Sunday, February 16, 2020

natural gas price hits another 4 year low; demand revisions leave 610,000 bpd global oil surplus in January...

natural gas prices hits another 4 year low; natural gas drilling at another 39 month low; demand revisions leave 610,000 barrel per day global oil surplus in January...

oil prices ended higher for the first week in six and by the most in any week this year, as oil traders dismissed demand concerns while also ignoring a big increase in US crude supplies...after falling 2.4% to $50.32 a barrel last week as demand destruction in China overwhelmed OPEC's attempts to stabilize prices, the benchmark price of US light sweet crude for March delivery opened lower and crashed to a 13 month low on Monday, as the rapidly spreading coronavirus dampened the demand outlook for China, the worlds biggest oil consumer while silence from Russia called into question the efficacy of OPEC's proposed supply cuts, with US crude ending down 75 cents at 49.57 a barrel... oil prices then rebounded on Tuesday in sympathy with a broad rally in equity markets even as OPEC dramatically lowered its forecast for oil demand, and finished up 37 cents at $49.94 a barrel...oil prices then jumped more than 3% on Wednesday as traders eyed deeper production cuts from OPEC, and as China reported the lowest number of new coronavirus cases this month, with US oil closing $1.23 higher at $51.17 a barrel...prices moved up again on Thursday, finishing 25 cents higher at $51.42 a barrel, as traders focused on possible deeper supply cuts from OPEC, while largely ignoring reports of coronavirus related demand cuts...the bear market rally continued into a fourth session on Friday, as traders bet the economic impact of the coronavirus would be short-lived and hoped that further Chinese central bank stimulus would provide a cure, as WTI gained 63 cents to close at $52.05 a barrel, thus finishing 3.4% higher on the week and notching its first weekly rise in six weeks, as Bloomberg News reported a "buying spree" among China's independent oil refiners...

natural gas prices, meanwhile, could not hold on to last week's small gain and a crashed to another 4 year low, before recovering to end the week with a small loss...after rising less than 1% to end at $1.858 per mmBTU on a shift in the forecasts to more seasonable weather last week, the contract price of natural gas for March delivery tumbled 9.2 cents, or 5%, to a 4 year low of $1.766 per mmBTU on Monday as the latest U.S. forecasts all but eliminated hopes for a late-winter cold spell, even as natural gas production continued rising...forecasts for a frigid blast to hit the US next week unpinned a 2.2 cent increase in prices Tuesday and a 5.6 cent increase on Wednesday, but they gave back 1.8 cents on Thursday in spite of that was considered a strong EIA storage report...prices then inched back up 1.1 cents to $1.837 per mmBTU on Friday, but still finished with a 2.1 cent, or 1.1% loss on the week...

the natural gas storage report on the week ending February 7th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 115 billion cubic feet to 2,494 billion cubic feet by the end of the week, which left our gas supplies 601 billion cubic feet, or 31.7% higher than the 1,893 billion cubic feet that were in storage on February 7th of last year, and 215 billion cubic feet, or 9.4% above the five-year average of 2,279 billion cubic feet of natural gas that has been in storage as of the 7th of February in recent years....the 115 billion cubic feet that were withdrawn from US natural gas storage this week was a bit more than the average forecast for a 108 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, and was also more than the 101 billion cubic feet withdrawal reported during the corresponding week of last year, but was still well less than the average 131 billion cubic feet of natural gas that have been pulled from natural gas storage during the first week of February over the past 5 years....

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending February 7th showed that because of an increase in our oil imports and a decrease in our oil exports, we had quite a bit of surplus oil to add to our stored commercial supplies for the fourteenth time in the past twenty-two  weeks....our imports of crude oil rose by an average of 363,000 barrels per day to an average of 6,978,000 barrels per day, after falling by an average of 46,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 443,000 barrels per day to 2,970,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,008,000 barrels of per day during the week ending February 7th, 806,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was 100,000 barrels per day higher at 13,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 17,008,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 16,020,000 barrels of crude per day during the week ending February 7th, 48,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that an average of 1,066,000 barrels of oil per day were being added to to the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 78,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+78,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil" ... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to an average of 6,671,000 barrels per day last week, now just 6.8% less than the 7,158,000 barrel per day average that we were importing over the same four-week period last year....the 1,066,000 barrel per day net addition to our total crude inventories was all added to our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be 100,000 barrels per day higher at 13,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 12,500,000 barrels per day, while a 2,000 barrel per day increase Alaska's oil production to 487,000 barrels per day still added the same rounded 500,000 barrels per day to the rounded national total....last year's US crude oil production for the week ending February 8th was rounded to 11,900,000 barrels per day, so this reporting week's rounded oil production figure was 9.2% above that of a year ago, and 54.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 88.0% of their capacity in using 16,020,000 barrels of crude per day during the week ending February 7th, up from 87.4% of capacity the prior week, but still a bit below the recent average refinery capacity utilization for the first week of February...however, the 16,020,000 barrels per day of oil that were refined this week were 1.6% above the 15,768,000 barrels of crude that were being processed daily during the week ending February 8th, 2019, when US refineries were operating at 90.7% of capacity....

with the small increase in the amount of oil being refined, gasoline output from our refineries was much lower, decreasing by 662,000 barrels per day to 9,241,000 barrels per day during the week ending February 7th, after our refineries' gasoline output had increased by 745,000 barrels per day over the prior week... after this week's big decrease in gasoline output, our gasoline production was 3.9% lower than the 9,619,000 barrels of gasoline that were being produced daily over the same week of last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 139,000 barrels per day to 4,837,000 barrels per day, after our distillates output had decreased by 3,000 barrels per day over the prior week...after this week's drop in distillates output, our distillates' production for the week was still 1.5% above the 4,764,000 barrels of distillates per day that were being produced during the week ending February 8th, 2018....

with the big decrease in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the second time in fourteen weeks and for the 16th time in 34 weeks, falling by 75,000 barrels to 261,049,000 barrels during the week ending February 7th, after our gasoline supplies had decreased by 91,000 barrels from a record high over the prior week....our gasoline supplies decreased this week even as our exports of gasoline fell by 364,000 barrels per day to 622,000 barrels per day, while our imports of gasoline fell by 270,000 barrels per day to 406,000 barrels per day, and while the amount of gasoline supplied to US markets decreased by 211 000 barrels per day to 8,722,000 barrels per day...even after this week's decrease, our gasoline supplies were 1.1% higher than last February 8th's gasoline inventories of 258,301,000 barrels, and 3% above the five year average of our gasoline supplies for this time of the year, which historically has been near the annual peak...

meanwhile, with the decrease in our distillates production, our supplies of distillate fuels decreased for the 14th time in 20 weeks and for 29th time in the past 45 weeks, falling by 2,013,000 barrels to 141,222 ,000 barrels during the week ending February 7th, after our distillates supplies had decreased by 1,512,000 barrels over the prior week....our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 391,000 barrels per day to 3,820,000 barrels per day, because our exports of distillates rose by 232,000 barrels per day to 1,407,000 barrels per day while our imports of distillates fell by 92,000 barrels per day to 102,000 barrels per day....but even after this week's decrease, our distillate supplies at the end of the week were still 0.7% more than the 140,200,000 barrels of distillates that we had stored on February 8th, 2019, even as they slipped to about 5% below the five year average of distillates stocks for this time of the year...

finally, with lower oil exports and higher oil imports, our commercial supplies of crude oil in storage rose for the seventeenth time in thirty-four weeks and for the thirtieth time in the past 52 weeks, increasing by 7,459,000 barrels, from 435,009,000 barrels on January 31st to 442,468,000 barrels on February 7th...even after that increase, our crude oil inventories remained roughly 2% below the five-year average of crude oil supplies for this time of year, but remained more than 36.1% higher than the prior 5 year (2010 - 2014) average of crude oil stocks after the last week of January, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels....even though our crude oil inventories had generally been rising over the past year, except for during the past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of February 7th were 1.9% below the 450,840,000 barrels of oil we had stored on February 8th of 2019, while still 4.8% above the 422,095,000 barrels of oil that we had in storage on February 2nd of 2018, while at the same time falling to 14.6% below the 518,119,000 barrels of oil we had in commercial storage on February 3rd of 2017, during a period that we were adding 10 million barrels per week to storage...

OPEC's Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC's February Oil Market Report, which covers OPEC & global oil data for January, and hence it gives us a picture of the global oil supply & demand situation as increased production cuts of 500,000 barrels per day from OPEC and its partners were going into effect...but as we'll see, this report shows there was still a surplus more than 600,000 barrels per day of oil produced globally in January, mostly due to downward revisions to demand..

the first table from this monthly report that we'll look at is from the page numbered 54 of that report (pdf page 64), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures...

January 2020 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC's oil output fell by 509,000 barrels per day to 28,859,000 barrels per day in January, from their revised December production total of 29,368,000 barrels per day...however that December output figure was originally reported as 29,444,000 barrels per day, which means that OPEC's December production was revised 76,000 barrels per day lower, and hence January's production was, in effect, a 585,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official December OPEC output figures as reported a month ago, before this month's revisions)...

from that OPEC table, we can also see that the 344,000 barrel per day decrease in production in wartorn Libya was the primary reason for magnitude of the January drop in OPEC's output, and were it not for that, the target of a 500,000 barrel per day production cut by the group would not have been met....nonetheless, it appears that oil output from most OPEC members, other than Iraq, still remains far enough below the output allocations as originally determined for each OPEC member after their December 7th, 2018 meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers so as to cover their additional first quarter cut....their output allocations for the past year, before January's​ added​ cuts, can be seen in the table of OPEC production quotas for 2019 we've included on the left below: 

OPEC supply cut targets as of October 2019

OPEC additional supply cuts as of December 2019

in addition to the allocations shown on the table on the left, at their meeting with other oil producers on December 6th of this past year, OPEC announced additional production cuts of 500,000 barrels per day through to March 2020 on top of those 2019 allocations, a breakdown of which we have in a table from OPEC on the right above...that table was posted on OPEC's website after their December 6th meeting, and it shows the additional production cuts each of the OPEC members and their allies among other producers are expected to make over the 3 month period beginning January...as you see, the heaviest cuts fall on the core OPEC members of Saudi Arabia. the United Arab Emirates, Kuwait and Iraq, while embargoed Iran and Venezuela remain exempt...obviously, that table would be more meaningful if their current production, or even their expected end production, were included, but i've been unable to find a table with those complete metrics, so we'll just have to make do switching back and forth between the two tables we have to see how each member is impacted....in addition to those cuts that came out of the OPEC meeting, the Saudis voluntarily pledged to cut an additional 400,000 barrels a day more than was mandated by the December 6th agreement, bringing the total cut for the group to 2.1 million barrels a day, or more than 2% of global output...as we can see, however, the Saudis made no such cuts in January, and actually increased production, although to be fair it's likely the situation in Libya had a lot to do with that...

the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from February 2018 to January 2020, and it comes from page 55 (pdf page 65) of the January OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale... 

January 2020 OPEC report global oil supply

despite the 509,000 barrel per day drop in OPEC's production from what they produced a month ago, OPEC's preliminary estimate indicates that total global oil production ​was only down by a rounded 0.01 million barrels per day to average 100.12 million barrels per day in January, a reported decrease which came after December's total global output figure was revised lower by 150,000 barrels per day from the 100.28 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 500,000 barrels per day in January after that revision, with higher oil production from US, the UK, Canada, Malaysia, Qatar and Russia the major reasons for the non-OPEC output increase in January... despite the downtick in January's output from that revision to December's output, the 100.12 million barrels of oil per day produced globally in January were 0.80 million barrels per day, or 0.8% greater than the 99.32 million barrels of oil per day that were being produced globally in January a year ago, after their first round of cuts officially kicked in (see the February 2019 OPEC report (online pdf) for the originally reported January 2019 details)...with this month's big decrease in OPEC's output, their January oil production of 28,859,000 barrels per day fell to 28.8% of what was produced globally during the month, down from the 29.3% share OPEC contributed in December, and the 29.5%​ global share they had in November....OPEC's January 2019 production was reported at 30,806,000 barrels per day, which means that the 14 OPEC members who were part of OPEC last year produced 1,947,000 fewer barrels per day of oil in January than what they produced a year ago, when they accounted for 31.0% of global output, with a 668,000 barrel per day drop in the output from Iran, a 480,000 barrel per day decrease in output from Saudi Arabia, and a 373,000 barrel per day decrease in the output from Venezuela from that time accounting for most of the year over year decrease... 

even with the big drop in OPEC's output that we've seen in this report, there was a still substantial surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...     

January 2020 OPEC report global oil demand

the above table came from page 32 of the February OPEC Monthly Oil Market Report (pdf page 42), and it shows regional and total oil demand estimates in millions of barrels per day for 2019 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2020 over the rest of the table...on the "Total world" line in the second column, we've circled in blue the figure that's relevant for January, which is their estimate of global oil demand during the first quarter of 2019...

OPEC is estimating that during the​ 1st quarter of this year, all oil consuming regions of the globe will be using 99.51 million barrels of oil per day, which is a big downward revision from the 99.95 million barrels of oil per day they were estimating for the 1st quarter a month ago, largely reflecting coronavirus related demand destruction....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were producing 100.12 million barrels per day during January, which means that there was a surplus of around 610,000 barrels per day in global oil production when compared to the demand estimated for the month... 

the revisions to December output and to 2019 demand (included in the green ellipse above) means that the previous surplus ​and shortfall figures we had computed for prior months should be revised as well....a month ago we estimated a global shortage of around 790,000 barrels per day in global oil production during December, based on the figures published at that time...however, as we saw earlier, December's global output figure was was revised higher by 150,000 barrels per day from those figures, while global demand for the 4th quarter was unrevised, so with these revised figures, we now find that global oil production in December was running roughly 640,000 barrels per day short of demand...

meanwhile, for 2019, OPEC is revising its 3rd quarter demand estimates 60,000 barrels per day lower, and is revising its 1st quarter demand estimates 40,000 barrel per day lower (​breakout ​figures which are not shown on the above table)...based on the December figures, a month ago we had estimated that for the twelve months of 2019, global oil demand exceeded production by roughly 297,900,000 barrels...hence, based on these revisions to 1st quarter and 3rd quarter demand, plus our revision to December's shortage, we'll have to revise the oil shortage for the entirely of 2019 to 284,090,000 barrels...that's still a substantial a net oil shortfall that is the equivalent of almost two days and twenty hours of global oil production at the December production rate...

This Week's Rig Count

the US rig count was unchanged for a second straight week over the week ending February 14th, after falling 20 out of the 24 prior weeks, and hence remains down by 27% from the last week of 2018.....Baker Hughes reported that the total count of rotary rigs running in the US was unchanged at 790 rigs this past week, which was still down by 261 rigs from the 1051 rigs that were in use as of the February 15th report of 2019, and 1,139 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business...

the number of rigs drilling for oil increased by 2 rig​s​ to 678 oil rigs this week, which was still 179 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations fell by one to 110 natural gas rigs, the fewest natural gas rigs deployed since October 21st 2016, and hence another 39 month low for natural gas drilling, down by 84 gas rigs from the 194 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to the rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California, while the "miscellaneous" rig that had been drilling in Washoe County, Nevada, over the past fourteen weeks was shut down... a year ago, there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico was unchanged at 23 rigs this week, with 22 rigs drilling in Louisiana waters and one rig drilling offshore from Texas...that's an increase of two Gulf rigs from a year ago, when 20 rigs were drilling offshore from Louisiana and one was operating in Texas waters...since there are no rigs deployed off other US shores elsewhere at this time, nor were there a year ago, the current Gulf of Mexico rig count as well as the count of last year is equal to the national total in both cases..

the count of active horizontal drilling rigs was up by two to 713 horizontal rigs this week, which the highest horizontal rig count since November 1st of last year, but still 202 fewer horizontal rigs than the 915 horizontal rigs that were in use in the US on February 15th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by 1 rig to 47 directional rigs this week, but those were also down by 23 from the 70 directional rigs that were operating during the same week of last year.... on the other hand, the vertical rig count was down by 3 rigs to 30 vertical rigs this week, and those were down by 36 from the 66 vertical rigs that were in use on February 15th of 2019...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 14th, the second column shows the change in the number of working rigs between last week's count (February 7th) and this week's (February 14th) count, the third column shows last week's February 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 15th of February, 2019...    

February 14 2020 rig count summary

in the western Texas Permian basin, two rigs were added in Texas Oil District 8, or the core Permian Delaware, and 1 rig was added in Texas Oil District 7C, or the southern Permian Midland, while at the same time, 1 rig was pulled out of  Texas Oil District 8A, or the northern Permian Midland ...hence, for the overall Permian basin to be showing a three rig increase for the week, the rig that was added New Mexico had to have been set up for drilling in the western reaches of the Permian Delaware...the Granite Wash rig addition in the panhandle Texas Oil District 10 accounts for the other Texas rig addition, and while there were some rigs moving around like barnyard chickens in the southeastern part of the state, none of them show up as net activity in any of the summary tables...meanwhile, the only natural gas rig change of this week was the rig that was pulled out of Pennsylvania's Marcellus; all other natural gas basins were unchanged...

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Ohio Justices Uphold Tax On Pipeline Co.'s In-State Receipts - -- The Ohio Supreme Court on Tuesday ruled that the operator of an interstate natural gas pipeline was not exempt from the state’s public utility excise tax on receipts earned from transporting gas solely within Ohio..

Ohio anti-protest bill could criminalize support for pipeline demonstrations - Activists say a bill advancing in the Ohio legislature could criminalize activities such as offering rides, water or medical aid to anti-pipeline protesters. Even chanting “stop the pipeline” could be construed as encouraging damage to critical infrastructure under the bill’s vague language, critics say. Trespass, willful destruction of property and various other actions are already crimes under Ohio law. But Ohio Senate Bill 33 calls for heavier penalties for trespass or property damage that might affect “critical infrastructure.” The Ohio Senate passed the bill last spring, and the House Public Utilities Committee reported out a substitute version on Jan. 30. The broad definition of “critical infrastructure” would cover most oil and natural gas facilities, including many areas relating to pipelines and facilities to handle materials derived from oil and natural gas. About half the critical infrastructure facilities covered by the bill would fall into those categories, said Ted Auch, Great Lakes program coordinator for the FracTracker Alliance. He made that estimate when a similar bill from sponsor Sen. Frank Hoagland, R-Mingo Junction, was pending in 2018. “This is not a necessary bill,” Auch said, noting that Ohio law already imposes liability for various trespass and property crimes. Critics say the bill’s heavier criminal penalties for individuals and its vicarious liability for organizations could have a chilling effect on First Amendment rights to freely speak and assemble. “Controversial infrastructure projects are far from the only public policy issues that generate mass mobilization, public protest, and deeply felt political expression,” said Elissa Yoder Mann, conservation manager for the Ohio chapter of the Sierra Club, in her Jan. 28 testimony against the bill. “However, individuals and organizations who engage in similar activities on other political issues would not be subject to the same standard of financial and criminal liability.” For example, tampering with a “critical infrastructure facility” would be a third-degree felony. The potential prison term of up to three years would be two to three times as long as sentences for similar actions in other contexts, which might be no more than a fourth- or fifth-degree felony. Several of the bill’s terms may also be unconstitutionally vague. For example, the bill forbids anyone from improperly tampering with critical infrastructure, defined to mean changing its location or physical condition. “What about a temporary change to the surface of the property, such as graffiti [on] a pipe?” asked Rev. Joan VanBecelaere, executive director of Unitarian Universalist Justice Ohio in her testimony against the bill. “Does that constitute a change to its physical condition? Do we really want to charge people with a felony for non-violently putting graffiti on a pipe?”

