Local Lab to the World for 25 Years | http://stratochem.com
January 2015
Celebrating a 25-Year Journey

2014 marked our twenty-fifth anniversary, and much has changed between 1989, when we started in a tiny workshop in Maadi, Cairo with just a Rock-Eval II, a 5890 Agilent gas chromatograph, a LECO CR 12 oven and a single technician.


Our original lab.


StratoChem's early years.

Now we occupy a four-story, two-building complex with separate labs for rock, gas, and oil analyses.  With over 70 employees and customers all over the world, we've seen a lot of growth in just a quarter-century.



But most of all, we are grateful for all those we have had the pleasure of working with over the past 25 years. Some of our valued clients and partners have been on this journey with us since the very beginning--others have just joined us over the past year.  Either way, you have all been instrumental in transforming us from that tiny lab to the international geochemical presence we have become.

For that, we wish to give you our sincerest thanks, our best wishes for the new year, and our heartfelt desire that you'll celebrate with us again when SCS reached 30, 40, and 50 years of age.

Your Friends at StratoChem Services
Oil & Gas Prices
(Image courtesy of Freepik.com.)
Industry News
Egypt: BP to Explore Two Blocks for US$240Mn
November 12th, 2014
(www.oilreviewmiddleeast.com)

Egypt Flag Flat
BP Egypt has been awarded two exploration blocks, Block 3 and Block 8, for US$240mn in the country as a result of the 2013 EGAS bid round

BP will operate the two blocks with Abu Dhabi's Dana Gas and Italy's ENI.

 

Company officials revealed that BP and its partners have committed to invest the money in the blocks over different phases.

 

Block 3 North El Mataria lies 57 km west of Port Said city and is BP's first entry into the onshore Nile Delta. BP will operate the block with 50 per cent equity and Abu Dhabi's Dana Gas will hold the remaining 50 per cent working interest.

 

The second exploration block is Block 8 Karawan Offshore is located in the Mediterranean Sea. BP will have 50 per cent equity and the block will be operated by ENI which holds the remaining 50 per cent.

 

In addition to exploration, the programme will include 3D seismic and three exploration wells in each of the onshore and offshore blocks in phases over six to eight years.

 

Hesham Mekawi, regional president of BP North Africa, said,  

"BP is proud of the successful partnership it has had with Egypt for 50 years. We look forward to continuing to play a key role in the development of Egypt's energy sector and maximising the use of our existing resources. Our expertise and latest technologies will be deployed for mutual benefit in these new blocks which we believe have gas-bearing characteristics.

 

Exploring the two blocks will require substantial investments to unlock their potential, and will be done as part of our commitment to meeting Egypt's energy needs. We also look forward to working with our Abu Dhabi partners at Dana Gas." 

Obama Move on US Oil Exports Paves Way for Canadian Crude, Too
November 11th, 2014
(rigzone.com by Jessica Resnick-Ault)

NEW YORK, Dec 30 (Reuters) - As the Obama administration issued landmark guidelines expected to open the door for selling more domestic shale oil abroad, it also likely smoothed the way for more Canadian crude to be shipped through U.S. ports.

 

Unlike crude produced domestically, oil from Canada is not limited by the longstanding U.S. ban on exports, and licenses to re-export foreign crude are granted routinely. However, many companies have been wary of such trade due to rules that prohibit mixing non-exportable domestic oil with foreign grades.

 

The risk of contaminating Canadian oil with a few drops of restricted U.S. crude, which accounts for most of what flows through U.S. oil pipelines and terminals, had deterred energy traders from attempting re-exports, they have said.

 

On Tuesday, the Commerce Department's Bureau of Industry and Security clarified for the first time that the prohibition on co-mingling was not absolute, issuing guidelines that allow "incidental" contact for foreign oil using the same infrastructure as domestic grades.

The agency said that "a minimal amount of mixing may occur due to incidental contact in pipelines and/or storage tanks when foreign and U.S. origin-oil is sequentially transported or stored in the same pipeline or tank."

 

The bureau said it encouraged applicants for re-export licenses to explain the precautions they are taking to ensure that U.S. oil is not mixed with the foreign-origin crude, other than incidental contact.

Canada, the largest oil exporter to the United States, sends 3.4 million barrels a day to its southern neighbor, according to the U.S. Energy Information Administration.

 

The clarification could reinvigorate opposition to big Canadian oil pipeline projects such as TransCanada Corp's Keystone XL, which some environmentalists have said will be used to ship carbon-intensive oil sands to China via U.S. ports.

 

While TransCanada has maintained that it would not trade crude shipped on that proposed line for export, other shippers have already begun testing the waters. Some had explored shipping Canadian oil to the coast by rail, a costly method but one that would ensure it remained segregated.

Rival Enbridge Inc shipped several cargoes of Canadian crude to Europe earlier this year, after opening a reversed pipeline from Oklahoma to Freeport, Texas, but has said that re-exports would account for less than 1.5 percent of its total U.S. shipments, under 36,000 bpd.

