecture, a fascinating contrast and remarkable historical reminder of life as a soviet state. In these same concrete-grey neighborhoods, there is also an amazing variety of cafes, bars, and small art spaces occupied by students, making a lively atmosphere that shouldn’t be missed.

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During my stay I also took a day trip by train to the nearby town of Kutna Hora, famous for its unique Ossuary, a church made for the purpose of storing (human) bones. The Ossuary of Kutna Hora is macabre, but it’s also bizarrely and enchantingly beautiful. All of the skeletal remains here have been used to create incredible works of art, from chandeliers to enormous crests. I would say that, disturbing or no, it is entirely worth the trip. You certainly will never forget it.

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The Czech Republic is bursting with completely singular works of art, historical artifacts, and cultural marvels. It truly has something for everyone, whether you’re interested in history, architecture, stunning countryside, or just some really, really, good beer. Na zdraví!

Originally written for the Happy Nomad: http://www.bambaexperience.com/blog/a-week-in-prague/