Attempting to greenwash the cracker plant – Randi Pokladnik - One again, JobsOhio, an economic development organization in Ohio, has awarded a huge sum of money, $20 million, to the Thailand chemical company PTT Global Chemical America and its South Korean partner, Daelim Industrial Co. The $20 million grant is for additional site preparation for a potential ethane cracker plant to be built at Dilles Bottom in Belmont County. This brings the total amount of money given by JobsOhio to this project to a whopping $70 million.This announcement came shortly after a Columbus-based spokesperson for the company, Dan Williamson, attempted to assuage concerns of citizens by basically “greenwashing” the dangers associated with petrochemicals and the increase in single-use plastics production. He admitted in his interview that the company has been quiet thus far but “concerned residents staging protests against the project and meeting with state officials” made the company decide to get involved in the conversation on environmental issues.  He said the company would “assess reducing greenhouse gas emissions and use renewable materials instead of fossil fuels.” However, all plastics, since the 1950s have been made from coal, oil or gas, and all petrochemical processes produce enormous amounts of carbon dioxide. Shell’s Monaca ethane cracker is allowed to emit 2.2 million tons of carbon dioxide a year. Given these facts, Williamson’s proclamation seems disingenuous at best.  He touted the “initiation of an upcycling plastic waste projects to transform plastic waste into useful items such as clothing and bags” with programs such as, “Trash to Treasure” or “Wear your Own Waste.” This project creates a T-shirt from 14 beverage bottles. These initiatives will hardly make a dent in the current plastic crisis facing our planet, especially the 100 billion beverage bottles sold in the United States each year.  Recycling is now industry’s go-to answer for addressing the more than 300 million tons of plastic wastes created each year.  Plastic Oceans International said, “more than 500 billion plastic bags are produced, that’s about 1 million bags every minute.” Much of these wastes materials eventually end up in our oceans. A report in Jefferies Financial Inc. said “even if the world were able to reuse 50 percent of its plastic wastes in the next 10 years, it still will not be enough.” The report also stated, “the impact of plastics leaking into the environment, polluting oceans and entering the food chain, could potentially be almost as big a concern for civil society as climate change.” The United States currently only recycles 9 percent of its plastic wastes. Additionally, “most of the 8 billion tons of plastic ever produced continue to exist, either in landfills or in the environment,”according to Jefferies.

Strs Ohio Lowers Stock Holdings in Chevron Co.-- Strs Ohio cut its position in shares of Chevron Co. (NYSE:CVX) by 4.8% in the 4th quarter, according to the company in its most recent Form 13F filing with the Securities & Exchange Commission. The firm owned 1,381,114 shares of the oil and gas company’s stock after selling 69,365 shares during the quarter. Chevron comprises about 0.7% of Strs Ohio’s holdings, making the stock its 22nd largest position. Strs Ohio owned 0.07% of Chevron worth $166,438,000 at the end of the most recent reporting period.  Chevron (NYSE:CVX) last posted its earnings results on Friday, January 31st. The oil and gas company reported $1.49 EPS for the quarter, beating analysts’ consensus estimates of $1.47 by $0.02. The firm had revenue of $36.35 billion during the quarter, compared to the consensus estimate of $38.98 billion. Chevron had a return on equity of 8.14% and a net margin of 2.00%. The company’s quarterly revenue was down 14.2% compared to the same quarter last year. During the same period in the prior year, the company earned $1.95 EPS. On average, sell-side analysts anticipate that Chevron Co. will post 7.07 earnings per share for the current year.

Green pipeline panel issues final report— After months of discussion and four meetings, the city’s seven-member Pipeline Settlement Fund Advisory Committee has recommended three proposals for using the balance of the Nexus settlement funds.  Chairman Rod Moore presented the report to City Council this week. The proposals were set at $1.24 million, Moore said. The funds are what remains of the $7.5 million that Nexus gave to the city after a long court battle to keep the pipeline out of Green. Outside legal counsel advised city leaders to accept the settlement money because it had become apparent that Green couldn’t block Nexus.  Moore said the panel’s first $600,000 recommendation is to cover safety emergency preparedness and fire response associated with the Nexus natural gas pipeline route, which runs through the city to carry natural gas through Ohio and Michigan to Canada.  Another $600,000 was suggested for construction and maintenance of a right of way to connect the dead-end south end of Thursby Road with Boettler Park as a possible escape route for those residents who could be cut off from reaching Koons Road in the event of a catastrophe. He said the city engineer said the amount was probably more than enough for at least an aggregate pathway. Moore also suggested that any leftover funds be used for safe pathways throughout the city. He mentioned Comet Lane and similar areas. He said the panel suggested $40,000 be used to study pipelines and educate the community on the dangers related to them as well as general safety issues.

CNX Announces 7% Increase in Proved Reserves to 8.43 Tcfe- CNX Resources Corporation announced today total proved reserves of 8.43 Tcfe, as of December 31, 2019, which is a 7% increase, compared to the previous year. CNX organically added 1,648 Bcfe of proved reserves through extensions and discoveries, which resulted in the company replacing over 300% of its 2019 net production of 539 Bcfe. These extensions and discoveries were a result of our continued development within the Marcellus and Utica Shale formations.In 2019, drilling and completion costs incurred directly attributable to extensions and discoveries were $630 million. When divided by the extensions and discoveries of 1,648 Bcfe, this yields a drill bit F&D cost of $0.38 per Mcfe.Future development costs for proved undeveloped reserves (PUDs) are estimated to be approximately $942 million, or$0.26 per Mcfe. The following table shows the summary of changes in reserves: During the year, total net revisions were negative 564 Bcfe. The revisions included 709 Bcfe positive revisions due to improved well performance in both proved developed and proved undeveloped reserves, offset by 97 Bcfe negative pricing and other revisions primarily from decreasing natural gas prices compared to year-end 2018, 304 Bcfe of reductions due to the reclassification of PUD's through compliance with the SEC 5-Year rule, and 872 Bcfe negative revisions due to plans changes from our continued focus on portfolio optimization.

WV House of Delegates passes bill that takes aim at pipeline protesters – The West Virginia House of Delegates passed a bill on Thursday that is modeled after legislation in other states aimed at pipeline protesters. The legislation would increase penalties for people who engage in acts of civil disobedience in response to industrial activity. House Bill 4615, called the "Critical infrastructure Protection Act" and sponsored by Delegate John Kelly, R-Wood, states that any person who "willfully and knowingly" trespasses on property contacting a "critical infrastructure" facility, shall be guilty of a misdemeanor and punished by a fine of not less than $250 nor more than $1,000, or confined in jail not less than 30 days nor more than one year, or both fined and confined. If protesters intend to "willfully damage, destroy, vandalize, deface, tamper with equipment, or impede or inhibit operations of the critical infrastructure facility," they are guilty of a felony and could be fined not less than $500 nor more than $3,000, or imprisoned in a state correctional facility for not less than one nor more than three years, or both fined and imprisoned. The bill also states that any person who "willfully damages, destroys, vandalizes, defaces or tampers with equipment in a critical infrastructure facility" is guilty of a felony and maybe fined not less than $1,000 nor more than $5,000, or imprisoned in a state correctional facility for a term of not less than one year nor more than five years, or both fined and imprisoned. Oklahoma was the first state to pass a similar version of the bill, after activists said they planned to protest a pipeline slated to cross tribal land. The American Legislative Exchange Council, a group of lawmakers and representatives of corporations, then turned the bill into model legislation for other states to follow. The bill has been amended several times. Originally, most of the facilities that were categorized as "critical infrastructure" were related to oil and gas. The bill has since been amended to also include military facilities, Department of Highways facilities, and health care facilities. Previous versions of West Virginia's bill had no upper limit on fines. The bill also now includes provisions protecting "picketing at the workplace that is otherwise lawful and arises out of a bona fide labor dispute" and the "right to free speech or assembly, including, but not limited to, protesting and picketing." Del. John Shott, R-Mercer, said the bill is an effort to dissuade people "from going upon those types of infrastructures with the idea of creating either disruption or damage" but that Republicans "don't want to chill free speech." "If you're standing on property on which you have the right to be, or on public property on which you have the right to be, you can yell and holler and carry on all you want," he said.

A bill discouraging protests against pipelines and other "key infrastructure" has passed out of the Kentucky House of Representatives. - A bill discouraging protests against pipelines and other “key infrastructure” has passed out of the Kentucky House of Representatives after receiving an amendment quelling some advocates’ free speech concerns. The House approved the amended version of House Bill 44 on Monday to make tampering with the operations of a “key infrastructure asset” in ways that are dangerous or harmful a Class D felony punishable by up to five years imprisonment and up to a $10,000 fine. Rep. Jim Gooch sponsored the amended measure, which passed 71-17 with bipartisan support. The bill now moves to the Senate. Gooch drafted the amendment after speaking with labor and free speech advocates, who were concerned the bill’s original language would have a chilling effect on First Amendment rights. “We made sure in this bill, in this language, that it is clear that we are not infringing with people’s rights,” Gooch said. Democratic Rep. Terri Branham Clark of Catlettsburg thanked Gooch for the compromise language in the amendment. “By removing the words ‘inhibits’ and ‘impedes’ it eased a lot of concerns some of us had on infringing on rights to protest,” she said. “Living in a district where I am five minutes from an oil refinery and have railroad tracks running through my backyard, I really appreciate our effort in securing public safety.” A spokesman for the AFL-CIO said the union is neutral on the measure while the American Civil Liberties Union of Kentucky continues to oppose it. Advocacy Director Kate Miller said the ALCU appreciates that the amendment narrows the scope of the bill, but still believes HB 44 would limit protest. “We are still concerned that it could potentially chill First Amendment protected speech,” Miller said. “That doesn’t just include environmental advocates, of course we were thinking of folks who were protesting their wages not being paid.”

FT: Surge in plastics production defies environmental backlash - Royal Dutch Shell plc .com At a time when the oil industry is gripped by fears that demand for petrol will collapse in an era of electric vehicles, many hydrocarbon producers are betting on petrochemicals — and in particular, plastics — to fill the gap.Along the banks of the Ohio River in Beaver County, Pennsylvania, giant cranes whir overhead as thousands of construction workers toil away at what will be one of the largest plastic factories in the world.The multibillion dollar Royal Dutch Shell plant, on the site of an old zinc smelter in the American rust-belt, is the biggest investment in the state since the second world war… At a time when the oil industry is gripped by fears that demand for petrol will collapse in an era of electric vehicles, many hydrocarbon producers are betting on petrochemicals — and in particular, plastics — to fill the gap. But doubts are emerging about the wisdom of a huge expansion in capacity that will leave the world awash in products that can take hundreds of years to decay.

Natural gas production headed for a slow-down in 2020 - StateImpact Pennsylvania - The region’s Marcellus and Utica shale gas producers had a banner year in 2019. Pennsylvania, Ohio and West Virginia together accounted for one-third of the nation’s natural gas production. But a likely slow-down is ahead in 2020. Marcellus and Utica shale drillers produced 30 billion cubic feet of gas in 2019. The increased supply has driven down prices to about $2 per million British thermal units. Compare that to the previous decade, when gas was selling at about $8 per million Btu. Penn State geologist Terry Engelder first reported on the abundance of shale gas in 2008. “These companies made their investments, anticipating six- to eight- to 10-dollar gas,” Engelder said. “No one ever dreamed it would stabilize at two-dollar gas. There’s just so much of it, particularly here in Pennsylvania, that the companies can’t sell it.” IHS Markit senior director for natural gas Charles Nevle says it’s not an indication natural gas production is going away, but it does mean production will be flat in 2020. “We can’t grow production in 2020,” Nevle said. “So we’re going from this really rapid growth period in 2019 to a year that will have to keep production essentially flat.” Major gas producer Chevron recently announced it is pulling out of the Marcellus and Utica shale plays. In parts of the country, gas production is so high, companies are burning it offrather than selling it. Nevle says producers in shale formations that also include oil, like the Permian Basin in Texas, have seen negative prices for natural gas. And that has also driven down prices nationwide. “So that makes it a very challenging environment when you are dependent on natural gas prices,” he said. Nevle says demand will also wane in 2020, and storage will be a challenge. You can burn it or put it back in the ground. If there’s no more room for storage, you just have to cut production. “That means less rigs operating, less wells being drilled, lower activity,” he said.

Trade unions support tax breaks for petrochemical manufacturers - The Pennsylvania Building Trades Unions on Monday intensified efforts to pass a hefty tax break for future petrochemical and fertilizer manufacturers using state natural gas. The Pennsylvania Building Trades Unions on Monday intensified efforts to pass a hefty tax break for future petrochemical and fertilizer manufacturers using state natural gas. The Pennsylvania General Assembly last week approved House Bill 1100 with overwhelming bipartisan support as western Pennsylvania, in particular, continues to debate the natural gas industry’s impact on climate and business. HB 1100 would establish multi-million-dollar tax breaks for companies investing at least $450 million to build a manufacturing plant that creates a minimum of 800 combined temporary and permanent jobs. The incentive is similar to what Shell Chemicals received years ago to build its petrochemical complex in Potter Township. The company agreed to invest at least $1 billion in Pennsylvania’s economy and create thousands of construction jobs in exchange for $1.6 billion in state subsidies over the course of 25 years. The Pennsylvania Department of Revenue estimates the new program would cost $22 million annually per plant in missed taxes until the strategy ends in 2050. It encourages the use of natural gas across the board, roping in fertilizer manufacturers. As part of a package of Republican-sponsored bills called Energize PA, the effort is just one of many established to help subsidize the natural gas and petrochemical industries. Although the bill passed through the state House and Senate with sweeping support, including from Beaver County’s state legislators, Gov. Tom Wolf plans to veto it. A spokesperson for the governor last week said the subsidies should be evaluated on a case-by-case basis, but there’s a chance legislators will attempt to override the veto. The bill includes language requiring companies to pay construction workers the prevailing wage rate and make “good-faith efforts” to employ local laborers, earning the support of building trade unions. “Let’s call a veto of HB 1100 what it really is – an attack on Pennsylvania’s blue-collar workers,”

Oil and gas industry, leaning on Pittsburgh region, punches back against fracking ban in messaging campaign - Pittsburgh Post-Gazette  - Allegheny County Councilman Sam DeMarco, introducing himself to a crowd of 800 people drawn to a glitzy new entertainment district along the Potomac River, touted his home turf: “This is the region providing much of the energy making our country stronger and more self-reliant,” he said. “Tens of thousands of Pennsylvanians are enjoying the jobs, the safety and the comfort this industry is bringing.” Mr. DeMarco’s message — along with his Western Pennsylvania roots — is a central pillar of the oil and gas industry’s national campaign in 2020, unveiled in the face of rising political pressure to address climate change. The American Petroleum Institute used its annual policy event here to make clear it would punch back against calls for nationwide bans on fracking proposed by leading Democratic presidential candidates. The Pittsburgh region was among seven areas of the country that the industry trade association highlighted as places energy jobs are embedded into the fabric of the local economy. A ban on the drilling technique, an API report estimated, would mean 7.3 million lost jobs. “Here’s a glimpse at that vision: Millions of jobs lost, a spike in household energy costs, a manufacturing downturn, less energy security in the short run,” said Mike Sommers, the association’s president and CEO. “A fracking ban in America would quickly invite a global recession.” Mr. Sommers, in a conference call with reporters, said oil and gas companies have gradually lowered emissions, all while making the United States the top producer of oil and gas in the world. Energy independence has been the goal of the last seven American presidents, he pointed out. Mr. Sommers called fracking — which over the past two decades has unlocked pools of natural gas in Pennsylvania previously trapped by shale rock — “one of the most important environmental achievements in this country.” Natural gas burns cleaner than coal, and Pennsylvania’s shale drilling boom pushed down the cost of natural gas enough to replace coal as the country’s primary source of power generation.“We are stepping up to the plate to address the issue of climate change,” he said, by supporting “smart regulation” and laws to encourage carbon capture and storage technologies.Yet the group has pushed back against climate policies, drawing criticism from environmental advocates. The industry successfully pressed for a relaxation of Obama-era federal methane rules, which aimed to require natural gas operators to fix methane leaks and cut down on flaring. Methane is a significantly more potent greenhouse gas than carbon dioxide. The oil and gas industry, by addressing its views on climate policies, previews the battle over a key issue in the 2020 presidential election and contested races for Congress.

Study funded in part by PA DEP finds no evidence fracking waste harming Pennsylvania streams - A new federal study failed to find evidence that oil and gas production in northern Pennsylvania has contaminated the commonwealth’s forest rivers and streams, providing a timely counterweight to the vows to ban fracking being made by some Democratic presidential candidates. The study, which was published Feb. 3 in the Proceedings of the National Academy of Sciences (PNAS), one of the world’s most prestigious scientific journals, concluded that there were no signs that chemicals or wastewater from fracking wells had entered more than two dozen streams running through the gas fields of the Marcellus Shale formation. There was also no evidence found that fracking had significantly altered the volume and makeup of the microscopic creatures in the water or had changed the chemical composition of the water itself. The study’s authors included experts from the Bureau of Forestry within the Pennsylvania Department of Conservation and Natural Resources and the Division of Water Quality at the Pennsylvania Department of Environmental Protection.“No quantifiable relationships were identified between the intensity of oil-and-gas development, water composition, and the composition of benthic macroinvertebrate and microbial communities,” the study said. “No definitive indications that hydraulic fracturing fluid, flowback water, or produced water have entered any of the study streams were found.”Rebecca Oyler, the Pennsylvania Legislative Director for the National Federation of Independent Business, told Pennsylvania Business Report that the study shows that fracking can provide affordable energy for the state’s economy without significant environmental risk. “The study just released by PNAS confirms what we’ve known all along,” she said, “that the responsible development of Pennsylvania’s natural gas resources is not incompatible with protecting our environment.”

Pennsylvania fracking: Op-ed urges end to tax breaks for gas and plastics companies -   Pennsylvania is approaching a steep precipice, and the ramifications will be irreversible if we tumble over the edge and link our future to fracked gas, petrochemicals and plastics. The precipice, in this case, is the potential enactment of a new state law that passed in the General Assembly on Feb. 4 that could cement Pennsylvania’s economy as one beholden and inextricably linked to the fossil fuel industry for decades to come. Called House Bill 1100, the legislation is part of an overall package dubbed “Energize PA.” This bill will be a bonanza for the fracked gas, plastics and petrochemical industries, as our state seeks to attract more pollution and polluters to Pennsylvania with giant subsidies and regulatory rollbacks. Specifically, the bill establishes the same tax credit provided to Royal Dutch Shell, which is building a massive ethane-to-plastics cracker facility in Beaver County. Despite being one of the largest and wealthiest corporations on the planet, Pennsylvania lawmakers in 2012 saw fit to award the company a tax break equivalent to $1.6 billion over 25 years. Shell has anticipated that 600 full-time jobs will be created when the plant becomes operational, which means each job at the facility along the Ohio River carries with it a subsidy price tag of about $2.7 million. The price per job will become even more costly if the promised employment numbers do not pan out. [More Opinion] Readers React: It was a rough week for America » This courting of, and devotion to, the fossil fuel industry is nothing new for Pennsylvania, which has a centuries-long history of tethering its economy to extractive industries such as coal mining, oil and shallow gas. Elected officials promulgate tired ideas — in this case, extracting every last drop of Pennsylvania gas so that energy, petrochemical and plastics companies can derive profits from our natural resources. With the climate crisis worsening each day and the fact that those industries have a poor environmental record, a question begs to be asked: Why do Pennsylvania taxpayers owe those kind of companies our monetary largesse to expand here?

