oil prices fell by more than 2% each day this week and ended down by the most in any week since 2008, as building awareness of the economic impacts of the coronavirus epidemic finally battered financial markets worldwide....after rising 2% to $53.38 a barrel on oil supply cutoffs in Libya and Venezuela last week, the contract price of US light sweet crude for April delivery opened more than 1% lower on Monday and skidded to a 4% loss, as the rapid spread of coronavirus in countries outside China left investors concerned about a big hit to demand, with US crude ending $2.12 lower at $51.26....oil prices continued lower Tuesday, as concerns about the spread of the coronavirus outweighed OPEC talk of output cuts and Libyan supply losses and oil prices settled down $1.53, or 3%, at $49.90 a barrel, the lowest settlement in two weeks...oil prices briefly rose back above $50 a barrel on Wednesday, as both the API and EIA reported smaller than expected crude inventory builds, but then fell to their lowest in more than a year after hundreds of new coronavirus cases in Europe and the Middle East stoked fears that energy demand would drop, with April US crude closing $1.17 lower at $48.73 a barrel...oil prices then fell for a fifth straight day on Thursday as the growing number of new coronavirus cases outside of China fueled fears of a pandemic which would lower crude demand and ended $1.64 lower at $47.09, the lowest close since January 2019...fears that a slowing global economy would hit energy demand continued to push prices lower Friday, with oil prices at one point down almost 7% to $43.85 a barrel, before shaving the day's losses to end down 5% at $44.76 a barrel, after fears over the outbreak had sent shares on Wall Street down by the most in almost a decade....oil prices thus finished more than 16% lower on the week, the biggest weekly drop since December 2008, with the spread of the COVID-19 epidemic around the world expected to significantly dent demand for crude...
with oil prices seeing such a significant drop, we'll include a graph of their recent trajectory so you can see how fast and how far they've fallen..
natural gas prices also finished much lower this week, with the April gas contact ending at an all time low, while the front month price as quoted daily slid to its lowest level in 4 years...after rising 3.7% to $1.905/mmBTU on the strength of a late-winter cold snap last week, the contract price of natural gas for March delivery fell 7.8 cents to $1.827 on Monday, following further warming in the latest weather models....the March contract price then moved up 2.0 cents on Tuesday but fell 2.6 cents on Wednesday as trading in the March contract expired at $1.821 per mmBTU....meanwhile, the price of natural gas contracts for April delivery, which had ended last week at $1.917 per mmBTU, had fallen to $1.837 per mmBTU by the close on Wednesday, then fell 8.5 cents on Thursday to settle at a four year low of $1.752 per mmBTU, on what was called "a paltry draw" of natural gas from storage...the April contract price was then down another 6.8 cents to $1.684 per mmBTU on Friday, as traders brushed off the last fleeting cold spell of the season and like oil, turned their focus to the possible impacts that the coronavirus impact might have on demand...that left the April natural gas down more than 12% on the week at an all time low for the contract, while the quoted "price of natural gas" was at a 4 year low, and closing in on the lowest price since the third quarter of 1998...
with natural gas prices also at significant lows, we'll also include a pair of charts on their recent trajectory...
the above graph is a screenshot of the interactive monthly price chart for the nearby natural gas futures contract at Barchart.com, and like the oil graph we showed earlier, it shows the range of prices, in dollars per mmBTU, for the nearest natural gas futures contract as a vertical bar for each month over the past 12 years...this graph was compiled by taking quotes for what is called the "front month" natural gas contract, or the contract that is being quoted as "the price of natural gas" daily, with the each monthly contract price being replaced by the next one when trading in that contract expires on the third business day before the end of the preceding month...the lowest natural gas price on this graph is from early March 2016, when the April 2016 contract briefly traded at $1.611 per mmBTU...the lowest price that natural gas saw this past week was on Friday, when April 2020 gas briefly traded at $1.642 per mmBTU, before ending the week at $1.684...
in contrast to that graph, this next graph from the same interactive site shows the monthly price of the April 2020 natural gas contract over the last 12 years, and you can clearly see that the current price for that contract is at a life of contract low...in the futures market, one can lock in a price to buy or sell a commodity 20 years in the future...thus, during the month of March 2016, when natural gas was being quoted at prices ranging between $1.611 and $2.032 per mmBTU, one could enter into a contract to buy or sell natural gas in April 2020 at prices ranging from $2.660 to $2.884 per mmBTU, obviously well above the daily price...thus, when we've said in the past that a given natural contract price was at an all time low, it's this future's price that we are referring to...spot natural gas prices, or what physical natural gas might trade at on a given day, were as low as $1.50 in the mid-1990's, even as the long term future prices for gas were $1 higher...
meanwhile, the natural gas storage report on the week ending February 21st from the EIA indicated that the quantity of natural gas held in storage in the US fell by 143 billion cubic feet to 2,200 billion cubic feet by the end of the week, which left our gas supplies 637 billion cubic feet, or 40.8% higher than the 1563 billion cubic feet that were in storage on February 21st of last year, and 179 billion cubic feet, or 8.9% above the five-year average of 2,121 billion cubic feet of natural gas that has been in storage as of the 21st of February in recent years....the 143 billion cubic feet that were withdrawn from US natural gas storage this week was smaller that the consensus estimate for a 155 billion cubic feet withdrawal, and was also less than the 167 billion cubic feet withdrawal reported during the corresponding week of last year, but was still more than the average 122 billion cubic feet of natural gas that have been pulled from natural gas storage during the third 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 21st indicated that a decrease in our oil imports was mostly offset by a decrease in our refinery throughput, again leaving us with a bit of oil left to add to our stored commercial supplies for the sixteenth time in the past twenty-four weeks....our imports of crude oil fell by an average of 330,000 barrels per day to an average of 6,217,000 barrels per day, after falling by an average of 431,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 93,000 barrels per day to 3,657,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,560,000 barrels of per day during the week ending February 21st, 423,000 fewer 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 unchanged 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 15,560,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 16,008,000 barrels of crude per day during the week ending February 21st, 202,000 fewer 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 65,000 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 512,000 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 (+512,000) 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", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...nonetheless, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we'll continue to report them, just as they're watched & believed as accurate by most everyone else (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) indicate that the 4 week average of our oil imports fell to an average of 6,589,000 barrels per day last week, now just 1.6% less than the 6,699,000 barrel per day average that we were importing over the same four-week period last year....the 65,000 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 unchanged at 13,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 12,500,000 barrels per day, while a 8,000 barrel per day decrease Alaska's oil production to 474,000 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 22nd was rounded to 12,100,000 barrels per day, so this reporting week's rounded oil production figure was 7.4% 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 87.9% of their capacity in using 16,008,000 barrels of crude per day during the week ending February 21st, down from 89.4% of capacity the prior week, but still close to the recent average refinery capacity utilization for the third week of February...nonetheless, the 16,008,000 barrels per day of oil that were refined this week were fractionally more than the 15,890,000 barrels of crude that were being processed daily during the week ending February 22nd, 2019, when US refineries were operating at 87.1% of capacity....
even with the decrease in the amount of oil being refined, gasoline output from our refineries was somewhat higher, increasing by 272,000 barrels per day to 9,797,000 barrels per day during the week ending February 21st, after our refineries' gasoline output had increased by 284,000 barrels per day over the prior week... after this week's increase in gasoline output, our gasoline production was 2.6% higher than the 9,553,000 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 6,000 barrels per day to 4,846,000 barrels per day, after our distillates output had increased by 15,000 barrels per day over the prior week...after this week's small change in distillates output, our distillates' production for the week was fractionally above the 4,816,000 barrels of distillates per day that were being produced during the week ending February 22nd, 2018....
even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell for the fourth week in a row, after twelve consecutive increases, but were still down for the 18th time in 36 weeks, falling by 2,691,000 barrels to 256,387,000 barrels during the week ending February 21st, after our gasoline supplies had decreased by 1,971,000 barrels over the prior week....our gasoline supplies decreased by more this week because our exports of gasoline rose by 72,000 barrels per day to 842,000 barrels per day, while our imports of gasoline fell by 16,000 barrels per day to 405,000 barrels per day, and because the amount of gasoline supplied to US markets increased by 117,000 barrels per day to 9,035,000 barrels per day...even after this week's inventory decrease, our gasoline supplies were 0.6% higher than last February 22nd's gasoline inventories of 254,941,000 barrels, and 3% above the five year average of our gasoline supplies for this time of the year...
meanwhile, with the decrease in our distillates production, our supplies of distillate fuels decreased for the 16th time in 22 weeks and for 31st time in the past 47 weeks, falling by 2,115,000 barrels to 138,472,000 barrels during the week ending February 21st, after our distillates supplies had decreased by 635,000 barrels over the prior week....our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 391,000 barrels per day to 4,119,000 barrels per day, even as our exports of distillates fell by 137,000 barrels per day to 1,206,000 barrels per day while our imports of distillates rose by 50,000 barrels per day to 177,000 barrels per day....nonetheless, after this week's decrease, our distillate supplies at the end of the week were little changed from the 138,683,000 barrels of distillates that we had stored on February 22nd, 2019, while they slipped to about 5% below the five year average of distillates stocks for this time of the year...
finally, even with lower oil imports and higher oil exports, our commercial supplies of crude oil in storage rose for the nineteenth time in thirty-six weeks and for the thirty-first time in the past 52 weeks, increasing by 452,000 barrels, from 442,883,000 barrels on February 14th to 443,335,000 barrels on February 21st....but even after 5 straight increases, our crude oil inventories slipped to roughly 3% below the five-year average of crude oil supplies for this time of year, even while they remained 34.6% higher than the prior 5 year (2010 - 2014) average of crude oil stocks after the third week of February, 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 this past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of February 21st were 0.6% below the 445,865,000 barrels of oil we had in commercial storage on February 22nd of 2019, while still 4.7% above the 423,498,000 barrels of oil that we had in storage on February 23rd of 2018, while at the same time remaining 14.8% below the 520,184,000 barrels of oil we had in commercial storage on February 24th of 2017, a week which followed a period when we had been adding 10 million barrels per week to storage...
This Week's Rig Count
the US rig count was little changed for the 4th week in row over the week ending February 28th, after being down 18 of the prior 22 weeks, and hence remains down by 27% from the end of 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by one rig to 790 rigs this past week, which was also down by 248 rigs from the 1038 rigs that were in use as of the March 1st 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 decreased by 1 rig to 678 oil rigs this week, which was also 165 fewer oil rigs than were running a year ago, and much lower 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 was unchanged at 110 natural gas rigs for the 3rd week in a row, but still down by 85 gas rigs from the 195 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... a year ago, there were no such "miscellaneous" rigs deployed..
offshore drilling activity in the Gulf of Mexico was unchanged at 22 rigs this week, with 21 of those Gulf rigs drilling in Louisiana waters and one rig drilling offshore from Texas...that was the same number of rigs that were deployed in the Gulf a year ago, when 19 rigs were drilling offshore from Louisiana and three rigs were 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 offshore rig total in both cases..
the count of active horizontal drilling rigs was down by 6 to 706 horizontal rigs this week, which also 203 fewer horizontal rigs than the 911 horizontal rigs that were in use in the US on March 1st of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count was up by 4 rigs to 34 vertical rigs this week, but those were still down by 24 from the 60 vertical rigs that were operating during the same week of last year....at the same time, the directional rig count was up by one rigs to 46 directional rigs this week, but those were also down by 21 from the 67 directional rigs that were in use on March 1st 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 28th, the second column shows the change in the number of working rigs between last week's count (February 21st) and this week's (February 28th) count, the third column shows last week's February 21st 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 1st of March, 2019...
the 4 rig increase in Texas includes 2 rigs that were added in Texas Oil District 8, which corresponds to the core Permian Delaware, and another rig that started up in Texas Oil District 7B, while a rig was being pulled out of Texas Oil District 7C, or the southern Permian Midland at the same time...hence, the rig added in District 7B must have been targeting the far eastern Midland basin for the Permian basin to show a 2 rig increase for the week...elsewhere in Texas, rigs were pulled out of Oil Districts 1 and 3 to account for the 2 rig decrease in the Eagle Ford, while 2 rigs were added in Texas Oil District 6, one was added in Texas Oil District 2, and one was added offshore...it appears that the 2 rigs added in Texas Oil District 6 were natural gas rigs in the Haynesville shale, while a Haynesville gas rig was concurrently taken down in adjacent northern Louisiana....other Baker Hughes data shows the Haynesville shale with a one rig increase to 43 rigs this week, so it appears that the above table is wrong on that count...the natural gas rig count still balances because there was also a natural gas rig pulled out of a basin not tracked separately by Baker Hughes....meanwhile, since there was no change in the panhandle Texas Oil District 10, it seems likely that the oil rig pulled out of the Granite Wash had been operating in Oklahoma...other changes in Oklahoma would include the 2 rigs that were added in the Cana Woodford shale, and one rig that was pulled out of the Ardmore Woodford, and hence it seems likely that 3 rigs were also shut down in other Oklahoma basins not shown above...elsewhere, the Denver-Julesburg Niobrara rig addition could have been in either Colorado or in Wyoming, but Colorado seems more likely, since other basins in Wyoming have had more activity lately..
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Utica Shale well activity as of Feb. 22:
- DRILLED: 157 (157 as of last week)
- DRILLING: 111 (109)
- PERMITTED: 481 (475)
- PRODUCING: 2,451 (2,451)
- TOTAL: 3,200 (3,192)
Eight horizontal permits were issued during the week that ended Feb. 22, and 11 rigs were operating in the Utica Shale.
Ohio oil production totals increase - Horizontal shale wells in the state produced 6.8 million barrels of oil and 685 billion cubic feet of natural gas during the fourth quarter of last year, the Ohio Department of Natural Resources announced Friday. Oil production grew 17 percent compared to the last quarter of 2018, while natural gas production rose 3 percent.ODNR reported production from 2,452 wells, most of them tapping the Utica Shale. Those wells averaged:
- • 2,774 barrels of oil
- • 279 million cubic feet of natural gas
- • 90 days of production
Horizontal wells also produced 26 million barrels of brine, a salty wastewater often found in underground oil and natural gas deposits, during the fourth quarter.
Plant plans reason for encouragement - Residents of our region received some positive news Wednesday when it was learned that a local company has plans to build a gas-to-liquids facility in Saline Township in northern Jefferson County. Hammondsville-based Orin Holdings and county officials see a big potential for the facility, which would be located on 500 acres of ground that has sat idle for more than 30 years. According to the plan that was released Wednesday, Orin would construct on the property two state-of-the-art plants that would convert natural gas into a product that would be shipped to other plants where it would be further refined into commercial-grade diesel fuel. The twin plants will likely provide a big boost to the region’s economy. According to Trustee Danny Householder, the project will create as many as 500 jobs and will provide a significant increase to the tax base of the township. . Orin officials said the land where the proposed facility would be built sits in a sweet spot — right in the heart of the Marcellus and Utica shale plays. It also is located close to Norfolk Southern’s rail line, which runs next to the Ohio River; is close to the river itself; and is close enough to the Columbiana County Port Authority’s inter-modal terminal in Wellsville that it will have easy access to barge transportation. Plus, its proximity to Shell’s Falcon Pipeline means the facility will have easy and economical access to natural gas — the plant’s raw material. Orin said the potential exists to build an underground storage facility for natural gas in a salt cavern below the property. Company officials explained that the facility will be one of the most modern, efficient and environmentally compliant alternative fuel plants in the world. The oil and gas industry has played an important role in our region’s economy for many years now, and it’s likely that role will expand. Construction is continuing on Shell’s ethane cracker in Monaca, and it’s expected the official announcement about a cracker in Dilles Bottom planned by PTT Global Chemical and Daelim Industrial Co. LLC will come soon. It’s not known how soon the Orin facility can get up and running. The permitting process is expected to take more than a year to complete before construction can begin.
Should county, state welcome giant petrochemical project? - The Columbus Dispatch - Plans for the Ohio River’s petrochemical buildout, including multibillion dollar “cracker” plastic plants, were laid between 2010 and 2017 when there was reason for them. “Fracking” opened two of the world’s largest natural gas deposits. The U.S. became the world’s leading oil and gas producer for the first time ever and global plastic production surged. “The world demand for plastic will triple by 2030,” gasmen quote a DuPont vice president. But since 2017, everything has changed. And so are those plans. Buckling after being assessed the largest-ever EPA fine, DuPont, the Ohio River-based Teflon plastic manufacturer, joined its competition in 2017. A staggering 32 oil and gas companies went bankrupt in 2019. National fracking leaders Eagle Ford and Halliburton ended 2019 bankrupt, losing $1.6 billion; Murray Energy, bankrupt; Parkersburg, West Virginia’s plastic cracker, scrapped. Because most of all, since the petrochemical buildout was planned the global “plastic crisis” hit. And it hit hard. In 2017 China stopped importing the world’s supply of used, “recycled,” plastic. Cities from Pittsburgh to San Diego have canceled their plastic recycling programs — or just started stockpiling it — because in practice plastic is no longer recyclable. Plastic is trash. Ninety percent of all plastic has not been recycled. It makes up the Great Pacific Garbage Patch, a floating plastic “island” 14 times the size of Ohio, and is already on track to outweigh fish in the sea by 2050. Now with no scale plastic recycling system, expect all new plastic to end up polluting either our water (as floating trash), our air (as toxic burnt plastic) or our land (as nonbiodegradable fill). But it’s not all bad. The world is responding boldly to the plastic crisis by banning plastic, especially single-use plastic, i.e. throwaway bags, bottles and packaging. Compared with 2016, the global market for plastic has lost close to 3.5 billion people, nearly cut in half, most just this past year. And companies such as Kroger, Giant Eagle and even McDonald’s are following suit. This industry promises jobs. But jobs for companies that return to us pennies in wages on every dollar in profit they take from us, that openly pass their enormous environmental and community health bills to us, that are propped up by Big Government and that will only keep going bankrupt, are not worth it. We lost nearly 10 times more jobs than this cracker plant promises when three of our local hospitals closed last year; combined they only needed about 100th the investment.Let’s build up our health, not destroy it.
Gulfport Energy writes down value of oil, gas assets in 2019, report shows An expensive write-down contributed to big losses on the year for Gulfport Energy. After markets closed Thursday, the company issued a report stating it lost about $2.02 billion, or $12.49 per share, on total revenues of about $1.35 billion for the entire year. Gulfport wrote down the value of its oil and natural gas assets by $2 billion in 2019. As part of that, the company took an impairment charge on the value of its oil and gas assets of about $2.04 billion. The Oklahoma City-based company, which owns and operates wells in Ohio’s Utica Shale and Oklahoma’s SCOOP play of the Anadarko Basin, also announced it's cutting the amount of money it expects to spend to drill and complete wells in 2020 to between $285 million and $310 million. In 2018, the company spent $602.5 million. In 2018, the company had earned a profit of about $430.6 million, or $2.46 a share, on total revenues of about $1.36 billion. David M. Wood, Gulfport’s CEO, said the company halved its capital expenditures budget for 2020 because of continued low pricing for natural gas — mostly what the company produces. “At current strip pricing, our 2020 drilling program will be funded within cash flow, ensuring a very strong liquidity position … with a relatively low amount of revolver draw,” Wood said. “The large decline in spending during 2020 also allows us to retain our high value inventory for a better gas price environment in the future.” In the Utica Shale in 2019, Gulfport drilled 16 wells and turned 47 wells to sales. Average daily production from its operations there averaged about 1.01 billion cubic feet (equivalent, officials said). This year, Gulfport intends to run one rig in the play with plans for it to drill 16 wells. In the SCOOP play of the Anadarko Basin, the company drilled 10 wells and brought 14 wells to sales.
Lawmakers Pass Bills To Lure Petrochemical Industry To W.Va. - The West Virginia House of Delegates on Tuesday passed two bills that would provide tax cuts to the natural gas industry in an effort to boost petrochemical and plastics manufacturing. House Bill 4421 the “Natural Gas Liquids Economic Development Act” would provide tax credits to companies that transport or store natural gas liquids. These by-products of natural gas drilling include propane and ethane, which are feedstocks for chemical and plastics production. Del. Bill Anderson, a R-Wood County, speaking on HB 4421, said the measure would promote natural gas storage and pipelines in an effort to boost development of downstream manufacturing in the state. “We must develop manufacturing of these liquids in this state,” he said. “Our alternative is simply this: Are we going to put them in a pipeline and send them to the Gulf Coast and create jobs there? Or are we going to encourage development in this state, a natural gas storage hub?” State officials, including Gov. Jim Justice, have pushed for the development of a petrochemical industry in West Virginia. In late January, Justice told natural gas producers, currently facing record low prices, he would do “anything” to help the state’s struggling oil and natural gas industry. Last fall, Justice signed an executive order creating a task force aimed at bringing petrochemical manufacturers to the state. Some lawmakers worried the proposed tax cuts could shoot a hole in the state’s already precarious budget. The Legislature at the time was debating other measures that could radically change the state’s tax code. “These things cost $200, $300, $400 million a year and we’re giving away something for $1 million,” said Del. Isaac Sponaugle, D-Pendleton County. “That’s not going to drive the needle one way or another whether we’re going to get those investments, but that $1 million is gone and you’re wasting it.” The fiscal note attached to HB 4421 finds the state could lose up to $500,000 in revenue in fiscal year 2022, but if and as the storage and transportation sectors grow, “local property taxes on associated machinery and inventory will likely increase significantly with revenue gains to local governments along with the potential loss in State General revenue associated with the tax credits for local taxes paid.” HB 4421 passed 85 in favor, 14 against and 1 member not voting. The lower chamber Tuesday also passed House Bill 4019 the “Downstream Natural Gas Manufacturing Investment Tax Credit Act of 2020.” It seeks to encourage investment in downstream natural gas manufacturing, such as the building of ethane cracker plants, by giving businesses up to an 80 percent tax credit on personal or corporate net income taxes for new investment that creates jobs.
EQT, EQM sign gas gathering pact - Independent producer EQT Corp. and EQM Midstream Partners LP (EQM) said Wednesday they’ve executed a 15-year gas gathering agreement covering Pennsylvania and West Virginia both sides call a win-win deal. The minimum volume commitment (MVC) between EQT and EQM rises to 3.0 billion cubic feet per day (Bcf/d) from 2 Bcf/d, and incremental MVC increases begin with the completion of the Mountain Valley Pipeline (MVP), Kallanish Energy reports. The MVP project is a natural gas line system that spans roughly 303 miles from northwestern West Virginia to southern Virginia, and will flow up to 2 billion cubic feet per day (Bcf/d) Marcellus and Utica Shale play gas to the south. The MVP will be constructed and owned by Mountain Valley Pipeline, LLC, a joint venture of EQM, NextEra Capital Holdings, Con Edison Transmission, WGL Midstream, and RGC Midstream LLC. EQM will operate the pipeline. The deal consolidates nearly all of EQT's existing Pennsylvania and West Virginia gathering contracts with EQM into one new consolidated agreement, the partners said. The new deal will provide EQT with gathering and compression fee relief, effective upon the MVP's in-service date, currently expected to be Jan. 1, 2021. Gathering fee relief is estimated to impact cash flow by roughly $125 million, $140 million, and $35 million, in the three years following MVP's in-service, respectively. Also part of the new pact, EQT dedicated over 100,000 additional acres in West Virginia to EQM and extended its contractual obligations with EQM to 2035. EQM has also agreed to defer approximately $250 million in current credit assurance posting requirements. Present value, using 10% discount rate (PV10), of MVC revenue is roughly $2.1 billion higher under the new 15-year gathering pact than under prior MVCs with EQT.
