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Despite Oil Prices, U.S. Crude Production at Record Levels

According to the Energy Information Administration (EIA), the first full week of January saw U.S. crude oil production increase to 60,000 barrels per day (BBL/d) to a record 9.19 million (BBL/d). That’s the highest level since the EIA started keeping track of production in 1983.

Also during that week, crude inventories in the U.S. peaked at 387.8 million barrels. This marks the largest figure, for this time of year, since at least the 1930’s.

In the EIA’s new Short-Term Energy Outlook, the agency predicts crude oil production continuing to increase in the next few months. They predict 9.47 million BBL/d in May before starting to decline in the summer months. 

Global Petrochemical Prices Plunged 18% in December

Prices in the $3-trillion-plus global petrochemicals market fell another 18% in December, the biggest month-over-month drop since November 2008, as energy and naphtha prices continued to slide.

Petrochemical prices, expressed as a monthly average, spiraled down $222 per metric ton (/mt) from November to $984/mt in December, according to the just-released monthly Platts Global Petrochemical Index (PGPI).

On a year-over-year basis, petrochemical prices were down 30% compared with the same month last year.

"Crude and naphtha prices were both down more than 20% last month," said Jim Foster, director of petrochemical analysis at Platts. "When the prices of feedstocks are falling that fast, the derivatives are bound to follow. Petrochemical prices are unlikely to bottom out until energy prices find a floor."

U.S. Chemical Companies Earnings Estimates Lowered

“Goldman Sachs Group Inc. cut earnings estimates at seven U.S. chemical makers to reflect a stronger dollar and product prices that are falling with crude oil,” Bloomberg Businessweek is reporting.

In a recently released note, Goldman analyst Robert Koort “lowered 2015 profit estimates 20 percent at Dow Chemical Co. and LyondellBasell Industries NV, 19 percent at Westlake Chemical Corp. and 6 percent at Eastman Chemical Co.”

Since oil peaked last June, Goldman has cut profit estimates for Dow Chemical a total of seven times. “The slide in oil prices and a rising dollar against the euro and other currencies will lead other industry analysts to revise estimates, Goldman said.”

EPA Unveils New Steps to Curb Methane Emissions

The EPA has announced a new goal to cut methane emissions from the oil and gas sector by 40 – 45% from 2012 levels by 2025, and a set of actions designed to achieve that goal. If enacted, the EPA says, it would save up to 180 billion cubic feet of natural gas in 2025, enough to heat more than 2 million homes for a year and support businesses that manufacture and sell cost-effective technologies to identify, quantify and reduce methane emissions.

As part of the inter-agency effort, the Department of Interior’s Bureau of Land Management (BLM) will update decades-old standards to reduce venting, flaring and leaks of natural gas, which is primarily methane, from oil and gas wells. These standards, to be proposed this spring, will address both new and existing oil and gas wells on public lands. The action would boost natural gas supplies, making royalties available for taxpayers from development of public resources, and reduce emissions.

Elsewhere, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) will propose new natural gas pipeline safety standards in 2015. While the standards will focus on safety, they are expected to lower methane emissions as well. 

North Dakota May Use Oil Revenue for New Project Incentives

“North Dakota's legislature will decide how to divvy up oil tax revenue among the state's 53 counties, and whether to wave sales taxes on materials used to build natural gas pipelines and chemical plants in a biennial session starting on Tuesday,” Reuters is reporting.

A bill currently being discussed is "aimed at curbing sales taxes for natural gas pipelines comes as the state enforces tough standards to curb flaring, the wasteful burning of gas. The bill's sponsors hope the proposed law would further encourage companies to build pipe networks, the best way to prevent flaring.”

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