Some Lawmakers Think They Can Override Wolf's Veto On Manufacturing Tax Break Bill  - Democratic Gov. Tom Wolf has said he'll veto a bill that would give tax breaks to manufacturers that use Pennsylvania natural gas. But Republicans—and a few others—are trying to see if they can override him. The bill passed with support from more than two-thirds of lawmakers in each chamber. That means if nobody changes their position, members can ensure the bill becomes law. It’s rare for lawmakers to override a governor’s veto — in part, because members of the governor’s party are often reluctant to vote against him. So, even if they voted for a bill, many tend to switch their vote to back their party leader. Luzerne County Senator John Yudichak is a staunch supporter of the bill who recently left the Democratic Party to become an Independent. He said he hopes Wolf reconsiders vetoing the bill. If Wolf does veto it, he said, he thinks trade unions — which support the measure — may be able to rally enough legislative support for an override. “The communication to me from my friends in the building trades—they are going to fight this and get this to the goal line,” he said. “They’re going to call on Democrats and Republicans to stand with the Pennsylvania building trades, stand with growing the economy in Pennsylvania, specifically in northeastern Pennsylvania. Yudichak and other lawmakers from the northeast are specifically expecting the tax breaks will help a methanol manufacturer in their region. Wolf has said he opposes the bill because he thinks these tax breaks should be decided on a case-by-case basis. Asked Friday if his mind had been changed by the House and Senate’s overwhelming support for the bill, he said he still plans to veto it. At least one company has said it would likely use the tax break to build a methanol plant in northeastern Pa. — Elis Energy, which is based in Connecticut. The commonwealth’s Department of Revenue has said the proposed program would probably cost about $22 million annually per plant. The initiative would last until 2050, unless lawmakers renew it. A spokesman for House Democrats said the caucus is still mulling the situation, and will discuss the bill further when they reconvene in March. A spokeswoman for Senate Democrats declined to comment.

Creditors urge judge to reject Philly refinery bankruptcy plan; Heap scorn on executive bonuses -The committee of unsecured creditors in the Philadelphia Energy Solutions bankruptcy case has served up a scathing denunciation of the refinery’s reorganization plan, saying two rival offers to buy the refinery are flawed, and heaping scorn on the refinery’s plan to pay millions of dollars in what it calls “bogus” bonuses for executives.The committee, which represents creditors to whom PES owes a total of more than $1 billion, called the reorganization plan “an artifice for doling out control, bonuses, and releases to insiders,” and asked U.S. Bankruptcy Court Judge Kevin Gross to reject it at a confirmation hearing scheduled for Wednesday in Wilmington. The committee asked the judge to submit the plan instead to mediation or convert it to a Chapter 7 liquidation, which it argues would protect creditors more than the current Chapter 11 reorganization plan.If the judge approves the plan, the committee asked him to suspend implementation while it pursues an appeal.The committee’s objections, filed late Thursday, are one of more than 10 pleadings submitted by parties this week, suggesting that plans for the 1,300-acre South Philadelphia oil refinery are still very much in flux and contention. The refinery, which employed 1,100 people, shut down last June after a devastating fire. The committee said things have not proceeded correctly: "The facility occupies a massive percentage of the city of Philadelphia; it occupies a position of economic significance and national security; many political and special interests have asked this court to be especially deliberative and thoughtful as to how these cases should conclude, and the livelihood of thousands of people hangs in the balance. “Creditors were not given sufficient time to vote and, importantly, interpose objections and avail themselves of their rightful day in court. Due process is supposed to mean something. Confirmation should be denied.”

PES refinery shouldn’t reopen, worker-turned-filmmaker says -  Bilal Motley’s last day at the Philadelphia Energy Solutions refinery was Sept. 22. He worked there for 13 years, going in through the vast Point Breeze facility to get to his job as a wastewater-treatment plant foreman. His coworkers were his family, Motley says — he spent more time at the refinery than at home. That’s why last Monday was a hard day, like a coming out. It was the first public screening of “Midnight Oil” — a 48-minute documentary Motley made about the last days of the refinery. And his coworkers were not happy. “They just found out about the screening tonight and things like that, and they’re calling me traitor and things like that.…I’m like, you guys know me, I’m not a traitor, I can’t tell my story?” Most of his former coworkers have either rallied to keep the refinery open or kept their thoughts private. Motley wants to speak up. He doesn’t think it would be good for Philadelphia if the complex were reopened as a refinery. “It’s painful to say this but … I don’t think it should be, I don’t. The community doesn’t want it. We can’t just do everything based on jobs, jobs, jobs. Like, come on, let’s just be forward-thinking,” Motley said. More than 1,000 people lost their jobs when the refinery stopped operating in June. Philadelphia Energy Solutions filed for bankruptcy in July, a month after an alkylation unit in the Girard Point section of the complex exploded and burst into flames, releasing toxic chemicals into the atmosphere and prompting PES to shut down operations. The company’s reorganization plan currently contemplates selling the 150-year-old refinery complex and its prime 1,300-acre location in South Philadelphia to a Chicago-based developer that, according to city officials and court documents, wants to permanently shut down the refinery and build warehouses and a logistics center instead.

Bankrupt PES says Philly refinery restart is a ‘fantasy’ and urges court to approve sale to developer -- Philadelphia Energy Solutions on Monday urged the U.S. Bankruptcy Court to approve the sale of its shuttered South Philadelphia refinery complex to a Chicago real estate firm that plans to redevelop the 1,300-acre site, saying efforts to promote a return to oil-refining were a “fantasy.” PES lawyers, in court filings, defended a proposed reorganization plan that includes a $240 million sale to Hilco Redevelopment Partners of Chicago. The plan promises “billions of dollars of investment into the site to transform the debtors’ business from a destroyed refinery complex to a mixed-use industrial site.” The refinery shut down following a June 21, 2019, fire and declared bankruptcy in July. U.S. Bankruptcy Court Judge Kevin Gross has scheduled a hearing Wednesday in Wilmington to confirm the reorganization plan. PES, in two filings that totaled more than 300 pages, attempted to clear the wreckage from a multi-car pileup of objections filed last week to its reorganization plan from the committee of unsecured creditors, the U.S. Trustee, the U.S. Environmental Protection Agency, the United Steelworkers Union, and others. The fire-damaged refinery, after 150 years of producing fuel and chemicals from crude oil, and after going through three owners and two bankruptcies since 2012, may no longer be an attractive investment in a world oversupplied with oil. The bankruptcy “is the result of the tremendous damage caused by the accident and market realities, not the debtors,” PES said in its filing. The company called the Hilco offer the best and most realistic option it received after months of shopping the property to prospective buyers. No credible bidder offered to resume refining operations at the site, despite “extreme measures" to find a new refinery operator,” PES said.A bid by rival developer Industrial Realty Group of Santa Monica, Calif., was $25 million greater than Hilco’s, but came with only a $5 million deposit compared with Hilco’s $30 million deposit. Supporters of resuming refining operations have also characterized IRG’s proposal as a refinery restart, but PES said the bidder did not present it that way at the auction.

Bankruptcy judge approves Philadelphia Energy Solutions’ sale to a developer that has no plans to re-start a refinery - Study funded in part by PA DEP finds no evidence fracking waste harming Pennsylvania streams -  A U.S. Bankruptcy Court judge has approved the sale of the Philadelphia Energy Solutions complex in South Philadelphia to a Chicago-based developer with no plans to re-start refinery operations. Also approved as part of PES’ Chapter 11 reorganization is a $29 million settlement with the company’s unsecured creditors that includes a $5 million severance fund for former refinery workers. The sale to Hilco Redevelopment Partners, which received tentative approval after a heated confirmation hearing Wednesday in Wilmington, likely means the end to 150 years of oil-refining activities in the city. PES filed for bankruptcy in July, one month after an explosion and fire destroyed parts of the 1,300-acre refinery complex. A week after the fire, the company shut down operations and laid off about 1,000 workers. The 335,000-barrel-per-day complex was the largest oil refinery on the East Coast, and the largest stationary source of air pollution in Philadelphia. Hilco offered $252 million for the complex, according to PES lawyers, representing the highest bid and the best opportunity for creditors to recover their claims. But the offer was valid only if confirmed by the court before Feb. 13. “I’m very much satisfied that the sale to Hilco is the highest bid and sale,” Judge Kevin Gross said Wednesday evening. “Clearly is in the best interest of the community as well, given the risks that were attended to the prior operations with the refinery, and a refinery frankly that had numerous and repeated problems over the years. And I see no reason to think that that wouldn’t have continued.” Initially objecting to the sale were PES’ unsecured creditors, including the United Steelworkers union, which represented about 600 former refinery workers. They argued that the backup bidder, Industrial Realty Group in partnership with former Philadelphia Energy Solutions CEO Phil Rinaldi, offered $25 million more than Hilco and an opportunity to restart refining operations and bring union workers back. But PES said Hilco’s bid still was “deemed superior.” Those differences were settled with the $29 million agreement, with $5 million going to former refinery workers.

Proposed liquid natural gas plant in N.J. draws heated opposition -— The prospect of a liquid natural gas export facility across the Delaware River in Gloucester County, New Jersey, drew about 100 persons to the Widener University campus Friday afternoon.   The terminal, being developed by Delaware River Partners, a subsidiary of Fortress Transportation and Infrastructure, would receive an LNG supply from a still pending processing plant in Bradford County in northern Pennsylvania. The plant is being planned by New Fortress Energy, an affiliate of Fortress Investment Group, parent of Fortress Transportation and Infrastructure. Transportation to Gibbstown would be handled by trucking and potentially by rail, as New Fortress subsidiary Energy Transport Solutions received a special permit from the federal Pipeline and Hazardous Materials Safety Administration in December 2019 for rail transport between the two sites. Carluccio laid our her group's opposition to the developers' proposal, claiming they planned the LNG terminal with minimum public knowledge, stating the Riverkeepers learned most of the planning information through Right to Know requests from state and federal agencies involved in the permitting process. The Repauno site, operated from 1880 until roughly 20 years ago, is still undergoing remediation. "This is a contaminated site … it’s one of the largest sources of PCBs (polychlorinated biphenyl, classified by the EPA as a probable human carcinogen) to the Delaware River and bay,” Carluccio said. “What is that going to do moving these pollutants around and perhaps moving them out in to the environment?” Speakers Jeff Tittel, senior chapter director for the New Jersey Sierra Club, and Jocelyn Sawyer, South Jersey organizer for Food and Water Watch, addressed the audience on safety and environmental concerns from their respective groups. “When these (LNG) tankers are in port … there’s major safety issues … whether it’s accidental or threat of terrorism,” Tittel said. “In Boston, when LNG tankers come in, they close bridges … they put the National Guard in. Logan Airport does not allow planes to take off,” he said, noting the proximity of the Commodore Barry and Delaware Memorial bridges, and Philadelphia International Airport, to the Gibbstown site.

Iroquois Gas to build system in Milford to help increase New York’s natural gas supply - A cooling system is planned for the Iroquois Gas Transmission System at 840 Oronoque Road, as part of a system-wide project to increase natural gas supply in New York. The Planning and Zoning Board unanimously recently approved a coastal area management site plan for the project . The board added the condition that a licensed Connecticut surveyor survey the property. The report assesses a project’s impact on coastal waterways, in this case, the Housatonic River. Project Director Robert Perless said the property is about 600 feet from the river, and said there would be no drainage to or impact on the river. According to City Planner David B. Sulkis, the project, as a utility, is exempt from zoning, but not from a coastal area management review. A building project typically requires site plan approval. In his report, Sulkis wrote, “The project does not appear to have any adverse impact on coastal resources.”

US state regulators hear notes of caution on municipal gas ban movement - — State regulators were served a strong dose of skepticism Sunday about municipal bans on natural gas hookups in new buildings from parties concerned about the consumer costs and the wisdom of setting key energy policies outside the state utility regulation construct. Depending on how widespread it becomes, the wave of bans, as well as other incentives for building electrification, could have broad implications for the residential fuel mix and the future of gas distribution infrastructure and demand. "My experience has been that the city councils aren't necessarily the source of balanced information, just and reasonable cost estimates, all the things that are part of the utility regulatory framework that makes determinations on the capital infrastructure investments," said Timothy Simon, a former California Public Utility Commission member. Simon, who currently represents several local distribution companies, was among panelists urging caution about the bans during a staff gas subcommittee meeting at the National Association of Regulatory Utility Commissioners winter policy summit. While residential energy use makes up only 7% of California's carbon dioxide emissions, "it's gaining the ire and the attack of city councils across my great state," he said. The "real culprit" in his view is transportation, which makes up 41% of CO2 emissions and is concentrated around big rig diesel trucks. Those trucks "generally don't run through Bel Air and Beverly Hills, he said. "They generally are running by black and brown communities that are in industrial sections near ports of entry and other areas." Beginning with a ban in Berkeley, California, municipal gas bans have spread through California and appeared in the Boston area and Washington state. Bill Malcolm, senior legislative representative from AARP, said that while his group does not favor one type of fuel over another, it has raised questions in several states about rate impacts for low and moderate income residents. "I just checked the numbers and natural gas is now at $1.85/MMBtu, and just to put that in perspective, in 2012 it was actually $12/MMBtu," he said. "So where is the new power for the new load going to come from?" he said.   "So the PUCs will most likely not weigh in on the issue until the courts decide," he said. Dianne Solomon, a New Jersey Board of Public Utilities commissioner, said she also sees a movement by states to empower their departments of environmental protection to "get into this space, take it out of the hands of the utility regulators and suggest that all projects going forward would have to have some environmental impact." Several state regulators suggested green groups have had the more effective messaging thus far. "I have heard a lot from the environmental advocates, Sierra Club and what have you, saying why we should have the natural gas bans," said Greer Gillis, a member of the Public Service Commission of the District of Columbia, adding it was important to get the views aired in the room out into the mainstream.  David Kolata with the Citizens Utility Board of Illinois, said he believed the issue was more complicated than the dialogue Sunday suggested. "It's pretty clear that in every blue state, we're going to need to deliver a plan" that keeps the increase in temperatures due to climate change under 2 degrees Celsius, he said, with the modeling showing the need to decarbonize electricity, heating and transportation. "Given that, how do we think about this from a consumer advocate point of view, where money spent on natural gas right now and natural gas infrastructure could very well be stranded?" he said.

Court rules against Narragansett Tribe in pipeline dispute (AP) — A federal appeals court ruled against a Rhode Island tribe Friday in a dispute over a natural gas pipeline built in Massachusetts on land with ceremonial stone groupings. The U.S. Court of Appeals for the District of Columbia Circuit dismissed a petition by the Narragansett Indian Tribe’s historic preservation office for lack of jurisdiction. The tribe argued that in authorizing the Tennessee Gas Pipeline Co. to build a pipeline across landscapes with sacred significance, the Federal Energy Regulatory Commission denied it procedural protections of the National Historic Preservation Act. The tribe took issue with a nearly 4-mile-long pipeline segment near Sandisfield, Massachusetts. The court found the tribe lacks standing to seek relief because the ceremonial landscapes had been destroyed by the time it filed its petition for review,. The tribe sought to save 73 ceremonial stone landscapes in the pipeline’s path. Tennessee Gas proposed to remove them during construction and replace them later, but the tribe said that doing so would be equivalent to destroying the features because their spiritual work would be broken. The regulatory commission allowed Tennessee Gas to start construction in April 2017. The work was completed later that year, destroying more than 20 ceremonial stone landscapes, according to the court. 

Dominion Pipeline Clashes With Appalachian Trail at High Court - The Supreme Court hears oral arguments Feb. 24 in the high-stakes battle over the $7.8 billion Atlantic Coast pipeline. The justices must decide whether federal officials overstepped when they approved the project’s path across the Appalachian Trail. The pipeline, backed by Dominion and Duke Energy Corp., would stretch some 600 miles from West Virginia’s shale gas fields to electric utilities in Virginia and North Carolina, helping to feed power demand on the Eastern Seaboard—though critics question how strong that demand really is.  The Blue Ridge mountains and the adjacent trail stand between the pipeline’s start and end points. The planned route would cross the range here, about 40 miles southwest of Charlottesville, Va. Conservation groups are concerned about impacts to the environment and the Appalachian Trail experience. The resulting Supreme Court dispute is one of many clashes between the Trump administration’s quest for energy dominance and environmentalists’ efforts to protect the nation’s wild lands. More broadly, it spotlights a persistent challenge that transcends political winds: how to build America’s infrastructure without ripping up America.  Robert Percival, who heads the environmental law program at the University of Maryland, called the high court’s interest in the dispute “idiosyncratic,” given the case’s narrow focus on the Appalachian Trail. But, he said, the court’s conservative majority is likely to view it as an opportunity to telegraph broader leanings on the spread of energy infrastructure across the country. “I think the justices would be inclined to want to signal they don’t want legal obstacles in the way of pipeline development,” he said. The Appalachian Trail provides an iconic backdrop for the debate. Stretching more than 2,000 miles from Georgia to Maine, the “footpath for the people” meanders through the East Coast’s most prized mountain scenery and attracts hikers from around the world. The planned route crosses under the Appalachian Trail near the Blue Ridge Parkway. Builders plan to drill sideways through the mountain’s bedrock and basalt, threading the pipe through a nearly mile-long horizontal borehole 700 feet beneath the footpath. Atlantic Coast estimates it would take a year to complete that work. The trail would remain open throughout, but hikers would often hear the roaring sound of machinery instead of the trail’s typical soundtrack of woodpeckers and crunching leaves. With drilling rigs planted at the ends of the underground passage, each more than 1,000 feet from the trail, a hiker standing atop the junction wouldn’t see any evidence of a pipeline. Cameron, of the Virginia Wilderness Committee, says Atlantic Coast’s portrayal of the pipeline’s impact misses the bigger picture.  Millions of cubic feet of natural gas rushing deep underground may be imperceptible to hikers passing directly overhead, but they’d see the project soon enough, on nearby segments of trail where the pipeline corridor would jut into panoramic mountain views.

Dominion agrees to buy Southern stake in Atlantic Coast Pipeline as project costs soar  — Southern Company is out as an equity partner in the Atlantic Coast Pipeline after majority owner Dominion Energy agreed to buy its stake, amid ballooning costs and legal challenges that have stalled the 1.5 Bcf/d US Northeast natural gas project. Dominion disclosed the new ownership structure Tuesday as it released financial results for the final three months of 2019. It will own 53% and Duke Energy will own 47%, with Dominion acquiring Southern's 5% stake in the pipeline and gas transmission assets, which include an interest in a small LNG project in Florida, for $175 million. Southern will remain an anchor shipper on Atlantic Coast Pipeline. The 600-mile pipeline, which would run through West Virginia, Virginia and North Carolina, moving Appalachian Basin gas to Mid-Atlantic markets, is now expected to cost approximately $8 billion, slightly above the high end of Dominion's previous guidance range of $7.3 billion to $7.8 billion. And while Dominion expressed confidence it will eventually finish the pipeline, it isn't talking about the pipeline's growth potential in the same way it has before. "We are confident there will be expansions over time, but right now we are focused on getting the base project completed," Diane Leopold, executive vice president and co-chief operating officer, said during a conference call with analysts. To achieve even that, the project developers will effectively have to draw an inside straight in the courts in the coming months. The Supreme Court is expected to decide by mid-2020 on the developers' appeal of a lower court ruling involving US Forest Service authorizations for the pipeline to cross the Appalachian Trail. The pipeline also must resolve a challenge to US Fish and Wildlife Service authorizations related to four species potentially affected by the project. And last month, the 4th US Circuit Court of Appeals vacated a state air permit for a compressor station in Buckingham County, Virginia. Assuming everything goes as Dominion hopes, the operator is maintaining its target of completing construction by the end of 2021 and finishing commissioning in early 2022. At the time the operator filed its permit application with the Federal Energy Regulatory Commission in September 2015, it was estimated that Atlantic Coast Pipeline would enter service by November 1, 2018, at a total cost of $5.1 billion. With the price tag having soared, talks continue with shippers to revise rates to reallocate how costs for the pipeline are shared, Dominion said. An agreement is expected to be formalized in the coming weeks, CFO James Chapman said on the investor conference call.

PIPELINES: FERC vows rapid responses in eminent domain legal brawl -- Tuesday, February 11, 2020 -- Federal energy regulators told a court yesterday that they would attempt to reach final decisions within 30 days on complaints from property owners who have their land seized for construction of projects like natural gas pipelines.