Pa. approves $200,000 fine and orders 'remaining life’ study of leaky 89-year-old Sunoco pipeline - State regulators on Thursday finalized a settlement with Sunoco Pipeline to atone for a 2017 leak from the aging Mariner East 1 pipeline that includes a $200,000 fine and a promise to conduct a “remaining life” study of the nearly 90-year-old pipeline. The Pennsylvania Public Utility Commission unanimously adopted a recommended decision by Administrative Law Judge Elizabeth H. Barnes, which requires the study be completed six months after an independent expert is selected to conduct it. A redacted summary of the study will be released to the public. The PUC cited Sunoco in 2018 for the April 2017 leak, during which 840 gallons, or 20 barrels, of highly volatile natural gas liquids escaped from a small hole that formed in the eight-inch diameter steel pipeline in New Morgan, Berks County. The PUC cited Sunoco for having inadequate cathodic protection of the pipeline, which allowed it to corrode and to leak ethane and propane. The material bubbled to the surface and evaporated without causing injury or explosion, but the episode heightened concerns about what might happen if the 300-mile pipeline experienced a larger failure.
DOJ is building a criminal case around Energy Transfer’s Revolution pipeline explosion -- The U.S. Department of Justice has launched a criminal investigation into the 2018 natural gas pipeline explosion in Beaver County, adding to a growing list of state and federal probes into Energy Transfer’s pipeline projects in Pennsylvania. The investigation has been going on since at least November, according to a disclosure in the Texas-based pipeline company’s financial filings. Energy Transfer said the U.S. attorney for the Western District of Pennsylvania “issued a federal grand jury subpoena for documents relevant to the incident,” which is also being examined by the Pennsylvania attorney general’s office. “The scope of these investigations is not further known at this time,” Energy Transfer wrote in its annual report earlier this month. Energy Transfer disclosed Attorney General Josh Shapiro’s investigation into the Revolution pipeline’s failure in a financial filing in August 2019. The Revolution pipeline — a 40-mile link between shale gas wells in Beaver and Butler counties and a processing plant in Washington County — slid down a steep hill one rainy September morning in 2018, bursting into flames, burning down one family’s home and prompting an early morning evacuation of the Center Township neighborhood. The landslide and resulting blast occurred just days after Energy Transfer began moving gas through the pipeline. Events and decisions surrounding the routing, design and construction of the Revolution pipeline already have been the subject of other investigations, such as by the Pennsylvania Department of Environmental Protection. DEP stopped reviewing any new permits for Energy Transfer across the state for nearly a year and last month announced a settlement with a historic $30.6 million fine for the Revolution explosion. DEP focused on Energy Transfer’s record of landslides and slope destabilization during the engineering and construction of the pipeline, finding that the company knew it was building in erosion-prone terrain but did not take enough precautions to avoid the problem or bolster the land. Meanwhile, the Pennsylvania Public Utility Commission’s investigation into the Revolution pipeline is still ongoing, spokesman Nils Hagen-Frederiksen said. The PUC’s jurisdiction over the line, categorized as a gathering facility, revolves around enforcing federal pipeline safety regulations. It’s not known what documents the federal Justice Department is seeking or what criminal acts are being investigated. One aspect that could fall under federal law and hasn’t been addressed publicly by Pennsylvania regulators is the possibility that a bad weld might have contributed to the blast. This suspicion was highlighted in a lengthy document filed by the creditors of EdgeMarc Energy Corp. after they’d reviewed 24,000 documents and taken five depositions of Energy Transfer witnesses.
Chevron Launching Layoffs in April - Chevron Corp. will be launching a round of layoffs beginning April 6 as it sells its Appalachian natural gas operations, according to a WARN notice the company sent to the Pennsylvania Department of Labor & Industry earlier this month. According to the notice the potential number of people affected totals 288 employees at its regional headquarters at 700 Cherrington Parkway in Moon Township, PA.The notice indicated that an unspecified number of layoffs would occur April 6 and added that some employees will be offered temporary assignments, with extended layoff dates potentially through the end of this year, according to the Pittsburgh Business Times."We are taking active steps to reduce job loss and will facilitate the placement of as many impacted employees as we can with other Chevron business units," the letter stated, according to the Pittsburgh Business Times. Chevron also indicated that any employees who are laid off would receive severance and outplacement services.Rigzone reached out to Chevron directly for comment on the matter and received the following statement via email on Feb. 24: "The WARN Act is a regulatory requirement intended to give employees advance notice before potential layoffs at a plant or facility. It’s too soon to know how many employees will be affected on or after the April 6 date indicated in the WARN letter."At the end of 2019 the company announced a $20 billion CAPEX budget for 2020 and that it was considering strategic alternatives, including divestment, for “gas-related opportunities including Appalachia shale, Kitimat LNG, and other international projects”. During 4Q 2019 the company took a hefty write-down due to ongoing depressed natural gas prices.
Report: Pa. natural gas production grew in 2019 but at lower rate -Total natural gas production in Pennsylvania grew by 7.6% in the fourth quarter of 2019 compared to the same period in 2018 — the lowest growth rate in more than two years, a report by the Pennsylvania Independent Fiscal Office said.Pennsylvania remains the second-highest natural gas producing state after Texas, with 6.9 trillion cubic feet of natural gas produced in 2019, the Natural Gas Production Report said.“Through November 2019, nationwide (natural gas) production grew by 10.2% compared to the prior year, largely driven by significant gains in Texas and Pennsylvania,” the report said.Production volume for horizontal wells in the fourth quarter of 2019 reached 1,775 billion cubic feet, the report said. All of the production growth for the quarter was from unconventional wells — i.e., wells requiring horizontal drilling into deep formations and fracturing with fluids.Horizontal well production in Pennsylvania has grown for 14 consecutive quarters, but average production-per-well growth moderated in 2019, the report said.There were 9,319 producing horizontal wells in the state in the fourth quarter of 2019 — an 8.3% increase over the previous year. Since the fourth quarter of 2017, total producing wells increased by 18.2%, the report said.Southwestern Pennsylvania has four of the top 10 natural gas producing counties in the state — Washington (No. 2), Greene (No. 3), Butler (No. 8) and Allegheny (No. 10), the report said.Allegheny County, although representing only 2.1% of the production volume in the state, had the highest rate of production growth — 34.4% — from 2018 to 2019, the report said. The IFO report is based on data from the state Department of Environmental Protection.
Voters divided on fracking - - Voters in Pennsylvania — the second-largest natural-gas producing state in the country — are closely divided over whether they support a ban on fracking, a process used in natural gas drilling that spurred a surge in production here over the last decade. That’s according to a new statewide Morning Call/Muhlenberg College poll, which found 42% of Pennsylvanians oppose a ban on fracking and 38% support a moratorium, with 20% undecided. The finding comes as Democratic presidential candidates Bernie Sanders and Elizabeth Warren are calling for a halt to fracking, arguing its effects on the environment are greater than the economic benefits. The new poll showed Pennsylvania voters are split on whether fracking has more positive than negative: 38% said they strongly or somewhat agree that it has had more positive effects, 37% strongly or somewhat disagreed, and 24% were not sure. On the economic effects, half of respondents said the industry has been “a major boost” to Pennsylvania’s economy. Another 26% disagreed, and 25% weren’t sure. Asked whether natural gas drilling poses a major health risk to state residents, 44% agreed and 36% disagreed, with 20% who were not sure. With Pennsylvania a critical battleground state in this year’s presidential election, some Democrats have concerns that having a nominee at the top of the ticket who supports a fracking ban could be politically risky in a state where gas drilling has boomed. “This could be something that poses some challenges to Sen. Sanders,”
DEP fines landfill near Pittsburgh for problems tied to fracking waste - The Pennsylvania Department of Envirommental Protection has fined a Westmoreland County landfill that had been passing pollution from oil and gas drilling waste into a local sewage treatment plant. The fine is part of a consent agreement with Westmoreland Sanitary Landfill to find a solution for the plant’s leachate, the liquid waste formed when rain and moisture percolates through the landfill. As part of the settlement, the landfill will pay a $24,000 fine and reduce the amount of waste it generates by closing up part of the landfill’s open area and installing an evaporator and other treatment equipment for the liquid waste. Ro Rozier, a spokeswoman for the landfill, said the company was “committed to investing substantial amounts of capital to purchase and install technology and equipment capable of treating and evaporating the leachate generated from the landfill on site. We are confident that our plan for onsite treatment and evaporation will resolve the landfill’s recent leachate disposal issues.”In May, a Fayette County judge ordered the landfill to stop sending its liquid waste to the Belle Vernon Municipal Authority’s sewage treatment plant, which had reported problems meeting water quality standards for its treated sewage. The sewage plant sought the injunction because the leachate it was receiving from the landfill was high in salts and radioactive materials found in drilling waste, which the landfill had been taking for several years. The landfill’s own waste reports showed the leachate it was sending the treatment plant had an “oil like” or “petroleum sheen.” The agency says it wants the landfill to find a local disposal site for the waste to cut down on truck traffic from the landfill. For now, the waste will be sent to sewage plants in Ohio and Pennsylvania.
Natural gas synthesis plant proposed – An effort has been underway for 16 months to explore the development of a natural gas synthesis plant in western Clinton County by Frontier Natural Resources and a new company formed for the purpose called, ‘KeyState Agri’, both of Bellefonte.Perry Babb, spokesman for the KeyState stopped at The Express on Thursday to informally introduce the proposed $500,000,000 project that could potentially generate 600 to 800 jobs during construction and 150 to 200 permanent jobs.A natural gas synthesis plant uses the methane in natural gas as a feedstock to produce a range of products used in agriculture, industry, medicines and transportation. A synthesis plant is not a ‘cracker plant’. The majority of CO2 generated in gas synthesis processes is captured and used in the making of other products. More than a dozen similar plants have been built and safely operated across the US in the last 30 years.“The economic development impact would be profound and generational,” Babb said. “Commercial and other activity generated would go beyond Clinton County, impacting areas of Cameron, Centre and Clearfield, local rail siding and road upgrades, housing for the construction workforce proposed to be converted to permanent affordable housing, coordination of workforce development programs with the surrounding county high schools, vo-tech schools as well as Lock Haven, Penn College and Penn State University, substantial research activities with the surrounding universities and major wildlife habitat enhancement in reclaimed mining and other areas funded,” he continued.
Op-Ed: PennEast Has a Pipeline to Sell You -You’ve heard the saying, “If you believe that, I’ve got a bridge to sell you.” The pipeline that PennEast has tried to sell us for the past five years is a lot like that bridge. Now, adding insult to injury, they want to sell us half a bridge. Do they think we’re suckers? Faced with a court decision barring PennEast from seizing state-preserved land in New Jersey, and iron-clad evidence from gas experts and the NJ Ratepayer Advocate that the pipeline isn’t needed, PennEast is desperately trying to build something — anything — to gain the excessive profits the federal government guarantees for such projects, needed or not. PennEast recently asked the Federal Energy Regulatory Commission (FERC) for approval to build the pipeline in two phases, constructing in Pennsylvania by 2021, then crossing the Delaware River into New Jersey by 2023. Maybe they think a half-loaf is better than none, but leaders in both states should reject this faulty premise.PennEast says it has contracts for only half of the gas that would be delivered by phase one of the project and has provided no information about who the customers would be. That doesn’t even meet FERC’s weak test of public need. FERC should put the brakes on this scheme and treat PennEast’s new proposal as an entirely new project requiring intense scrutiny. PennEast also claims the Delaware River Basin Commission (DRBC) no longer has authority over phase one of the project. That’s an end run around the agency charged with protecting water quality in the area, supplying drinking water to over seven million people. The DRBC shouldn’t let them get away with it. This all smacks of desperation for PennEast. The state Department of Environmental Protection rejected the company’s application for the permits needed to build the pipeline. A federal court ruled that PennEast can’t use eminent domain to take land owned by the state. And now PennEast says it will appeal that decision to the U.S. Supreme Court in hopes of a ruling that could pave the way for construction of a pipeline that no one needs but PennEast.
Energy giant drops proposed Constitution Pipeline — Williams Companies, the Oklahoma energy giant, confirmed Friday that it has shelved the Constitution Pipeline, a proposed interstate natural gas pipeline that triggered a prolonged battle between environmental activists and pro-development advocates.“Williams — with support from its partners, Duke, Cabot and AltaGas — has halted investment in the proposed Constitution project,” the company said in response to questions from CNHI.“While Constitution did receive positive outcomes in recent court proceedings and permit applications, the underlying risk adjusted return for this greenfield pipeline project has diminished in such a way that further development is no longer supported,” Williams added.Anne Marie Garti, an environmental lawyer who helped form the opposition group Stop the Pipeline, said the group “fought this epic 8-year battle with courage, conviction and intelligence, adding: “Perseverance pays off.”Williams disclosed this week in a financial report that the investors in the Constitution Pipeline took a $345 million “impairment,” suggesting that the investment in the mammoth 124-mile pipeline was being written off.“Impairment” is an accounting term meaning a reduction in the recoverable amount of a fixed asset.Despite being approved by the Federal Energy Regulatory Commission, the project skidded into trouble when New York regulators refused to issue water-crossing permits, citing environmental concerns.Constitution’s footprint would have crossed hundreds of real estate parcels in Chenango, Delaware and Schoharie counties. Garti said Stop the Pipeline’s next mission is to ensure easements acquired by Constitution are removed from landowners’ deeds.
Scrapped pipe project for New York a dire sign for other Northeast gas proposals - The cancellation of a proposed natural gas pipeline into New York may be a sign of challenges ahead for other projects, both at the grassroots level and in Washington, D.C., according to energy analysts. Anti-fossil-fuel activists have grown more successful in recent years, but Williams Cos. Inc.'s move to scrap the Constitution Pipeline Co. LLC project earned a rare designation in the history of energy infrastructure, according to Katie Bays, co-founder of energy consultancy Sandhill Strategy. "It does take a lot to kill a pipeline project," Bays said. "There's really only a handful that have been killed by public policy. I think that was certainly a milestone." Williams announced it would shelve the project after years of opposition from New York and environmentalists. The proposed line from Pennsylvania's shale gas fields became a symbol of the movement to keep fossil fuels in the ground and a trend of Northeast states with ambitious clean energy goals denying key water permits to pipeline projects. SNL Image After Constitution won a favorable ruling at the Federal Energy Regulatory Commission, Bays suspected Williams would have to choose between building it and another pipeline, the Northeast Supply Enhancement project. Constitution became so mired in acrimonious politics that continuing to do battle with New York over the project likely would have closed the door to other plans, Bays said. New York has also opposed the Northeast Supply Enhancement proposal, and the line continues to face headwinds, analysts said. Gov. Andrew Cuomo's administration has refused to grant a water permit to that project as well, as the state uses all policy options to achieve its clean energy goals.
US NRC checks review of gas pipeline at New York nuclear plant after report — The chairman of the US Nuclear Regulatory Commission has ordered a review of the agency's safety analysis of a natural gas pipeline near the Indian Point nuclear plant in New York after NRC's inspector general said in a report made public Wednesday the staff review was flawed and might need to be redone. The NRC IG's report also said NRC missed an opportunity to correct those flaws when it rejected a subsequent petition from consultants for the town of Cortlandt, New York seeking to reverse the agency's conclusions.The NRC's 2014 review of the 42-inch-diameter Algonquin Incremental Market pipeline, designed to ease gas constraints in New England, was the basis for US Federal Energy Regulatory Commission approval of that project in 2015. The pipeline, which has a capacity of 342 MMcf/d, went into service in January 2017. NRC Chairman Kristine Svinicki directed agency staff Monday to promptly examine whether any immediate action should be taken in response to the report, and determine within 45 days whether the original analysis or the response to the petition should be changed. She also told staff to study whether any modifications to agency practice or procedures are needed.
Hotly Contested Proposal to Build Gas Pipeline Into NYC and LI Returns – A hotly contested proposal to build a pipeline to take natural gas to customers in New York City and Long Island is back before New Jersey regulators.The Northeast Supply Enhancement Project would add to the existing Transco pipeline and would carry enough gas to heat 2.3 million homes. It would take gas from Pennsylvania through New Jersey and its Raritan Bay to New York.Oklahoma-based Williams Companies plans to spend $926 million on the project, saying that it is needed to ensure adequate heating and energy supplies to New York City and Long Island, and that it can be built safely with minimal environmental disruption. But opponents say it is unneeded and will encourage the burning of fossil fuels at a time when climate change is causing serious harm.Williams filed its latest application with the New Jersey Department of Environmental Protection on Jan, 21, a filing made public Thursday by the state. It is at least the fourth time the Tulsa company has applied for permission to build the project, which includes more than 23 miles of pipeline through Raritan Bay into New York, and a compressor station to be built in Franklin Township in Somerset County, New Jersey.The company withdrew its application twice before, and New Jersey regulators denied it once. “Nasty NESE is back for an unbelievable fourth time, and the environmental impacts of this unnecessary, climate-changing project will still be severe and devastating,” said Cindy Zipf, Clean Ocean Action’s executive director. “They’re trying to wear us down. We will not give up. We have too much to lose: our ocean, bay, air, and coastal economy and communities.”
After clash with Cuomo, National Grid warns of widening NY gas shortage - Downstate New York's growing demand for natural gas will begin outstripping supply next winter, creating a gap that will continue to grow for at least the next decade absent a long-term solution, National Grid USA forecast in a new report. Possible solutions include new pipelines and other large-scale projects, smaller-scale infrastructure or energy efficiency programs, and other workarounds, the gas and electric power utility operator said. Without some combination of those fixes, undersupply reaching 265,000 Dth/d by the onset of winter 2032-2033 in a low-demand scenario, or 415,000 Dth/d in the winter of 2034-2035 in a high-demand scenario. "National Grid's current capacity of 2,888 MDth/day is challenged to meet existing peak demand during cold winter days, leaving our network with little room for error," the company said. "And looking ahead, our existing and planned expansion capacity to supply natural gas is not sufficient to meet forecast demand." National Grid presented its outlook in a 116-page report, part of a $36 million settlement with its New York state regulator, the Public Service Commission, over the utility's six-month moratorium on new downstate gas hookups. The standoff reached a climax in November 2019, when New York Gov. Andrew Cuomo gave National Grid two weeks to present a remedy or else lose its license to deliver gas to 1.9 million customers of subsidiaries KeySpan Gas East Corp. and Brooklyn Union Gas Co. across Brooklyn, Queens, Staten Island and Long Island.
National Grid offers options to meet projected gas supply constraints -Options to meet long-term natural gas supply constraints for the downstate region include a deep-water liquefied natural gas port for the waters off Long Island, two barges that could deliver liquefied gas during peak demand times and a pipeline that National Grid has long proposed, according to a company report.The report was released Monday in response to a state settlement last year over its controversial moratorium on new gas hookups, In it, National Grid laid out the pros and cons of seven different large-scale and so-called distributed solutions to its gas supply constraints, along with green-energy options to help further curtail use.Growth in natural gas usage across the downstate region is expected to increase in coming years, the company said, but at a slower rate than the historic annual jump of 2.4%. The company cited growth in electrification and the anticipated jump in electric heat pumps, along with efficiency measures, efficient appliances and demand-reducing programs, in projecting that demand could slow to 0.8% to 1.1% per year through 2035. But National Grid said increased demand continues to strain the system. To handle short-term supply worries, National Grid had 42 trucks last winter and 108 this winter at the ready to deliver compressed national gas into the system, when needed, on peak demand days. Earlier this year the company had said warming weather meant the company didn’t need to deploy those planned short-term measures this year. .”Among three large-scale infrastructure options to meet the increased demand is an offshore LNG deep-water port for the waters off New York that would take six to eight years to complete, the company said. “There is a potential location in Long Island Sound that would enable delivery of up to 400 million dekatherms per day to Commack, NY, or Hunts Point, NY,” the report says. “An alternative location exists off the South Shore in the Atlantic Ocean” with an underwater connection to an existing subsea pipeline.
NEW YORK: Utility warns of gas shortages in Cuomo pipeline fight -- Wednesday, February 26, 2020 -- Fresh off a high-profile battle with New York's governor over natural gas supplies, National Grid PLC is warning once again it might have to refuse gas customers if the state doesn't allow construction of new pipelines.
How New York City plans to end natural gas, oil use in buildings - New York City's path to limiting natural gas in buildings could look very different than the course that California towns and cities have charted — and, as a result, could go farther than other measures already in the works. Mayor Bill de Blasio recently announced his administration will aim to end the use of natural gas and fuel oil in buildings by 2040, following a wave of gas bans and building electrification codes in California, the Boston area and Seattle. The announcement on Feb. 6 signaled that the nation's most populous city could soon set about electrifying a portion of its more than 1 million buildings. "One of the reasons why the mayor is so strongly stating this kind of goal in the State of the City is that we have to take very comprehensive action," Mark Chambers, director of the mayor's Office of Sustainability, said. "And so I think that we are very committed to being more aggressive, more thoughtful and intentional ... and moving forward as quickly as possible because the urgency of the climate crisis demands it." City officials do not envision a swift prohibition on gas hookups in new buildings as Berkeley, Calif., pioneered, and instead are considering building on previous legislation and existing city programs in ways that could create a new template for other cities. The transition would likely challenge Consolidated Edison Inc. and National Grid USA to accelerate plans to evolve their local gas distribution companies' New York operations. The de Blasio plan is short on details for now as the administration embarks on the earliest stages of shaping the policy, Chambers told S&P Global Market Intelligence. To date, the administration has said its goal is to stop using gas and other fossil fuels in "large building systems" by 2040. It also said it would start with government buildings and work with City Council to "ensure new permits for building systems are aligned with our goal of carbon neutrality by 2050." That language would seem to indicate the city is at least contemplating the California model: deny building permits to new buildings or renovations that include gas hookups, or else use the permitting process to incentivize all-electric systems.