 

Opportunities to re-export oil sands crude will expand significantly over the next few months as more pipelines designed to carry Canadian oil to the Gulf Coast come on line.

 

Accounting for this incidental contact might make it easier for pipeline companies and other midstream handlers of crude oil who manage crude that is re-exported.

It will also offer opportunities for traders to blend abundant U.S. condensate - which under Tuesday's notice is now likely to be freely exported if it is minimally processed - with heavy diluted bitumen and Mayan crude, creating medium-grade oil more valuable than either of the original grades on their own, said Ed Morse, Global Commodities Strategist at Citigroup.

 

Such blending "spells competition for Middle East producers and Russia in European and other markets," he wrote.

Egypt Signs First Gas Fracking Contract with Apache, Shell
November 17th, 2014
(reuters.com by Shadi Bushra & Nadia El Gowely)

Egypt Flag Flat

Dec 17 (Reuters) - Egypt has signed its first contract to extract gas by fracking in a deal with Apache and Shell Egypt that includes investments of $30-$40 million, the oil ministry said on Wednesday, part of efforts to boost output and ease a lingering energy crunch.

 

"The project will require horizontal drilling and hydraulic fracturing, which is the same as the shale gas production method used in the United States," the oil ministry statement said.

 

The ministry said in a statement that the deal to drill three wells in the Abu al-Ghardeeq region of the Western Desert, about 200 km west of Cairo, was Egypt's first contract for the production of unconventional gas.

 

The head of Egypt's state oil company (EGPC) signed the deal with a senior executive of Houston-based Apache Corporation and the chairman of Shell Egypt, a subsidiary of Anglo-Dutch oil major Royal Dutch Shell.

 

Shale gas extraction is more expensive than traditional drilling and generally requires high energy prices to make it economically feasible. Global oil prices are at 5-1/2-year lows, with benchmark Brent crude futures under $60 a barrel.

 

A source at the petroleum ministry told Reuters that unconventional gas extraction in the Western Desert will require the operators to drill to depths of 14,000 feet.

 

The deal comes as Egypt is seeking new sources of energy to cope with its worst energy crisis in decades, caused by declining gas production and rising consumption.

 

Egypt reached an agreement with Norway's Hoegh LNG in November for a long-delayed liquefied natural gas (LNG) import terminal to be installed at the end of March, in time to receive cargoes before power demand peaks in summer.

 

It is also seeking a second floating LNG import terminal to boost its import capacity.

Iraq Government and Kurdish Region Strike Budget and Oil Export Deal
December 2nd, 2014
(www.theguardian.com)

Iraq's government and the autonomous Kurdish region have reached an agreement resolving a longstanding dispute over the budget and oil, a move seen as a key step in improving cooperation against jihadists.

 

A statement from the Iraqi prime minister Haider al-Abadi's office on Tuesday said the deal, which comes in to effect next month, was approved during a cabinet meeting also attended by the Kurdish prime minister, Nechirvan Barzani.

 

"We have reached an agreement with the Iraqi government which will benefit both parties and whereby we will export 250,000 bpd [barrels per day] of regional oil and help the federal government export the Kirkuk oil," said Barzani.

 

The deal will see oil from the Kurdish region or claimed by its leadership exported via Kurdish pipelines but through the federal oil company.

 

In return, Baghdad will release the Kurdistan regional government's share of national revenue, which had been frozen for more than a year in retaliation for Irbil's efforts to export oil unilaterally.

 

It will also give a share of its military budget to the Kurdish peshmerga fighters. Barzani said Abadi had guaranteed a $1bn [638m] share.

 

Abadi's office did not confirm the exact amount, saying the Kurdish military would get a percentage of the federal armed forces' budget.

Masirah Oil Launches New 3D Survey Offshore Oman
December 4th, 2014
(oilreviewmiddleeast.com)

Flat Omani Flag
Masirah Oil has commissioned a new 3D seismic survey offshore Omani Block 50 to select prospects for its planned multi-well exploration drilling programme in the next two years.
 

 

Dolphin Geophysical would use its vessel Artemis Arctic to survey the block. (Image source: Dolphin Geophysical)

 

The survey would be conducted by Dolphin Geophysical using its vessel Artemis Arctic and has been scheduled to be completed within 45 days following mobilisation, the company said.

 

According to Masirah Oil chairman Hans Lidgren, "The data collected will help increase our understanding of the geology in the area and provide more information for the use of Rex Virtual Drilling to select prospects for our planned multi-well exploration drilling programme in 2015 and 2016."

 

In September 2014, the company was conferred the 'Offshore Discovery of the Year' award in Oman for discovering hydrocarbons at its second offshore exploration well in Block 50 earlier this year.

WTI Falls Below $50 a Barrel for the First Time in 5.5 Years
January 5th, 2014
(bloomberg.com by Mark Shenk)

Benchmark U.S. oil prices dropped below $50 a barrel for the first time since April 2009 as surging supply signaled that the global glut that drove crude into a bear market will persist.