The NC Oil and Gas Commission: Pointless, obsolete and often surreal - Out in the woods in far northern Lee County, two natural gas wells have been idling, under pressure as much as 900 pounds per square inch, for nearly 22 years. Over several days in September 1998, Simpson 1 and Butler 3, as the test wells are known, were fracked by Amvest using nitrogen foam. While a small amount of gas flowed from the wells, the fracking ultimately failed. The wells have lain fallow since. The Oil and Gas Commission — or at least the two members who attended the Feb. 10 meeting — is concerned about fate of these wells and the potential dangers they pose to neighbors. The wells are grandfathered and not subject to current oil and gas inspection regulations. “The casing over time corrodes,” said Commission Chairman Jim Lister. “There could be a mechanical integrity issue.” “Are the wells inspected monthly?” Lister asked. No one at the state Geological Survey or Department of Environmental Quality knew. “Do they present a liability to the state or to residents?” Lister pressed. “What happens if there’s a problem with the well? With the groundwater? If they’re damaged? If there are leaks?” No idea. “Who spends the money to plug an abandoned well. The state?” Again, no one knew. Rebecca Wyhof Salmon, the only other commissioner physically present at the meeting, echoed Lister’s concerns about the well integrity. “If no one is inspecting them regularly,” said Salmon, who is also a Sanford City Councilwoman in Lee County, “we have a responsibility to the community.” Had this been a functioning commission — and had the legal information been available — this could have been an interesting, even productive discussion. But the question of the status of these wells was never resolved. (Russell Patterson of Patterson Exploration, which owns the wells, did not return a phone message from Policy Watch asking about the inspections.) The commission failed to have a quorum of at least five people, and thus could take no formal action. Members can call in, but too few of them did. Instead, like the two main characters in the absurdist play Waiting for Godot, Lister and Salmon were the only commissioners in the room, waiting for an answer to arrive. The commission has been dysfunctional since the legislature revived it in 2014. The fracking boom that the McCrory administration predicted was a pipe dream, much to the relief of residents of and Chatham and Lee counties who lived in the bulls-eye, their drinking water, health and property values at risk.

Deepwater oil spill was worse than thought, study says - The worst oil spill in U.S. history was much worse than had been thought, a new study suggests, as the Deepwater Horizon spill of 2010 unleashed "toxic and invisible" oil into the Gulf of Mexico."According to our findings, the toxic extent of the spill may have been as much as 30 percent larger than satellite data previously estimated," said study co-author Igal Berenshtein of the University of Miami, in a statement.The findings revealed that a large part of the spill was invisible to satellites, and yet toxic to marine wildlife. On April 20, 2010, the Deepwater Horizon oil rig exploded, killing 11 people and releasing 210 million gallons of crude oil into the Gulf of Mexico for a total of 87 days. Oil slicks from the blowout covered an area estimated at 57,000 square miles."While the Deepwater Horizon oil spill has been extensively studied, several fundamental questions remained unanswered," Berenshtein and study lead author Claire Paris, also of the University of Miami, told Newsweek. "What was the full extent of the oil spill? Does the satellite footprint account for the entire oil spill extent? And is there a part of the spill that extends beyond the satellite footprint but is still toxic to marine animals?"Satellites are typically the way researchers track oil spills like the Deepwater Horizon, but this method often underestimates the spill's actual environmental damage. The scientists in this study used three-dimensional computer simulations and previously published on-site measurements to focus on the oil that was invisible to satellites but toxic to organisms.  “We found that there was a substantial fraction of oil invisible to satellites and aerial imaging,” said Berenshtein, in a statement. “The spill was only visible to satellites above a certain oil concentration at the surface, leaving a portion unaccounted for.”

Deepwater Horizon Also Spilled 'Invisible Oil,' Harming Far More Marine Life Than Previously Known - Ten years after BP's Deepwater Horizon disaster sent hundreds of millions of gallons of oil across the Gulf of Mexico, researchers say the reach of the damage was far more significant than previously thought.In a study published Wednesday in Science, Claire Paris-Limouzy and Igal Berenshtein of the University of Miami revealed that a significant amount of oil was never picked up in satellite images or captured by barriers that were meant to stop the spread."Our results change established perceptions about the consequences of oil spills by showing that toxic and invisible oil can extend beyond the satellite footprint at potentially lethal and sub-lethal concentrations to a wide range of wildlife in the Gulf of Mexico," said Paris-Limouzy.The "invisible oil" spread across an area roughly 30% larger than the 92,500 square miles experts previously believed it had reached, the study says. "I think it kind of changes the way you think about oil spills," Berenshtein told The Washington Post. "People have to change the way they see this so that they know there's this invisible and toxic component of oil that changes marine life." The ocean protection group Blue Frontier Campaign expressed "disgust" at the revelation — but not surprise. Much of the spilled oil that Berenshtein and Paris-Limouzy detected in their research, using a model that allowed them to trace oil in the Gulf from its source, spread below the water's surface and became toxic enough over time to destroy 50% of the marine life it came across."When you have oil combined with ultraviolent sunlight it becomes two times more toxic than oil alone," Paris-Limouzy told the Post. "Oil becomes toxic at very low concentrations."’

Massive Fire Breaks Out at Exxon Refinery in Baton Rouge - A massive fire that broke out at the Exxon refinery in Louisiana has been contained and was not the result of an explosion, officials said.Firefighters responded to the scene in north Baton Rouge shortly after midnight on Wednesday, ABC affiliate WBRZ reported.Jeremy Eikenberry, spokesperson for ExxonMobil, confirmed to Newsweek a volunteer fire crew had contained the blaze and no injuries were reported. He said crews are continuing to monitor the air quality around the facility."ExxonMobil volunteer fire team members have contained a fire at the ExxonMobil Baton Rouge Refinery. There are no injuries. The fire was contained to the area where it occurred," he said. "ExxonMobil is actively monitoring the facility fence line and surrounding areas of the North Baton Rouge community. Currently, all readings are non-detect. We will continue to conduct air monitoring as a precaution." He added: "We apologize for any inconvenience and concern this incident may have caused. We will continue to keep you updated with information as it becomes available. The safety of our workforce and community is ExxonMobil's highest priority."A spokesman for the Baton Rouge Fire Department confirmed the fire was not the result of an explosion. Curt Monte said the blaze had broken out inside the facility at around 11.30 p.m. on Tuesday, according to CBS affiliate WAFB. "There has not been any off-site impact. We sent Baton Rouge Fire Department hazmat teams out and they're continuing at this time to monitor outside air quality. They have not picked up any readings outside the facility," he said. The blaze lit up the night sky in Baton Rouge, with many taking to Twitter to express their concerns.

No injuries, off-site impact after significant fire at ExxonMobil - (WAFB) - A significant fire broke out at an ExxonMobil refinery in Baton Rouge late Tuesday night.First reports of the fire began coming in around 11:50 p.m. on Feb. 11. The cause of the fire has not been determined.There were no injuries and no off-site impact, officials say. “The fire that occurred at the ExxonMobil Baton Rouge Refinery has been extinguished. There were no injuries much in part to the swift and safe response from our ExxonMobil volunteer fire team. ExxonMobil will continue to actively monitor the facility fence line and air quality in the surrounding areas of the North Baton Rouge community. All readings are non-detect. We apologize for any inconvenience and concern this incident may have caused,” The fire was extinguished around 6:40 a.m., according to ExxonMobil public and government affairs spokesperson, Megan Manchester.

Exxon Louisiana refinery restart depends on natgas supply: sources -  (Reuters) - Restarting Exxon Mobil Corp’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery after an early morning fire will depend on how quickly natural gas supply can be restored to the crude distillation units (CDUs), said sources familiar with plant operations. The fire broke out in a natural gas pipeline supplying the units before midnight on Tuesday, the sources said. The fire was put out on Wednesday morning, the company said. No injuries were reported. Exxon had made preliminary plans to restart the Baton Rouge refinery’s large CDU, the 210,000 bpd PSLA-10, before the fire was extinguished, the sources said. The unit cannot be restarted until the natural gas supply is restored. Most of the refinery’s units, including the three CDUs, were shut early on Wednesday, the sources said. Exxon spokesman Jeremy Eikenberry declined on Wednesday to discuss the status of units at the refinery. He did say operations were continuing at the refinery and adjoining chemical plant.

Cheniere safety fixes not finished 2 years after LNG leaks -- Friday, February 14, 2020 -- Two years after leaks led federal regulators to shutter a pair of liquefied natural gas storage tanks at Cheniere Energy Inc.'s Sabine Pass export terminal in Louisiana, the company has met fewer than half the conditions for reopening.

Four LNG projects along Texas coast land non-FTA export permits - Four proposed liquefied natural gas export projects along the Texas coast won approval Monday to ship LNG to nations that aren't part of free trade agreements, such as Japan, South Korea and India. The Energy Department authorized the projects to annually send up to 47 million metric tons and to enter into contracts with utility companies and other customers in Europe, Asia and Latin America where natural gas prices are higher than those in the United States. But approval comes as LNG prices in Asia are at record lows amid a supply glut attributed to a mild winter and the coronavirus outbreak in China. Three of the four proposed projects are at the Port of Brownsville: Rio Grande LNG, by Houston-based NextDecade; Annova LNG, a Houston subsidiary of Chicago utility company Exelon; and Houston-based Texas LNG. The fourth is an expansion to Cheniere Energy's Corpus Christi LNG. Rio Grande LNG, Annova LNG and Texas LNG face stiff opposition from a coalition of Rio Grande Valley shrimpers, fishermen, environmentalists, neighbors and communities working under the banner Save RGV from LNG. Citing concerns about endangered species, climate and other issues, opponents of projects have asked the Federal Energy Regulatory Commission to reconsider permits issued for Rio Grande LNG and the other projects. FERC officials tabled the requests to reconsider the permits for Annova LNG and Texas LNG and denied the request to reconsider the permit for Rio Grande LNG, setting the stage for opponents to file a federal lawsuit. "This is a shameless attempt to prop up the fracked gas industry at the expense of our climate and communities," Sierra Club Beyond Dirty Fuels Campaign Director Kelly Martin said in a statement.

Energy Markets Need Winter, and Climate Change Is Taking It Away - Even before the deadly virus struck, another menace confronted the global energy industry: the warmest winter anyone can remember. Russia’s winter was so balmy that snow was trucked into downtown Moscow for New Year, and bears came out of hibernation. In Japan, ski competitions were canceled and the Sapporo Snow Festival had to borrow snow. On the shores of Lake Michigan, Chicago residents watched playgrounds and beaches disappear under the waves as warm weather swelled the water level. Norwegians basked in T-shirts in January. London’s spring daffodils have already flowered. For global energy markets it’s a disaster—and as the world continues to get hotter it’s something producers, traders and government treasuries will have to live with long after the acute dislocation of the coronavirus has passed. The industry relies on cold weather across the northern hemisphere to drive demand for oil and gas to heat homes and workplaces in the world’s most advanced economies. Climate activists might find a certain poetic justice in energy markets suffering from the global warming caused by fossil fuels. Burning natural gas, oil and other fuels to heat homes and businesses accounts for as much as 12% of the greenhouse-gas emissions blamed for raising the world’s temperatures. The loss in global oil demand due to mild temperatures is probably about 800,000 barrels a day in January, according to Gary Ross, chief investment officer of Black Gold Investors LLC and founder of oil consultant PIRA Energy.   The natural gas market has taken a similar hit. “The oversupply keeps coming and winter so far hasn’t really showed up,” Last month was the hottest January ever in Europe, the Copernicus Climate Change Service reported. Surface temperatures were 3.1 degrees Celsius (5.6 degrees Fahrenheit) warmer than average. Northern Europe was particularly hot, with some areas from Norway to Russia more than 6 degrees above the 1981-2010 January average. Temperatures in Tokyo took until Feb. 6 to hit freezing point, the latest date on record. Globally, the last five years have been the hottest for centuries, as greenhouse gases change the Earth’s ecosystem. Natural gas prices have collapsed globally as the weather crimped the need for heating. U.S. futures are trading at the lowest levels for this time of the year since the 1990s. Asian spot prices for liquefied natural gas have crashed to a record as demand slumps in the world’s three biggest importers—Japan, South Korea and China.

Climate change fears put US gas utilities on defensive - US natural gas utilities are rallying against an emergent threat to their historically stable business as communities worried about climate change block new pipelines and gas connections for homes. As the cleanest-burning fossil fuel, natural gas reduced total US energy-related carbon emissions as it displaced coal at power stations. The majority of household heating, hot water and cooking is now fuelled by gas, while it is also the most-used input for US electricity generation, aided by cheap supplies from shale drilling. However, this has led annual emissions from gas to increase by nearly 500m tonnes in the past 10 years, including a 4 per cent rise in 2019, the Energy Information Administration estimates. This rise has stoked opposition against new pipelines and home connections, with climate activists saying energy demand could be better served by renewable sources. The city of Berkeley last year banned gas connections in new construction, sparking similar efforts in other communities. In New York state, regulators stopped a new pipeline sought by National Grid, causing the UK-based utility owner to halt gas hookups for new customers until the governor threatened to revoke its operating licence. These setbacks have led the American Gas Association to release its first climate change position statement. Its document published last month contained 10 commitments for a lower-carbon economy and eight principles, the last of which declares that public policy “should include the option of natural gas for consumers”. “We are seeing a growing velocity of efforts to remove natural gas from the system with very little regard to cost, scale, options and the current environmental contributions that natural gas is making today and will continue to make in the future,” said Karen Harbert, AGA chief executive, in an interview with the FT.  The AGA’s 200-strong membership includes gas utilities and their corporate parents including Berkshire Hathaway, CenterPoint Energy and Southern California Gas. They delivered 20tn cubic feet of gas in 2018, equal to two-thirds of US production. The annual report of Sempra Energy, the San Diego-based owner of SoCalGas, highlighted concerns by identifying “a substantial reduction or the elimination of natural gas as an energy source in California” as a business risk for its utilities in the state. Mark Brownstein, senior vice-president of energy at the Environmental Defense Fund, said gas utilities used to be able to take for granted the fact that they had a captive customer base. “They are now going to have to compete — and they’re going to have to compete not just on how well the product cooks food or heats homes, but how clean it is.”   

Natural-gas futures drop 5% to end at nearly 4-year low on mild winter weather - Natural-gas futures dropped by about 5% Monday to their lowest settlement in almost four years as a milder-than-usual winter continued to limit demand for the heating fuel. Natural-gas prices took “heavy losses to start the week…as mild weather outlooks continue to pressure prices lower,” said Christin Redmond, commodity analyst at Schneider Electric. The analyst said the National Oceanic and Atmospheric Administration forecasts a high probability of warmer-than-normal temperatures across the Eastern and Midwest U.S. over the coming eight to 14-day period.“With the little remainder of winter waning away, the possibility of a late-season return to colder temperatures to prop up heating demand becomes bleak,” she wrote in a daily note. The winter season official ends on March 19, which marks the start of spring.On Monday, the front-month March natural-gas futures contractNGH20, +0.71%  lost 9.2 cents, or about 5%, to settle at $1.766 per million British thermal units. Prices, which have dropped 19% in the year to date, settled at their lowest since March 9, 2016, according to Dow Jones Market Data. U.S. production has also contributed to the loss in prices for the fuel. “Production has been slowly rising though not at quite the rate we saw in 2019,” said Marshall Steeves, energy markets analyst at IHS Markit. “Interestingly, production has risen not just from shale (primarily the Permian) but also from offshore in the Gulf of Mexico.”In a monthly report issued in mid-January, the Energy Information Administration estimated that U.S. dry natural gas production will average 94.7 billion cubic feet per day this year, up 2.9% from 2019. The government agency, meanwhile, said it expects combined residential and commercial consumption for natural gas to average 23.2 billion cubic feet this year, down 1% from last year, citing a lower forecast for space heating demand. Dry natural gas typically contains at least 85% methane and is used in heating and cooling systems as well as for power generation. A separate report from the EIA released Thursday revealed that domestic natural-gas supplies fell by 137 billion cubic feet for the week ended Jan. 31. That was less than the 228 bcf decline for the same week a year ago and below the five-year average reduction of 143 bcf, according to S&P Global Platts. “It’s really a combination of a very mild winter dampening demand with rising supplies,”

Natural Gas Tumbles to 4-Year Low on 'Epic' U.S. Demand Loss -- Natural gas futures sank to a four-year low as the latest U.S. forecasts all but eliminated bulls’ hopes for a late-winter cold push. Frigid weather in parts of the Midwest and West this week won’t stick around for long, according to Commodity Weather Group LLC. Mild temperatures are poised to blanket the eastern half of the country in late February, a shift from previous outlooks that showed a lingering chill. Unusually warm winter weather has wreaked havoc on gas demand, allowing an onslaught of supply from shale basins to overwhelm the market. American liquefied natural gas cargoes, a key outlet for production, are at risk of being curtailed as the coronavirus outbreak in China curbs consumption in the world’s second-largest economy. The resulting collapse in global gas prices is squeezing profits for U.S. exporters. “The lack of heating demand is epic. It’s a worst-case scenario,” John Kilduff, founding partner at hedge fund Again Capital LLC in New York, said by phone. “We continue to have a very weak demand environment that’s persisted all winter.” The gas glut has been especially severe in the Permian Basin, where local prices for March delivery have dropped below zero. Output from the West Texas and New Mexico shale play, where gas is extracted as a byproduct of oil drilling, is increasing so fast there isn’t enough space on pipelines to take it away. Gas futures for March delivery slid 9.2 cents, or 5%, to $1.766 per million British thermal on the New York Mercantile Exchange, the lowest settlement since March 9, 2016. The premium for April gas over the March contract widened 0.4 cent to 3.8 cents, a sign that traders don’t expect an end-of-winter supply crunch.

US working natural gas in underground storage decreases by 115 Bcf: EIA — US working natural gas storage inventories fell by 115 Bcf to 2.494 Tcf for the week ended February 7, which was slightly more than the market expected, the Energy Information Administration data showed Thursday morning. However, Henry Hub futures still fell slightly following the release of the data. The pull was more than an S&P Global Platts' survey of analysts calling for a 108 Bcf withdrawal. It was also more than the 101 Bcf pull reported during the corresponding week in 2019 but less than the five-year average draw of 131 Bcf, according to EIA data. Massive storage volumes now tower 601 Bcf, or 31.7%, more than the year-ago level of 1.893 Tcf and 215 Bcf, or 9.4%, more than the five-year average of 2.279 Tcf. After significant production declines throughout January, Texas production estimates gained 700 MMcf/d week over week, further tipping the US balance towards the supply side, according to S&P Global Platts Analytics. The lack of significant heating demand in 2020 so far has built up a sturdy inventory surplus which will be hard to chip away at during the shoulder season, extending the current bearish risks at least until power burn can ramp up during peak summer demand days. The NYMEX Henry Hub March contract was static at $1.84/MMBtu during trades following the weekly storage report, slightly recovering in the past two days after hitting a nearly four-year low for prompt month gas on Monday when it settled at $1.77. The forward curve continues to price successively higher each month over the next year, reaching $2.58 by January, before falling slightly in February. Expectations for a possible production pullback in the face of such low prices may not materialize in the near term, at least based on early production guidance that has started to roll in from leading US producers. Despite huge cuts to spending, producers are still targeting modest production growth in 2020 compared with 2019 levels, which may look more like a flattening-out due to the steady gains that accrued in the second half of last year. With this persistent amount of supply seemingly locked in, demand is more important than ever in keeping the market in balance. However, the warmer-than-normal winter has put inventories above normal levels and set the market on course for a possible bearish summer ahead. A forecast by Platts Analytics' supply and demand model expects a 118 Bcf draw for the week ending February 14, which is 18 Bcf below the five-year average. For the week in progress, demand is expected to have increased by 6.3 Bcf/d as supplies also grew by more about 1 Bcf/d. The demand gains have been fairly equally distributed across the Northeast, Midwest and Southeast regions. Upstream, total supplies are averaging 97.8 Bcf/d, with Texas production gains once again driving the majority of the overall supply increase.