The Perfect Storm Sends Natural Gas Crashing - If you’re waiting for natural gas prices to recover, you might be in for a considerable wait, as inventories are expected to hover well above their five year average for the remainder of the year, the EIA has forecast, painting a rather sour picture for the industry that has seen investments stifled due to the lower prices. In fact, inventories later this year will reach levels never seen before if forecasts prove accurate. According to the Energy Information Administration Short-Term Energy Outlook (STEO), working natural gas in storage in the Lower 48 will end the current heating season—which ends on March 31—at 1,935 billion cubic feet. This is 12% above the previous five-year average. Now, we’re about to head into what the industry refers to as “the refill season”. Normally, the end of the heating season is when inventories are at their lowest. Now, we’re heading into this stockpiling season with inventories that are high. So we will be amassing even more nat gas in inventory as heating demand falls off. The EIA estimates that we will end the refill season, which runs until the end of October, with 4,029 billion cubic feet. This would be the largest monthly level of nat gas we’ve ever had in storage. At the end of January, inventories had already reached 2.6 trillion cubic feet. The COVID-19 outbreak—likely soon to be pandemic—might be the obvious target on which to lay blame for the increasing inventories. After all, it is responsible for demand in crude oil. But that is only a piece of the puzzle, with weather, weather, weather topping the list of critical factors that are affecting natural gas inventories. January 2020 was the fifth warmest January on record—that’s out of over 125 years of data. January 2020 saw average temperatures of 35.5 degrees F across the United States. This is 5.4 degrees more than the 20th Century average, according to the US Department of Commerce’s National Oceanic and Atmospheric Administration. The problem? It’s just been so warm that the need for heating has been reduced, depressing demand. And while production has not fallen with demand, inventories have bloomed. Add to that unfavorable price scenario the fact that COVID-19 is spooking the market and further denting demand, and you have a perfect storm for lower nat gas prices.
US natural gas futures fall to four years low - US natural gas futures plunged over 4% to a near four years low on Thursday on a smaller-than-expected weekly storage draw, forecasts for milder weather over the next two weeks and a drop in oil futures to their lowest in over a year. “A trend to milder weather and reduced storage withdrawals going into March are exacerbating bearishness and price impacts," Daniel Myers, market analyst at Gelber & Associates in Houston, said in a report, noting last week's storage withdrawal “was a bit of a letdown as it likely contained the last relatively strong cold shot of the winter season." The US Energy Information Administration (EIA) said utilities pulled 143 billion cubic feet (bcf) of gas from storage during the week ended February 21. That is much less than the 158-bcf decline analysts forecast in a Reuters poll and compares with a decline of 167 bcf during the same week last year and a five-year (2015-19) average reduction of 122 bcf for the period. The decrease for the week ended February 21 cut stockpiles to 2.200 trillion cubic feet (tcf), 8.9% above the five-year average of 2.021 tcf for this time of year. On its first day as the front-month, gas futures for the most active contract for April delivery on the New York Mercantile Exchange fell 8.5 cents, or 4.6%, to settle at $1.752 per million British thermal units (mmBtu), their lowest close since March 2016. US crude futures dropped over 3% to their lowest since January 2019 as a rise in new coronavirus cases outside China fueled fears of a pandemic that could slow the global economy and dent oil demand. Since hitting an eight-month high of $2.905 per mmBtu in early November, gas futures have collapsed 40% as record production and mild winter weather enabled utilities to leave more gas in storage, making fuel shortages and price spikes unlikely. Meteorologists projected weather in the Lower 48 US states will fluctuate between warmer and cooler than normal over the next two weeks, with the most cold weather expected between February 27-29 and March 6-10. That forecast was milder than Wednesday's outlook. With the weather warming with the coming of spring, data provider Refinitiv projected average demand in the Lower 48, including exports, would ease from 117.7 billion cubic feet per day (bcfd) this week to 114.0 bcfd next week. That forecast for next week is lower than Refinitiv's 114.8-bcfd projection on Wednesday. The amount of gas flowing to US liquefied natural gas (LNG) export plants edged up to 8.9 bcfd on Wednesday from 8.8 bcfd on Tuesday, according to Refinitiv. That compares with an average of 8.5 bcfd last week and an all-time daily high of 9.5 bcfd on January 31.
Covid-19 Fears Combine with Warmer Weather Forecasts to Send Natural Gas Futures Below $1.70 --After being driven sharply lower by an increasingly mild weather forecast, natural gas futures sustained even more damage on Friday as global fears of the coronavirus continued to hammer stocks and energy commodities. The April Nymex gas futures contract plunged to an intraday low of $1.642/MMBtu before going on to settle at $1.684, down 6.8 cents from Thursday’s close. May also fell 6.8 cents to land at $1.732. Spot gas, which traded Friday for delivery on Sunday and Monday, also moved lower as any remnants of the blustery conditions that hit the United States in the final days of February were set to dissipate. NGI’s Spot Gas National Avg. dropped 10.5 cents to $1.525. The latest weather data, already fairly warm, trended further milder overnight Thursday as the American model lost more than 10 heating degree days (HDD) and the already warmer European model lost three to four more HDD, according to NatGasWeather. The midday Global Forecast System continued to trim demand from its outlook, losing another four HDD, the firm said. However, while the warmer weather trends undoubtedly aided Friday’s selling, the move lower also was likely influenced by major moves in commodity and equity markets because of the coronavirus fears, according to NatGasWeather. Stocks continued to plunge on Friday, and energy commodities went along for the ride. West Texas Intermediate front month futures dropped below $44/bbl early Friday before recovering a bit, while Brent crude broke below $50. The global markets were poised to extend the worst losing streak since the 2008 financial crisis, with the virus, officially dubbed Covid-19, forecast to pound productivity levels this year. “Our current assessment forecasts that Covid-19 could result in global E&P investments falling by around $30 billion in 2020 — a significant hit to the industry,“ said Rystad Energy’s Audun Martinsen, head of oilfield service research. Some of the investments are likely to come back in 2021, he said, but the situation is expected to worsen in March, slamming the global services industry well beyond Asia.
Columbia Gas to plead guilty in Merrimack disaster, pay $53 million fine; parent company must leave Mass. - The Boston Globe — The utility company responsible for the 2018 gas pipeline disaster in the Merrimack Valley has agreed to plead guilty to violating federal regulations and will sell off its operations in Massachusetts, helping to bring closure to a community that has remained rattled since fires and explosions forced residents to evacuate their homes.Columbia Gas of Massachusetts also agreed to pay a $53 million criminal fine, which federal prosecutors called the largest-ever for a pipeline safety violation. And its parent company, NiSource, would turn over to a federal victims’ fund any profits it reaps from the sale of the Massachusetts property, according to an agreement reached with prosecutors.Wednesday evening, Eversource Energy announced that it had agreed to purchase Columbia Gas’s natural gas assets in Massachusetts for $1.1 billion from NiSource.“This disaster was caused by a wholesale management failure at Columbia Gas,” US Attorney Andrew Lelling said Wednesday in announcing the penalties.He said no one person could be held responsible for the disaster, which killed one person and injured more than 20 others, but instead blamed it on a series of systemic failures.“The company as a whole had simply failed to do what it was supposed to do to ensure public safety," Lelling said. Company representatives are slated to plead guilty in federal court in Boston on March 9. The agreement was welcomed by Merrimack Valley residents, who say they have lost trust in the area’s gas distributor, because of both the disaster and its botched response. Federal investigators have said the event, which set fire to more than 130 homes across Lawrence, Andover, and North Andover, would not have occurred had proper mechanisms been in place.
Miles-long oil slick from leaking equipment spotted on Midland-area rivers - Anyone walking along the Pine or Tittabawassee rivers around Midland may see and smell oil.Residents notified Midland city officials about the oil slick on Tuesday. Investigators found oil on about four to five miles of the Pine River.The Michigan Department of Energy, Great Lakes and Environment sent investigators to search for the source. They found a piece of heavy equipment leaking in a yard near St. Louis, according to Midland officials.The oil was entering the Pine River and flowing into the Tittabawassee River. Residents along the rivers may continue to notice oil as it continues flowing through the watershed.State environmental officials could not be reached for comment Tuesday evening about the amount of oil that spilled and whether any cleanup activities were taking place. Anyone with concerns or more information about the spill can call the Michigan Pollution Emergency Alerting System hotline at 1-800-292-4706.
Buttigieg tweets opposition to Line 5 ⋆ Michigan Advance - In a tweet Monday evening, former South Bend, Ind., Mayor Pete Buttigieg became the second Democratic presidential contender currently in the race to call for Enbridge’s controversial Line 5 oil pipeline to be decommissioned. “With such a high risk of an oil spill under the Great Lakes, Michigan can’t afford to keep the Line 5 pipeline in operation. In every community, we need new clean energy solutions to meet our climate crisis,” Buttigieg wrote. The tweet links to a Michigan Radio article from earlier this month about Enbridge’s replacement of a Line 5 segment under the St. Clair River. Washington Gov. Jay Inslee, who dropped out of the race in August, was the first presidential contender to publicly oppose Line 5. Inslee called the Line 5 tunnel project “a clear and present threat” in early July 2019. U.S. Sen. Bernie Sanders (I-Vt.) tweeted his opposition to Line 5 later that month, on the nine-year anniversary of Enbridge’s Line 6B oil spill in the Kalamazoo River. Attorney General Dana Nessel has been fighting the pipeline in court and praised Sanders earlier for his support. On Monday, she tweeted her thanks to Buttigieg, as well.* Nessel told the Advance again Monday that she is not planning to endorse in the Democratic primary, reiterating that she will campaign “as hard as I can” for the party’s nominee.* As the Advance has reported, the fierce Line 5 debate in Michigan (and ensuing legal battles) is just one example of oil pipelines becoming a more important national issue for the presidential cycle, as the debate on how to regulate fossil fuels in the era of climate change activism rages on.
Elizabeth Warren calls to shut down Enbridge Line 5 oil pipeline across Michigan, joining Sanders and Buttigieg - mlive.comDemocratic presidential hopeful Elizabeth Warren joined calls to shut down a controversial oil pipeline running across Michigan through the Straits of Mackinac.With less than two weeks before Michigan holds its March 10 primary, Warren said the pipeline is “a threat to millions who rely on the Great Lakes for clean water and a healthy economy” in a statement on Twitter. Warren voiced her opposition the day after Democratic opponent Pete Buttigieg made a similar statement, while Bernie Sanders called for the pipeline to be shut down last summer.Warren also touted her “Green New Deal” agenda to address climate change and create a new clean energy economy. The Massachusetts senator seeks to transition the United States to 100% clean energy within a decade while spurring new investments in renewable energy technology to create new jobs and alleviate fossil fuel dependence.Enbridge Energy’s Line 5 pipeline spans 645 miles between Superior, Wisconsin, and Sarnia, Ontario, carrying 23 million gallons of crude oil and natural gas liquids per day. Environmentalists are particularly concerned about the impact of an oil spill in a four-mile segment divided into dual pipes that extend across the Straits of Mackinac, linking Lake Huron and Lake Michigan.Enbridge reached a deal in 2018 with then-Republican Gov. Rick Snyder to decommission the twin underwater pipes and replace them with a single pipe housed in a tunnel built in bedrock beneath the straits. The idea remains controversial for environmentalists and some Democrats in the state Legislature, who would prefer no oil be transported across the straits at all. Republican lawmakers say there is no other alternative to satisfy the demand for energy, and closing the pipeline would cost thousands of jobs. Democratic Gov. Gretchen Whitmer has tried to block the Snyder-Enbridge deal, but the Michigan courts have backed Enbridge so far, the latest being a Michigan Court of Appeals ruling last month. Washington Gov. Jay Inslee called the pipeline and a proposed replacement tunnel a “clear and present threat” to the environment last year while he was running for president. Inslee since suspended his campaign.
Democratic candidates' drilling ban would cost U.S. economy $7 trillion: oil group -(Reuters) - Banning hydraulic fracturing and halting new drilling on federal land would cost the U.S. economy $7 trillion in the next decade and kill millions of jobs, the U.S. oil industry’s main lobby group said on Thursday in a report targeting the climate plans of top Democratic presidential candidates. The report from the American Petroleum Institute underscores mounting concern in the U.S. drilling industry over the possibility a candidate in favor of rapidly ending the fossil fuel economy to fight global warming will win the Democratic Party’s nomination to face Republican President Donald Trump in the November election. U.S. Senator Bernie Sanders, a democratic socialist who is the current front-runner to win the nomination, and Senator Elizabeth Warren, who is also in the race, have vowed to ban hydraulic fracturing style-drilling nationwide, stop offering drilling leases on public land, and re-impose a moratorium on crude oil exports if elected. Other Democratic presidential candidates have offered more moderate plans here “The U.S. energy revolution ... is dynamic and game-changing for the U.S. economy and energy security. Yet, banning fracking and halting federal natural gas and oil leasing has been proposed,” API said, without mentioning the presidential race. The group said its modeling showed that proposals to ban fracking and end public drilling leases would lead to a $7.1 trillion reduction in cumulative gross domestic product by 2030, and cut millions of jobs in places like Texas, California, Florida, Pennsylvania and Ohio. It added that it expected such proposals would increase U.S. reliance on foreign energy sources, and boost costs for homeowners and farmers.
East Chicago train derailment: Freight train carrying crude oil derails near Euclid Avenue - A freight train carrying crude oil derailed Wednesday in East Chicago, Indiana.The CSX train derailed about 5:20 p.m. in the 4600 block of Euclid Avenue, East Chicago and CSX police said. About 18 tankers containing crude oil came off the tracks, CSX police said. Hazmat crews were called to the scene. No injuries were reported, officials said. None of the tankers spilled any oil. Euclid Avenue is closed between 144th Street and Chicago Avenue, and police are asking drivers to avoid the area.The cause of the derailment remains under investigation.
EQT Corp sells half its stake in pipeline operator, strikes rate relief deal(Reuters) - EQT Corp said on Thursday it renegotiated its gas transportation rates and sold half its stake in pipeline company Equitrans Midstream Corp as the largest U.S. natural gas producer tries to cope with low fuel prices. U.S. natural gas prices are trading at their lowest in nearly two decades, hurting producers, many of whom have disclosed asset writedowns in the last few months. EQT recorded $1.6 billion non-cash impairment charge in the fourth quarter. Shares of EQT were down 3.3% at $4.79 amid a broader 4% drop in the S&P Energy index .SPNY. The Pittsburgh-based company has been looking to sell assets to pay down debt and said on Thursday that it had refined its hedging strategy and cut annual capital expenditure. The company expects 2020 capital expenditure between $1.15 billion and $1.25 billion, compared with a prior outlook of between $1.25 billion and $1.35 billion. It has hedged 87% for 2020 and 26% for 2021, assuming flat production. The company, which focuses on production from the Marcellus and Utica shale basins in Pennsylvania, Ohio and West Virginia, said it expects 2020 sales volumes in the range of 1,450-1,500 billion cubic feet equivalent (bcfe).
Oil spill under investigation in Baltimore Harbor - A fuel oil spill in Baltimore’s Inner Harbor covered the water into an eerie red sheen Saturday, prompting a big environmental emergency response.The Maryland Department of the Environment (MDE) estimates 50 gallons of red-dyed #2 heating fuel oil spilled into the outfall of the Jones Falls at President and Pratt Streets. The Baltimore Fire Department worked with MDE and a U.S. Coast Guard contractor to help contain the spill. On Saturday the Coast Guard contractor used a vacuum truck in an attempt to recover some of the fuel. MDE deployed a 100-foot-long piece of floating sorbent material to the spot where the Jones Falls emerges from underground, near Port Discovery and Power Plant Live. That should “help determine whether there is additional oil coming down the falls,” MDE spokesman Jay Apperson tells Bay Bulletin. MDE says it doesn’t know the source of the spill.
Coast Guard continues to search for source of oil in Baltimore’s Inner Harbor; spill might be growing - U.S. Coast Guard crews are continuing to search for the source of an oil spill in Baltimore’s Inner Harbor as photos from the scene Sunday appeared to show the spill possibly growing in size. Petty Officer 3rd Class Isaac Cross, a spokesman for the U.S. Coast Guard, said crews have still not located the source of an oil spill where the Jones Falls meets the Inner Harbor. The spill of red-dyed No. 2 fuel oil was first spotted Saturday morning near the Port Discovery Children’s Museum, where a U.S. Coast Guard contractor attempted to recover fuel at the site using a vacuum truck. Maryland environmental officials estimated about 50 gallons of oil were deposited into the harbor. Jay Apperson, spokesman for the Maryland Department of the Environment, said the department has “no indication this is an ongoing release.” “We do not know the source. We have checked some storm drain systems but the Jones Falls outfall services a massive area, making it difficult to trace back for a potential source without a report of a spill,” Apperson wrote in an email. He added that people should avoid contact with the water and that the vacuum truck is continuing to try to recover the fuel from the scene. As of Sunday afternoon, the spill had yet to be contained, said Cross, who added that crews are still trying to locate the source of the original spill and make sure there is not a second source adding to the problem. He said that while the maximum estimate for the spill would be 200 to 300 gallons of oil, he could not estimate how much had spilled into the water Sunday. Alex Volpitta, Baltimore Harbor Waterkeeper at Blue Water Baltimore, said images from the scene might show there are two separate oil spills. She said some of the spill “is really globular” while, in other areas, the substances “is almost like gasoline.”
With Inner Harbor Oil Spill Mostly Cleaned Up, Officials Turn Focus To Finding Source – CBS Baltimore — The U.S. Coast Guard is still trying to find the source of an oil spill that was first spotted in the Inner Harbor over the weekend. Coast Guard officials said they’ve been vacuuming the oil out of the water but there is still a little bit left. Now their concern is getting the smell of oil out of the air. “I smell the oil, and I walk here frequently, like almost every day,” Baltimore resident Lelle O’Connor said., “Yeah, I can smell it.” In total, officials believe around 50 gallons of red-dyed number two fuel oil seeped into the harbor over the weekend. “(The fuel is) very similar to a diesel fuel that you might put inside your car but the most common use is oil you use in your home to burn for heat,” said Lt. Justin Valentino with the Coast Guard. The oil was first found Saturday morning near Port Discovery. The trash wheel and boomers helped keep it contained until crews could vacuum the majority out of the water. “It’s very concerning; the water is already very dirty to begin with,” said Baltimore resident Summer Rahe. Officials are now focused on finding the source of the oil. “There’s more than a thousand miles of drains under the city that lead there,” Valentino said. “We have been working with the Maryland Department of the Environment and Baltimore City Fire Department popping open manholes and trying to investigate where that flow goes.” The remaining oil left in the water is expected to evaporate on its own. While there’s no threat to the public, officials warn people to stay away from the water.
Bill aims to answer pipeline question: 'Is this necessary?' (AP) — As Dominion Energy spearheads the $8 billion Atlantic Coast Pipeline, Virginia lawmakers are advancing legislation sponsored by a Republican who says he wants to protect the company’s captive ratepayers from possible overcharges. Under legislation from Del. Lee Ware, Dominion’s Virginia electric utility would have to demonstrate the need for a new fuel source and show that it “objectively studied” other options, among other conditions, before the State Corporation Commission could approve passing along costs from the natural gas pipeline. Ware said his bill “makes very clear the question that I’ve always wanted answered: Is this necessary for the ratepayers ... or is this entrepreneurial on Dominion’s part?” The legislation has passed the House and is scheduled for a hearing Monday in a Senate committee stacked with Dominion-friendly lawmakers. Richmond-based Dominion, the lead developer of the project that would run from West Virginia through Virginia and into North Carolina, is a giant energy company heavily invested in natural gas infrastructure with customers in 18 states. Dominion’s electric utility is Virginia’s largest and covers about two-thirds of the state. The company is developing the pipeline with partner Duke Energy. Southern Company recently sold its small stake in the project to Dominion. Electric and gas utilities owned by those three companies have signed up to receive about 96% of the the pipeline’s gas once it’s built. Critics say that setup raises questions about whether the gas is truly needed and whether customers could be on the hook for costs that have soared as the project faced numerous delays. Ware said he wants to make sure Dominion customers don’t overpay. The SCC previously rejected a bid by environmentalists to weigh in on the prudency of the pipeline before it goes into service.
Atlantic Coast Pipeline Appalachian Trail Case Heads to Supreme Court | West Virginia Public Broadcasting --A battle over the Atlantic Coast Pipeline is headed to the U.S. Supreme Court Monday, Feb. 24. Oral arguments are scheduled in the case U.S. Forest Service v. Cowpasture River Preservation Association for Monday, Feb. 24. At the heart of the case is whether the U.S. Forest Service has the authority to grant the Atlantic Coast Pipeline a permit to cross under the Appalachian Trail, federal land, that is a unit of the National Park Service. The ruling could have big impacts for the route of the 600-mile natural gas project, which begins in West Virginia and crosses through Virginia and North Carolina. In December 2018, the Fourth U.S. Circuit Court of Appeals ruled that the U.S. Forest Service improperly granted the pipeline a permit to cross under the Appalachian Trail, a popular 2,200-mile hiking route that goes from Georgia to Maine. Ahead of the case being argued in the high court, both the pipeline’s supporters and opponents say they are cautiously optimistic. Federal Barrier? “We think that the Fourth Circuit clearly erred,” said Republican West Virginia Attorney General Patrick Morrisey, speaking at a recent press conference at the capitol in Charleston. Morrisey led a group of 18 state attorneys general who filed an amicus brief urging the Supreme Court to overturn the lower court’s ruling. “You cannot set up literally an impenetrable federal barrier to economic development, not only under our constitution or a law, but under the statutes, the Mineral Leasing Act,” he said. Pipeline spokesperson Ann Nallo said more than 50 other pipelines cross under the Appalachian Trail. In court briefs, pipeline developer Dominion Energy argues if the lower court’s ruling is upheld, that would upend decades of precedent and permits. “So, where the Atlantic Coast Pipeline is currently routed, is underneath one-tenth of a mile stretch about 600 feet below the surface of the Appalachian Trail,” she said. “If it's now going to be understood that it's National Park Service land, where a pipeline can't cross without congressional approval, that essentially turns it into a 2,200-mile barrier.” Other Obstacles But environmental groups say this case is different. Greg Buppert is an attorney with the Southern Environmental Law Center, one of the groups that will defend the lower court’s decision. “Yes, to be sure other pipelines cross the Appalachian Trail. What's different here is that the crossing is proposed on federal land,” he said. “There's never been a new right of way for a pipeline on federal land in the last 50 years.”
