MONDAY EDITION

September 1st, 2014

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editorials

 
Achtung: Genius at Work!
Ferdinand E. Banks  Aug 21  

Ukraine's Next Crisis? Economic Disaster
OilPrice  Aug 20  

What The Oil Headlines Miss: Interview with Michael Levi
OilPrice  Aug 07  

21st Century Energy Centers Could Take the Bakken by Storm
Emerging Growth LLC  Jul 25  

Iraq Breaks Down, Oil Surges
Chris Martenson  Jun 18  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Aug 25th, 2014
$31.00 Unch www.uxc.com

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expert analysis & newsletter briefs

Arianne Phosphate Inc.

"Arianne Phosphate Inc. has an asset in Quebec with a full feasibility study. It is an igneous deposit, and it is expected to produce a 30% phosphate concentrate at 3 Mmt per year for more than 25 years. . .the company's deposit is an igneous deposit, which means it is lower in grade compared to a sedimentary deposit. But, importantly, an igneous deposit benefits from a much higher concentrate rate than a sedimentary deposit. While igneous deposits only have grades of 5–8%, they can easily be concentrated up to 39%, which is much higher than what sedimentary deposits can be concentrated up to, generally 29.5%. While the igneous ore grade is lower, the ultimate product is the concentrate. The greater the grade of concentrate, the higher the price." (8/26/14) - The Energy Report Interview with Ethan Park

Focus Ventures Ltd.

"Another project out there in the early stages of development is a Latin American operation run by Focus Ventures Ltd. Focus Ventures is working in the Bayovar region in Peru. The company's asset is in the same region as a phosphate mine that is operated by Vale, Mosaic and Mitsui & Co, which has an ore grade of 28–30% purity. Focus is also operating in the same area as Americas Petrogas Inc.'s GrowMax operation. . .the company acquired its asset in this area about a year ago, and has made significant developments in that short period of time. Focus' drill results have confirmed the existence of phosphate, and the company should be able to establish a resource estimate in the near future. Its share price has done well, especially compared to its peers, not only in the agriculture input sector, but also among junior resources companies." (8/26/14) - The Energy Report Interview with Ethan Park

Arianne Phosphate Inc.

"Arianne Phosphate Inc. has an asset in Quebec with a full feasibility study. It is an igneous deposit, and it is expected to produce a 30% phosphate concentrate at 3 Mmt per year for more than 25 years. . .the company's deposit is an igneous deposit, which means it is lower in grade compared to a sedimentary deposit. But, importantly, an igneous deposit benefits from a much higher concentrate rate than a sedimentary deposit. While igneous deposits only have grades of 5–8%, they can easily be concentrated up to 39%, which is much higher than what sedimentary deposits can be concentrated up to, generally 29.5%. While the igneous ore grade is lower, the ultimate product is the concentrate. The greater the grade of concentrate, the higher the price." (8/26/14) - The Energy Report Interview with Ethan Park

Focus Ventures Ltd.

"Another project out there in the early stages of development is a Latin American operation run by Focus Ventures Ltd. Focus Ventures is working in the Bayovar region in Peru. The company's asset is in the same region as a phosphate mine that is operated by Vale, Mosaic and Mitsui & Co, which has an ore grade of 28–30% purity. Focus is also operating in the same area as Americas Petrogas Inc.'s GrowMax operation. . .the company acquired its asset in this area about a year ago, and has made significant developments in that short period of time. Focus' drill results have confirmed the existence of phosphate, and the company should be able to establish a resource estimate in the near future. Its share price has done well, especially compared to its peers, not only in the agriculture input sector, but also among junior resources companies." (8/26/14) - The Energy Report Interview with Ethan Park

Royal Dutch Shell Plc

"We believe Royal Dutch Shell Plc's new CEO is the right man for the job and came at the right time with the right strategy to improve profitability and return, grow operating cash flow and boost valuation; he accelerated the pace of asset sales, especially in North America, which were deemed non-core. The company continues to shrink its refining and marketing portfolio while increasing capital allocation on high-growth and high-return projects." (8/25/14) - Fadel Gheit, Oppenheimer & Co.