Proposed Reroute Of Oil Pipeline In Northern Wisconsin Sows Division | Wisconsin Public Radio – Jan Penn fears their property may be part of plans by Canadian energy firm Enbridge to reroute its Line 5 pipeline.   Enbridge has been exploring alternative routes since the Bad River Band of Lake Superior Chippewa filed a lawsuit against the company aimed at shutting down and removing the pipeline from the tribe’s reservation. The line carries up to 23 million gallons of oil and natural gas liquids per day from Superior to Sarnia, Ontario. As Enbridge explores possible routes, the pipeline has created division among neighbors and communities over the path it may take. And, federal and state regulators have no authority to weigh in on the siting of the proposed line. . The Marengo River is a major tributary of the Bad River Watershed that drains more than 1,000 square miles along the shore of Lake Superior. The Kakagon and Bad River sloughs — referred to as the "Everglades of the North" — lie at its mouth, comprising around 16,000 acres of internationally recognized wetlands. Billy Creek is a Class I trout stream that flows into the Marengo River, which drains into the Bad River Watershed. Some tribal and community members say Line 5 and a potential reroute of the pipeline threatens the region's water quality. Danielle Kaeding/WPR It’s part of the reason the couple rejected Enbridge’s requests to survey their land for a roughly 40-mile reroute of Line 5 running south of the reservation through Ashland and Iron counties. Jan fears any spill could harm the region’s water quality. While Jan hopes to preserve her land, others see the value their property may bring to their struggling families and communities as Enbridge seeks land. Mellen Mayor Joe Barabe has been eager to work with Enbridge. The city reached a deal to sell land north of Mellen not far from Copper Falls State Park for $1 million as part of rerouting Line 5. If the pipeline is built, Mellen would receive another $3.25 million. The city of roughly 700 is struggling financially after it installed a new lagoon at its wastewater utility that prompted sewer rates to climb roughly 73 percent for residents in recent years, Barabe said. He said Mellen owes about $1.2 million on the upgrade while an upcoming road project that includes more utility improvements may cost $1.7 million.

Trump's budget proposes sale from emergency oil reserve -  (Reuters) - President Donald Trump’s 2021 budget released on Monday proposed a sale of 15 million barrels of oil from the emergency petroleum reserve to help pay for projects overseen by the Department of Energy. Budget documents said a sale from the Strategic Petroleum Reserve, or SPR, which stores oil in a series of underground salt caverns on the Louisiana and Texas coast, would help raise funds for priorities including $242 million needed to fix a Naval Petroleum Reserve site in California. The budget is largely a political document that serves as a beginning point for negotiations with Congress. But with a long-standing boom in domestic drilling, lawmakers from both political parties have supported sales from the reserve this year and next to help fund drug research and improvements at the SPR, where machinery is exposed to moist, salty air. The sale would be less than the roughly 20 million barrels of oil the United States consumes in a day. The reserve currently holds 635 million barrels, more than required under international agreements seeking to ensure that there are enough global reserves to keep oil markets stabilized in the event of disruptions in petroleum-producing countries. Laws passed in 2015, before Trump was president, and in 2018 call for about 15 million barrels to be sold through this year and 2021.

Thanks to Trump, Keystone XL Is Back. The Anti-Pipeline Movement Is Ready. -- Keystone XL, which would pump some of Canada’s most dangerous oil products over nearly 1,200 miles of US land and Indigenous territories largely for export to other countries, is back: In January, thanks to Trump’s efforts to revive the project, TC Energy, the company behind the major oil delivery system, said that it would begin preparing for construction in Montana, South Dakota, and Nebraska as soon as this month.  “We’ve been fighting this for ten years,” says Joye Braun, a member of the Cheyenne River Sioux Tribe and front-line organizer with the Indigenous Environmental Network. Braun has long worked to mobilize Great Plains communities against oil pipeline construction, but the unique risks and history of this project gives it special weight. “Kesytone XL is the granddaddy of them all. Obama stopped it, Trump revived it, [while] tribes have said a very firm ‘no. Not on our land.'” Braun, along with other Indigenous organizers and their allies, are gearing up to once again resist. “I’m not going to tell anyone what our plans are, but we will exercise every right that we have available to stop this.”   Keystone XL would transport tar sands—which scientists have called the “dirtiest” fossil fuel because it creates toxic byproducts, causes extra carbon emissions when burned, and is harder to clean up when spilled—from Alberta, Canada, where the tar sands industry is especially destructive and is rapidly clearing precious boreal forests, to Steele City, Nebraska. From there, the oil would flow into a pipeline network that reaches export terminals on the Gulf of Mexico. Government data suggests that much of the product flowing through Keystone XL would never be available to American consumers, a notion that TC Energy disputes. “We will exercise every right that we have available to stop this.”  In order to cross the Canadian border, the pipeline needs a permit from the State Department, which is required under federal statutes like the National Environmental Policy Act to analyze the project’s environmental impacts.    The Rosebud Sioux Tribe and the Fort Belknap Indian Community worked with the Native American Rights Fund to sue the Trump Administration in 2018 for what they call “numerous violations of the law in the Keystone XL pipeline permitting process,” including breaches of the National Environmental Policy Act, which requires that reviews take a “hard look” at environmental impacts. They also alleged violations of treaties in which the federal government promised to care for Native tribes’ ancestral lands.

Senate panel rejects Heinert plan on S.D. utility projects that haven’t been started  — An attempt failed Tuesday that would have required South Dakota regulators to reconsider a permit if a utility project hadn’t been built in 10 years. Senate Democratic leader Troy  Heinert of Mission brought SB 126 primarily because of the Keystone XL oil pipeline that is still in the preliminary stages.The state Public Utilities Commission granted a permit for the South Dakota segment of the XL project in February 2010 and determined the permit remained valid in January 2016.Construction on the South Dakota part could start later this year.TC Energy received initial approval in January from the state Water Management Board to draw from the Cheyenne, Bad and White rivers in western South Dakota.The water board meets February 26 to consider proposed findings of fact and conclusions of law. Heinert is a member of the Rosebud Sioux Tribe, one of several tribal governments, organizations and individuals who opposed granting the water permits. Many of them also opposed the utilities commission’s 2016 certification finding the pipeline permit was still good. The company, previously known as TransCanada, has one crude-oil pipeline running through eastern South Dakota. Keystone XL would go through more than 300 miles of South Dakota public and private properties in Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp counties. The route skirts around several current Indian reservations. Indian tribes had received all land in Dakota Territory starting at the east bank of the Missouri River in the 1800s. But they were later put onto separate, smaller reservations, so that homesteaders could compete for open property.

South Dakota tribes speak against 'riot-boosting' penalties (AP) — Native American groups opposed to the Keystone XL oil pipeline told South Dakota lawmakers Wednesday that Gov. Kristi Noem’s plan to restore criminal penalties for urging riots would result in peaceful protesters being silenced. The Republican governor proposed updates to the so-called “riot-boosting” laws after a judge struck down efforts last year to allow the state and counties to prosecute disruptive demonstrations against the pipeline. Several Indian tribes in the state opposed the bill, putting a strain on the governor’s relationship with the tribes. The new proposal sailed through a House committee on Wednesday, as Native American groups testified, prayed and protested at the Capitol. The bill would update definitions of rioting and “incitement to riot” that are on the books and allow government entities to seek civil fines against people who “urge, instigate, incite, or direct” groups of three or more to using force or violence. The state agreed not to enforce parts of those laws in October as part of a settlement with the American Civil Liberties Union. The Republican governor argues that the proposed laws are designed to protect people’s rights to protest peacefully and even includes language to make that clear. She has said the civil penalties would keep taxpayers from having to pay for damage caused by riots. Lester Thompson, the chairman of the Crow Creek Sioux Tribe, said the First Amendment already protects a person’s to protest. He said the law would put protesters in a defensive position, vulnerable to laws that do not make it clear what constitutes violence during a riot. “It could be me raising my fist,” said Derrick Marks, a committee member of the Yankton Sioux Tribe. “Is that considered riot boosting? Is that considered violence?”

Bill that would add liquefied propane to ‘Dig Safe’ law advances - Portland Press Herald— A legislative committee Thursday gave its support to a bill that would include liquefied propane gas in Maine’s Dig Safe law, according to a news release. Every member of the Energy, Utilities and Technology Committee present voted in favor of the measure submitted by state Rep. Seth Berry, D-Bowdoinham, who serves as the House chairperson of the committee. He submitted the bill in response to the deadly explosion in Farmington on Sept. 16, 2019, at LEAP Inc.’s building. During a work session, an emergency preamble was added to the bill that will allow the legislation to go into effect immediately, if signed into law, according to the release. The explosion killed a Farmington firefighter, injured six others and critically injured LEAP Inc.’s maintenance supervisor who was in the building. The Office of the State Fire Marshal released its findings Jan. 24, revealing the explosion ignited days after an underground propane line was severed when one of four bollards was being drilled into the ground near the building, according to a release. Investigators concluded the propane leaked from the severed line and led to the explosion that leveled the building and damaged surrounding homes. The source of ignition that sparked the explosion could not be determined. Dig Safe laws prohibit digging around certain underground utility lines. In Maine, liquefied propane lines are not on the prohibited list, according to the release.

New Report Details Impacts of Oil and Gas Development on Public Lands   The American Petroleum Institute has rolled out a multibillion-dollar public relations campaign stating that oil and gas can help to solve climate change. The association is claiming that expanding the use of fossil fuelscan lower climate emissions that are trapping heat on our planet.If that sounds fishy, it's because it is.The campaign, which includes online ads, airport displays and billboards, credits oil and gas for the recent dip of 2.1 percent in the U.S. climate emissions. It also pushes the false narrative that fossil fuels — especiallynatural gas — are the energy sources of the future. Our new report, The Climate Report 2020: Greenhouse Gas Emissions from Public Lands, shows that couldn't be farther from the truth. Our experts found that on public lands alone, oil and gas development is set to generate a massive amount of climate emissions. Federal lands leased to the industry in the last three years could produce as much as 5.9 billion metric tonnes of greenhouse gases. That's more than half the emissions that China — the world's largest emitter — releases per year.You won't see that number in the industry's advertisements.The problem is that oil and gas are far from being clean energy sources. Even the most efficient natural gas plant still emits about half of the carbon dioxide emitted by a coal plant. That's still high considering the world needs to slash carbon emissions to avoid the worst effects of the climate crisis, according to the United NationsFederal lands leased in the last three years could generate half of China's annual climate emissions.That's not all. The extraction of natural gas also releases methane, widely known as a climate change accelerant. The gas is released in smaller quantities than carbon dioxide, but it's 87 times more powerful in trapping heat in the Earth's atmosphere.It's clear that by investing in oil and natural gas instead of coal, we're just replacing one emissions problem with another.It's also clear that oil and gas companies are not interested in solving climate change. For instance, methane leaks could be easily cut with cost-effective solutions. But the industry has done the opposite, spending heavily to block the passage of any regulations.

Sanders, Ocasio-Cortez bill would outlaw fracking by 2025 - A bill introduced last week by Sen. Bernie Sanders (I-Vt.) that Rep. Alexandria Ocasio-Cortez (D-N.Y.) helped craft would ban fracking nationwide by 2025, according to its newly unveiled text. The legislation would immediately prevent federal agencies from issuing federal permits for expanded fracking, new fracking, new pipelines, new natural gas or oil export terminals and other gas and oil infrastructure. A House version of the legislation is being spearheaded by Reps. Ocasio-Cortez and Darren Soto (D-Fla.). By Feb. 1, 2021, permits would be revoked for wells where fracking takes place and that are within 2,500 feet of a home, school or other "inhabited structure." The wells would be required to stop operations. Fracking for oil and natural gas would become illegal "on all onshore and offshore land in the United States" by Jan. 1, 2025. The legislation follows up on Sanders's campaign promise of a fracking ban if he's elected to the White House. It was introduced the week before Monday's Iowa caucus, which kicks off the 2020 presidential nominating contest. “Fracking is a danger to our water supply. It’s a danger to the air we breathe, it has resulted in more earthquakes, and it’s highly explosive. To top it all off, it’s contributing to climate change," Sanders said in a statement. "If we are serious about clean air and drinking water, if we are serious about combating climate change, the only safe and sane way to move forward is to ban fracking nationwide,” he added. In a statement, Ocasio-Cortez said fracking is a contributor to “our climate emergency.” "The science is clear: fracking is a leading contributor to our climate emergency. It is destroying our land. It is destroying our water and it is wreaking havoc on our communities' health,” Ocasio-Cortez said in the statement. The legislation is backed by environmentalists but has been slammed by industry groups. "Sen. Sanders’ fracking ban bill is desperately needed if we’re going to stop the climate crisis,” said Kassie Siegel, director of the Center for Biological Diversity’s Climate Law Institute, in a statement. “This is the big, bold action that’s required so future generations can have a livable planet.”

Note to EIA: Major shale operator sending cash elsewhere - John Hess, CEO of Hess Corporation, a large U.S.-based independent oil producer, recently told a Houston audience where he's putting the company's money these days: Offshore drilling.  That should strike those who know of Hess Corporation's heavy involvement in the Bakken shale play (in North Dakota) as a bit strange. Hess says the company will "use cash flow from the Bakken to invest in longer-term offshore investments." Hess told his audience that "key U.S. shale fields are starting to plateau, calling shale 'important but not the next Saudi Arabia.'" Setting aside whether Hess is actually getting investable cash from the Bakken, the constant refrain from the U.S. oil industry has been precisely that shale plays ARE the next Saudi Arabia. Someone should send a note to the U.S. Energy Information Administration (EIA) that maybe it's not all going to work out. If Hess is right about a peak in U.S. shale oil production soon, that peak will come about a decade earlier than the peak forecast by the EIA.  None of this will come as a surprise to geologist David Hughes whose most recent update on U.S. shale oil and natural gas production suggests that not only will Hess be proven generally correct, but that production will fall much farther than the EIA believes in the coming decades. Hughes continues to rate EIA estimates of ultimate recovery from America's shale oil and natural gas fields as "extremely optimistic, and highly unlikely to be realized."U.S. shale oil production has been a major driver in the growth of world oil supplies. Last year the United States accounted for 98 percent of global growth in oil production. Since 2008 the number is 73 percent. It's not hard to imagine that a slowdown in U.S. oil production growth or worse yet a decline in overall U.S. production would mean trouble for the entire world.With 81 percent of global oil production now in decline, even a plateau in U.S. production would likely result in a worldwide decline. The world is simply not prepared for such an event—in part, because agencies such as the EIA are either unable or unwilling to grasp the plain facts and present them to policymakers and the public. When the real trouble arrives in the oil markets, the EIA and other forecasters will likely just shift their analysis and cite some "impossible to predict" factors that will have led to the stunning reversal of fortune. But those factors are in evidence right now, if only the EIA and others have eyes to see them.

Natural gas pipeline proposal fractures Oregon community | PBS NewsHour Weekend (audio & transcript) A protracted battle in Oregon over a proposal to build a 229-mile natural gas pipeline and processing terminal in the southern part of the state is pitting those hungry for economic development against those wary of the project's environmental risks. But as NewsHour Weekend's Christopher Booker reports, that fight is drawing closer to a conclusion. Read the Full Transcript: Since 2004, there has been a protracted battle underway in Oregon. It's a fight over a liquid natural gas export terminal, and the pipeline that would deliver the gas. Landowners and community members are wary of what they say is a risky proposition. But, as PBS NewsHour Weekend's Christopher Booker reports, it's a 15-year conflict that is finally inching closer to a conclusion.

Exxon Downplays Climate Risk to Oil and Gas in New Report - Climate change is not a crisis, according to ExxonMobil’s latest climate risk report to shareholders and the public. Despite ongoing record-setting global temperatures, wildfires, and other impacts, the oil and gas giant contends that growing climate instability does not rule out continued production of fossil fuels. The firm released its annual “Energy and Carbon Summary” on January 28, in the midst of a two-week slide that saw Exxon’s stock price hit its lowest point in a decade. Like previous editions of the report, Exxon's latest future-looking assessment outlines its plans for continuing to produce oil and gas while downplaying the risks of changing climate and energy regulations to its holdings. “Over the coming decades, oil and natural gas will continue to play a critical role in meeting the world’s energy demand,” the report states. But the firm’s stance that continued oil and gas production is a low-enough-risk proposition is misguided, said Andrew Grant, senior oil and gas analyst at Carbon Tracker, a London-based think tank that analyzes the impact of the energy transition on capital markets and fossil fuel firms. “In thinking about value risks, the danger isn’t just what if [Exxon] can’t develop new assets because they’re obviously uneconomic,” Grant said, “but also what if they do develop assets thinking that they will be economic but that subsequently turns out not to be the case.” The firm is not acknowledging that its oil and gas reserves could become such “stranded assets” over the next several decades, he said, and drop billions in value amidst a likely global transition to cleaner energy sources. “Ultimately, what Exxon is guilty of is being too certain about an increasingly uncertain future,” . “And it is betting billions of dollars in shareholder capital on its ability to be right.”

Hundreds rally in Metro Vancouver and Victoria in solidarity with Wet'suwet'en - Hours after police arrested dozens of protesters for blockading port entrances in Vancouver and Delta, B.C., marches were held in Vancouver and Victoria in support of the Wet'suwet'en First Nation and its fight against a pipeline. In Victoria, protesters blocked the Johnson Street and Bay Street bridges during afternoon rush hour while, in Vancouver, police warned drivers to expect delays as demonstrators blocked intersections and marched through the downtown core. In recent days, small-scale protests have emerged across Canada in solidarity with the Wet'suwet'en hereditary leaders' opposition to the construction of a gas pipeline through their traditional territory in northern B.C. Over the weekend, the RCMP arrested 21 people blocking Coastal GasLink workers from accessing the site. On Monday morning, Vancouver police arrested 43 demonstrators at the Port of Vancouver as they enforced an injunction against those blocking access to the site. Dozens of officers arrived at the intersection of Hastings and Clark streets around 5:30 a.m. PT Monday, and the injunction was read several times over a loudspeaker. Police then removed barricades blocking access to the port, reopening the ramp to vehicles.Shortly after 6 a.m., about a dozen protesters remained around a fire burning in the roadway. Officers reminded people they would be arrested if they stayed in the road. By 8 a.m., the police had cleared all demonstrators from the intersection and put the fire out. At midmorning, police had removed all barricades, and traffic reopened. All of those arrested in Vancouver have been released on the condition they abide by the injunction, according to police. Whess Harman, a multidisciplinary artist from the Carrier Wei'at Nation, said non-Indigenous volunteers had remained in the roadway as a strategy to prevent Indigenous youth protesters from being arrested. Demonstrators had blocked two other port entrances in Vancouver, and the Delta port, where local police arrested 14 protesters early Monday morning. Delta police said an ambulance was called for one person "out of an abundance of caution." Protesters had first blockaded the port on Feb. 8. Meanwhile, protesters in New Hazelton, west of Smithers, B.C., continue to block railways, significantly affecting CN Rail service.

CN shuts eastern Canadian rail network - Canadian National (CN) said today it has begun to shut down its eastern Canadian rail network following delays caused by protests against a pipeline that have spread across three provinces.More than 400 trains have already been cancelled this week. The situation has worsened since CN said on 11 February that blockades in Belleville, Ontario, had forced it to curtail some deliveries. The protests are unrelated to CN. First Nations groups and others have used blockades to protest a Coastal GasLink pipeline under construction in British Columbia."A progressive shutdown of our eastern Canadian operations is the responsible approach to take for the safety of our employees and the protestors," CN chief executive Jean-Jacques Ruest said today.  The closure ends all transcontinental train movements, including some that are hauling propane, coal, crude, potash and pellets.CN is taking steps to ensure it is well set up for recovery, "which will come when the illegal blockades end completely," Ruest said.CN sought and obtained court orders to end the blockades. The blockades have ended in Manitoba and an end is imminent in British Columbia, the railroad said. But the orders of an Ontario court have yet to be enforced and continue to be ignored, CN said. The shutdown puts up to 6,000 workers at CN and other rail companies out of work, Teamsters Canada said.