Supreme Court hears battle over Atlantic Coast Pipeline - The Supreme Court on Monday appeared ready to remove an obstacle to construction of the Atlantic Coast Pipeline, with a majority of justices expressing skepticism about a lower court ruling that tossed out a key permit needed for the natural gas pipeline to cross under the Appalachian Trail. Justices on the court grilled a lawyer for environmental groups who sued and won a 2018 ruling from the Richmond-based 4th U.S. Circuit Court of Appeal throwing out a special-use permit for the 605-mile (974-kilometer) natural gas pipeline. The 4th Circuit found the U.S. Forest Service did not have the authority to grant a right-of-way to allow the pipeline to cross beneath the Appalachian Trail in the George Washington National Forest. But conservative justices, who hold a 5-4 majority on the Supreme Court, expressed reservations about the ruling, with Chief Justice John Roberts at one point saying the lower court’s finding would “erect an impermeable barrier” to any pipeline from areas where natural gas is located to areas where it is needed. “Absolutely incorrect,” attorney Michael Kellogg, representing the environmental groups, responded. Kellogg said there are currently 55 pipelines that run under the Appalachian Trail, 19 of them on federal land with easements granted before the Appalachian Trail was designated as a national scenic trail under the 1968 National Trails System Act. The remaining pipelines are on state and private land, he said. But Justice Brett Kavanaugh told Kellogg that the environmental groups’ position has “significant consequences to it, enormous consequences.” The 4th Circuit found that the 1920 Mineral Leasing Act allows rights-of-way for pipelines on federal land, except for land in the National Park System. The court found that the trail is considered a unit of the National Park System, so the Forest Service doesn’t have the authority to approve a right-of-way.
Justices grapple with $8 billion pipeline that would cross Appalachian Trail - The Supreme Court on Monday heard arguments in a high-profile case that could block construction of an $8 billion gas pipeline seeking to cross the Appalachian Trail. The proposed Atlantic Coast Pipeline (ACP) would carry natural gas 604 miles from West Virginia to North Carolina and would tunnel below the famed trail that runs more than 2,000 miles from Georgia to Maine. At issue is whether jurisdiction over the affected land belongs to the U.S. Forest Service or the National Park Service (NPS). The case presents the justices with a complex tangle of federal laws that will determine if the land is open to energy development or must be preserved for recreational use under the park service's mandate. The Forest Service issued a permit that would allow the pipeline to cross the trail, but that decision was challenged in the courts by a number of environmental groups. They argue that because the National Park Service oversees all of the federal lands that make up the trail, other agencies don't have authority to issue a permit. And because the park service's mandate is focused on conservation, only an act of Congress could allow the pipeline to cross the trail. The 4th Circuit Court of Appeals agreed, revoking the Forest Service permit. The government and the Atlantic Coast Pipeline — on the same side in this case — appealed the decision to the high court. The federal government's lawyer on Monday argued that the Forest Service had the right to issue a permit. "If a tree falls on Forest lands over the trail, it's the Forest Service that's responsible for it. You don't call the nine Park Service employees at Harpers Ferry and ask them to come out and fix the tree," argued Anthony Yang with the Office of the Solicitor General, referring to one of the main park service outposts along the trail. In the lower court, lawyers for the Southern Environmental Law Center (SELC) argued the permit to cross the Appalachian Trail was only secured due to a change in administration, the first in the trail’s roughly 50-year history. That permit, they argued, threatened pipeline construction over steep and sensitive terrain before tunneling 600 feet below the trail, creating a “scar” on the landscape. “ACP developers should be playing by the rules, but instead they used political pressure to push a risky project through that, in the end, would harm our public lands,” SELC lawyer DJ Gerken said in a press conference after the hearing. The Atlantic Coast Pipeline is already tied up in a number of other legal challenges and lacks several other required permits, but the Supreme Court case could determine the fate not only of this pipeline, but others that seek to cross Appalachia. In a 2018 decision, the U.S. Court of Appeals for the 4th Circuit sided with the environmental activists based on its interpretations of several interconnected federal laws. The court determined that a 1968 statute called the National Trails Act transferred control over the Appalachian Trail to the National Park Service. And a separate law, the Mineral Leasing Act, prevents the NPS from granting land access, known as a right-of-way, for energy development. But lawyers advocating for the pipeline construction say the lower court misread the law. They argue the National Trails Act did not wrest control of the Appalachian Trail from the Forest Service, which, unlike the NPS, does have the power to grant rights-of-way.
Supreme Court seems ready to back pipeline across Appalachian Trail - New York Times - A challenge from environmental groups to an $8 billion natural gas pipeline that would cross the Appalachian Trail seemed to falter at the Supreme Court on Monday, with even some of the court’s more liberal members expressing skepticism about the breadth of the groups’ legal theory.The case concerns the Atlantic Coast Pipeline, which would deliver gas from West Virginia through Virginia, where it crosses the famous hiking trail, to North Carolina.The legal question for the justices is whether the U.S. Forest Service was entitled to grant a right of way to the pipeline. The United States Court of Appeals for the Fourth Circuit, in Richmond, Va., said no, citing a federal law that bars agencies from authorizing pipelines in “lands in the National Park System.”Monday’s argument was by turns metaphysical and practical.Anthony A. Yang, a lawyer for the federal government, arguing in support of the pipeline’s developers, said the trail, administered by the National Park Service, was distinct from the land underneath it.Justice Elena Kagan said that was “a difficult distinction to wrap one’s head around.”“When you walk on the trail, when you bike on the trail, when you backpack on the trail, you’re backpacking and biking and walking on land, aren’t you?” she asked. “It’s like you’re imagining some thing that goes on top of it somehow.”Justice Samuel A. Alito Jr. proposed a different distinction, one that would allow the pipeline but avoid the more difficult question.“When I think of a trail, I think of something that is on top of the earth,” he said. “And when I think of a pipeline that is 600 feet below the surface, that doesn’t seem like a trail. So instead of having to draw this distinction between the trail and the land, why can’t we just say that the trail is on the surface and something that happens 600 feet below the surface is not the trail?”That solution seemed to intrigue Justice Stephen G. Breyer, and Paul D. Clement, a lawyer for the project’s developers, said he was willing to prevail on that basis. “I represent the Atlantic Coast Pipeline,” Mr. Clement said. “It’s not my job to resist winning this case on a narrow ground.”Chief Justice John G. Roberts Jr. asked about the practical consequences of a broad ruling against the pipeline in the case, U.S. Forest Service v. Cowpasture River Preservation Association, No. 18-1587.“It really does erect an impermeable barrier,” he said of the trail, “to any pipeline from the area where the natural gas, those resources, are located and to the area east of it where there’s more of a need for them.”Michael K. Kellogg, a lawyer for the environmental groups, disputed that, saying there are 55 pipelines running under the Appalachian Trail, including some on federal land built before the federal law and others on state and local land. But he conceded that, under his theory, the trail would act as a barrier on federal land.Justice Sonia Sotomayor suggested that Mr. Kellogg’s argument may have been too sweeping and thus unlikely to satisfy her more skeptical colleagues.Justice Alito said that “there may be all sorts of very good environmental reasons why this pipeline shouldn’t be built,” adding that a lower court was still considering them. “But do you,” he asked Mr. Kellogg, “have more than a ‘gotcha’ argument?”
Virginia proposal would take a new look at Dominion Energy’s surplus profits - The Fair Energy Bills Act would give state regulators power to order refunds when the utility collects excessive revenue. Virginia environmental advocates expect Dominion Energy’s planned investments in solar, offshore wind, and coal ash dump cleanup will lead to some justifiable rate increases for customers in the coming years. The problem, they argue: Right now, the utility’s rates are excessively high. Five years after the General Assembly voted to let Dominion keep excess profits in exchange for freezing base rates for seven years, a bill advancing in the legislature would revisit that position ahead of the company’s next rate case. The Fair Energy Bills Act would empower state regulators to examine Dominion’s earnings, decide how much is fair, then direct the utility to refund the surplus to customers. The legislation sailed out of the House of Delegates this month on a 77-23 vote. It’s now in the Senate Commerce and Labor Committee. “Dominion opposes it and still it got out of House,” said Will Cleveland, a senior attorney with the Southern Environmental Law Center. “But it faces strong headwinds in the Senate.” HB 1132 has support from green groups, social justice organizations, and the manufacturing sector. If passed, the oversight measure would apply to Dominion’s 2021 rate case, when utility regulators will examine four years of records — from 2017 to 2020 — and set Dominion’s next base rate and allowed profit level. Dominion has overcharged customers by more than $1.3 billion since 2015, according to State Corporation Commission figures. Two sets of calculations by regulators estimate refunds would be between $7 and $9 a month for a typical residential customer.
Wetland bank won’t halt gas pipeline - A months-long dispute that pitted a proposed wetlands mitigation bank against an expanded natural gas pipeline is over. The pipeline won, but owners of the Fauquier farm on which the pipeline will be built say the result is a “win, win, win” for all involved. Shannon Jensen, one of the owners of the Catlett property impacted by the expansion of Transco’s natural gas pipeline, said the company made an offer to settle that works for everyone. “The settlement will still allow Virginia Waters and Wetlands to undertake other conservation projects on the property and will also help them to be able to expand their conservation efforts throughout the area,” Jensen said Tuesday, Feb. 18. “I believe this worked out to be a win, win, win for all involved.” The proposed, 30-acre wetland bank, called the Miller Stream Bank Phase II, would have restored 6,700 linear feet of stream channel and 30 acres of wetlands and associated riparian and upland buffers on the Catlett property. The firm estimated the value of the proposed wetland bank at $5 million. Prior to the agreement, Virginia Waters and Wetlands Vice President Andrew Hindman likened Transco’s actions to “bullying.” The firm’s President Joseph Ivers said Transco was attempting to intimidate the firm into accepting “pennies-on-the-dollar” for a deal that would kill the wetland mitigation project. Now, it appears the parties have reached an agreement. The details of the settlement have not been disclosed, however, because both Virginia Waters and Wetlands and Jensen have signed non-disclosure agreements with Transco.
Takoma Park works to eliminate gas by the year 2045 - The proposal would ban all gas appliances, close fossil fuel pipelines, and move gas stations outside city limits by 2045. — Takoma Park – deemed the 'Berkeley of the East' – is working toward a total reduction of greenhouse gas emissions by 2035, which includes phasing out such things as heating, water heating, lawn care equipment and cooking equipment that are fossil-fuel based. The city of nearly 17,000 in Montgomery County that voted back in 1983 to become a 'nuclear-free zone' is considering an overall ban on fossil fuels, all originating from a nationwide effort by local governments to address what they see as a lack of federal action on climate change.The resolution, which was first raised in a new climate resolution, would ban all gas appliances, close fossil fuel pipelines, and even move gas stations outside the Takoma Park city limits by 2045. The new plans are spelled out in resolution proposed by the Takoma Park City Council, which officials say are not mandatory. The resolution, which is expected to be adopted on March 4, lays out how Takoma Park plans to move toward the elimination of all fossil fuels – including adding to the tree canopy, making current houses and all new structures more energy-efficient and even convincing residents to walk and use public transportation rather than purchase or use cars.Additionally, Takoma Park is aiming to set up a Sustainability Assistance Reserve Fund that will be used to help pay for improvements and updates by low or middle-income residents and business owners.
EIA forecasts natural gas inventories will reach record levels later this year - In the U.S. Energy Information Administration’s (EIA) February Short-Term Energy Outlook (STEO), EIA forecasts that the Lower 48 states’ working natural gas in storage will end the 2019–20 winter heating season (November 1–March 31) at 1,935 billion cubic feet (Bcf), with 12% more inventory than the previous five-year average. This increase is the result of mild winter temperatures and continuing strong production. EIA forecasts that net injections during the refill season (April 1–October 31) will bring the total working gas in storage to 4,029 Bcf, which, if realized, would be the largest monthly inventory level on record.Mild winter temperatures for the current winter have put downward pressure on natural gas prices and led to smaller withdrawals from natural gas into storage. Year-over-year growth in dry natural gas production and natural gas exports—especially liquefied natural gas (LNG)—throughout 2019 also affected natural gas storage levels. On October 11, 2019, the total natural gas in storage surpassed the previous five-year average—an indicator of typical storage levels—for the first time since mid-2017. The total natural gas in storage at the start of this heating season was 3,725 Bcf on October 31, 2019. EIA expects withdrawals from working natural gas storage to total 1,790 Bcf at the end of March 2020. If realized, this would be the least natural gas withdrawn during a heating season since the winter of 2015–16, when temperatures were also mild.Injections into and withdrawals from natural gas storage balance seasonal and other fluctuations in consumption. Natural gas demand is greatest in the winter months, when residential and commercial demand for natural gas for space heating increases. Natural gas consumption in the power sector is greatest in summer months, when overall electricity demand is relatively high because of air conditioning.
Buyer Cancels LNG Cargoes From Cheniere-- A buyer of liquefied natural gas has canceled two cargoes from Cheniere Energy Inc., the biggest U.S. exporter, as a global glut pummels prices for the fuel and threatens to shut a key outlet for shale production. Spanish utility owner Naturgy Energy Group SA has decided not to take delivery of two shipments from Cheniere, according to people with direct knowledge of the matter. The cargoes, one of which was scheduled for April delivery, were rejected by Naturgy’s clients Repsol SA and Endesa SA, who had originally purchased the volumes from Naturgy and will now pay a contractual fixed fee, the people said. Cancellations of U.S. cargoes were closely watched and highly anticipated amid a grim outlook on global prices. It could be an early sign that global oversupply is poised to hammer the U.S. gas market, which is already straining under the weight of a domestic glut. Prices in Europe and Asia collapsed as storage levels rose during a mild winter, making it tougher for LNG buyers to make a profit reselling U.S. cargoes abroad. The coronavirus outbreak in China is stifling LNG demand from the world’s fastest-growing importer. While the Asian nation hasn’t directly imported any U.S. cargoes in more than a year amid trade tensions, the virus has contributed to the global price rout. The virus has wreaked havoc on commodity markets from LNG to copper while disrupting global industrial production, travel and supply chains. As Chinese demand for the fuel declined, PetroChina Co. is said to have delayed discharge of multiple cargoes. Qatar and the world’s biggest LNG trader, Royal Dutch Shell Plc, said they’re working with customers to reschedule or reroute deliveries. While lower prices are opening up demand in places such as India and Turkey, they’re also testing Europe’s ability to absorb extra supply in a weak market.
Time Will Tell - Sagging Supply and Rising Demand for Jones Act Ships to Send Rates Higher -This year marks the 100th anniversary of the Merchant Marine Act of 1920, a federal law whose section 27 is better known as the Jones Act for its author, Senator Wesley Jones of Washington state. As we said in The Sea and Mr. Jones, the Jones Act requires that all goods transported by water between U.S. ports be carried in U.S.-flagged ships constructed in the U.S., owned by U.S. citizens, crewed by U.S. citizens, and registered in the U.S. As it applies to the energy sector, the Jones Act fleet consists of five main categories of vessels: smaller inland barges that typically carry either 10 Mbbl or 30 Mbbl of crude or refined products and operate on inland waterways as well as coastal canals; regional offshore tank barges (e.g. New York Harbor) with capacities of 50 MMbbl to 135 Mbbl; coastal barges, including larger articulated tug barges (ATBs) with capacities of 142 Mbbl to over 320 Mbbl; tankers that operate in both coastal and international waters and generally carry ~330 Mbbl of crude oil or refined products; and large crude oil tankers in the Alaskan trade. In Flirtin’ With Disaster, we explained that the maritime industry is well known for its boom-and-bust shipping cycles, when periods of strong charter rates lead to overbuilding and subsequent rate collapses. A boom in charter rates for ATBs and tankers last occurred in 2013-14, when sharp increases in U.S. crude and condensate production spurred extraordinary demand for Jones Act vessels. Back in 2013-14, a run-up in demand for Jones Act tankers and large articulated tug barges –– and a spike in time charter rates — spurred orders for a flotilla of new vessels. By the time the new tankers and ATBs were built and launched, however, demand for them had fallen off. That decline was mostly due to the mid-decade slump in U.S. crude oil production and, with the lifting of the ban on most U.S. crude exports, the drop in crude shipments from one U.S. port to another. Term charter rates plummeted and ship owners stopped ordering new tankers and large ATBs. Now, for the first time in more than five years, there are barely enough Jones Act vessels to go around, and charter rates are on the rise. Today, we discuss recent trends and how they’re impacting crude oil and refined products transportation costs. The “shot heard ‘round the world” for those in the Jones Act trade was Koch Industries’ re-letting (or sub-chartering) of the Jones Act product tanker American Phoenix for $120,000/day in the spring of 2014; there were also several other charters of $100,000/day or more that same year. The combination of high demand for Jones Act vessels and soaring charter rates prompted a flood of orders at U.S. shipyards. The capacity of U.S. shipbuilders to construct new vessels is limited, though. There are only two U.S. shipyards currently able to build Jones Act tankers: General Dynamic’s NASSCO in San Diego, CA, and the Philly Shipyard in the City of Brotherly Love. It now takes about three years for new-order product tankers and large ATBs to be contracted, built and delivered. And, as everyone in the energy and shipping businesses knows, a lot can happen in three years.
Senator Rubio confident Trump administration will extend Florida offshore drilling ban - (Reuters) - U.S. Senator Marco Rubio on Tuesday said he was confident the administration of President Donald Trump will extend a ban on oil and gas drilling off Florida, despite its enthusiasm for opening much of the country’s coasts to petroleum development. “I expect that the Trump Administration will not act to oppose or defeat my efforts to extend the offshore drilling moratorium in the Eastern Gulf of Mexico beyond its current expiration in 2022,” Rubio, a Florida Republican, said in a statement. In December, Rubio lifted a hold he had placed on the confirmation of Katharine MacGregor as deputy secretary of the Interior Department. He had voiced concern that MacGregor, a proponent of Trump’s expansive oil and gas production policy, would work to lift the ban off Florida. Florida Senator Rick Scott, Rubio’s fellow Republican, also opposes drilling off the state. Not extending the ban would face fierce opposition by coastal tourism, real estate and environmental interests in Florida. The U.S. Senate will not likely pass a permanent moratorium on the drilling, Rubio believes, so he has sponsored a bill to extend the ban through 2027. Trump’s offshore drilling plan, which MacGregor helped develop, was sidelined after a court ruling blocked drilling in the Arctic and Atlantic, but it could resurface after November’s U.S. presidential elections.
Evacuations in order following gas leak in Yazoo County - (WJTV) – Several agencies are responding to a gas leak along Highway 433 and Highway 3 in Yazoo County.Corporal Kervin Stewart with Mississippi Highway Patrol said multiple people were transported to the hospital, while others have been treated near the evacuation area.According to Vicksburg News, Yazoo County authorities notified Warren County of a toxic chemical release in the Satartia area around 7:35 p.m. on Saturday.Yazoo Emergency Management Director Jack Willingham said that they may be dealing with a carbon dioxide gas leak. Authorities are asking people to stay out of the State Highway 3 and Highway 433 area until further notice.The Yazoo Co. Emergency Management Agency released the following statement:“To all residents of Satartia, if you are located within 1/4 mile of Satartia hill you need to take one of the following actions: If you are in a solid structure as a house or sturdy trailer you can shelter in place. Cut off all heaters and air conditioners. If you can smell a noxious odor in your home, whether trailer or house, you need to evacuate.”
48 hospitalized after gas leak in Yazoo County (WJTV) – Authorities said weather may have contributed to a gas leak in Sataria on Saturday. They said the ground may have shifted due to the recent rain.The pipeline was transporting carbon dioxide used by Denbury Resources for oilfield operations.At least 48 people were taken to the hospital because of the leak. 300 neighbors were evacuated from the area near MS 3 and MS 433. The Mississippi Department of Transportation reopened the roads Sunday morning.Officials said homes were inspected, and environmental specialists escorted neighbors to their houses on Sunday.Denbury released a statement about the leak:At approximately 7:00 p.m. on Saturday, February 22nd, a leak was detected on a carbon dioxide pipeline operated by Denbury Onshore in Yazoo County, MS near the town of Satartia. The affected area of the pipeline was isolated within minutes, and the leak site was evacuated as a precaution. Denbury has been working closely with state and local officials in the response and evacuation efforts to ensure the safety and welfare of the community, its residents and the environment, which is Denbury’s top priority. It is important to note that no injuries have been reported, the area is secure and poses no threat to the public, and local authorities lifted the evacuation at 8:00 a.m. Sunday morning permitting residents to return to their homes. Company and local officials are available to assist residents as they return. The cause of the release is under investigation.
Gas Pipeline Rupture Injures 46, Forces 300 to Evacuate in Mississippi - More than 300 people were forced to evacuate and 46 were sent to the hospital after a gas pipeline ruptured in Mississippi Saturday.The pipeline was used by the company Denbury Enterprises to transport carbon dioxide and hydrogen sulfide for oilfield operations, according to The Yazoo Herald. It ruptured around 8 p.m. near the town of Satartia in Yazoo County, according to the Mississippi Emergency Management Agency (MEMA)."Residents in the area complained of green gas and a noxious odor," MEMA said.People near the leak experienced headaches and dizziness, and some lost consciousness, the Vicksburg Daily News reported. The leak overwhelmed Yazoo County emergency rooms and at least five of those injured had to be transferred to Warren County. Among the injured were three people discovered non-responsive in a vehicle near the leak site by emergency workers just before 10 p.m.Those taken to the hospital were expected to recover, and evacuees were allowed to return to their homes after 9:30 a.m. Sunday, The Weather Channel Reported.Denbury shut off the gas as soon as it learned of the rupture, according to The Weather Channel."[T]he affected area of the pipeline was isolated within minutes, and the leak site was evacuated as a precaution," the company said in a statement reported by TIME.An initial investigation suggests the rupture was a result of recent heavy rainfall in Mississippi."It appears the ground caved into a ravine damaging the 24-inch pipe," MEMA said. Parts of the state near the rupture have seen 23 inches of rain since Jan. 1, the Weather Channel reported. Jackson, the state's capital, has had its wettest start to the year on record as of Feb. 22. Its Pearl River crested at 37 feet Feb. 17, its third highest water level in recorded history, The New York Times reported. More than 2,400 structures are likely to have been damaged by the flooding, authorities estimate.
U.S. crude oil production increases; imports remain strong to support refinery operations --United States refineries are some of the most complex in the world and can process a wide range of crude oil qualities. Although U.S crude oil production has grown significantly since 2009, having access to imports from oil producers around the world provides refiners with the range of crude oil quality that is optimum for each refinery’s configuration, maximizes profitability, and enables the refinery to either supply petroleum products for domestic consumption or export at competitive prices.In general, domestically produced crude oil is light when compared with imported oil. For example, in 2018, 56% of the oil produced in Texas, the largest crude oil-producing state, was relatively light with an API gravity between 40 and 50 degrees. At the same time, 58% of imported crude oil was relatively heavy with an API gravity of less than 25 degrees. By augmenting the relatively light domestic crude oil production with relatively heavy crude oil imports, the United States has significantly increased its ability to export refined product. Because of higher domestic production, the United States has exported more oil and petroleum products, combined, than it has imported since September 2019.U.S. refineries rely on imports as feedstock to optimize production and maximize profits. For example, as of January 2019, U.S. refineries had more than 3 million barrels per day of coking capacity. This capacity is used to process heavy and medium crude oils efficiently and would likely be underutilized if a refinery chose to only run domestically produced light crude oil because coking units are designed to convert heavy, low-value intermediates into high-value naphthas and distillates.In addition to the differences in crude oil quality, the refiner acquisition cost of crude oil can be different for domestic and imported barrels. The refiner acquisition cost is the total amount that a refiner can expect to pay for crude oil, including freight costs and other transportation fees. Traditionally, heavy and medium crude oils trade at a discountto light, sweet crude oils. Since 2012, the increase in the share of imported crude oils with lower API gravity (heavier oil) has resulted in a lower refiner acquisition cost for imported crude oil when compared with the domestically produced higher API gravity (lighter oil) volumes.