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Avanti Energy (TSX-V : AVN.V)
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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



The Coming Super Spike in Oil Prices


By Dan Dicker
admin@Oilprice.com
http://oilprice.com/
August 22nd, 2014

In 2005, Goldman Sachs oil analyst Arjun Murti wrote of an oil "super spike", with prices reaching $200 a barrel.  Murti was amazingly prophetic with that call, as oil topped $147 a barrel in 2008 and would likely have made his predicted $200 had the general economy not suffered an historic meltdown.

Now I am seeing another opportunity for $200 oil, even though the current oil market looks more ready to drop to $75 first.  It might do that, but then I can see the coming of the next major oil "spike" - and I'm also looking for at least a $150 target.  

What inspired the first ‘super spike' in 2008 was both fundamental - the new appetite for energy from the emerging markets of China and India, but moreover financial - the new drive for investment in oil, a phenomenon I outlined in my book "Oil's Endless Bid".  

What will inspire this next one is somewhat different.  Let's take 2007.  EM countries did create a rapidly increasing demand for oil barrels.  But what we also even more significantly had was a rapidly expanding demand for financial oil barrels -- for investment - that I posited entirely outraced the fundamentals.

Today, we have global energy demand that similarly continues to increase, but it is accompanied by a global risk of supply disruption greater than any I have ever seen in 25 years - and an almost certain lack of production growth in the future.

Let's forget the United States for the moment, where it's been supposed that the supply from domestic shale oil will trump whatever shortages might emerge globally.  Even if the US does obtain a high-water mark of 10 or 11 million barrels a day (which I doubt), it still does not come close to counteracting the shortages in a 92m (and growing) barrel a day oil market that are occurring everywhere else.

Iraq: now pumping less than 3m barrels a day, it was expected to supply up to 6m in the next few years.
Iran: Sanctions will again slow their production increases as their nuclear program continues unabated.
Saudi Arabia: 10m barrels a day today is likely full potential production.  
Libya:  Practically off-line and likely to remain so.
Egypt: Civil unrest continues and slows production growth.
Nigeria: How long before current Ebola outbreaks cause quarantines and slowdowns?
North Sea: Fast running dry
Russia: Rosneft/Exxon Arctic project projecting significant forward growth in trouble with sanction war ratcheting higher.
Canada: Oil sands under continuing environmental/transport pressure

There are, however, other potential replacement reserves that might be developed - particularly offshore the US coast, in Mexico and Brazil -- but these are very expensive barrels indeed.  The price of spot oil makes developing these reserves difficult.  But even more, the price of future oil - represented currently by a deeply backwardated futures curve—makes most near and mid-term development of these resources economically impossible. You need only witness the continuing swoon of offshore drilling stocks to understand just how little new investment by the Majors is being undertaken.

So, let's get the full 2014 picture:  We have, I believe, an oncoming massive shortage of crude; but unlike 2008, we cannot get the financial markets to recognize it and incentivize necessary production.  Instead of a financial market that's outracing the fundamentals, we now have a fundamentally at-risk market where the financials are unable to catch up.  

What happens in a situation like this and when does it happen?

What I expect is a real global shortage of energy - small to begin with, but fast growing more and more dire throughout 2015 - until the system of fundamental and financial oil again break with each other, as they did in the run-up in 2008.

You will ultimately need a future oil price that incentivizes the development of the more expensive barrels to relieve this coming shortage - and knowing how markets always overdo their needs, I expect this to be a ‘super spike' not unlike the last one.

Perhaps finally reaching Arjun Murti's original target.


By Dan Dicker
admin@Oilprice.com
http://oilprice.com/
August 22nd, 2014



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