Documentary on Alberta train derailment uncovers evidence of criminal negligence by CP Rail - A recently aired documentary that reveals corporate criminal negligence may have been responsible for a fatal train accident last year has prompted calls for an independent criminal investigation into CP Rail, Canada’s second largest railway. The 22-minute documentary, “Runaway Train,” was the product of a seven-month-long investigation undertaken by the CBC investigative program the Fifth Estate. Train 301 was travelling west to Vancouver when it derailed near the Alberta/British Columbia border at around 1 a.m. on February 4, 2019, killing the three crew members on board: conductor Dylan Paradis, locomotive engineer Andrew Dockrell and conductor trainee Daniel Waldenberger-Bulmer. (See: “Canada: Train derailment kills three, exposes terrible working conditions”) Shortly after the accident, the federal government’s Transportation Safety Board (TSB), released its preliminary findings. It determined that the 112 loaded grain cars had been parked in –28C weather on a steep grade with emergency air brakes applied, but no handbrakes. The train had been parked for almost three hours when the replacement crew arrived. Soon after their arrival, the air brakes failed and the train “began to move on its own,” accelerating beyond the authorized maximum track-speed of 15 mph to a speed in excess of 51 mph, until it derailed into the mountainside. The timeliness of CBC’s exposure was underscored by a train derailment that occurred in Saskatchewan last Thursday. At around 6 a.m., a CP Rail freight train derailed near Guernsey, for the second time in as many months, forcing the evacuation of 80 people after oil tanker cars caught fire. Federal Transport Minister Mark Garneau subsequently announced a 40-kilometer-per-hour speed cap for all trains carrying dangerous goods for 30 days. The CBC documentary includes footage describing a “string of critical failures” on the part of the railway company, including in maintenance, inspections, and braking practices, and the “compelling case for criminal negligence.”

The Race For Arctic Oil Is Heating Up - Despite climate concerns and environmentalist backlash against exploration for oil and gas in pristine sensitive regions of the Arctic, companies continue to explore for hydrocarbon resources in the Arctic Circle, in Russia and Norway in particular. The largest Russian energy companies are looking to explore more Arctic oil and gas resources on and offshore Russia, while Norwegian and other Western oil firms are digging exploration wells in Norway’s Barents Sea. Those companies lead the development efforts to tap more Arctic oil and gas resources as legacy oil and gas fields both offshore Norway and onshore Russia mature.   Russia’s biggest energy firms Gazprom, Rosneft, Novatek, and Lukoil, and Norway’s oil and gas giant Equinor, as well as Aker BP and ConocoPhillips, are the top oil and gas producers in the Artic region, data and analytics company GlobalData said in a new report. Gazprom is the undisputed leader in Arctic oil and gas production, followed, at a long distance, by two other Russian firms, Rosneft and Novatek, GlobalData’s estimates show. Russian firms are ramping up exploration in Russia’s Arctic, while Equinor and other Western companies drill exploration wells in Norway’s Barents Sea, hoping for a significant discovery that could add to the Johan Castberg oilfield—a massive discovery which was made in 2011, but which hasn’t been replicated in the Barents Sea so far.  Yet, both Russia and Norway face specific challenges in getting the most out of their respective Arctic oil and gas resources.In Russia, the government has made Arctic oil and gas development a key priority and offers tax breaks for firms exploring in the area.Energy giants Gazprom and Rosneft dominate the exploration and development efforts in Russia’s Arctic. Offshore, Gazprom’s Prirazlomnoye field is currently the only producing Russian oil and gas project on the Arctic Shelf. But even with tax breaks, Russia may find it hard to develop its offshore Arctic resources, due to the U.S. sanctions banning collaboration on Russian deepwater, Arctic offshore, or shale projects with Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft. These are the largest energy firms in Russia and they don’t have access to capital at western banks to develop such projects.  Although Russian firms downplay the effects of the U.S. sanctions on their development plans, and although domestic companies are focused on developing in-house technology solutions to replace foreign-sourced tech, analysts believe that 100-percent local content technology in challenging projects would likely take years to implement.

Russia is 'fearful' of US competition in the European gas market, official says - Europe can buy its natural gas wherever it wants, including Russia, but there should be more competition among suppliers, a top U.S. energy official told CNBC, adding that Russia was “fearful” of a rise in energy exports from America. “We expect that a lot of countries will continue to buy gas from Russia,” Frank Fannon, the U.S. assistant secretary of state for energy resources, told CNBC Tuesday. “That’s fine, that’s great, so long as it’s based on a competitive model — is there transparency in pricing, is there even a market, you can’t possibly have a market if you have one supplier — that’s not a market, there’s no competition.” The U.S., EU and Russia are engaged in an awkward triangle when it comes to gas with Russia and the EU integrated closely in terms of gas supplies, and the U.S. trying to gain more access to the EU market for its own liquefied natural gas (LNG) exports, or what the U.S. Department of Energy has called “freedom gas.” Being Europe’s closest energy giant and neighbor, Russia has naturally become the largest gas supplier to the continent over the years and it has consolidated this position most recently with gas pipeline projects designed to increase its exports to the continent. One gas pipeline, Nord Stream 2, has proved so controversial to the U.S. that the Trump administration announced in December that it would slap sanctions on any firms involved in finishing (it is near completion) the pipeline. The pipeline runs from Russia to Germany, via the Baltic Sea floor and through the territories of several other countries. It is owned and will be operated by Russian energy giant Gazprom, which said in January that it would finish the pipeline alone due to sanctions; it is expected to be operation in early 2021. The U.S. has argued that the pipeline makes Europe less secure and more dependent on Russia for its energy needs but the EU and Russia have deplored the sanctions with the former saying it should be able to determine its own energy policy. Germany’s Chancellor Angela Merkel said that she is “opposed to extraterritorial sanctions” against the project and Russia said it could complete the pipeline alone. It also said that U.S. sanctions were protectionist and just aimed at increasing its own U.S. LNG sales to Europe, a huge potential market for the U.S.

EU Plans to Measure True Climate Impacts of LNG Imports From US Fracked Gas -- With growing evidence that the climate impacts of natural gas are comparable to coal, the European Commission is planning to study ways to reduce methane emissions across the life cycle of natural gas production and consumption, with potential implications for fracked gas producers in the U.S.  “Work has started on the methane emissions linked to the energy sector, including oil and gas production and transport, but also coal mines and we are planning on presenting the strategic plan still this year,” said an unnamed official working with European Union (EU) energy commissioner Kadri Simson, as reported by Euractiv.The EU obtains natural gas from many sources, both in gas form via pipeline and as liquefied natural gas LNG. One area of this EU study will be methane emissions over the life cycle of LNG imports from US fracked natural gas.The U.S.is awash in natural gas from fracked shale basins, which has caused prices to plummet — creating big losses for natural gas producers in America — and the nation has been rapidlyramping up exports of LNG to deal with this excess. Despite the big price drops and glut of natural gas — both in the U.S. and globally — that cast doubt on the economic viability of U.S. LNG exports, the Trump administration just approved permits for four new LNG export facilities in Texas alone. U.S.Secretary of Energy Dan Brouillette commented on the new approvals, specifically mentioning the goal of exporting more U.S.LNG to Europe.The Trump administration recognizes the importance and increasing role U.S.natural gas has in the global energy landscape,” said Secretary Brouillette. “The export capacity of these four projects alone is enough LNG to supply over half of Europe’s LNG import demand.”Europe is currently a top destination for U.S.LNG exports, with Spain and France receiving the most out of European countries in 2019.  Bloomberg recently analyzed the climate impact of US LNG production production facilities and reported that “an analysis shows the plants’ potential carbon dioxide emissions rival those of coal.” Nevertheless, the oil and gas industry is putting serious ad dollars into positioning natural gas as a climate solution. As renewables have become more cost-competitive, the industry has shifted its language away from selling natural gas as a bridge fuel to renewables and toward gas as a “foundation fuel.” With the EU looking to quantify the full climate impact of US LNG, the biggest unanswered question is just how much methane is being vented and leaked during natural gas production, most of which involves fracking and horizontal drilling. What is known is that the level of gas flaring and venting has skyrocketed to the point that even oil company CEOs are admitting it’s a big problem.

Coronavirus affecting Woodside’s ability to sign gas deals - According to Reuters, Woodside Petroleum Ltd has announced that the coronavirus outbreak is affecting its ability to sign gas deals and sell stakes in a key growth project, reporting a 25% decrease in annual underlying profit.The fall in profit was reportedly in line with expectations because of both weaker output from Pluto LNG and lower oil and gas prices. However, Woodside claims the coronavirus outbreak is not only affecting prices, but also impacting broader sentiment.Speaking to Reuters, the head of Woodside, Peter Coleman, claimed the company will use this year to focus on its Scarborough project, and will put efforts to secure an agreement for the long-delayed Browse project to supply gas to the North West Shelf LNG plant on hold.According to Reuters, Scarborough and Browse are crucial to driving the company’s planned 6% growth per year in output through 2028. Woodside is now planning to make a final investment decision (FID) on Browse late next year. This is at least six months later than previously expected.Coleman commented: “We’ve pushed it really hard. We’ve just said it’s time for us to all just step back for a while.”He also noted that talks to reach gas agreements and sell part of its 75% stake in Scarborough to help it fund the project have been negatively affected by both low gas prices and travel restrictions caused by the coronavirus outbreak. Coleman said: “The longer the coronavirus goes on people will form the view that distressed assets may come on the market.”

North West Shelf LNG project to return to full production imminently -- According to Reuters, output from Australia’s largest LNG plant – the North West Shelf project – is set to return to full production in the next few days. This follows the announcement that a cyclone last weekend had affected the facility.Woodside Chief Executive Peter Coleman said that the cyclone was the worst to ever hit the facility in its 30 years of operation. Fortunately, Coleman added that there was only minor damage to the facility. Coleman also told analysts that the company had not seen any impact to its LNG shipments caused by the coronavirus outbreak.

Coronavirus epidemic diverts LNG tankers - According to the latest Reuters report, four LNG tankers en route to North Asia have been diverted due to the Coronavirus outbreak in China.The Coronavirus epidemic has affected 60 000 people worldwide and has had a significant effect on energy markets and demand, particularly in China.In light of the circumstances, China’s top LNG buyer, China National Offshore Oil Corp’s (CNOOC), among others, has declared force majeure to suspend supply contracts with at least three LNG exporters.As a result of this action, Asian LNG demand has taken a notable hit, with prices falling below US$3 per million Btu (a record low). Reduced demand brought about by a mild winter has also been a contributing factor.Shipping companies are now scrambling to divert cargoes bound for Asia to more profitable destinations. For example, according to Reuters, three of four LNG tankers loaded in Qatar and Oman have been diverted from their original eastwards course. Two will reportedly now deliver their shipments to South Hook terminal, UK, while the other is returning to the Gulf of Oman. In addition to cargoes being diverted, several carriers have been flagged as floating storage. According to a Reuters source, there are 15 vessels currently flagged as floating; two in the Middle East, two in western Australia and 11 scattered across Asia. The source expressed that this number of floated LNG cargoes was unusual for this time of year.

Qatar re-routing cargoes to China after coronavirus -According to Reuters, Qatari energy companies are actively engaged in accommodating both rescheduling and re-routing requests on some deliveries of Qatari oil and gas cargoes to China after the coronavirus outbreak. In a statement, the chief executive of state energy company Qatar Petroleum, Saad al-Kaabi, said the company supports “its counterpart Chinese energy companies to meet any needs that can support China’s efforts to deal with the coronavirus and its impact.“All concerned Qatari energy companies are already working closely with their Chinese partners to assist in identifying and assessing potential support areas, and... are actively engaged in accommodating certain rescheduling or re-routing requests for deliveries of Qatari energy products.”

Gazprom hopes China will buy US LNG, not Europe -According to the latest Reuters report, after the signing of a trade deal between Washington and Beijing, Gazprom is hopeful that China will purchase the majority of US-produced LNG cargoes, not Europe.Speaking at a recent investor meeting, the head of Gazprom’s exporting arm, Elena Burmistrova, noted that weak European gas pricing might curb the company’s LNG supplies to the region, due to low prices and increased rivalry.As US gas producers look to expand their markets and continue their steady growth, LNG exports are proving to be a profitable avenue through which to offload large quantities of shale gas. This activity is a direct threat to Gazprom’s dominance in Europe.According to Reuters, China has recently restarted talks with US LNG exporters to purchase greater quantities of LNG, following the signing of a Phase 1 accord between the two countries. This move is very favourable for Gazprom, since the arrival of new US LNG cargoes in Europe has had a negative impact on gas prices in the region. However, the company is reportedly closely monitoring the situation, in light of China’s recent suspension of some LNG purchases due to weaker demand caused by the ongoing coronavirus epidemic.

China likely to shun US LNG despite multi-billion trade deal -An ongoing two-year long trade war between the US and China that has impacted the exports of both countries seemed to be closer to a resolution in January, when the two rivals sealed a deal that left the Asian nation committed to buy a total of US$26.2 billion in energy products this year.Amid a crisis caused by the coronavirus epidemic, China recently decided to halve the additional tariffs it imposed on US$75 billion worth of US goods from September 2019. However, this reduction has not affected the 25% tariff imposed on US LNG, and Rystad Energy does not consider any such imports commercially viable. With not a single US cargo sent to a Chinese terminal since 2Q19, Rystad Energy estimates that LNG imports will restart only once the tariffs are lifted or if political support is offered by the Chinese government.Rystad Energy expects a reduction or even a complete removal of tariffs on imports of US LNG. Nevertheless, the company’s calculations show that volumes will most likely remain relatively low, due to both the cost-competitiveness of other global supplies and to the coronavirus epidemic’s effect on Chinese LNG demand.To calculate the volumes, Rystad Energy identified three scenarios, the most conservative of which (low case) is thought to be the most likely outcome:

  • Low case: LNG imports in 2020 are kept at the 2018 level of around 2.5 million t, valued at US$1 billion.
  • Middle case: In 2017, before the trade war started, LNG represented 8% of all US energy product sales to China. Applying the same percentage would see China import 5.27 million t of US LNG for a total value of US$2.2 billion in 2020.
  • High case: The trade agreement did not specify any amounts of particular energy products such as crude oil, LNG, refined products and coal. As a result, LNG and especially crude oil, which will get a 2.5% tariff cut from February, could account for a larger proportion of Chinese energy purchases to meet the agreed target. LNG imports could potentially reach 8.4 million t, worth US$3.5 billion in 2020.

In the longer term, new LNG projects need to have long term contracts to secure financing for development, and the imports-reliant Chinese market will continue to be among the biggest sponsors for new developments – although probably very limited in the US, said Xi Nan, Vice President for Gas and Power Markets at Rystad Energy. “The cost of supply for new US projects is not as competitive as in Qatar, Mozambique and Australia, which gives Chinese buyers more commercial incentives to sign new contracts with non-US suppliers,” she said.

Structurally cheaper LNG should displace coal from Japan, and broader Asia: Russell - (Reuters) - The collapse in the spot price of liquefied natural gas (LNG) in Asia is a short-term phenomenon that may well end up having a longer-term impact, especially on thermal coal. The spot price dropped to $2.95 per million British thermal units (mmBtu) for the week ended Feb. 7, the lowest price in records stretching back to 2010. It has lost 57% of its value since the pre-winter peak of $6.80 per mmBtu in mid-October, and is down 74% from the peak price in 2018 and 86% from the all-time high from February 2014. The reasons for the slumping price are well understood, with both demand and supply factors playing a role. On the demand side, growth in China has slowed from its breakneck pace as the world’s second-biggest buyer of LNG works to build the infrastructure needed for more coal-to-gas switching in both residential heating and industry. LNG demand in Japan, the world’s top buyer of the super-chilled fuel, has also been sluggish amid a warmer than usual winter and the restart of some of its nuclear fleet, idled after the 2011 Fukushima disaster. On the supply side, the commissioning of several new projects in Australia, which has overtaken Qatar as the top LNG exporter, as well as in the United States, has led to an abundance of cargoes. While it’s unlikely that spot LNG prices will stay at the current depressed levels indefinitely, the trend toward structurally lower prices appears sustainable. There is still no shortage of LNG projects being built, with 17 million tonnes of capacity due to be commissioned this year alone, and considerably more likely in the next five years, as projects from Russia to East Africa start to come on line. This supply surge is likely to have two impacts on prices. Firstly it will ensure that spot prices remain under downward pressure, and secondly, it will likely accelerate the shift away from long-term, oil-linked contracts to shorter-term, more flexibly priced deals. This change in the way LNG is priced should give pause for considerable thought to any would-be developers of thermal coal power projects based on imported fuel in Asia, especially Japan.

PetroChina to cut February crude runs by 320,000-bpd due to virus: company official - (Reuters) - PetroChina, China’s second-biggest state refiner, plans to reduce its crude throughput by 320,000 barrels per day (bpd) this month versus its original plan as the Wuhan virus hits fuel demand, a company official told Reuters on Monday. PetroChina’s planned February cut is equivalent to about 10% of the refiner’s average production rate of around 3.32 million bpd. This would bring total production scalebacks by state refiners, include Sinopec Corp and China National Offshore Oil Company, to around 940,000 bpd for this month. The cuts from PetroChina are likely to be deepened to 377,000 bpd in March, said the senior company official with direct knowledge of the matter. He declined to be named as he’s not authorized to speak to the press. Reuters reported last week that Sinopec Corp, Asia’s largest refiner, is cutting its throughput this month by 600,000 bpd, or 12% of its average crude runs, its deepest reduction in over a decade. Independent Chinese refiners in Shandong, meanwhile, have slashed output to below half their capacity. “The production cuts are mostly on refineries in northeast and north China, where demand is hit harder than in the western parts of the country,” said the PetroChina official. PetroChina started the production cuts at the beginning of the month, but deepened them on Monday, the official said. PetroChina did not immediately respond to a request for comment. PetroChina is talking with its key long-term suppliers such as Saudi Arabia, Kuwait and the United Arab Emirates about possibly deferring cargo loadings or trimming loading volumes, the official said, without giving further details.

China's Hengli Petrochemical cuts refinery operations to 90%: spokesman -  (Reuters) - China’s private chemical giant and refiner Hengli Petrochemical has cut to 90% from this week its crude oil processing rate at a northeastern plant, down from 109%, as a spreading coronavirus hits demand, a spokesman said on Tuesday. The cuts at the 400,000-barrel-per-day refinery and petrochemical complex in Dalian will be equivalent to 17%, or 76,000 bpd, Reuters’ calculations show. Hengli also shut in a 3.2-million-tonne-per-year reforming unit, one of three it operates, because of a mix of technical and market problems. “We’ve been planning to shut down the unit for maintenance to fix some technical issues,” the spokesman told Reuters. “And now it seems the right time, as we are also worried about falling demand for both refined fuel and petrochemicals because of the epidemic.” As Hengli typically pre-markets fuel for more than two months, its refined fuel sales so far have been smooth, another company source said. In face of weakening demand for petrochemical products, Hengli also cut back operations at a newly started plant making purified terephthalic acid, or PTA, to half its capacity, from 80% earlier, the spokesman said. The facility has an annual capacity of 2.5 million tonnes of PTA, a chemical used to make polyester fiber.