Proposed Settlement Seeks To Offset Emissions From Refinery Explosion - Husky Energy will have to upgrade safety and install solar panels to offset emissions from the2018 explosion at its Superior refinery. The projects are part of a proposed settlement filed Friday in federal court. Husky, which does business as Superior Refining Co. in Wisconsin, will make safety upgrades to its hydrofluoric acid (HF) tank under the agreement with state and federal justice officials. Concerns about an HF release prompted a temporary evacuation for some of the city’s 27,000 residents during the aftermath of the explosion April 26, 2018. While no release occurred, Husky has already said it will make safety improvements to its HF unit as part of its $400 million rebuild. The improvements include installation of a rapid acid transfer system that can move hydrofluoric acid to an emergency holding vessel in the event of a release. Planned upgrades also include enhanced leak detection with a laser detection system and cameras, as well as additional layers of water protection. "Superior Refining shall retain a qualified, third-party consultant or consultants with knowledge in refinery processes and operations relevant to the HF Unit to assist Superior Refining's development and implementation of each of the upgrades," states the proposed settlement. The agreement also includes a study of physical barriers or other measures that could mitigate the effects of an HF release. . "This is a refinery in the middle of an urban area. Increasing safety, mitigating risk is an ongoing permanent effort. Having a major energy producer in your community always carries with it some level of risk," Superior Mayor Jim Paine said. "We always have to be assessing that and making that refinery and the community that surrounds it safer."The proposed settlement also requires Husky to spend at least $290,000 to replace or retrofit inefficient wood-burning stoves or furnaces at homes, churches or schools spanning a seven-county region and several reservations in northern Wisconsin. At least 12 percent of the funding must be dedicated to rebates or discounts for low-income households. The work must be completed within four years.
Exxon Baton Rouge, Louisiana, refinery aims to restart CDU this week: sources - (Reuters) - Exxon Mobil Corp plans to restart the large crude distillation unit (CDU) and a coker this week at its 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery this week, sources familiar with plant operations said on Monday. The 240,000 bpd PSLA 10 CDU and the 50,000 bpd coker were shut on Feb. 12 following a natural gas pipeline fire that idled most of the production units at the refinery, the sources said. Exxon spokesman Jeremy Eikenberry said on Monday operations were continuing at the Baton Rouge refinery and adjoining chemical plant. He declined to discuss the status of individual units. m PSLA 10 and the coker could restart as early as the middle of this week, if all goes as planned, the sources said. Three of the four CDUs at the refinery were shut by the fire. The pipeline that caught on fire supplies natural gas that fuels boilers on the units, the sources said. The CDUs do the primary breakdown of crude oil into the hydrocarbon feedstocks, from which motor fuels like gasoline and diesel and plastics are made in other production units at the refinery.
Momentum Builds to Monitor Cancer Alley Air Pollution in Real Time After Exxon Refinery Fire in Louisiana - A large fire at ExxonMobil's Baton Rouge oil refinery late on February 11 lit up the sky for miles and continued until dawn. The night of the fire, ExxonMobil representatives claimed that air monitoring inside the plant and in surrounding neighborhoods did not detect the release of harmful concentrations of chemicals, a claim echoed by first responders and state regulators. What unfolded, however, reinforced a growing community movement to require real-time independent air pollution monitoring at industrial facilities.A week after the incident, Exxon filed a required “seven-day report” to the Louisiana Department of Environmental Quality (LDEQ) indicating the plant released four toxic chemicals during the incident, including benzene, butadiene, and sulfuric acid in quantities above allowable limits, and sulfur dioxide. Exxon said in its report that thousands of pounds of unspecified flammable vapor released in the incident were burned off by the fire and that little, if any, escaped the refinery in concentrations that could have posed a risk to nearby residents. However, many in the community were outraged about how much time passed before they were notified of potential hazards and expressed doubt that the fire had no significant effect on the air quality around the plant.The incident reignited calls from environmental advocates for more real-time monitoring of a class of potentially toxic chemicals known as volatile organic compounds (VOCs) at chemical plants and refineries. They say that with this kind of publicly available monitoring, residents near such facilities won’t have to rely on industry for health warnings in case of an emergency. “Everyone in the community has the right to be safe and secure in your homes,” Louisiana Senator Cleo Fields, a Democrat representing Baton Rouge, said at a community meeting he organized a week after the fire. Flares were visible from the Star of Bethlehem Baptist Church’s parking lot where the meeting was held, near Exxon’s 2,100-acre complex that includes the refinery and multiple chemical plants. At the meeting, Fields promised to craft legislation aimed at improving emergency notifications, implementing 24/7 real-time air monitoring, upgrading the current supply of safety devices, and establishing a clear and transparent emergency plan for chemical facilities and refiners statewide. For residents near Exxon’ refinery and adjacent chemical plants in Baton Rouge, a sense of safety and access to clean air are not a given. The plants lie at the northern end of Louisiana’s Cancer Alley, an 80-mile stretch along the Mississippi River with more than a hundred petrochemical plants and refineries woven among the river’s communities.
The market for hydraulic fracturing is expected to grow at a CAGR of approximately 8.55% during the forecast period of 2019. - Reportlinker.com announces the release of the report "Hydraulic Fracturing Market - Growth, Trends, and Forecast (2019 - 2024)" -On the flip side, environmental concerns and lack of capital market & incentives are restraining the market growth.
- Horizontal well type is expected to be the fastest growing well type. The majority of the wells active in the Permian Basin are horizontal wells (more than 2,000). As of April 2019, the total number of drilled wells in the Permian basin reached 555, repressing an increase of around 4.7% compared to the previous year value in the same month.
- The economic viability of using CO2 and nitrogen-based ‘foam’ fluids, capable of providing waterless fracking, presents a growth opportunity for the companies.
- North America to dominate the market across the globe in the future, with the majority of the demand coming from the US and Canada.
- New technique of horizontal drilling and combined it with the pre-existing hydraulic fracturing techniques making it favorable for drilling in shale gas regions.
- The United States can be considered as the country, which has benefited the most from the combination of horizontal drilling and hydraulic fracturing. The shift from vertical to horizontal wells is the most important change to occur over the last decade, allowing for greater formation access, while only incrementally increasing the cost of the well.
- The country’s natural gas production increases since 2005 have mainly been the result of horizontal drilling and hydraulic fracturing techniques, notably in shale, sandstone, carbonate, and other tight geological formations.
- Since 2010, horizontal good drilling activity has dominated and currently accounts for the vast majority of drilling activity in the Western Canada Sedimentary Basin (WCSB). Therefore, an increase in horizontal well drilling activities propels the demand for the hydraulic fracturing market.
Yale study finds link between STIs and fracking - Yale Daily News - Increased rates of sexually transmitted infections in Texas are associated with high levels of shale drilling activity, according to findings in a recent Yale study. In early January, researchers at the School of Public Health published a study on the reported rates of STIs and the number of active shale wells in Texas, North Dakota and Colorado. Investigators found increased rates of chlamydia and gonorrhea in Texas counties during years of high drilling activity. Still, the study shows no statistically significant relationship between the prevalence of STIs and drilling in North Dakota or Colorado. This was the first multi-state, multi-region analysis of shale drilling activity and STI rates in the United States. “Previous studies have examined the relationship between shale drilling activity and rates of gonorrhea, chlamydia and syphilis in counties throughout the eastern [United States]. Our intent was to assess whether this phenomenon could be observed in other geographies,” said lead author Nicholaus Johnson SPH ’19. “I think this [is] important because [it] demonstrates the often unexpected ways in which resource extractive processes can impact human health.” As the leading global producer of crude oil and natural gas, the United States is home to many specialized workers that often migrate across state lines to meet the demands of fracking companies installing new drilling rigs. The temporary workcamps house a labor force that is 80 percent male and, according to the study, serve as cradles for “masculinized culture,” hot spots for sex workers and breeding grounds for STIs. Researchers analyzed data provided by the Centers for Disease Control on STIs in the three states. The authors obtained information on the number of active shale wells from the online database Enverus. Counties with high rates of shale drilling activity were classified as those with 50 operational hydraulic fracking wells. Data spanned the time frame from 2006 to 2016, to provide a comparison of STI rates before and after the start of drilling activity in the areas of interest. The analysis showed increased rates of chlamydia as high as 10 percent and increased rates of gonorrhea as high as 15 percent in Texas counties during years of high drilling activity, with no notable difference in STI rates associated with drilling in North Dakota or Colorado counties. Deziel speculated that the incongruous findings between the three states “may reflect the higher level of [Texas] drilling activity and a greater number of densely populated metropolitan areas compared to other regions.”
To Many’s Dismay, Permian Produces More Gas and Condensate Instead of Oil and Profits - 0As oil prices plummet, oil bankruptcies mount, and investors shun the shale industry, America’s top oil field — the Permian shale that straddles Texas and New Mexico — faces many new challenges that make profits appear more elusive than ever for the financially failing shale oil industry. Many of those problems can be traced to two issues for the Permian Basin: The quality of its oil and the sheer volume of natural gas coming from its oil wells. The latter issue comes as natural gas fetches record low prices in both U.S. and global markets. Prices for natural gas in Texas are often negative — meaning oil producers have to pay someone to take their natural gas, or, without any infrastructure to capture and process it, they burn (flare) or vent (directly release) the gas. As DeSmog has detailed, much of the best oil-producing shale in the Permian already has been drilled and fracked over the past decade. And so operators have moved on to drill in less productive areas, one of which is the Delaware sub-basin of the Permian. Taking a close look at the Delaware Basin highlights many of the current challenges facing Permian oil producers. The Delaware Basin is where most of the new oil production is coming out of the Permian. As a Bloomberg Wire story reported in December, “in recent years investments have shifted to the Delaware, where output is much gassier than in the historic Midland portion of the Permian.” The last thing a Permian oil producer wants is to have natural gas coming out of the ground with the oil because, as Bloomberg notes, this persistent “nuisance” is “undercutting profits for explorers.” That’s a generous assessment because many explorers have no profits to undercut, only losses to grow. Shale wells become “gassier,” or produce more natural gas, as they age and oil production falls. And this problem hasn’t improved for wells in the Delaware that are drilled closer together, compounding the Permian’s gas problem. With natural gas prices often going negative in Texas, producers are turning to flaring and venting more of the gas, which is mostly the powerful greenhouse gas methane. Fracking CEOs have been publicly noting that this issue U.S.\ shale industry can’t flare or vent its excess methane, those companies will likely be forced to shut down oil production due to cost.
'It's A Joke': Flaring Expert Finds Big Problems In Report From Texas Oil And Gas Regulator -- The amount of natural gas that oil companies burn off in Texas as a waste product could power every home in the state. It’s an industry practice known as “flaring,” and as it grows, so does pollution and waste associated with oil extraction. So, last week, a top state oil and gas regulator produced a report on it.The Railroad Commission of Texas regulates the oil and gas industry in the state. It's run by three commissioners who are elected statewide. Commissioner Ryan Sitton wrote that he produced the paper “to evaluate the nature of potential changes to regulation [around flaring] and the potential impacts of those changes.”The report was notable for naming names. Sitton ranked different oil producers by how much they flare. It also provides some historical context for flaring. The commissioner also argued the state is actually flaring less than it did decades ago.Industry groups applauded the effort, but a leading flaring researcher has found plenty to criticize. “It’s not a report,” Gunnar Schade, an associate professor of atmospheric sciences at Texas A&M University, said. “It looks more like a political manifesto to me” because it relies so heavily on pro-industry talking points. Schade also said the report is misleading.In the paper, Sitton wrote that he “established a metric that relates the amount of gas flared to the amount of oil produced, referred to herein as flaring intensity.”When Schade reads that, it makes him think Sitton is trying to take credit for creating a metric that is nothing new and often used to downplay the impact of natural gas flaring.Sitton “would receive an F for this report at A&M [his alma mater] for blatant plagiarism” of a well-known research metric, Schade wrote in an email.“The industry has been promoting this flaring intensity metric for a very long time,” he said. “One of the reasons the industry likes this type of metric is that it lets them compare themselves against others in terms of efficiency.”It's a way for the industry to brag about how efficient it is, he said, while downplaying the amount of gas being burned off. "The metric itself is not too useful from an environmental point of view,” he added, “because what matters to the environment is the total amount of flaring that you have in the region.”
Apache Ditches Alpine High After $3B Writedown -- Apache Corp. is officially calling it quits on a highly publicized but disappointing shale discovery in West Texas after vehemently defending the play’s prospects for about three years. The Houston-based company posted a roughly $3 billion writedown on its Alpine High project, a find from 2016 that fizzled when it turned out to hold more natural gas than oil. Apache will instead focus on offshore riches in Suriname, where the explorer recently struck crude and enlisted French oil titan Total SA as a partner. “Apache has no current plans for future drilling at Alpine High,” Clay Bretches, chief executive officer of Apache’s pipeline spinoff, Altus Midstream Co., said in a statement. The discovery was announced in September 2016 to much fanfare and claims the field held 3 billion barrels of crude and 75 trillion cubic feet of gas. But it quickly became apparent that that corner of the prolific Permian Basin was far richer in natural gas and its byproducts than more-valuable oil. The Alpine High became even more worrisome for investors as gas supplies in the region ballooned and prices cratered. Until recently, Apache executives defended the Alpine High, saying in May that investors didn’t yet “have an appreciation for the potential cash flow generation from the liquids play at Alpine High.” But roughly five months later, the star Apache geologist who led discovery of the field abruptly left. At the time, the departure of Steven Keenan, Apache’s senior vice president of worldwide exploration, raised red flags for the company’s other high-profile prospect -- offshore Suriname. Apache calmed investors who were nervous Suriname would be a bust last month when it disclosed a major discovery. The announcement came shortly after Apache brought Total aboard to help develop the project on Suriname’s Block 58. The company will now shift its capital spending to focus on Suriname rather than on “near-term growth opportunities,” Christmann said. Altus Midstream, meanwhile, will look for new customers to fill its pipes. “We are aggressively pursuing third-party volumes to replace declining production from Alpine High and maximize throughput at our Diamond processing facility,” Bretches said in Altus’ fourth-quarter earnings statement.
Williams seeks to raise $5B in pipeline sale - Williams Companies Inc is seeking a partner to invest in a network of its pipelines in the western United States, a deal that could raise close to $5 billion for the Tulsa, Oklahoma-based company, people familiar with the matter said, as reported by Reuters. Contract.jpg The investment would be larger than the joint venture that Williams clinched last year with the Canada Pension Plan Investment Board (CPPIB) in the Marcellus and Utica shale basins of Appalachia, which gave the pension fund a 35% stake in the assets for $1.33 billion. The deal would underscore how pipeline operators are cashing out on some of their assets, so that they can pay down debt and put money into new projects, which have the potential to give them better returns. The latest collection of pipelines that Williams is offering a stake in transfers hydrocarbons away from oil and gas drilling sites, usually to larger pipelines which reach storage facilities or customers - known in the energy industry as gathering and processing (G&P) assets. It generates 12-month earnings before interest, tax, depreciation and amortization of around $1 billion, according to the sources. As with the CPPIB deal, Williams is seeking to remain the operator of the pipelines, the sources added. The sources spoke on condition of anonymity as the information is not public.
Ducey Signs Bill Banning Local Bans on Natural Gas Into Law -Governor Doug Ducey has signed into law a bill that will prevent cities and towns in Arizona from banning natural gas, despite clear opposition from major cities. Spokesperson Patrick Ptak said that Ducey signed House Bill 2686, which was fast-tracked through the State Legislature this month with companion bills in the House and Senate, on Friday. On its face, the new pre-emption law prevents municipalities from discriminating against different utilities in issuing building permits and making zoning decisions. They cannot "deny a permit application based on the utility provider proposed,” the bill reads, and they cannot pass codes or ordinances that could “have the effect of restricting a person’s or entity’s ability to use the services of a utility provider.” But the new law is expected to benefit, in particular, the gas industry. The bill was pushed by Southwest Gas, a major gas company in Arizona, where more than half of its some 2 million customers live. It is backed by others in the industry and its business-minded allies. Last year, its sponsors in the Legislature received their largest donations from Southwest Gas. Southwest Gas has said that the legislation would ensure “homeowners, builders, or business owners have access to balanced energy solutions that are efficient, affordable, and clean.” The legislation was proposed just as the gas industry nationwide began looking to undercut efforts by a growing number of cities to curb or end the use of natural gas, which leaks methane and produces carbon dioxide, in an attempt to mitigate climate change at a local level. Now, with the help of a new law preserving its customer base and protecting its profits, the gas industry doesn't have to worry about such bans happening here in Arizona. Before it became law, major cities in Arizona registered opposition to the bill, for other reasons. Mayor Kate Gallego of Phoenix has criticized the legislation as undermining local authority. “City government is the branch of government closest to the people it serves,” she said in a statement earlier this month. “We think pre-emption of local control in any form sets a bad precedent.” Regina Romero, the mayor of Tucson, voiced similar concerns. "I will always be against state legislation that needlessly micromanages cities and tells us what we can and cannot do. Tucsonans know what is best for our community, not the State Legislature,”
Major California refinery explosion, fire temporarily shuts down 405 Freeway - A major refinery fire in Carson, California, temporarily shut down the 405 Freeway in both directions late Tuesday night. The thick smoke and flames could be seen from miles away as the plumes of smoke were hundreds of feet into the air. The fire started after an explosion around 11 p.m. local time in a cooling tower at the Maraton refinery, according to the Los Angels County Fire Department. Authorities said Marathon personnel are "keeping flames in check" while they work to depressurize the system. Flames shut down the freeway for less than an hour before officials reopened the interstate. No injuries have been reported. Fire and refinery officials said on-site monitors had not reported any harmful products in the air "emanating" from the facility as a result of the fire. The Marathon refinery, according to ABC Los Angeles station KABC, is believed to be the largest refinery on the West coast. It processes around 360,000 barrels per day, the station reported.
Crews battle large fire at Los Angeles-area refinery after explosion - It was not immediately clear what caused the fire in the city of Carson. Local residents reported hearing an explosion and seeing a fireball. An explosion and a large fire erupted at a Los Angeles-area refinery late Tuesday. The blaze at a Marathon refinery in the city of Carson happened about 11 p.m. Tuesday. The Los Angeles County Fire Department tweeted that an explosion preceded a fire in the cooling tower, and that Marathon fire crews were keeping the flames in check while the system was being depressurized. No injuries were reported by the county fire department, which was assisting. Carson is a city in southern Los Angeles County, south of Compton. Resident Pricilla Reyes told NBC Los Angeles in a phone interview that her niece came running over to ask whether she heard an explosion and that they saw the fire from their home, which is about four blocks from the refinery. "I heard about four or five explosions, really loud," said Reyes. "You could see the flames and the smoke from our house,” she said. Reyes said she shut the windows of her home in case the smoke was harmful. Michael Molina told NBC Los Angeles he saw sparks and then “a big fireball in the air." "I heard a couple more thumps, and I could see like a big ball of smoke,” Molina said. Molina, a truck driver who works in the area, said the force of the blast shook his truck. The city of Carson did not immediately respond to a request for comment late Tuesday. The Los Angeles Sheriff's Department Carson station tweeted crews had secured a perimeter around the facility but did not anticipate needing to evacuate residents. The fire department was monitoring air quality. Marathon Petroleum’s Los Angeles refinery is the largest on the West Coast with a crude oil capacity of 363,000 barrels per day, according to its website.
Investigation into cause of explosion at California oil refinery - — Investigators are looking into what sparked a tremendous explosion and fire at the largest fuel refinery on the West Coast. The blast there was felt miles away and a huge ball of fire could be seen at the center of the facility. "There were several explosions, up to potentially three explosions, that preceded the fire itself," according to LA County Fire Department inspector Sean Ferguson. The boom could be heard at least 25 miles away. One of the busiest freeways in the nation — the 405 — shutdown overnight when more than three dozen LA County firefighters raced to extinguish the blaze. It happened at the Marathon Petroleum Refinery, south of LA. What burned was not crude oil. Fire officials told CBS News the incident was a massive propane explosion. The cause still under investigation and the bulk of the refinery, back up and running. This refinery produces more than 360,000 barrels of oil a day and there are no signs that will be impacted. Fire officials told CBS News there were no injuries, and there does not appear to be a threat to the public. They continue to monitor air quality, making sure there are no toxic hazards to surrounding neighborhoods.
Vessel sinks, spills oil in Anacortes - A vessel sunk and spilled oil in Anacortes Thursday The state Department of Ecology said they responded to the spill in Skyline Marina in Anacortes along with personnel from the US Coast Guard.They deployed a boom around the 44-foot vessel, using absorbents to recover oil and diesel, and a dive team closed off fuel vents and other openings to stop any more from spilling out.The department lifted the vessel Friday afternoon and were working to remove all fuel in the water.
Express Yourself, Part 3 - What REX Pipeline's Contract Changes Mean for Gas Flows, Prices --After a major decontracting and partial recontracting last fall, Tallgrass Energy’s Rockies Express Pipeline headed into 2020 with 839 MMcf/d in firm, long-haul commitments for natural gas moving east out of the Rockies for delivery into the Midwest. That volume is down from 1.3-1.8 MMcf/d in firm commitments previously. The contracted volume is also much lower than the peak — and even the average — historical gas flows on the route to the Midwest markets in recent years. At the same time, Tallgrass’s Cheyenne Connector pipeline and Cheyenne Hub Enhancement projects are expected to bring as much as 800 MMcf/d of new firm gas supply from the Denver-Julesburg (D-J) Basin to the REX mainline at Cheyenne Hub. What will these changes mean for Rockies’ eastbound flows and prices? Today, we wrap up our series on REX’s recontracting with an assessment of how the recent contract changes could affect REX gas flows.