 

West Texas Intermediate slid 5 percent in New York while Brent fell below $55 in London for the first time since May 2009. Russia's output rose to a post-Soviet high while Iraq, the second-largest producer in OPEC, plans to boost crude exports to a record this month. The price drop accelerated as the dollar climbed against the euro amid investor concern Greece might leave the currency union

 

"The market is continuing to price in weak fundamentals in the first half of this year," Mike Wittner, head of oil research at Societe Generale SA in New York, said by phone. "There's also been a return to risk aversion because of Greece, something we haven't seen in a while."

 

Brent slumped 48 percent last year, the most since the 2008 financial crisis, as the Organization of Petroleum Exporting Countries resisted calls to cut output amid a battle with U.S. shale producers for market share. The 12-member group pumped above its target for a seventh straight month in December, according to a Bloomberg survey.

 

WTI Futures

West Texas Intermediate for February delivery dropped $2.65 to $50.04 a barrel on the New York Mercantile Exchange. It was the lowest settlement since April 28, 2009. Prices slipped as much as 5.5 percent to $49.77 during trading. The volume of all futures traded was 11 percent higher than the 100-day average at 2:54 p.m. 

 

Brent for February settlement declined $3.31, or 5.9 percent, to end the session at $53.11 a barrel on the London-based ICE Futures Europe exchange. It was the lowest close since May 1, 2009. Volume for all futures traded was 40 percent above the 100-day average. The European benchmark closed at a $3.07 premium to WTI. 

 

"Everyone is looking for the bottom," Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone. "We've already dropped below what would be justified by fundamentals. Brent should find support around the $58 to $60 area given supply and demand."

 

Iraqi Exports

 

Iraq plans to expand crude exports to 3.3 million barrels a day this month, Asim Jihad, a spokesman at the Oil Ministry in Baghdad, said by phone yesterday. The country exported 2.94 million a day in December, the most since the 1980s, he said.

Russian oil production rose 0.3 percent in December to a post-Soviet record of 10.667 million barrels a day, according to preliminary data published Jan. 2 by CDU-TEK, part of the Energy Ministry.

 

"This bearish market is being fed by a combination of surging supply and shaky demand," John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. "We now have Russian production at a post-Soviet high and the Iraqis planning to add even more supply to the market. This just adds to negative market sentiment."

 

Saudi Discount

 

Saudi Arabia narrowed discounts in its official February crude selling prices to buyers in Asia to $1.40 a barrel below the average of Middle East benchmark Oman and Dubai grades.

 

The world's biggest oil exporter offered its Arab Light grade at the greatest discount in at least 14 years for January. That move was followed by Iraq, Kuwait and Iran, prompting speculation that Middle East producers were protecting market share.

 

The oil market is set for "more problems" this year as increasing supplies add to the global glut, according to Morgan Stanley.  

 

Output may rise in West Africa and the Americas in addition to more shipments from Russia and Iraq, offsetting concerns of reduced Libyan production, analysts including New York-based Adam Longson said in an e-mailed report today. Iran may boost exports by about 500,000 barrels a day if western sanctions against it are lifted, the analysts said.

 

Revised Projections

 

Brent will trade at $80 a barrel this year, down from an earlier estimate of $104, amid gains in global spare capacity and rising inventories, Sanford C. Bernstein said in an e-mailed report today.

 

U.S. crude output rose to 9.14 million barrels a day in the week ended Dec. 12, the most in Energy Information Administration weekly data that started in January 1983. Production will climb to an average 9.32 million this year, the EIA said Dec. 9 in its monthly Short-Term Energy Outlook.

 

"We're still focused on U.S. production," Kyle Cooper, director of commodities research at IAF Advisors in Houston, said by phone. "Production is going to rise during the next six months as projects that are already underway reach completion."

 

Dollar Strength

 

The euro dropped as far as $1.1864, the lowest in almost nine years. A stronger U.S. currency usually reduces the appeal of commodities as a store of value.

 

"The euro is getting trounced on the Greek news today," Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, said by phone. "There's a very strong correlation between dollar strength and oil prices. The dollar is very strong right now."

 

The EIA is projected to report Jan. 7 that U.S. supplies of crude, gasoline and distillate fuel, a category that diesel and heating oil,  

rose last week, according to a Bloomberg survey.

 

Fuel Prices

 

Gasoline futures declined 5.2 cents, or 3.6 percent, to $1.3814 a gallon, the lowest settlement since April 1, 2009. Diesel decreased 4.65 cents, or 2.6 percent, to close at $1.7492, the least since Sept. 29.

 

Regular gasoline at U.S. pumps fell to the lowest level since May 2009. The average retail price slipped 1 cent to $2.199 a gallon yesterday, according to Heathrow, Florida-based AAA, the nation's biggest motoring group. Pump prices were around $2.05 a gallon when oil was last below $50 a barrel.

 

"This bearish syndrome will continue until the drop in prices either stimulates economic growth or there is a supply response," Kilduff said.

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