The coronavirus is a 'black swan' for oil and energy markets, says Ned Davis Research - The outbreak of the coronavirus is a “true black swan” for the oil and energy market, and as crude prices continue to move lower the worst may not be over yet, Ned David Research said in a note to clients Monday. Analyst Warren Pies noted that the outbreak has reduced Chinese demand for oil by 2 million to 3 million barrels per day, which means “the oil market is looking down the barrel at no demand growth for the calendar year, and outright demand contraction is now on the table.” At the end of January the firm downgraded its outlook on oil from bullish to neutral, and Pies said that his best guess is that “crude oil and energy equities will see more weakness before this is over.” That said, he was quick to note that attempting to draw comparisons between the 2003 SARS outbreak, or attempting to forecast the spread of the disease are “fools errands,” arguing that investors should instead should rely on “objective indicators.” On Monday U.S. West Texas Intermediate crude fell to its lowest level in 13 months as traders continue to worry that a global economic slowdown caused by the coronavirus will weigh on demand. Both WTI and international benchmark Brent crude are coming off a fifth straight week of losses, and both are currently trading in bear market territory. Pies noted that in prior times of broad weakness in the energy sector refiners were sometimes a pocket of strength. But this time around that might not be true since this is a demand-driven decline, rather than the supply-driven declines of recent years.

Hedge funds sell oil as coronavirus stokes recession fear: Kemp (Reuters) - Hedge funds were heavy sellers of petroleum last week for the third time in four weeks, amid mounting anxiety about the impact of a coronavirus outbreak on oil consumption in China. Hedge funds and other money managers sold the equivalent of 131 million barrels in the six most important futures and options contracts in the week ending Feb. 4. Portfolio managers have sold a total of 367 million barrels since Jan. 7, reversing a large amount of the 533 million barrels bought during the previous 13 weeks (https://tmsnrt.rs/2UEBRTK).  Fears about a coronavirus-driven downturn in oil consumption have replaced earlier expectations about a cyclical recovery in oil demand growth. Selling has been concentrated in crude and the middle distillates used heavily in manufacturing and transportation, including aviation and shipping, the sectors most exposed to China’s economy and the coronavirus. Hedge funds were heavy sellers last week of NYMEX and ICE WTI (-56 million barrels), Brent (-50 million), European gasoil (-18 million) and U.S. heating oil (-8 million). In response to the coronavirus, PetroChina has said that it will cut crude processing at its refineries by 320,000 barrels per day in February, around 10% of its average production rate, with even deeper cuts to come in March. China’s state-owned refiners have now signalled production cuts totalling more than 900,000 bpd this month (“PetroChina to cut February crude runs by 320,000 bpd due to virus”, Reuters, Feb. 10). By contrast, fund managers made no net change in their position in U.S. gasoline last week, which is more focused on the United States and private motorists. The economic and oil market impact of the virus outbreak is similar to a severe recession centered on China, which is currently extremely deep but of uncertain duration, and where the full impact on other countries is unclear. The coronavirus-recession in China is driven by the success of primary infection control in Hubei province; the probability of secondary outbreaks in the rest of China and worldwide; and decisions by governments, businesses and individuals about the optimal trade-off between the need for infection control and the need to keep normal commercial activities operating. If the virus can be successfully contained while business activity is normalised, the coronavirus-induced recession could be very short, albeit severe, and localised mostly in China, though with impacts on the country’s supply chain.  However, if there are uncontained secondary outbreaks across the rest of China forcing an extended suspension of normal business activity, the recession could be much longer, with an inevitable worldwide effect. And if the virus cannot be contained within China, governments and businesses will face an even more uncomfortable choice about how to manage the trade-off between risks to human health and the need to maintain semi-normal operations.

Crude Oil Crashes to 13-Month Low Amid Devastating Supply Shock - Crude prices nosedived on Monday, as the rapidly spreading coronavirus dampened the demand outlook for oil’s biggest consumer market.Russia and Saudi Arabia are reportedly at odds over how to adjust supplies in the wake of the negative demand shock. The West Texas Intermediate (WTI) benchmark for U.S. crude prices fell nearly 2% to $49.42 a barrel on the New York Mercantile Exchange, its lowest in around 13 months. The futures contract is coming off its fifth straight weekly decline. Brent crude, the international futures benchmark, declined 2% to $49.42 a barrel on London’s ICE futures exchange.Commodity prices are also being pressured by a resurgent U.S. dollar. The dollar index (DXY), a broad measure of the greenback’s performance, peaked at 98.88 on Monday, the highest since October. DXY has gained in six straight sessions.China’s failure to contain the coronavirus outbreak has contributed to oil’s steep drop in recent weeks. Already in a bear market, oil prices could slide another 10% from current levels as the world’s second-largest economy grinds to a halt.That’s because Chinese demand for crude has plunged by around 20% in the wake of the coronavirus epidemic. It’s said that up to 400 million people across the country are under some kind of quarantine. This includes major economic centers like Shenzhen and Shanghai.Before the outbreak, China was the world’s largest energy consumer.The epidemic has already caused Chinese inflation to soar as businesses and supply chains faced disruption. The January consumer price index soared 5.4% annually, its highest in eight years.With demand plunging, energy producers are struggling to come up with an effective response to keep prices from crashing even further.Saudi Arabia and its Gulf Arab allies are reportedly seeking production cuts to the tune of 600,000 barrels per day. According to the New York Times, Russia has yet to endorse the recommendations.   As the de facto head of the Organization of Petroleum Exporting Countries (OPEC), Saudi Arabia wields enough power to push for compliance among its Gulf Arab neighbors. Russia, on the other hand, is an external partner that hasn’t always seen eye-to-eye on the need for deep and prolonged production cuts. Russia and OPEC members are expected to meet later this week to discuss potential market-balancing measures. According to Bloomberg, the oil market is experiencing the biggest demand shock since the global financial crisis of 2008 to 2009.

Oil Sinks as Traders Exploit Russian Bear Impact on OPEC – The Russian silence is costing oil bulls dearly. Crude prices fell for a third-straight day on Moscow’s hesitation to greenlight a 600,000-barrels-per-day output cut proposed by an OPEC technical committee to counter the coronavirus crisis. Brent, the London-traded benchmark for crude oil, settled down $1.20, or 2.2%, at $53.27 per barrel. New York-traded West Texas Intermediate, U.S. crude benchmark, closed down 75 cents, or 1.5%, at $49.57. Since hitting nine-month highs in the first week of January, crude prices have closed down each of the past five weeks. Brent and WTI are now down about 20% each on the year, falling into bear-market territory. Russian Energy Minister Alexander Novak said on Friday his administration needed more time to decide whether to join additional oil output cuts proposed by the OPEC technical committee because it had reasons to believe U.S. crude production growth could slow while global demand appeared solid. Some analysts think Moscow is basically skeptical that even the 600,000 bpd of cuts proposed by OPEC would be enough to assuage and boost the market. If the cuts weren’t, then all the Russians would have done is lose more market share without getting corresponding price returns. “Russia wants to take some time before accepting anything, and it might also be that the 600,000 of additional cut is not convincing, even to Russia,” The Russian indecision came as top buyer China’s demand for oil was estimated to be falling by hundreds of thousands of barrels daily from the viral pandemic that had virtually crippled whole parts of its economy from travel to automobile assembly, among others. “The run cuts in China due to the coronavirus are coming at the same time that European and U.S. refineries go on maintenance turnarounds, and the pressure is starting to show in physical crude oil,” Jakob added. The OPEC technical committee meeting, which ended on Friday without a production cut deal was precursor to a more important two-day gathering scheduled March 5-6 among oil and energy ministers of OPEC+, a larger group comprising the 13-member OPEC and its 10 allies, which include Russia. Amena Bakr, deputy bureau chief in Dubai for markets advisory service Energy Intelligence, said in a tweet on Friday there was speculation that the March gathering could be brought forward to as early as Feb. 14-15. But if that meeting too passes without a deal, then Brent could seriously be at risk of breaking its $50 support level while WTI could fall to $45 or below, say traders. “Unless we see a substantive enough cut from OPEC, the forward curve in crude will move further into contango, encouraging storage in oil and even more price weakness ahead,” said Tariq Zahir, managing member at the oil-focused Tyche Capital Advisors in New York.

Crude Oil Crashes to 13-Month Low Amid Devastating Supply Shock - Crude prices nosedived on Monday, as the rapidly spreading coronavirus dampened the demand outlook for oil’s biggest consumer market.Russia and Saudi Arabia are reportedly at odds over how to adjust supplies in the wake of the negative demand shock. The West Texas Intermediate (WTI) benchmark for U.S. crude prices fell nearly 2% to $49.42 a barrel on the New York Mercantile Exchange, its lowest in around 13 months. The futures contract is coming off its fifth straight weekly decline. Brent crude, the international futures benchmark, declined 2% to $49.42 a barrel on London’s ICE futures exchange.Commodity prices are also being pressured by a resurgent U.S. dollar. The dollar index (DXY), a broad measure of the greenback’s performance, peaked at 98.88 on Monday, the highest since October. DXY has gained in six straight sessions.China’s failure to contain the coronavirus outbreak has contributed to oil’s steep drop in recent weeks. Already in a bear market, oil prices could slide another 10% from current levels as the world’s second-largest economy grinds to a halt.That’s because Chinese demand for crude has plunged by around 20% in the wake of the coronavirus epidemic. It’s said that up to 400 million people across the country are under some kind of quarantine. This includes major economic centers like Shenzhen and Shanghai.Before the outbreak, China was the world’s largest energy consumer.The epidemic has already caused Chinese inflation to soar as businesses and supply chains faced disruption. The January consumer price index soared 5.4% annually, its highest in eight years.With demand plunging, energy producers are struggling to come up with an effective response to keep prices from crashing even further.Saudi Arabia and its Gulf Arab allies are reportedly seeking production cuts to the tune of 600,000 barrels per day. According to the New York Times, Russia has yet to endorse the recommendations.   As the de facto head of the Organization of Petroleum Exporting Countries (OPEC), Saudi Arabia wields enough power to push for compliance among its Gulf Arab neighbors. Russia, on the other hand, is an external partner that hasn’t always seen eye-to-eye on the need for deep and prolonged production cuts. Russia and OPEC members are expected to meet later this week to discuss potential market-balancing measures. According to Bloomberg, the oil market is experiencing the biggest demand shock since the global financial crisis of 2008 to 2009.

Oil drops 1.5% to 13-month low as weak Chinese demand weighs  - Oil prices fell to their lowest level since January 2019 on Monday on weaker Chinese demand in the wake of the coronavirus outbreak and as traders waited to see if Russia would join other producers in seeking further output cuts. Oil has dropped more than 20% from a peak in January after the spreading virus hit demand in the world’s largest oil importer and fueled concerns of excess supplies. Brent crude slipped $1.14, or 2%, to $53.33 per barrel, while U.S. West Texas Intermediate fell 75 cents, or 1.5%, to settle at $49.57 per barrel, its lowest settle since Jan. 7, 2019. That keeps both Brent and WTI in oversold territory for 13 days and 14 days, respectively, their longest bearish streaks since Nov. 2018. The premium of the Brent front-month over the same WTI contract, meanwhile, fell to its lowest since August 2019 in intraday trade. “The concern remains that the wider markets have yet to reflect the full impact of the disruption,” said Saxo Bank commodity strategist Ole Hansen. “With China being the world’s most dominant consumer of raw materials, the impact continues to be felt strongly across key commodities and the world is facing the biggest demand shock since the 2009 global financial crisis.” Beijing has orchestrated support for its companies and financial markets in the past week and investors are hoping for more stimulus to lift the world’s second-biggest economy. Worries over supply were not alleviated on Friday when Russia said it needed more time to decide on a recommendation from a technical committee that has advised the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production by a further 600,000 barrels per day (bpd). The group, known as OPEC+, has been implementing cuts of 1.2 million bpd since January 2019. Algeria’s Oil Minister Mohamed Arkab said on Sunday the committee had advised further output cuts until the end of the second quarter. Russia’s Energy Minister Alexander Novak said Moscow needed more time to assess the situation, adding that U.S. crude production growth would slow and global demand was still solid.

The Jet Fuel Crack Killing Oil Won’t Last - Just when investors were beginning to come to terms with weak oil demand amidst a synchronized global economic slowdown, a deadly viral outbreak in the world’s most populous nation has put paid hopes for a quick recovery and placed the oil market in danger of a complete meltdown. Asian jet fuel refining margins have now seen their biggest monthly fall in over 10 years.  Global demand for jet fuel is expected to take a big hit after a series of carriers suspended flights to China amid the marauding coronavirus that has so far claimed 362 lives and infected another 17,300 people across the globe.Key international airlines that have cancelled or reduced flights to China include British Airways, Lufthansa, American Airlines, United Airlines, Austrian Airlines and Swiss International Air Lines. Jet crack spreads -- a metric that measures the differential between an oil product and the crude from which it is derived -- have already narrowed against Brent crude amid expectations of lower demand.Things could get a lot worse if more airlines follow suit.  China’s foreign ministry has slammed the United States for setting a “very bad example” after Washington temporarily banned foreign nationals who have traveled to China within the past two weeks entry into the country. Australia, Japan, Italy, Russia, Pakistan and Singapore have announced similar restrictions.   Cracks, or refining margins, are trouncing oil right now. In January alone, the jet fuel crack for JETSGCKMc1 (the benchmark Singapore refining margin) plunged 34%--a rate that hasn’t been witnessed since the spring of 2009, according to Refinitive Eikon data cited by Reuters.  As we explained in a previous article, crack spreads can be used to gauge demand with narrowing spreads a harbinger for weak demand. China is a major demand hub for jet fuel, with the IEA pegging Chinese jet/kerosene demand at 858,000 b/d in 2019, or 10.7% of global jet fuel demand of 8.01 million b/d. One jet fuel trader has told S&P Platts that further flight cuts could prove to be a game changer in an already depressed market with S&P Platts estimating that a single flight to China carries around 80-90 metric tonnes of jet fuel.The China situation has turned the oil outlook strongly bearish, with the European jet market already weighed down by weak demand due to seasonality. Platts Analytics has forecast a catastrophic drop in oil demand of 2.6 million b/d in February and 2 million b/d in March, in its worst-case scenario against global oil demand of 100.83 million b/d. A best-case sees demand dropping by 900,000 b/d in February and 650,000 b/d in March. The viral outbreak could wreak even more havoc by slowing down the world’s second biggest economy. IHS Markit estimates that the epidemic could lead to a 1.1-percentage-point reduction in Chinese economic growth from its baseline forecast of 5.8 percent growth this year. IHS Markit has based its estimates on a benchmark crafted during the SARS outbreak in 2003.

Oil rebounds amid broad market recovery; investors still wary - Oil prices rose more than 1% on Tuesday in sympathy with a rally in equity markets but investors remained jittery over the Wuhan virus that has now killed over 1,000 in China. Brent crude rose 70 cents, or 1.3%, to $53.97 a barrel by 0428 GMT, retreating from an intraday high of $54.13. U.S. West Texas Intermediate was up 61 cents, or about 1.2%, at $50.18 a barrel. “A broad positive sentiment across Asia markets seems to have boosted crude oil prices,” Margaret Yang, market analyst of CMC Markets, told Reuters. “The rebound is mild and might be short-lived as China’s energy demand is likely to remain soft in the near term due to virus impact. OPEC+ and Russia will need to come out with a cohesive output cut plan to shore up oil prices,” she said. The number of coronavirus deaths in mainland China have now reached 1,016, its National Health Commission said, and the number of cases has topped 42,600. The virus has also spread to two dozen other countries, with the head of the World Health Organization (WHO) cautioning on Monday that the cases outside of China could be “the spark that becomes a bigger fire”. Traders remain concerned that China’s oil demand could take a further hit if the coronavirus cannot be contained. Chinese state refiners have already said they will cut as much as 940,000 barrels per day (bpd) from their crude runs in February due to the virus. “China’s refiners are processing 15% less crude and that could get a lot worse if the virus doesn’t peak this month,” Edward Moya, senior market analyst at OANDA, told Reuters. “OPEC+ appears to be stuck in a wait-and-see mode ... Russia can live with $40 oil (and) thus might not be so eager to play ball with the other OPEC+ members in delivering another 600,000 bpd in production cuts,” Moya said. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+ and including Russia, proposed the additional cuts last week, but Russia said on Friday it needed more time to decide whether to join in any further output reductions. The coronavirus outbreak could trim China’s full-year economic growth rate by as much as 1 percentage point in 2020, said the Chinese government think tank National Institute for Finance and Development.

Oil Bounces Back from One-Year Low-- Oil bounced back from a one-year low in New York but the emergence of a glut since the coronavirus outbreak loomed over the market as traders looked to store excess crude on tankers. The world’s largest oil traders are seeking to hoard crude on vessels at sea as the industry tries to deal with the oversupply that’s developed as the outbreak wreaked havoc on Asia’s largest economy. Chinese energy importers are struggling to cope with swelling stockpiles, with one declaring force majeure, as travel bans and quarantines weigh on fuel demand. The growing glut and dithering by OPEC and its allies over how to respond have pushed the oil market into a structure known as contango, where near-term prices trade at a discount to future contracts. And, while oil rebounded somewhat on Tuesday amid a broader move up in financial markets, the contango for U.S. crude stayed near widest in four months. “Crude remains under pressure from worries over demand destruction from the coronavirus,” said Vandana Hari, founder of Vanda Insights. “Prices are likely to continue drifting lower in tandem with the progression of the epidemic.” West Texas Intermediate crude for March rose 1% to $50.07 a barrel on the New York Mercantile Exchange as of 7:28 a.m. in Singapore. It fell 1.5% on Monday to close at $49.57, the lowest in 13 months. Brent crude for April climbed 1% to $53.81 a barrel on the London-based ICE Futures Europe exchange after dropping 2.2% in the previous session. The global benchmark crude traded at a $3.55 premium to WTI for the same month. Vitol SA, Royal Dutch Shell Plc and Litasco SA are among firms asking about hiring supertankers for storage purposes as a sharp drop in Chinese demand due to the coronavirus prompts requests for cargo deferments, according to people familiar with the matter, shipbrokers and oil traders. The Organization of Petroleum Exporting Countries and it allies are unlikely to hold an extraordinary meeting this month to discuss the impact of the virus on oil markets, leaving the possibility of further production cuts up in the air, according to Azerbaijan’s energy minister. However, his Kazakhstan counterpart said Tuesday a meeting may be held around the end of February.

OPEC slashes oil demand outlook for 2020 as coronavirus outbreak stifles China - OPEC has dramatically lowered its forecast for oil demand growth this year, citing China’s coronavirus outbreak as the “major factor” behind its decision. In a closely-watched monthly report published Wednesday, the Middle East-dominated producer group downwardly revised its outlook for global oil demand growth to 0.99 million barrels per day (bpd) in 2020. That’s down by 0.23 million bpd from the previous month’s estimate. The amended forecast is likely to reinforce the case for OPEC and allied non-OPEC producers, including Russia, to impose additional output cuts sooner rather than later. “The impact of the Coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020,” OPEC said in the report. “Clearly, the ongoing developments in China require continuous monitoring and assessment to gauge the implications on the oil market in 2020.” International benchmark Brent crude traded at $55.06 at midday London time on Wednesday, up nearly 2%, while U.S. West Texas Intermediate (WTI) stood at $50.69, around 1.5% higher. Both crude benchmarks have each fallen around 20% since climbing to a peak in early January, dragged lower by concern over demand in China during the coronavirus outbreak. WHO says outbreak ‘holds a very grave threat’ for world The group, which consists of some of the world’s most powerful oil-producing nations, said the fast-spreading flu-like virus had necessitated a further downward revision to China’s oil demand forecast. Chinese oil demand was revised down by 0.2 million bpd in the first half of the year, when compared to OPEC’s previous month’s assessment. This has resulted in the producer group downwardly revising its global oil demand growth forecast to 0.4 million bpd through the first half of 2020 — hence a downward revision of 0.2 million bpd for the whole year.