Oneok announces expansions of new natural gas liquids pipeline, processing plant - Oneok plans to expand its new natural gas liquids pipeline that runs from the Bakken to Kansas, and it also intends to add onto a new processing facility. The company’s Elk Creek Pipeline started operating in December. It can transport up to 240,000 barrels per day of natural gas liquids, such as ethane, propane and butane that are removed from the raw gas that comes up in wells alongside oil. Under certain temperatures and pressures, those components exist in liquid form. Now Oneok seeks to add 10 pump stations along the line in Montana, Wyoming, Colorado and Kansas to boost its capacity to 400,000 barrels per day. The company, which announced the expansion this week, estimates the upgrades will cost $305 million. Oneok plans to start transporting more natural gas liquids via the pipeline in early 2021 and ramp up to the line's full capacity by the third quarter of the year. “That expansion will be necessary in order to keep pace with growth,” said Justin Kringstad, director of the North Dakota Pipeline Authority. North Dakota processes just over 600,000 barrels per day of natural gas liquids, and that figure is expected to increase in the years ahead, he said. The Elk Creek Pipeline begins in Richland County in eastern Montana and runs for 900 miles to Kansas. It does not cross through North Dakota, although it carries natural gas liquids from the state that it receives via other pipelines. Once those liquids arrive at their end destination, the various components are further separated so they can be used to manufacture plastics or to make cooking fuel, to name a few applications.
Brine, oil spill in North Dakota mostly recovered -- An estimated 26,000 gallons of produced water and 1,900 gallons of oil spilled Thursday, Feb. 20, at a saltwater disposal well in Mountrail County, N.D., according to a news release from the state Department of Environmental Quality.Produced water is a mixture of saltwater, oil and sometimes, drilling fluids, that is created during oil and gas production.Saltwater disposal company Goodnight Midstream reported that a tank leak caused the spill, which occurred about eight miles northeast of New Town. Nearly all of the spilled brine and oil was recovered on-site when the spill was reported to the state on Friday, according to the release, and cleanup continues. Department officials will continue inspecting the site and monitoring remediation efforts.
Valve leak spills treated produced water in NW North Dakota (AP) — The North Dakota Oil and Gas Division reports a valve leak has spilled 105,000 gallons of treated produced water in northwestern North Dakota.The release was reported Monday at Justin SWD 1 saltwater disposal well, about five miles (eight kilometers) southwest of Tioga.Bosque Disposal System, LLC reported Tuesday that 2,500 barrels of treated produced water was released due to a valve/piping connection leak. The product was contained on-site and at the time of reporting all of the spill had been recovered.A state inspector has been to the location and will monitor any additional cleanup required. The produced water was mixed with hydrochloric acid which was neutralized with sodium bicarbonate as part of the cleanup. Hydrochloric acid is a commonly used acid in oil and gas production.
Canada: police clear rail blockade by Indigenous anti-pipeline activists - Police in Canada have removed Indigenous activists from a railway line in Ontario, where a two-week protest against a contentious natural gas pipeline has blocked train traffic and fueled a growing political crisis for prime minister Justin Trudeau. Ten members of the Tyendinaga Mohawk nation were arrested on Monday when officers moved in to lift the blockade which had been erected in support of the Wet’suwet’en First Nation in British Columbia who are fighting a 416-mile pipeline through their traditional territory. Ontario provincial police had warned the activists that they had until midnight Sunday to leave the area, or face arrest and charges. Wet’suwet’en activists opposing the C$6.6bn (US$4.98bn) Coastal GasLink pipeline were forced to leave a remote camp which had been blocking construction on 10 February. But secondary protests sprang up across the country as demonstrators blocked railways, government buildings and ports. Canadian National, which owns the rail line, won an injunction to clear the blockade near the city of Belleville, Ontario, in early February. But police, wary of violent standoffs in the 1990s with Indigenous groups, had so far been unwilling to forcefully remove the demonstrators. Shortly after sunrise on Monday morning, however, dozens of officers descended on the blockade. Police barred media from the operation, but the confrontation was broadcast on a Facebook live broadcast. Tyendinaga Mohawk activists heckled a phalanx of police officers, telling them they were standing on Indigenous land and had no authority. ADD Officers warned that people standing near the rail line were in violation of the injunction and faced imminent arrest. Moments later, dozens of officers tackled a number of protestors, forcing them to the ground and cuffing their hands with zip-ties. “Stay back,” police shouted to the remaining demonstrators. The two sides remained in a tense standoff until members of the Tyendinaga Mohawk nation received orders from community leaders to back away. The blockade of rail lines through Tyendinaga Mohawk territory has crippled much of Canada’s freight and commuter rail traffic, and the string of protests have been blamed for 1,400 layoffs at Canada’s main rail companies, propane shortages in eastern Canada and economic hardship for farmers. The protests have piled pressure on Trudeau, who came to power promising reconciliation with Canada’s First Nations, but has supported the country’s fossil fuels industry.
Domestic Terror?- Canadian Environmentalist Protesters Attempt To Derail Train -- Shocking video out of Ontario, Canada shows left-wing environmentalist protesters attempt to derail and then set fire to a train. Members of the Mohawk First Nation, who are engaging in rail blockades in an effort to stop the construction of a pipeline, were filmed standing in front of a train before pelting it with rocks and then laying thick tree branches on the tracks. Another video shows firefighters attending to a car that was engulfed in flames and placed on the railway tracks. A car was engulfed in flames on Wednesday on the railway tracks at Shannonville Road in Tyendinaga, Ont. Firefighters arrived on scene to extinguish the fire and it is currently unknown if protesters set the fire. It's time to call a spade a spade. As violence spreads on the tracks, and professional protestors attempt to light trains on fire, a PM must act, or resign. “It is extremely concerning to see people endangering their own lives and the lives of others by trying to interfere with the trains,” remarked Prime Minister Justin Trudeau. According to Quebec Premier Francois Legault, some of the demonstrators have also been seen carrying AK-47s. While some of the protesters have been arrested while manning the blockades, no charges have been brought.
Teck drops C$20.6 billion oil sands Frontier project, to take writedown (Reuters) - Canadian miner Teck Resources Ltd has withdrawn an application to build its C$20.6 billion ($15.7 billion) Frontier oil sands mine in Alberta, days before the federal government was to decide on whether to approve a project opposed by environmentalists and indigenous groups. Teck said on Sunday it would write down the C$1.13 billion ($852.12 million) carrying value of the project. The news was first reported by the Globe and Mail newspaper. The company released a letter by Teck Chief Executive Don Lindsay to Canada’s environment minister, stating Teck was “disappointed to have arrived at this point”. The fate of the mine, which was first proposed in 2011, was expected to be decided next week in what had become a test of Canada’s commitment to reduce greenhouse gas emissions and repair relations with the country’s indigenous people. At full capacity, the mine would have produced 260,000 barrels of crude oil per day, making it one of the largest in Alberta’s carbon-intensive oil sands. “The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” Lindsay wrote in his letter. “In that context, it is now evident that there is no constructive path forward for the project.” On Friday, the Canadian miner floated a potential exit from the oil sands and warned of the possible C$1.13 billion hit should Prime Minister Justin Trudeau’s government reject the Frontier bitumen mine.The decision was a complicated one for Trudeau who made a 2019 election pledge to put Canada on the path to reach net zero greenhouse gas emissions by 2050. But unhappiness with the government’s energy and pipeline policy cost Trudeau’s Liberals all their seats in Alberta, where the project was considered essential for employment and growth. “The withdrawal of Teck’s Frontier Mine application is more devastating news for the Canadian economy, especially for Albertans and indigenous people,” Alberta Premier Jason Kenney tweeted on Sunday.
Almost 100 oil barrels removed from ghost ship; Council now closing down the wreck - NINETY-FIVE oil barrels were airlifted by helicopter from the MV Alta ghost ship today in an operation co-ordinated by Cork County Council before the cargo ship was “closed down”. Among the 95 barrels were 62 full containers and another 33 which were empty. The removed containers were taken to a designated drop-off point where they were transferred to a vehicle and removed by an environmental agent. As a further precaution, Cork County Council has left oil-absorbent pads and booms at some locations onboard the ship where there could be residual seepage from pipe systems which have been drained. The waste oil will be disposed of by a licensed contractor and will be recycled for use in bituminous road-making materials. The MV Alta was shipwrecked on Ballycotton rocks during Storm Dennis after spending a year and a half wandering the seas unmanned. The cargo ship has a complex and mysterious past that begun on a voyage from Greece to Haiti in 2018. Ten crew members were rescued by the US coast guard, whisked off the boat ahead of a looming hurricane, and a tug vessel was reportedly contracted to tow the MV Alta to Guyana, but it is not thought to have made it to port. Six months before washing up in Cork, the ghost ship was spotted off the coast of West Africa. Cork County Council said it was now closing down the wreck with the removal of the pilot ladder and any other access points, rendering the ship inaccessible. “The wreck is now essentially empty, having had no cargo, and with any significant documentation and equipment removed,” said a spokesperson. “Cork County Council continues to ask members of the public to stay away from the wreck location as it is located on a dangerous and inaccessible stretch of coastline, is in an unstable condition and on private property.”
PDVSA shifts oil cargoes to different Rosneft unit, U.S. threatens action - (Reuters) - State-run PDVSA has shifted several oil cargoes from Rosneft Trading SA, which was hit by U.S. sanctions last week, to another affiliate of the Russian oil giant, internal documents from the Venezuelan company showed, prompting the U.S. special envoy to warn that more firms could be penalized if they “play games.” According to PDVSA’s trade reports seen by Reuters, four cargoes carrying some 6.7 million barrels of Venezuelan oil which had previously been allocated to Rosneft Trading for February loading were changed in recent days to another unit of the Russian firm, TNK Trading. Two of the cargo changes occurred in the first week of February. The other two came after the U.S. sanctions date, the data shows. Rosneft absorbed TNK Trading International after it completed the purchase of TNK BP in 2013. TNK Trading and Rosneft Trading share an address in Geneva, according to online company registry Moneyhouse. PDVSA and Rosneft did not respond to questions about the changes. Reuters could not determine whether the move was in response to U.S. sanctions. U.S. Special Representative for Venezuela Elliott Abrams told Reuters on Monday that he was aware of the cargoes shifted to TNK Trading. “I’d only say that if they play games like that with OFAC, all that will happen is additional companies will get sanctioned,” he said, referring to companies trying to work around the sanctions from the Office of Foreign Assets Control. In an escalation of its “maximum pressure” strategy designed to oust Venezuelan President Nicolas Maduro, Washington imposed sanctions last week on Rosneft Trading SA - PDVSA’s main business partner - and its boss, Didier Casimiro. U.S. officials accused Rosneft Trading, which last year became the largest intermediary for Venezuelan oil, of propping up PDVSA following the imposition of U.S. sanctions on the state firm at the beginning of last year and engaging in “tricks” to hide the country of origin of some cargoes.
Russia's Rosneft Still Quietly Exporting Venezuelan Oil Via Sanctions-Free Affiliate - Last week's announced US sanctions on an arm of Russia's Rosneft for helping Venezuelan leader Nicolas Maduro circumvent US punitive measures by propping up Venezuela's oil sector already appear to be failing.Specifically, the Feb.18 sanctions targeted Rosneft Trading SA, a unit of Russia's state-owned oil giant Rosneft, as well as company’s executive Di dier Casimiro as part of Trump's heightened pressure campaign on Venezuelan oil, but in fresh reporting Monday Bloomberg finds, "Now, another company affiliated with Moscow-based oil giant Rosneft PJSC that isn’t sanctioned — and thus can trade freely — is ramping up shipments from Venezuela."A subsidiary company acquired by Rosneft in 2017 called TNK Trading is greatly increasing its shipments of Venezuelan crude while Rosneft Trading SA hasn't shipped since January 29, according to data examined by Bloomberg. In the month up to Rosneft Trading being sanctioned, it accounted for up to half of the country's 850,000+ barrels a day in exports. By all appearances TNK is now busy picking up the slack. Bloomberg details further:TNK Trading International SA is scheduled to load 14.3 million barrels of Venezuelan crude in the first two months of 2020, compared with 5 million in all of 2019, according to shipping reports compiled by Bloomberg. That may offset any lost oil revenue for the Maduro administration, underscoring the difficulty of shutting Venezuela’s access to the global market.This allegation of Russia's continued assistance to Maduro for sanctions-evading comes after last week a senior Trump administration official accused Rosneft of “actively evading sanctions — engaging in ruses, engaging in deception.”But Rosneft's position has been that US sanctions are illegal and that its own operations in Venezuela are commercial in nature, not political. Over the past months the company's cooperation with state-run PDVSA has been an "open secret".
US LNG leaned on Europe in 2019, but it might not be able to in 2020 - Exporters of U.S. LNG in 2019 relied increasingly on Europe to absorb a flood of new natural gas supply, but there is growing skepticism among market observers that the European market can continue to provide the same level of relief this year. If Europe cannot, one of the few bright spots for the U.S. gas market could dim. Experts are warning that exporters may have to curtail LNG production. LNG prices have collapsed as rising supplies, especially in the U.S., met weaker-than-expected demand in a mild winter. On top of that, the coronavirus outbreak has crippled industrial demand for gas in China, which is supposed to be the world's fastest-growing importer of LNG. Recent figures from the U.S. Department of Energy underscored the dependence of U.S.-based exporters on European markets last year. In 2019, the combined Europe and Central Asia region, which includes Turkey, took about 40% of LNG cargoes exported from the U.S., while about 30% of cargoes went to the East Asia and Pacific region, which includes major end-users like Japan and South Korea, according to an analysis of monthly DOE export figures released Feb. 18. The top destinations in Europe for U.S. cargoes were the U.K., Spain and France. Many of the purchases were concentrated in the second half of 2019, as prices weakened and trade tensions between the U.S. and China continued. In the fourth quarter of 2019, about 53% of U.S. cargoes went to Europe, while the East Asia and Pacific region accounted for about 32%. The U.K. received about 95.9 Bcf worth of U.S. LNG during the fourth quarter, which was the majority of the approximately 120.6 Bcf that the U.K. imported from the U.S. in all of 2019.
Eni Sees Oil Peak Just 6 Years Away- Eni SpA predicted its oil and gas output will top out within six years as it announced a more ambitious climate plan, following the lead of peers in pledging to offset emissions from the fuels it makes and sells. The Italian energy giant sees output reaching a plateau in 2025 and targets an 80% cut in net emissions by 2050, it said Friday. That commitment illustrates the mounting pressure on oil companies to act on climate change -- not only from environmental activists but a growing proportion of major investors too. “We have designed a strategy that combines economic sustainability with environmental sustainability,” Chief Executive Officer Claudio Descalzi said in a statement. “This will allow Eni to be a leader in the market supplying decarbonized energy products.” Eni’s plan expands on a previous goal to reach net-zero emissions from its own exploration and production operations by 2030. The new strategy refers to so-called scope 1, 2 and 3 emissions, covering “the entire life-cycle of the energy products sold and a 55% reduction in emission intensity compared to 2018,” according to the Rome-based company. The raft of recent climate pledges by Europe’s major oil companies marks a big step for an industry that produces the bulk of the world’s planet-warming gases. Earlier this month, BP Plc stunned investors with a promise to eliminate emissions from its operations by 2050. It also vowed to halve the carbon intensity of the fuel it sells but doesn’t produce itself. That followed moves by Royal Dutch Shell Plc and Repsol SA to adopt new emission targets. The industry’s plans are likely to necessitate an expansion of renewables and better technology to capture and store carbon, as well as a retreat from the most polluting fossil fuels.
Control of offshore gas and oil provokes conflicts in eastern Mediterranean - The dispatch of Turkish troops to Libya, the bitter dispute between France and Italy over military policy at December’s NATO summit in London, and the formation of a French-Greek military alliance against Turkey indicate the extent to which oil and gas have become the source of ever widening conflicts. While it was popularly understood that the US/UK-led invasion of Iraq was a war for oil, this is less well understood in the case of Libya, which contains the largest deposits of oil in Africa and in 2010 was one of the 10 largest oil producers in the world. The struggle for Libya and its oil has now, moreover, become embroiled in the escalating conflict over the newly discovered gas fields in the Levantine Basin. A new “scramble for Africa” is being tied into a new “scramble” for the eastern Mediterranean, as Turkey, Greece, Israel, Egypt, Cyprus, Lebanon and the European powers compete over gas exploration, production licenses and pipelines. According to a US Geological Survey report published in 2010, the Levantine Basin, which straddles the maritime borders of Cyprus, Egypt, Israel, Palestine, Lebanon and Syria, contains an estimated 1.7 billion barrels of oil and 122 trillion cubic feet (tcf) of gas. It estimates that eventually there will be enough gas to meet regional and European power demand for decades. In 2009 and 2010, Israel discovered gas reserves of 11 trillion cubic feet in the Tamar field, and 22 tcf in the Leviathan field, ensuring sufficient capacity for both its domestic needs and exports, although some of these fields lie in waters claimed by Lebanon and Gaza. In 2011, Cyprus discovered an estimated 8 tcf of gas reserves in the Aphrodite field. With Turkey claiming ownership of the natural resources around Cyprus, divided between Turkish and Greek zones since the 1974 war, this heightened tensions in the region, leading to violent ship collisions and even the suspension of drilling in 2016. By far the largest field in the region is Egypt’s Zohr field, discovered in 2015, with an estimated 30 tcf. Located north of the Suez Canal, it is owned jointly by Italy’s Eni (50 percent), Russia’s Rosneft (30 percent), the Anglo-American BP (10 percent) and Egypt’s Mubadala Petroleum (10 percent). Last week, Egypt signed a $43 million oil and gas exploration deal with the German company Wintershall DEA to explore oil and gas in the East Damanhour Bloc in the Nile Delta.
Crew Kidnapped from Oil Tanker - Reporting indicates that the Alpine Penelope crude oil tanker has been attacked while in transit towards Lagos, resulting in the kidnap of nine personnel, Dryad Global has revealed on its website. The identities of the kidnapped crew remain unknown, although Dryad highlighted that the vessel is known to have a crew of 24 personnel, consisting of Georgians, Filipino and Ukrainian nationals. Dryad, which outlined that the “source confidence level” of the incident is “high”, said the fate of the crew remains unclear at this stage. This is the seventh incident to occur in the waters off Cotonou since January 19, according to Dryad. Of those, five have resulted in illegal boardings offshore, two of which resulted in kidnappings of crew, Dryad pointed out. “Within 2019 the waters off Lome and Cotonou witnessed an increase in both volume and severity of maritime crime incidents,” Dryad said in a company statement posted on its website. “Dryad advise that all vessels transiting the area be subject to thorough transit risk assessment prior to entry into the area and implement full mitigation measures,” Dryad added. Dryad describes itself as an expert in maritime risk and global security. According to the company’s website, there have been 544 attacks on commercial shipping in the last two years.
OPEC hasn’t run out of ideas, Saudi energy minister insists as oil prices slump - OPEC and its allied oil-producing nations are still working well together and still have options to try to rebalance global crude markets, Saudi Energy Minister Prince Abdulaziz bin Salman said Tuesday. “We do communicate with each other, we use every opportunity to talk with each other,” he said, speaking to reporters at the ICCUS conference in the Saudi capital of Riyadh. “We did not run out of ideas, we haven’t lost our phones and there are always good ways of communicating through conference calls and technology is very helpful.” His comments came amid speculation that there is tension in the alliance, known as OPEC+, over whether to cut oil production further. Prices continue to be weighed on by ample supply and falling demand and, lately, fears surrounding the coronavirus and its impact on the global economy. Prince Abdulaziz insisted that the producer countries in the alliance communicate and he was “confident of our partnership,” adding that every producer was a “responsible” one. OPEC and its non-OPEC allies, led by Russia, will meet in Vienna on March 5-6 but there is uncertainty over whether the entire group will agree to cut their collective oil output further with rumors that Russia is still undecided. As it stands, the alliance has reduced its total oil output by 1.7 million barrels a day in a bid to stabilize oil prices. The technical committee of OPEC+ met earlier in February to debate a possible oil output cut but the meeting ended with no solid recommendation.
Oil prices skid on demand concerns as virus spreads globally - Oil prices tumbled 4% on Monday, as the rapid spread of a coronavirus in several countries outside China left investors concerned about a hit to demand.Global shares also extended losses as worries about the impact of the new virus grew, with the number of infections jumping in Iran, Italy and South Korea.Brent crude was down $2.42, or 4.1%, to $56.09 a barrel. U.S. crude futuresfell by $2.12, or 4%, to $51.26."Oil prices will remain vulnerable here as energy traders were not pricing in the coronavirus becoming a pandemic," said Edward Moya, senior market analyst at OANDA."While some parts of China are seeing improving statistics with the coronavirus, financial markets will remain on edge until we start seeing the situation improve in Iran, Italy, South Korea and Japan."South Korea's fourth-largest city, Daegu, grew increasingly isolated as the number of infections there rose rapidly, with some airlines suspending flights to the city until March 9 and March 28, respectively. The country reported its seventh death after raising its infectious disease alert to its highest level.Italy reported a third death from the flu-like virus and 150 infections.Iran said it had confirmed 61 cases and 12 deaths, with most of the infections in the Shi'ite Muslim holy city of Qom. Afghanistan, Iraq, Kuwait, Saudi Arabia and Turkey imposed travel and immigration curbs on the Islamic Republic."We should not underestimate the economic disruption as a super spreader could trigger a massive drop in business activity around the globe of proportions the world has never dealt with before," Stephen Innes, chief market strategist at AxiCorp, said in a note on Monday.Oil prices received some support after local health officials in China said on Monday that four provinces had lowered their virus emergency response measures.Chinese President Xi Jinping said on Sunday the world's largest energy consumer will adjust policy to help cushion the blow to the economy from the virus outbreak.Goldman Sachs said commodity prices could fall sharply before Chinese stimulus efforts later this year helps the sector achieve its 12-month return forecast of about 10%."The promise of stimulus has made commodity markets act like equity markets, building up risks of a sharp correction," the bank said in a note
Oil falls 5%, sliding into bear market territory as coronavirus sparks demand fears - Oil slid more than 4% on Monday, falling into bear market territory as the number of coronavirus cases outside of China surged, worrying investors that a subsequent slowdown in the global economy could dent the demand for crude.U.S. West Texas Intermediate crude slid 5%, or $2.68, to $50.70 per barrel, while International benchmark Brent crude fell $3.06, or 5.2%, to trade at $55.44 per barrel. Raymond James cut its oil outlook on Monday as the number of coronavirus cases continues to rise. "There is no escaping the fact that China — the world's largest oil importer — will have meaningfully weaker near-term oil demand than we had envisioned as the year began," analyst Pavel Molchanov wrote in a note to clients. Molchanov said demand in the first quarter will be reduced by an average of 1.5 million barrels per day. He said that a warmer-than-normal winter across the Northern Hemisphere is also hitting demand.Total confirmed cases of the coronavirus now stands at more than 79,400, while the death toll is more than 2,621. On Monday Italian news agency ANSA said that a seventh person has died in the country, with the number of confirmed cases exceeding 220.Citi was among the other firms cutting its oil outlook as cases of the coronavirus accelerate."The oil market is confronting new signs of weakness, largely from the coronavirus and its impacts on refinery demand for crude oil and from Russia's refusal to agree to an emergency OPEC+ meeting to curb oil production," the firm said in a note to clients.Citi said that it now believes inventories could grow to 2 million barrels per day in February alone, which will put "even more sustained pressure on prices." A week ago, the firm's forecast stood at a potential build of over one million barrels per day for the quarter.The firm also raised its first quarter build projection from 112 million barrels to 145 million barrels, and lifted its second quarter forecast from 53 million barrels to 94 million barrels. "However, our draws for 3Q are lower vs. last week's estimates," the firm added.Molchanov added that since the virus and weather issues are transitory, "the global oil market will need sustainably higher prices in order to avoid a major undersupply in 2021 and beyond."
