Benchmark: Focus on Ike and Nigeria
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By Duncan Sutherland – Exclusive to Crude Investing News
Hurricane Ike
Hurricane Ike seems to have been much less damaging to production, refining and transportation infrastructure in the Gulf Coast than was expected. Though ConocoPhillips (NYSE:COP) and Placid Refining Company are both receiving hundreds of thousands of barrels of crude from America’s federal reserves to continue refinery operations, and two rigs in the Gulf have been knocked adrift, the overall impact of Ike appears fairly benevolent to energy companies.
Going forward, the ongoing lack of power in the Houston area will be the most significant obstacle to resuming pre-hurricane activity levels. Exxon Mobil (NYSE:XOM) has confirmed that the Baytown refinery has only experienced limited damage, and it should be able to ramp up operations quickly once power is restored. Similarly, Shell (NYSE:RDS.A) is reporting ‘moderate’ damage, though assessment is continuing. The company outlined that its Deer Park and Port Arthur refineries have been hampered by utility problems, reports Bloomberg.
Unfortunately, population centres on the Texas Gulf Coast were far more severely affected. Even though your portfolio may have taken a rather severe beating today, please scrounge up some money for the American Red Cross if you can. Donate here.
Market & international news
The headline here is obviously the precipitous drop in prices below US$100 per barrel on the NYMEX for the first time in more than six months. Additionally, the continuing implosion of the financial sector may presage a rapid retrenchment of the commodity’s value.
Falling prices and the news from Wall Street have started gnawing on the Canadian dollar, and further slide is assured as oil prices continue to drop. Although commodities, financials and currencies may all be in a bad way right now, you can try your luck with treasuries and bonds.
Shell is having more serious infrastructure problems in Nigeria, as the Movement for the Emancipation of the Niger Delta have reportedly “razed” the Alakiri complex in Rivers State. MEND appears to be stepping up attacks recently, perhaps motivated by recent reports of President Umaru Yar’Adua being in poor health. Some analysts have diagnosed a power struggle within the government, and the announcement of an impending cabinet shuffle bear this view out.
Like much of Nigeria’s government, the intra and extra governmental conflict is opaque and changes rapidly, but President Yar’Adua’s decision to create a specific ministry to stabilize Rivers State (where most petroleum operations are located) signaled a less-martial approach to the conflict. The recent spate of attacks suggests MEND is either not interested in this approach, or is unable to control some of the more belligerent militants within its loose confederation.
Company news
Frontier Oil Corporation (NYSE:FTO) offered US$200 million in senior notes due in 2016 at 8.50 per cent per year from March 2009 Reuters reports. I am inclined to agree with 24/7 Wall St.’s take here via Stockhouse.
Well, that is probably enough bad news for the week, so I will end on something less gloomy. New Zealand-based Aquaflow Bionomic Corp. has apparently created commercially viable biodiesel from algae grown on sewage. We all know the old proverb about what to do when life gives you lemons. With the markets the way they are this week, turning human waste into money seems more appropriate.
Tags: ConocoPhillips, crude, Dollar, drop, dropped, Energy, exxon, falls, gulf, houston, Hurricane, impact, invest, investing, mobil, news, Nigeria, NYMEX, Oil, Oil rig, petroleum, price, prices, production, refiner, refiners, refinery, refining, shell, texas
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September 17th, 2008 at 10:21 am
[...] complete story, click this link. Follow developments in resource mining and exploration for free.Sign on to the Resource Investing [...]
September 22nd, 2008 at 7:35 pm
[...] bad news for Shell is certainly worrying. Benchmark examined the situation in Nigeria’s Delta state last week amid escalating violence by the militant MEND [...]
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