Oil jumps more than 3% at high as Street eyes deeper production cuts, new coronavirus cases slow Oil jumped more than 3% on Wednesday as traders eyed deeper production cuts from OPEC, and as China reported the lowest number of new coronavirus cases since the end of January, easing concerns about a drop-off in demand for oil. “The market is keeping a close watch on the possible move by Russia and its oil companies to get on-board with the proposal to deepen the OPEC+ production cuts,” Again Capital’s John Kilduff said to CNBC. “The companies seem to be willing to extend the time frame of the deal, but not deepen. Any cooperation is a positive, however.” On Wednesday U.S. West Texas Intermediate crude gained 2.6%, or $1.30, to trade at $51.24 per barrel, while international benchmark Brent crude rallied 3.1%, or $1.69, to trade at $55.70 per barrel. Earlier in the session WTI traded as high as $51.73 per barrel. In a closely-watched monthly report published Wednesday, OPEC cut its forecast for oil demand growth this year, saying the coronavirus outbreak was the primary reason. The cartel said it now expects 2020 daily oil demand growth to be 990,000 barrels per day (bpd), which is 230,000 bpd below prior forecasts. This, in turn, could encourage OPEC and its allies, known as OPEC+, to implement additional production cuts. “The impact of the Coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020,” OPEC said in the report. An OPEC+ technical committee last week recommended expanding production cuts to put a floor under falling oil prices, although there was some resistance from Russia. RBC’s global head of commodity strategy Helima Croft said that oil’s move higher is “signs that we are getting close to Russia signing off on the OPEC+ deeper cut.” Prices also got a boost as China announced a slowdown in the number of new coronavirus cases. On Tuesday night China’s National Health Commission said there were 2,015 confirmed new cases of the coronavirus on the mainland and 97 additional deaths, bringing the total numbers to 44,653 confirmed cases and 1,113 deaths. Some of oil’s gains were pared, however, after the U.S. Energy Information Administration reported a larger-than-expected inventory build for the week ending Feb. 7. Stockpiles rose by 7.5 million barrels, ahead of the 3.2 million barrel build analysts had been expecting, according to estimates from FactSet.

Oil jumps more than 2% as slowdown in new China coronavirus cases eases fuel demand concerns - Oil prices climbed more than 2% on Wednesday as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover from the epidemic. Brent crude was up $1.48, or 2.7%, at $55.47 per barrel. U.S. West Texas Intermediate rose $1.11, or 2.2%, to $51.05 per barrel. According to data through Tuesday, the growth rate of new coronavirus cases in China has slowed to the lowest since Jan. 30. Still, international experts remained cautious over forecasting when the outbreak might reach a peak. Travel restrictions to and from China and quarantines have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing by about 940,000 barrels per day (bpd) as a result of the consumption drop, or about 7% of their 2019 processing runs. “As the growth rate of new cases has decreased ... that has improved the (market) sentiment,” said Kim Kwang-rae, commodities analyst at Samsung Futures in Seoul. The demand concerns from the outbreak pushed Brent and WTI to their lowest in 13 months on Monday. Both benchmarks are down more than 20% from highs reached in January. The U.S. Energy Information Administration (EIA) on Tuesday cut its global oil demand growth forecast for this year by 310,000 bpd as the virus outbreak crimps oil consumption in China. Demand worries flipped the oil market into a contango last week, a market structure where prices for near-term contracts are lower than those for later contracts, indicating ample supplies. Contango spread in Brent is unchanged at 15 cents per barrel from a week earlier, while the WTI contango is at 24 cents a barrel, from 17 cents last week.  The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, recommended a further cut of 600,000 bpd last week to stem the oil price fall. However, Russia has been hesitant to commit to the additional cut, while Saudi Arabia wanted global major oil producers to agree a quick oil supply cut. U.S. crude inventories rose by 6 million barrels in the week to Feb. 7 to 438.9 million barrels, beating analysts’ expectations for an increase of 3 million barrels, data from industry group the American Petroleum Institute showed.

Global oil demand set to see first quarterly decline in over 10 years, IEA says - Global oil demand is now expected to see its first quarterly contraction in over a decade, according to the International Energy Agency (IEA), as the new coronavirus and widespread shutdown of China's economy hits demand for crude.Demand is now expected to fall by 435,000 barrels a day (b/d) in the first quarter of 2020, down from the same period a year ago, and marking the first quarterly contraction in more than 10 years, the IEA said in its monthly oil market report Thursday.The expected decline in demand prompted the agency to cut its 2020 growth forecast by 365,000 b/d to 825,000 barrels a day, the lowest since 2011. Lower-than-expected consumption in the OECD countries trimmed 2019 growth to 885,000 b/d, it also said. The forecast downgrade comes as the coronavirus, which has infected over 59,000 worldwide and killed over 1,300 people, continues to weigh on global market sentiment and China's economic activity with factories and businesses closing and travel restricted both to and from China and within the country.The outbreak has also affected business elsewhere with economic forums and business conferences cancelled, the latest being the Mobile World Congress that was set to take place in Barcelona this month. The World Health Organization has said the outbreak "holds a very great threat for the world" and the International Monetary Fund's Managing Director Kristalina Georgieva told CNBC Wednesday the new strain of coronavirus was "clearly more impactful" on the world economy than the 2002-2003 SARS epidemic. The negative impact on oil demand hit oil prices hard as the virus took hold in January with a barrel of Brent crude falling by around $10 to fetch below $55 a barrel.  But prices have risen this week on expectations that major producers OPEC and non-OPEC producers, led by Russia, could cut global oil output further to counteract the slump in demand (a slump that had already been around before the coronavirus due to the trade war between the U.S. and China). On Thursday, benchmark Brent crude was trading at $55.73 per barrel, whileU.S. West Texas Intermediate (WTI) was trading at $51.21 per barrel.  The consequences of the new coronavirus, known now as "Covid-19," will be "significant" for global oil demand, oil prices and producers, the IEA said Thursday.

Trading Giants Seek Oil Storage at Sea as Virus Creates Glut (Bloomberg) -- Three of the world’s largest oil traders are seeking to store crude on tankers at sea as the industry tries to deal with a glut that’s emerged since the outbreak of the coronavirus in China. Vitol SA, Royal Dutch Shell Plc and Litasco SA are among firms asking about hiring supertankers for storage purposes as a sharp drop in Chinese demand due to the coronavirus prompts requests for cargo deferments, according to people familiar with the matter, shipbrokers and oil traders. Two oil tanker owners said last week that there was rising demand to store, without identifying the companies making the requests. While the emergence of floating storage will come as little shock to an oil market whose main source of demand growth -- China -- has been hit hard by the virus outbreak, it shows the scale of the buying weakness in the Asian country. Storing doesn’t look profitable on paper and keeping barrels at sea would normally be more expensive than land-based options. For Shell and Vitol, the requests are simply to find ships to store barrels for a several weeks or months. Traders sometimes ask for regular cargo charters to include storage options. Officials from all three companies declined to comment. It’s not clear if any of the companies has booked a vessel yet, and traders will sometimes ask for prices to calculate the viability of a trade. Chinese refiners have cut the amount of crude they’re turning into fuels by about 15% -- a reduction of about 2 million barrels a day -- as the deadly outbreak hinders the movement of people and hits demand for travel. The fall in processing has prompted re-offers for grades such as Brazil’s Lula, as well as West African crudes as buyers try to back out of purchases. Costs of chartering a very-large crude carrier with capacity of 2 million barrels were $30,000-$33,000 a day, said two shipbrokers. While the 1-month contango structure of about 30 cents per barrel would be insufficient to offset the total cost of chartering the supertanker, it does partly cover the expenses.

Oil jumps 1% on hopes of deeper OPEC+ production cuts - Oil prices moved higher on Thursday as investors focused on the possibility of deeper supply cuts from the world's biggest producers, whilst largely shrugging off reports which cut demand forecasts after the coronavirus outbreak in China, the biggest oil importer.Brent crude rose 86 cents, or 1.5%, to $56.65 per barrel. U.S. West Texas Intermediate rose 58 cents, or 1.2%, to $51.77 per barrel.Oil demand in China, the world's second-largest crude consumer, has plunged because of travel restrictions to and from the country and quarantines within it.Hubei province, the epicentre of the outbreak, said on Thursday the number of new confirmed cases there jumped by 14,840 to 48,206 on Feb. 12 and that deaths climbed by a daily record of 242 to 1,310, reflecting changes to the diagnostic methodology.Oil refiner China National Chemical Corp said on Thursday it would close a 100,000 barrel per day (bpd) plant and cut processing at two others amid falling fuel demand.The International Energy Agency (IEA) expects oil demand in the first quarter to fall for the first time in 10 years before picking up from the second quarter. The agency cut its full-year global growth forecast to 825,000 bpd."(It's) worth noting that these forecasters are for now assuming a V-shape recovery in oil demand, with the bulk of the impairment concentrated in Q1, 2020," BNP Paribas analyst Harry Tchilinguirian told the Reuters Global Oil Forum. On the supply side, the Organization of Petroleum Exporting Countries (OPEC) lowered its 2020 demand forecast for its crude by 200,000 bpd, prompting expectations the producer group and its allies, known as OPEC+, could agree further output cuts when they next meet, possibly as early as this month.Brent and WTI have fallen more than 20% from their January peak because of the disease outbreak.Lower fuel demand expectations because of the virus have also shifted the market structure for both Brent and WTI into a contango - where prompt prices are lower than those for later dates.The six-months spread of Brent futures contracts is at about minus 32 cents.Reflecting a well-supplied market, U.S. crude inventories in the week to Feb. 7 increased by a more than expected 7.5 million barrels, the Energy Information Administration said on Wednesday.Meanwhile, a report by consultancy Wood Mackenzie about Nigeria said cost increases and uncertainty could lead to a 35% decline in oil output there over 10 years.

Oil jumps 1%, on course for weekly gain - Oil prices rose on Friday and were on track for their first weekly gain since early January as investors bet the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown.Brent crude was up 92 cents or 1.7% at $57.27 per barrel. It has risen 4.4% since last Friday, its first weekly increase in six weeks.U.S. West Texas Intermediate gained 64 cents or 1.2% to trade at $52.07 a barrel, up 3.2% for the week."It would seem in our view that the oil price is on a more positive footing in the past couple of days, with improved sentiment reflected in Asian equity prices holding up," said BNP Paribas analyst Harry Tchilinguirian.More than 1,350 people have died from the coronavirus in China, which has disrupted the world's second largest economy and shaken energy markets. Brent has fallen 15% since the beginning of the year.However, market sentiment improved as factories in China started to reopen and the government eased its monetary policy.The World Health Organization also reassured traders by saying the big jump in China's reported cases reflected a decision by authorities to reclassify a backlog of suspected cases, and did not necessarily indicate a wider epidemic.Some officials and analysts were still hopeful that the demand impact would remain limited to China."Our baseline thesis remains that oil demand destruction remains largely a China story and has yet to spill over to impact global demand," said Helima Croft, head of commodity strategy at Citadel Magnus.U.S. Energy Secretary Dan Brouillette told Reuters the coronavirus epidemic in China had had a marginal impact on energy markets and was unlikely to dramatically affect oil prices even if Chinese demand fell by 500,000 barrels per day.The International Energy Agency (IEA) said that first-quarter oil demand was set to fall versus a year earlier for the first time since the financial crisis in 2009 because of the coronavirus outbreak. 

No need to panic about coronavirus impact on oil markets, US energy secretary says - The U.S. energy secretary does not believe the ultimate impact of China’s fast-spreading coronavirus is a cause for concern for markets. His comments come shortly after both OPEC and the International Energy Agency (IEA) dramatically lowered their oil demand growth forecasts this year as a result of the deadly flu-like virus. “I think we are going to pay close attention to what is happening with the virus itself. We are still analyzing, not only the actual virus to learn more about it, but also the response to it,” Dan Brouillette told CNBC’s Hadley Gamble in an exclusive interview on the sidelines of the Munich Security Conference on Friday. “So, we are looking to see if the Chinese government will be able to contain or at least help contain the spread of the virus. At this moment, while we are seeing some slight reductions in production as a result of the virus, we are not yet concerned about its ultimate impact.” International benchmark Brent crude traded at $56.40 Friday morning, up around 0.1%, while U.S. West Texas Intermediate (WTI) stood at $51.49, around 0.15% higher. Both crude benchmarks have fallen nearly 20% since climbing to a peak in early January, dragged lower by concern over demand in China during the coronavirus outbreak.

Oil rises over 1% on hopes demand will rebound from coronavirus effect - (Reuters) - Oil prices rose over 1% on Friday, posting their first weekly gain since early January as investors bet the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown. Brent crude LCOc1 rose 98 cents, or 1.74%, to settle at $57.32 a barrel. It rose 5.23% since last Friday, its first weekly increase in six weeks. U.S. West Texas Intermediate (WTI) futures CLc1 gained 63 cents, or 1.23%, to settle at $52.05 a barrel. The weekly rise was 3.44%. “The massive liquidation process that drove prices sharply lower last month has likely been completed and is being replaced by accumulation as well as short-covering from speculators who have recently entered the market,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. Brent has fallen around 15% year to date in part due to worries the coronavirus outbreak would stunt the global economy. More than 1,380 people have died from the virus in China. However, market sentiment improved as factories in China started to reopen and the government eased monetary policy in the world’s second largest economy. The World Health Organization said the jump in China’s reported cases did not necessarily mean a wider epidemic but reflected a decision to reclassify a backlog of suspected cases. The International Energy Agency (IEA) said the outbreak should knock first-quarter oil demand down from a year earlier for the first time since the financial crisis in 2009. In response to the demand slump, the Organization of the Petroleum Exporting Countries and allied producers, known as OPEC+, are considering deepening production cuts.

Oil prices end higher to notch their first weekly climb in six weeks - Oil prices ended higher on Friday to notch their first weekly rise in six weeks, as a report of oil purchases by Chinese refiners helped to ease worries about a slowdown in oil demand from the spread of COVID-19. Bloomberg News reported a "buying spree" among China's independent oil refiners. March WTI oilrose 63 cents, or 1.2%, to settle at $52.05 barrel on the New York Mercantile Exchange. For the week, prices rose 3.4%, according to FactSet data.

Oil snaps 5-week losing streak with best week of the year - Oil prices rose on Friday, on track for their first weekly gain since early January as investors bet the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown. Brent crude was up 89 cents or 1.6% at $57.23 per barrel. It has risen 4.4% since last Friday, its first weekly increase in six weeks. U.S. West Texas Intermediate gained 63 cents or 1.2% to settle at $52.05 per barrel, up 3.3% for the week. “The massive liquidation process that drove prices sharply lower last month has likely been completed and is being replaced by accumulation as well as short-covering from speculators who have recently entered the market,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. Brent has fallen 15% since the beginning of the year in part due to worries the coronavirus outbreak would stunt the global economy. More than 1,380 people have died from the virus in China. However, market sentiment improved as factories in China started to reopen and the government eased monetary policy in the world’s second largest economy. The World Health Organization also noted the big jump in China’s reported cases did not necessarily mean a wider epidemic but reflected a decision to reclassify a backlog of suspected cases. “Our baseline thesis remains that oil demand destruction remains largely a China story and has yet to spill over to impact global demand,” said Helima Croft, head of commodity strategy at Citadel Magnus. The International Energy Agency (IEA) said first-quarter oil demand was set to fall versus a year earlier for the first time since the financial crisis in 2009 because of the outbreak. In response to the demand slump, the Organization of the Petroleum Exporting Countries and allied producers, a grouping known as OPEC+, are considering deepening production cuts.

US Navy Intercepts Advanced Iranian Weapons Bound For Yemen In Arabian Sea --On Thursday the US Navy announced it has seized a vessel in the Arabian Sea bound for Yemen that was transporting advanced weaponry to Shia Houthi rebels. Crucially, a CENTCOM statement described the weapons as “of Iranian design and manufacture” and included such advanced arms as Iranian Dehlavieh anti-tank missiles, as well as at least three surface-to-air missiles, drone parts, and weapon scopes.The defense department statement said the intercepted weapons were similar or identical to prior shipments seized in the area, bolstering the US charge that Tehran has long been using Yemen's Houthis to wage a proxy war against the Yemeni government and the Saudis.  "Many of these weapons systems are identical to the advanced weapons and weapon components seized" in the Arabian Sea in November 2019, the statement continued. "The weapons seized include 150 ‘Dehlavieh’ anti-tank guided missiles (ATGM), which are Iranian-manufactured copies of Russian Kornet ATGMs,""Other weapons components seized aboard the dhow were of Iranian design and manufacture and included three Iranian surface-to-air missiles, Iranian thermal imaging weapon scopes, and Iranian components for unmanned aerial and surface vessels” the statement described. "Those weapons were determined to be of Iranian origin and assessed to be destined for the Houthis in Yemen," it said. CENTCOM began releasing news of the weapons intercept even as the operation was still said to be "ongoing" by the USS Normandy. The vessel boarded was described as a small to medium-sized vessel. Importantly, the major haul comes after the Sept.14 Saudi Aramco oil facility attacks, which briefly crippled Saudi oil production, which Washington had promptly blamed on Iran. That attack had involved drones and surface-to-air missiles as well.Yemen's Houthis had claimed responsibility at the time, but the US blamed Iran for being directly behind the attack. But Washington has also long described the Houthis as taking direct orders from the Islamic Revolutionary Guard Corps - while some independent regional analysts have argued the Shia group is more independent than most in the West believe.

Tent Cities, Troop Surge & Tanks Pouring In- Reasons Why The 'Final War' For Idlib Has Begun - In the next weeks and months, Idlib is set to be front and center once again in world headlines. Not only have the Turkish and Syrian armies engaged in direct clashes since the weekend with dozens of casualties on each side ready for what increasingly looks like the final showdown over Idlib, but superpowers Russia and the US have again lined up on either side. Here are some indicators that dramatic escalation is on the immediate horizon.  An impressive, perhaps unprecedented build-up of seemingly endless columns of Turkish armored vehicles and tanks were seen amassing on the border this week:

  • 1) Turkey announced Thursday more soldiers are being deployed to Idlib after already previously amassing troops at the border. According to Turkey's Daily Sabah: The Turkish military has dispatched more soldiers and stationed multiple rocket launchers on the Syrian border as it continues to reinforce units and equipment at Turkey's observation posts in northwestern Idlib province.The rocket launchers were deployed in Hatay province, while commando squads headed to their units in armored vehicles.
  • 2) Turkish tanks, armored columns, and elite commandos are pouring in as state powers are on a collision course: Turkish President Recep Tayyip Erdogan has put NATO’s second-largest army on a collision course with Russian-backed forces loyal to Syrian President Bashar al-Assad to try to prevent the fall of Idlib province, Syria’s last rebel stronghold.The Turkish military ordered hundreds of tanks and armored cars dispatched to Idlib and struck about 170 targets in Syria in retaliation for attacks by Syrian forces that killed at least 12 Turkish soldiers in the northwestern province this month. Russia demanded a halt to attacks on Russian forces and their allies in the northwestern province, who’ve been conducting a months-long advance on the opposition bastion. — Bloomberg
  • 3) Erdogan is erecting new "refugee cities" along Turkish-occupied Syrian border territory, in line with his 'solution' for the refugee crisis at a moment he's also threatened Europe with "opening the gates" if he doesn't receive EU funding to alleviate the burden:
  • 4) The United Nations is warning Idlib civilian displacement is now the worst over the nine-year total period of war in Syria. President Assad is being assisted by Russia in the fight to liberate all of Idlib province and insurgent holdout pockets of neighboring Aleppo from al-Qaeda faction Hayat Tahrir al-Sham. In the process pro-Assad forces are clashing with Turkish troops, which maintains 'observation posts' in and along Idlib provinces border areas.  All of this has created a massive refugee outflow toward the Turkish border: A wave of displacement that has seen around 700,000 people flee a regime offensive in Syria's Idlib region is the biggest of the nine-year-old conflict, the United Nations said Tuesday."In just 10 weeks, since 1 December, some 690,000 people have been displaced from their homes in Idlib and surrounding areas," a spokesman for the Office for the Coordination of Humanitarian Affairs said.
  • 5) The United States said it will "stand with its NATO ally Turkey" after the Syrian and Turkish armies engage in direct clashes, and after Erdogan threatened to begin downing Syrian aircraft. This brings the world back to a major international proxy war centered on Idlib, as almost happened before (especially in 2018).