Oil Ends Sharply Lower On Virus Jitters - Crude oil prices plunged sharply on Monday amid rising concerns about the outlook for energy demand due to the rapidly spreading coronavirus outside China. According to reports, the number of new cases of coronavirus infection is rising in South Korea, Iran, Afghanistan and Italy. A report from Reuters, quoted Saudi Aramco CEO Amin Nasser as saying the coronavirus impact will be "short term". This probably pulled oil prices from the day's lows. West Texas Intermediate Crude oil futures for April ended down $1.95, or about 3.7%, at $51.43 a barrel, after falling to a low of $50.45 in the session. Brent Crude futures declined $2.20, or about 3.8%, to $56.30 a barrel. On Friday, WTI Crude oil futures for April ended down $0.50, or about 0.9%, at $53.38 a barrel. South Korea has raised its coronavirus alert to the "highest level" for the first time in a decade, following a rapid spike in cases over the weekend. Reports say the total number of cases so far in South Korea has risen to 763. Italy became Europe's epicenter for coronavirus cases over the weekend. Iran has confirmed an uptick in infections. Italian bank Intesa Sanpaolo has reportedly decided to close 4 branches in the country as the government imposed strict quarantine restrictions in two northern "hotspot" regions close to Milan and Venice. Iran has confirmed 43 cases and eight deaths, with most of the infections in the Shi'ite Muslim holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic. The virus has now killed 2,592 people in China, which has reported 77,150 cases. The rapid spread of the deadly virus in several countries outside China left investors concerned about a hit to demand. Meanwhile, the World Health Organization said it is worried about the growing number of cases without any clear link to China.
Oil falls more than 1% as virus fears outweigh supply cuts -- Oil slipped towards $56 a barrel on Tuesday, falling for a third day, as concerns about the spread of the coronavirus and its impact on oil demand outweighed OPEC output cuts and Libyan supply losses.Crude fell almost 4% on Monday, with other commodities also reporting losses while U.S. and European equities suffered their steepest declines since mid-2016 on concern the coronavirus outbreak could turn into a pandemic.Brent crude fell 61 cents, or 1.2%, to $55.64 a barrel. U.S. West Texas Intermediate crude slipped 74 cents, or 1.4%, to $50.69."Oil prices are naturally feeling the full wrath of the coronavirus spread," said Craig Erlam, analyst at brokerage OANDA, who added the $54 level for Brent was looking "vulnerable".South Korea aims to test more than 200,000 members of a church at the centre of a surge in coronavirus cases. The virus is also spreading in Europe and the Middle East.Concern about the demand impact from the virus has pushed Brent down by almost $10 a barrel this year despite the shutdown of most of Libya's output and a supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and allies.Prices received further support as lawmakers based in areas of eastern Libya on Monday said that they would not participate for now in peace talks.However, oil could come under more pressure from the latest U.S. supply reports.Crude inventories are expected to rise for a fifth week running. The first of this week's two supply reports, from the American Petroleum Institute (API), is due at 2130 GMT.Potential support for prices could also come from OPEC and allies including Russia, which are considering whether to curb output further. However, scepticism is growing about the chance of further action."Doubts are emerging about the willingness of OPEC+ to extend and expand the necessary production cuts," said Commerzbank analyst Eugen Weinberg. The producers are due to meet in Vienna over March 5-6 to decide policy.Saudi Arabia's energy minister on Tuesday said OPEC+ should not be complacent about the coronavirus. But Russia, key to any deal, has yet to announce its position on further curbs.
Oil Futures Settle At 2-week Low - Crude oil prices declined sharply on Tuesday, extending recent losses, amid concerns about the outlook for energy demand due to the impact of the coronavirus outbreak on global growth. West Texas Intermediate Crude oil futures for April ended down $1.53, or about 3%, at $49.90 a barrel, the lowest settlement in about two weeks. Brent crude futures declined $1.48 to $54.86 a barrel. On Monday, WTI crude oil futures for April ended down $1.95, or 3.7%, at $51.43 a barrel. According to reports, the number of new virus cases in China outside Hubei continued to drop. Countries around the world have stepped up efforts to prevent a pandemic of the flu-like virus, with the U.S. pledging $2.5 billion to fight the disease. South Korea said it aims to test more than 200,000 members of a church at the center of a surge in coronavirus cases. On Monday, the World Health Organization insisted it was premature to declare the deadly outbreak of a novel coronavirus a pandemic even though it had the potential to reach that level. According to a report from Reuters, Saudi Aramco expects the coronavirus impact on oil demand to be short-lived. Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman said that OPEC+ should not be complacent about the coronavirus. Traders were also looking ahead to the weekly inventory reports from the American Petroleum Institute (API) and Energy Information Administration (EIA). While the API's report is due later today, the EIA is scheduled to come out with its inventory data Wednesday morning.
Everybody Wants To Rule The World, Part 3 - Coronavirus, the Crude Price Slide and OPEC Production Cuts --Oil-production restraint by OPEC and 10 cooperating countries grows more challenging with time, and just when market projections began to hint at relief for the OPEC-Plus group, the spread of the new coronavirus in China and beyond became a sudden and possibly serious impediment to global economic growth and oil demand. Yesterday’s slide in crude oil prices amid newly heightened concern about the potential pandemic’s effects will only add to the challenges that OPEC-Plus countries will face in managing crude supply. So far, the OPEC-Plus group has achieved unprecedented compliance with its production ceilings, which it implemented in January 2017 and has adapted a few times since in response to market pressure. That effort has kept the crude price above the ruinous levels of 2015, memories of which have encouraged quota discipline. But the threat of a major, coronavirus-related slowdown in global oil demand could seriously undermine OPEC-Plus’s efforts, which already had been hurt by dissent within its ranks. Today, we continue our series with a look at Monday’s price drop, the latest supply and demand forecasts and a discussion of the obstacles that might affect OPEC-Plus going forward.
WTI Back Above $50 After Smaller Than Expected Crude Build - Oil prices roundtripped overnight after running back above $50 following the smaller-than-expected API-reported crude build, sliding back lower overnight, and ramping back to $50.00 ahead of the official government data thanks to promises from OPEC+ that they will meet, despite the virus concerns:“The OPEC secretariat is in contact with the authorities in the city of Vienna on the recent reported cases of infections in Austria,” Secretary-General Mohammad Barkindo says while returning from meeting in Riyadh.“While we continue in earnest with the preparations for the meetings of the extraordinary conference next week, we are continuing to monitor developments closely” 'There will be blood' comes to mind. Additionally, Bloomberg Intelligence Senior Energy Analyst Vince Piazza says E&Ps have professed heightened capital discipline in 2020, which should slow oil-production growth in the U.S and help tighten balances. But global demand remains a broader concern, with the fears of the coronavirus spreading even as oil exports from the U.S recovered recently. DOE:
- Crude +452k (+2.8mm exp)
- Cushing +906k
- Gasoline -2.691mm (-1.9mm exp)
- Distillates -2.115mm (-900k exp)
The official crude inventory data showed an even smaller build than API (and notably less than expected)
Oil little changed as pandemic fears deepen, but smaller than expected inventory build caps losses - Crude prices slid for a fourth day on Wednesday as Asia and oil producing countries in the Middle East reported hundreds of new coronavirus cases and the United States warned of an inevitable pandemic.Brent crude fell 48 cents, or 0.8%, to trade at $54.49 per barrel, while U.S. West Texas Intermediate crude fell 15 cents, or 0.3%, to $49.75 per barrel.The U.S. Energy Information Administration said Wednesday that inventories for the week ending Feb. 21 increased by 500,000 barrels. According to FactSet, analysts had been expecting a build of 1.8 million barrels.Pandemic fears intensified as authorities around the world battled to prevent the spread of coronavirus, which has now been found in about 30 countries. World stocks tumbled for the fifth straight day on Wednesday, while safe-haven gold rose back towards seven-year highs and U.S. bond yields held near record lows after governments and health authorities warned of a possible coronavirus pandemic.Goldman Sachs reduced its 2020 oil demand growth forecast to 600,000 barrels per day (bpd) from 1.2 million bpd, and lowered its Brent forecast to $60 a barrel from $63."We see oil prices improving through the year assuming demand begins to normalize in 2020," it said, referring to the second half of 2020.Earlier, oil prices rose on short-covering and amid hopes for deeper output cut by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+.Saudi Arabia's energy minister said on Tuesday he was confident that OPEC and its partners, known as OPEC+, would respond responsibly to the spread of the coronavirus.
Oil prices drop to lowest in more than a year as coronavirus spreads -Oil prices fell to their lowest in more than a year on Wednesday after hundreds of new coronavirus cases reported in Europe and the Middle East stoked fears that energy demand would decline, and on concerns that the virus could spread across the United States. Brent crude settled at $53.43 a barrel, shedding $1.52, or 2.77%, while U.S. West Texas Intermediate (WTI) crude settled at $48.73 a barrel, down $1.17, or 2.34%. Earlier in the session, both benchmarks hit their lowest since January 2019, with Brent sinking to $53.03 a barrel and WTI dipping to $48.30. Oil followed equities lower after reports that 83 people were being monitored in New York for possible coronavirus exposure. “Every time a headline comes out, especially one regarding new cases in the U.S. such as New York, that comes in and forces additional selling and pushes normal fundamental input to the sidelines,” said Jim Ritterbusch, president of Ritterbusch and Associates. First cases of the virus were confirmed in countries including Greece, Georgia and Brazil, while authorities enacted more travel restrictions and quarantines across multiple continents. The U.S. heating oil crack reached its lowest since 2017, reflecting reduced diesel demand due to the virus spread. Prices briefly turned positive after the U.S. government reported a drop in gasoline inventories last week. Crude stocks grew by 452,000 barrels to 443.3 million barrels, the Energy Information Administration said, which was less than the 2-million-barrel rise analysts had expected. Goldman Sachs cut its 2020 oil demand growth forecast to 600,000 barrels per day (bpd) from 1.2 million bpd, and lowered its Brent forecast to $60 a barrel from $63.
Oil falls for fifth day as coronavirus spreads outside of China - Oil prices fell for a fifth day on Thursday to their lowest since January 2019 as a growing number of new coronavirus cases outside of China fuelled fears of a pandemic which could slow the global economy and lower crude demand. Brent crude was down $1.47, or 2.8%, at $51.96 per barrel. West Texas Intermediate futures fell $1.35, or 2.7%, to trade at $47.38 per barrel. In the five trading sessions through Thursday, Brent has dropped 10.6%, while WTI has declined 10.4%, their biggest five-day percentage losses since August 2019. On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases. The spread to large economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand growth will only 60,000 barrels per day in 2020, or “practically zero”, because of the widening outbreak. U.S. President Donald Trump assured Americans on Wednesday evening that the risk from coronavirus remained “very low”. However, Asian share markets fell on Thursday morning, as investors fear the coronavirus spread will disrupt the global economy as quarantines and other measures taken to halt its advance slow trade and industry.
US to Sell 12 Million Barrels of Oil as Virus Hits Demand-- The U.S. will sell up to 12 million barrels of oil from its emergency government stockpile just as global crude demand takes a hit from the spreading coronavirus. The crude would be delivered to U.S. Gulf Coast pipelines in April and May, adding incremental barrels to an already oversupplied market at a time when oil demand is expected to slump. The International Energy Agency and the Organization of Petroleum Exporting Countries both expect fuel consumption to contract in the second quarter. OPEC and allied producers will gather in Vienna next week to discuss ways to stabilize oil prices, which have tumbled as supplies swell. The Energy Department sale announced Friday is part of a regular drawdown schedule intended to raise $450 million for government programs in fiscal year 2020. That goal may prove difficult as oil prices have plunged more than 20% this year on the back of the coronavirus contagion. The U.S. benchmark on Thursday settled at the lowest level in more than a year. Up to 6 million barrels will be sold from agency’s Bryan Mound site in Texas, with 6 million more coming from its Big Hill, Texas, and West Hackberry, Louisiana, sites. Earlier this month, the Trump administration proposed selling 15 million barrels of oil from the emergency stockpile as part of its fiscal 2021 budget plan and has previously proposed reducing it by half. The oil reserve, set up after the Arab oil embargo in the 1970s, has also been tapped in response to emergencies, such as Hurricane Katrina.
Coronavirus and the O&G industry The coronavirus outbreak seems to be moving towards containment in China, but the epidemic is gaining steam worldwide and it could be a matter of time before it becomes a pandemic. Although the fatality rate of the virus is smaller than the flu, its unknown nature is driving uncertainty and fear in markets across the globe. And the oil and gas industry isn’t immune to this.Whether Covid-19 has and will continue to slash crude oil and gas demand, or whether sentiment is pushing commodities prices to historic lows, you need to be in the know. Here’s our latest coverage:
- Upstream's biggest coronavirus fear is prices, not project delays. The greatest impact of the outbreak is expected on oil prices, and consequently, companies’ cash flow and dividends. So far, the threat from potential project delays is “a mere scratch on the surface of global supply,” said Wood Mackenzie.
- Crude falls for 5th day on demand concerns. Crude oil prices fell for a fifth straight trading day last Thursday, to their lowest point in 13 months, as a growing number of new coronavirus cases outside China fueled fears of a pandemic, which could slow the global economy and lower crude demand. Brent crude was down $1.47, or 2.8%, at $51.96 per barrel, while WTI fell $1.35, or 2.7%, to trade at $47.38/Bbl.
- Coronavirus outside China obstructs oil market recovery. Signs of worsening outbreaks in South Korea, Italy and Iran are getting in the way of recovery. “These are not small demand markets and, together with China, nearly one in five global demand barrels is located in countries facing public health emergencies,” said IHS Markit.
- Chevron’s London employees continue working from home. The oil major asked staff in its Canary Wharf offices to work remotely to reduce exposure to the virus, after one employee showed flu-like symptoms. Italy’s Saipem has also minimized staff in offices and operations, particularly in northern Italy, where the virus is growing.
- Coronavirus will meaningfully impact oil demand growth. Dallas Fed economists believe the coronavirus presents a serious risk to demand growth globally, as China consumes 14% of total global oil demand. As a consequence, U.S. crude oil output growth is expected to decline to roughly 0.4 Mmbpd in 2020. This is also heavily influenced by dramatic pressure for capital discipline.
- Consumers unlikely to feel benefit of lower oil prices: IEA. Covid-19 is set to affect 435,000 Bpd of crude demand in the first quarter, compared to the same period last year, the IEA forecast. This will be the first quarterly contraction in more than a decade. For 2020, the loss is estimated at 365,000 Bpd, dropping demand growth to 825,000 Bpd – the lowest level since 2011.
- Chinese oil demand to fall by 200,000 Bpd in H1: Opec. The estimated loss will result in a 400,000 Bpd retraction in demand globally, the group said.
- Global LNG markets’ struggles intensify with coronavirus. The outbreak couldn’t have happened at a worse time for the global LNG market, amid weak demand due to a mild winter and a supply glut. Spot prices are at historically low levels of roughly $3.15/MmBtu, while long-term contract prices are around $8.33/MmBtu.
- Coronavirus slashes global oil demand growth: Rystad. The estimate is a plunge of 25%, to 820,000 Bpd, due to the virus and its travel-related restrictions. In a worst case scenario, Rystad forecast growth could be slashed to 650,000 Bpd in 2020.
Oil prices could remain weak even if OPEC cuts, S&P Global Platts says - Even if OPEC cuts production by 600,000 barrels a day, oil prices could remain weak until April, according to a senior analyst at S&P Global Platts. That’s because inventories are rising amid lower oil demand due to the coronavirus outbreak, Kang Wu, Asia’s head of analytics, told CNBC’s “Capital Connection” on Thursday. Oil prices have been under pressure because of the virus that shuttered Chinese businesses for weeks and forced flight cancellations around the world. As the economic impact of the coronavirus unfolded, the Organization of the Petroleum Exporting Countries slashed its global oil demand outlook. For China, where the outbreak began, OPEC revised its demand forecast down by 0.2 million barrels a day for the first half of the year. International benchmark Brent crude futures were at $52.81 a barrel, down 1.16% on Thursday afternoon in Asia, while U.S. crude futures fell 1.33% to $48.08 a barrel. OPEC’s Joint Technical Committee met over three days in early February and reportedly recommended a cut of 600,000 barrels a day, according to Reuters. That’s what S&P Global Platts expects at the March 5 and 6 OPEC meeting, Wu said.
OPEC+ Meetings Now on Critical Path - The upcoming OPEC+ meetings on March 5 and 6 are now on the critical path.That’s according to a new research note from Jefferies, which reveals that the company now believes OPEC+ needs to make “much steeper” cuts than the 600,000 barrel per day recommendation from their technical committee to support prices.“At least a one million barrel per day cut for 2Q strikes us as necessary to merely moderate inventory builds, and we confess to underestimating demand destruction over the last several weeks,” Jefferies stated in the note.Jefferies said the two-week backwardation pattern in the Brent forward curve that had given it some encouragement “completely collapsed” this week.“Flat prices have fallen sharply and the return to contango is a signal that the market is preparing for a longer duration of coronavirus demand destruction,” Jefferies stated in the note.Jefferies’ current Brent crude oil price estimate for 2020 is $59 per barrel. The company estimates that Brent will average $58 per barrel over the first two quarters of the year and $60 per barrel over the final two quarters.On Thursday, Rystad Energy revealed that it had cut its 2020 Brent crude oil price forecast from nearly $60 per barrel to around $56 per barrel. In addition to the cut, the company warned that another negative revision “might be around the corner” due to increasing downside risk.Earlier this month, the U.S. Energy Information Administration (EIA) also cut its Brent oil price forecast for 2020. The EIA’s Brent spot average forecast for this year is now $61.25 per barrel. Its previous forecast stood at $64.83 per barrel. Fitch Solutions Macro Research (FSMR) also revised down its Brent oil price forecast for 2020 in February. FSMR now sees Brent averaging $62 per barrel this year, which marks a $3 drop compared to its previous forecast in January.
Worst Oil Week Since 2011 Puts Pressure on OPEC+-- Oil was on course for its biggest weekly loss since 2011 as the fast-spreading coronavirus roiled global markets, intensifying speculation that OPEC and its allies will strike a deal to support prices. Futures in New York fell a sixth day after fears over the outbreak sent shares on Wall Street down by the most in almost a decade. With crude prices down more than 14% this week, there are signs that OPEC and its allies could be nearing agreement on action to stem the rout before meeting in Vienna next week. The group’s top official said the cartel and its allies are displaying a “renewed commitment” to reach an accord as the virus puts the world economy on course for its worst performance since 2009. Saudi Arabia has been pushing for deeper production cuts over the last few weeks, but Russia has so far taken a more cautious stance. One silver lining for markets is that prices are now at a level that may be uneconomic for U.S. shale producers. “Whatever production cuts that might be forthcoming next week are too little too late, given how oil prices have declined so rapidly,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “If OPEC+ cuts by 1 million barrels, that can shore up prices a little, but anything less is going to disappoint.” West Texas Intermediate futures for April delivery fell 3% to $45.68 a barrel on the New York Mercantile Exchange as of 7:30 a.m. in London. They closed down 3.4% on Thursday and have lost 14.4% so far this week, the most since May 2011. Brent for April settlement dropped 2.7% to $50.75 a barrel on the ICE Futures Europe exchange after falling 2.3% on Thursday. It’s down more than 13% for the week. The global crude benchmark traded at a $5.07 premium to WTI. The OPEC+ talks are scheduled for March 5-6 after Russia, whose budget is more resilient to lower oil prices, rebuffed pressure from Saudi Arabia for an earlier emergency meeting to deal with the outbreak. Combined OPEC output, not including Russia and other allied producers, is already at the lowest level since 2009.
U.S. oil futures suffer largest weekly percentage loss in over a decade – - Oil futures finished sharply lower on Friday, with U.S. benchmark prices down over 16% for the week, the largest weekly decline in more than 11 years, with the spread of the COVID-19 epidemic around the world expected to significantly dent demand for crude. The oil market looks like it’s pricing in “demand grinding to a halt,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch. “It’s the wild west in crude at this point, and we are at the mercy of the market sentiment.” West Texas Intermediate crude for April delivery dropped $2.33 on Friday, or about 5%, to settle at $44.76 a barrel on the New York Mercantile Exchange. The U.S. benchmark saw a weekly fall of over 16%, the largest weekly decline since the period ended Dec. 19, 2008, according to Dow Jones Market Data. For the month, the front-month contract ended over 13% lower. Global benchmark April Brent crude fell $1.66 on Friday, or 3.2%, to settle at $50.52 a barrel on the contract’s expiration day, with prices ending nearly 14% lower for the week, for the largest week loss since the period ended Jan. 15, 2016. It registered a monthly decline of just over 13%. The April WTI and Brent crude contracts marked their lowest settlements since December 2018. May Brent crude, which is now the front month, dropped $2.06, or 4%, to $49.67 a barrel—the lowest most-active contract price since July 2017. Analysts said the tumble puts increased pressure on the Organization of the Petroleum Exporting Countries and their allies as they prepare to meet next week to discuss the possibility of additional production cuts in a bid to balance supply and demand. Read: Coronavirus and Russia pose the biggest challenges for OPEC+ efforts to lift oil prices “Any remaining bullish optimism likely rests on the prospect of further OPEC+ action at next week’s meeting,” said Robbie Fraser, senior commodity analyst at Schneider Electric. The oil producers will meet in Vienna on March 5-6. “Russia has offered more supportive comments of late, while Saudi Arabia has already stated their backing for steeper cuts to combat lost demand” due to COVID-19, said Fraser. Saudi Arabia has also reportedly slashed exports to China by 500,000 barrels a day, “though that figure represents only a small portion of total demand loss.” “Moving forward, OPEC+ action appears likely, but the reality may be more muted. As usual, actual supply cuts will likely depend heavily on Saudi Arabia, where cuts already far exceed official quotas,” he added. New reports on Friday said that key OPEC members were looking favorably on a larger-than-previously-expected output cut. “OPEC and its allies may move ahead with deeper production cuts when they meet next week” said Lukman Otunuga, senior research analyst at FXTM. “This move would cushion oil’s downside losses.” “However, the path of least resistance for oil will point south, as long as demand is missing from the equation,” he told MarketWatch.
Oil Sinks in Worst Week Since 2008 - -- Oil had it worst week since the financial crisis as panic over the coronavirus pandemic battered global markets.Futures in New York fell 16% this week, marking the biggest weekly drop since December 2008. The viral outbreak showed no signs of relenting, with the World Health Organization raising global risk to “very high” from “high.” The collapse of financial markets prompted U.S. Federal Reserve Chairman Jerome Powell to assure investors that the central bank is prepared to cut interest rates to mitigate the virus’ threat to economic activity. “A month ago the concern was only China,” . “This meltdown is a fear of a global pandemic. The risk is we will see the same disruptions we saw in Asia, from travel restrictions to quarantines, materialize all over the world.” Oil prices have tumbled almost 27% this year on concerns the coronavirus outbreak will dent crude demand. OPEC and its allies have signaled the coalition could reach an agreement to stem the rout before meeting in Vienna next week. Saudi Arabia is reportedly pushing for collective OPEC+ production cuts of an additional 1 million barrels a day, of which it would bear the brunt.However, Riyadh’s proposal may not be enough to balance the oil market, according to a coronavirus-scenario analysis by Bloomberg Intelligence analysts Salih Yilmaz and Rob Barnett. The alliance’s overall compliance with production cuts has not been enough to support oil prices. The re-emergence of Libyan barrels also remains a risk. “We may be too far deep for any OPEC cuts to have a meaningful impact,” “If the virus keeps spreading, that is just going to keep hurting demand and cause another wave of panic selling. A production cut could give it a bounce, but these lows will persist for the foreseeable future without a vaccine.”West Texas Intermediate futures for April delivery fell $2.33, or 5%, to settle at $44.76 a barrel on the New York Mercantile Exchange.Brent for April settlement, which expired Friday, lost $1.66, or 3.2%, to end the session at $50.52 a barrel on the ICE Futures Europe exchange. The more active May contract fell 4% to $49.67.Brent’s so-called red spread -- the difference between December contracts in consecutive years -- sank deeper into bearish contango, settling at lowest level since 2018. Oil market drivers:
- Gasoline futures fell 1.1% to settle at $1.3955.
- The U.S. will sell up to 12 million barrels of oil from its emergency government stockpile just as global crude demand takes a hit from the spreading coronavirus.
- The volume of crude that will be shipped to China from West Africa next month is set to drop by at least ten million barrels as the demand destruction caused by the coronavirus hits home.
- The Trump administration is ready to unleash the full impact of sanctions on Chevron Corp.’s operations in Venezuela as the U.S. seeks to further squeeze the Maduro regime.
Iran's Hardliners Win Landslide Victory In Low Turn-Out Parliamentary Elections - Early results from Friday's nationwide Iran parliamentary elections show a landslide for conservative and hawkish anti-West candidates, with forecasts showing them taking more than two-thirds of the seats. Iranian state TV announced Sunday that hardliners won a landslide all 30 seats in Tehran, AP reports. Much of this conservative group is led by old guard supporters of ex-president Mahmoud Ahmadinejad, in a victory seen as a major blow to 'reformist' President Hassan Rouhani and his supporters. US state-funded Radio Farda identifies "that least 15 former cabinet ministers and provincial governors close to former ultraconservative Mahmoud Ahmadinejad's have also won in the elections" — among them Habibollah Dahmardeh, Ebrahim Azizi, Abdolreza Mesri, Hamid Reza Hajibabai, and Ali Nikzad.And The Guardian notes of the early results that "The reformists, the largest grouping in the outgoing parliament, have been decisively beaten, with predictions showing them taking only 17 seats in the 290-strong parliament. The principalists – or conservatives – were on course to take around 200 seats, including all 30 seats in the capital, Tehran, previously a stronghold of the reformers." This after Iran's election watchdog, dubbed the Guardian Council, admitted to disqualifying thousands of candidates just days before the vote. The State Department has said this translated to over 7,000 candidates that were denied a place in Friday's parliamentary elections, for which the Trump administration leveled sanctions against key Iranian individuals on the Guardian Council. Iran's Supreme Leader Ayatollah Khamenei still lambasted a "conspiracy" of external US and Israeli attempts at interference in the elections, but still praised the election as a "shining" victory affirming "the people's religious and revolutionary beliefs."
Iranian hardliners win all parliamentary seats in Tehran: report - Iranian hardliners won all of the parliamentary seats in Tehran, as the country experienced the lowest voter turnout since the Islamic Revolution four decades ago, state TV said, according to The Associated Press. Iran’s interior ministry said Sunday the voter turnout reached 42.57 percent, The Associated Press reported, noting it could be a sign of dissatisfaction with the government and the economy as U.S. sanctions continue. Comparatively, the turnout in 2016 was almost 62 percent and has consistently been above 50 percent since the Islamic Revolution. More than 7,000 potential candidates were disqualified from their races, most of whom were reformists and moderates. Ninety of those disqualified were sitting members of Iran’s parliament, which has 290 seats. Iranian officials had encouraged voters to turn out to stand up against the U.S. sanctions. The coronavirus also could have impacted voter turnout as the country reported its first cases and deaths two days before the election, the AP noted. Iran has reported eight deaths and 43 infections across five cities, including the capital. Voters showed up at the polls with facemasks. In Tehran, 25.4 percent of eligible voters showed, which Interior Minister Abdolreza Rahmani Fazli said, “we believe that the number of votes and the turnout is absolutely acceptable,” according to the AP. Iranian President Hassan Rouhani criticized the high number of disqualifications and alleged enemy “propaganda” attempted to scare voters away from the polls by exaggerating the extent of the coronavirus, the AP reported.
U.S. Military Raises Injury Toll In Iran Missile Attack In Iraq - The Pentagon has raised to 110 the number of U.S. service members who suffered traumatic brain injuries during an Iranian missile attack on an air base in Iraq last month. The total figure announced on February 21 is one higher than the toll announced on February 10. It represented the sixth time the U.S. military has raised the total of those suffering injuries in the attack that took place on the night of January 7-8. President Donald Trump initially said that no Americans were harmed in the attack on the Ain al-Asad Air Base, which came amid tensions between Washington and Tehran. Iran said the missile attack on Ain al-Asad and another air base hosting U.S. troops in Iraq was revenge for the killing of Iranian Major General Qasem Soleimani, the leader of Iran's elite Quds Force, in a U.S. drone strike near Baghdad's airport on January 3. The Pentagon said all of the wounded in the base attack were diagnosed with mild traumatic brain injury and that 77 of them have already returned to duty. It added that 35 others have been transported to Germany for further evaluation, 25 of whom have been sent on to the United States.
Who “Got” Iraqi Oil? -Not the US. Dick Cheney collaborated with US major oil companies in a plot to at least take over operating the oil production in Iraq, OPEC’s second largest producer and exporter, if not get to own the oil itself outright (which has not happened as oil in the ground was and remains owned by the Iraqi government, which is the way it is in pretty much all OPEC members). Of all people, Juan Cole and many other progressives agreed that the war was all about controlling Iraq’s oil. So the US overthrew Saddam Hussein, but then what followed was civil war and discombobulation, and oil production was seriously disrupted for a long time, with those US oil companies not getting any business for a long time. Of course, Donald Trump has repeatedly argued that the worst thing about the Iraq war was that “we did not get thee oil.” Of course, the only reason he has left any troops in northeastern Syria is that somwbody told him there is oil there and he should leave troops there to keep terrorists from getting at the oil. So there we have US troops occupying some of these wells, although there is basically no way they will ever be operated by US companies, much less owned by them. Trump is deluded if he thinks “we have got” that oil.So what about now? According to the Iraqi Oil Ministry, there are 23 foreign corporations operating in the Iraqi oil sector. Four of these are Chinese, three are Russian, and one is American: Exxon Mobil. Last year Exxon Mobil reduced its workforce in Iraq due to security issues.But now Russian interests are increasing their presence. Yesterday Simon Watkins reported that the Russian Oil Ministry has announced that several Russian oil companies are planning to spend US$20 billion in Iraq. That this is happening reflects a shift in attitudes in Iraq as well. Watkins reports that the Iraqi leadership is upset by two things coming out of the US. One is Trump’s sudden abandonment of the Kurds in northeastern Syria. The other, of course is Trump’s attack without justification that killed both Iran’s General Soleimani as well as Iraqi General al-Muhandis.
Syria Stands As A Mega-Embarrassment For America - For a long time, America has tried to ignore and distance itself from its role in making Syria the disaster it is today. Syria stands as a mega-embarrassment that shines a spotlight on America's failed foreign policy. To say President Obama blew it is an understatement. His inexperience took us down a rabbit hole with each turn revealing more ugliness than the one before. Both Obama and Trump pledged to reduce America's role in Afghanistan and Iraq but it has proven easier said than done, it has also had massive far-reaching ramifications. By reassuring and almost encouraging the people of Syria to rise up and overthrow their brutal leader Obama started a series of events that has taken countless lives and destroyed millions of others. Three of the most damaging developments flowing from this are the development of ISIS, the flow of millions of refugees into Europe, and the bombing and destruction of cities and innocent civilians.Continued violence in the region over the last decade has spurred the destabilizing mass migration of millions of people from the area.Many people do not realize the formation of ISIS is rooted in this mess and flowed out of America's meddling. A failed attempt to build an army to fight Syrian President Bashar al-Assad backfired. A report published by Reuters claimed that 200 men were trained and that over 1200 were to be added in a plan to prepare to free Syria from the rule of President Bashar but General Ibrahim al-Douri. who had been on the US most-wanted list since the second Gulf War took over control. This left the group with a problematic leader and a huge war chest at his disposal. Most of the money had come from US allies, including Kuwait, Qatar, and Saudi Arabia, all are Sunni-based countries that originally supported ISIS. For years, day after day, week after week, month after month, the American people have busied themselves with ignoring the Pandora's box of misery Obama opened and unleashed is his arrogance. Please don't take this as an Obama bashing, he didn't do it alone. The same old group of clowns that have infected American foreign policy for years weighed in and helped bring us to where we are today. America simply can't mind its own business.
Idlib Is the New Face of Conflict. The World Needs to Catch Up - The scenes and stories from Idlib province in Syria should be shocking – but it seems from the lack of reaction by western governments that we have been numbed. Children freezing to death in -11 degree temperatures after being bombed by their own government should never be normalized. But in fact the type of conflict we are seeing in Idlib is the new face of conflict. Diplomats and humanitarians need to catch up.The assault on Idlib is not just another turn in the Syrian conflict. It is intended to be one of the last. And the statistics show that it is the most brutal at least as measured by the flight of victims. 900,000 people have fled since December, over 100,000 in the past seven days alone, and over 300,000 still risk joining them. This is the largest civilian displacement since the conflict started nine long years ago. Among those forced to flee are 30 local IRC staff who, despite being displaced themselves, have continued their work helping others in the areas in which they've relocated.There is a current UN Inquiry into the attacks on health facilities and other civilian infrastructure. But it is limited to a mere seven incidents and it remains unclear if the findings will be made public and if the report will name perpetrators. So, it is not providing a credible deterrent to the current escalation of violence, or the ongoing attacks on civilians and the facilities they depend on for their survival. In the past few weeks alone, the IRC and the organizations it works with have had to suspend operations in a number of health facilities and relocate an entire fleet of ambulances. Faced with ongoing and deliberate targeting of aid workers, medical staff and their facilities, it is legitimate to fear that there will be no doctors and nurses left to help spare life and limb on the ground.The catastrophe in Idlib is a symptom of the utter failure of diplomacy and abandonment by the international community of Syrian civilians. But it also foreshadows an even darker trend towards an Age of Impunity—an era characterized by the total disregard for the rule of law and an equally grave deficit of international diplomacy, which allows the suffering of civilians to continue unabated. These changes create greater risks for civilians and aid workers and increase the likelihood that we'll be dealing with the repercussions for a generation. The danger is that Syria becomes not just a disaster, but a precedent for a new normal of brutal, divisive, contagious conflict—a testament to a global shift in the waging of war in four key ways.
Watch: Turkish-Backed Jihadists Attempt To Down Russian Jet Over Idlib With MANPADS - A new video released on Friday showed the Turkish military and their allied militants attempting to hit a Russian aircraft with an anti-aircraft missile in the Idlib Governorate yesterday. In the short video, the Turkish forces and their allies militants can be seen on the roof of a building, where they later attempted to shoot down the Russian aircraft in the skies of the Idlib Governorate. As shown in the video, however, the anti-aircraft missile fails to hit the Russian aircraft that had just flown over their positions in what is presumably the eastern countryside of Idlib. The Russian jet is seen deploying counter-measures seconds after the surface-to-air missile is fired. Prior to the release of this video, another film was released on Thursday that showed the militant forces in the Idlib Governorate trying to shoot down a Russian Su-24 aircraft that had just got done bombing their positions. Below is the video that was released on Friday of the attempted downing of the Russian aircraft:
Putin Keen To Cool Turkish Hawk Down – Pepe Escobar - Idlib is Erdogan's last stand, but the fighting goes way beyond Syria - it’s shaping as another NATO-Russia proxy war That pesky “Assad regime” simply won’t go away. The new Western narrative on Syria is that the regime is about to “massacre” over 900,000 people fleeing the not really de-escalated zones across the countryside in Idlib and Aleppo provinces. Context, as always, is absent. The fleeing masses – essentially conservative Sunnis – had been living in these areas under the yoke of myriad incarnations of al-Qaeda in Syria. Either they supported them, did their best to basically survive, or now know for sure the offensive by the Syrian Arab Army (SAA) is for real, and all jihadi holes, protected or not by human shields, will be bombed. The most relevant story, once again, is what Sultan Erdogan wants. Ankara and Moscow – partners in the Astana Process that theoretically would pave the way for peace in Syria – are at a crossroads. There were lengthy talks earlier this week, and a crucial phone call between Erdogan and Putin on Friday night. The stalemate prevails – they appear to have only agreed to “intensify contacts”. Ankara officially “does not accept the [de-escalation] map” put forward by Moscow. Russian Foreign Minister Sergey Lavrov stresses it’s the same map: there have been no additional demands. But Erdogan is, impulsively, threatening a remix of “Euphrates Shield” or a “Spring of Peace”, as in invading Idlib “at any moment”. Moscow, nearly exasperated, is one inch away from reading him the riot act. Idlib is Ankara’s last stand in terms of having anything to negotiate with when it comes to the peace process in Syria. Erdogan and his advisers, realistically, should know the north and western sides of Aleppo are back under Damascus’ control for good. The Turkish military are mostly in the countryside east of the Idlib city and in a town called Atarib. The real fighting on the ground in Idlib is not conducted by Turkish soldiers – but over 80% by the militia nebulae of jihadis and proto-jihadis that the West loves to describe as “rebels”; Hayat Tahrir al-Sham (HTS, aka al-Qaeda in Syria), the Turkistan Islamic Party and other smaller outfits. Ankara’s spin is that those “rebel” units will be dissolved once there is a political settlement. But that is nonsense. The Turkish government expects people to believe that one day these tens of thousands of “rebels” are weaponized, and the next they will drop everything, go back home and open a kebab stall.
More Turkish Troop Deaths In Idlib Bring Russia & Turkey To Breaking Point - After on Monday there were new unconfirmed reports of several Turkish Army soldiers killed or wounded in a Russian air strike on a Turkish convoy, already tense relations between Moscow and Ankara are at a breaking point. "Several soldiers from the Turkish Army were reportedly killed or wounded this afternoon following the joint airstrikes launched by the Syrian and Russian air forces in the Idlib Governorate," Beirut-based Al Masdar News reports. "According to pro-opposition media, as many as ten Turkish soldiers were killed or wounded as a result of the joint Russian-Syrian airstrikes near the town of Kansafra."And British-Syrian journalist Danny Makki, who reports from inside Syria lists "10 Turkish casualties between killed and wounded in the Russian airstrikes today sources suggest, 4 armoured vehicles also purportedly destroyed." However, there's yet to be official confirmation out of Turkey of these new alleged casualties. Ankara did previously confirm at least one soldier killed in fighting on Sunday.Turkey's Defense Ministry has in total acknowledged 16 of its soldiers killed amid the renewed Syrian-Russian offensive to take back Idlib, which began early December. These increasingly direct clashes between Syrian-Russian allied forces and Turkish national troops have led to renewed urgent talks announced Monday between Russian and Turkish officials. Russian FM Sergey Lavrov announced Monday that "Another series of consultations is now being prepared and we hope it will help us reach an agreement on how to ensure that this really becomes a de-escalation zone and terrorists don’t boss around there." The Kremlin is further trying to downplay what Turkish officials are describing as a "crisis" — also given President Erdogan has lately vowed to not allow Idlib to be taken by pro-Assad forces. "Russian-Turkish relations should not be depicted as in crisis even after an escalation in political tensions over Syria's last rebel-held enclave of Idlib, Presidential Spokesman Dmitry Peskov said on Sunday," according to TASS news agency.
President Erdogan's options narrow as Russia presses Syrian crisis to Turkey's doorstep – (Reuters) - With nearly one million displaced Syrians massing near the Turkish border in the face of a Syrian government military offensive, President Tayyip Erdogan’s options are narrowing. He feels blindsided by Russia’s push into Syria’s Idlib region and the risk of full-blown conflict is growing, but Turkey’s Erdogan remains hopeful a deal with Moscow may offer a way out of the crisis, according to Turkish government officials and other sources. Erdogan has repeatedly warned that Turkey, which backs rebels in Syria’s northwest province, would push Syrian President Bashar al-Assad’s troops away from territory taken in the recent months if they didn’t pull back by the end of February. But as Saturday’s deadline has drawn closer, the Russia-backed Syrian offensive has continued to gain ground and a third round of talks between Ankara and Moscow this week were not expected to quickly break the deadlock. Turkish government and Syrian opposition military officials, diplomats and analysts said while a full-scale Turkish-backed military operation is still a possibility, depending on how hard Russia bargains, Erdogan is more likely at this late stage to agree a deal with Moscow that has him withdraw some of Turkey’s military presence in exchange for a role in deciding Syria’s future. They added that Erdogan has been taken aback by what Turkey views as Russian President Vladimir Putin’s uncompromising stance in the field and in discussions.
Dozens of Turkish soldiers killed in strike in Idlib in Syria - Dozens of Turkish soldiers have been killed in an airstrike in Syria’s Idlib province, in a dramatic escalation in the battle for control of the country’s last opposition stronghold. Turkish officials said at least 33 of its military personnel were killed in the attack on Thursday night. Military sources among moderate and jihadist rebel factions fighting in the north-western province bordering Turkey said the deaths followed a precision strike on a two-storey building in the village of Balioun. A Turkish convoy, part of reinforcements sent to the area to aid rebel groups earlier this month, was subjected to heavy shelling on Thursday morning. The soldiers had taken cover in Balioun, basing themselves in the local council building. Rahmi Dogan, the local governor of the south-eastern Turkish province of Hatay on the border with Idlib, said ambulances streamed from a Syrian border crossing to a hospital in the nearby town of Reyhanli on Thursday night. Turkish officials have blamed the Syrian regime for the attack, but several sources in Idlib and unverified footage of the nighttime strike suggested it had been carried out by the Russian air force, which has helped Damascus conduct a ferocious three-month-old offensive on Idlib. After the attack the United Nations called for urgent action in north-west Syria, warning that “the risk of greater escalation grows by the hour.” Nearly a million civilians have been displaced in Idlib near the Turkish border since December as Russia-backed Syrian government forces seized territory from Turkey-backed Syrian rebels, marking the worst humanitarian crisis of the country’s nine-year war.
Turkish Army Is Targeting Russian Planes In Idlib With Shoulder-Fired Missiles- Report -We reported previously that an increasing number of advanced shoulder fired "Man-portable air-defense systems" or MANPADS are showing up in Idlib, alarmingly in the hands of al-Qaeda linked factions such as US terror designated Hayat Tahrir al-Sham.But now the Kremlin is charging Turkey's military with orchestrating the campaign to shoot down Russian aircraft over the war-torn northwest Syrian province. Reuters now reports that "Russian state television said on Thursday Turkish military specialists in Syria's Idlib region were using shoulder-fired missiles to try to shoot down Russian and Syrian military aircraft." The report aired Thursday the Rossiya 24 channel:"Their own and Russian planes are saving the lives of Syrian troops in a literal sense," said the Rossiya 24 report. "Syrian and Russian planes are stopping the rebels again and again. But the sky above Idlib is also dangerous. The rebels and Turkish specialists are actively using portable air defense systems."Recent footage out of Idlib showed Russian aircraft deploying countermeasures to escape an incoming shoulder-fired rocket.The following video was published to social media and was widely circulated last week:Turkish soldiers firing a MANPADS against a Russian jet over Idlib in Syria yesterday, the missile missed the jet #Syria #Turkey #Russia pic.twitter.com/Ek3WvGgkW5— CNW (@ConflictsW) February 21, 2020 Jihadists on the ground fighting a major Syrian-Russian air and land offensive have over the past month downed at least two Syrian helicopters and possibly other aircraft.
Turkey says it will let refugees into Europe after troops killed in Syria - (Reuters) - Refugees in Turkey headed towards European frontiers on Friday after an official declared that borders had been thrown open, a response to the escalating war in Syria where 33 Turkish soldiers were killed by Russian-backed Syrian government troops. European officials rushed to respond to Turkey’s direct threat to reverse an agreement that halted the migration crisis of 2015-2016, when more than a million people arrived by sea in Greece and crossed the Balkans on foot. Moscow and Ankara traded blame over the strike in northwest Syria, the deadliest attack suffered by the Turkish army in nearly 30 years. Turkish financial markets plunged over the prospect of the country being pulled far more deeply into a new escalation of the nine-year-old war across the border in Syria. “We have decided, effectively immediately, not to stop Syrian refugees from reaching Europe by land or sea,” a senior Turkish official told Reuters on condition of anonymity. “All refugees, including Syrians, are now welcome to cross into the European Union,” the official said, adding that police and border guards had been stood down. Within hours, a column of dozens of migrants was heading on foot towards the European frontier in the early morning light. A man carried a small child in his arms. Others rode in taxis.
Greece Sends 50 Naval Vessels & Commandos To Block Refugee Wave Out Of Turkey - Greece sealed its key land Kastanies border crossing with Turkey Friday after Ankara declared it's allowing refugees to flee Idlib and on to Europe for at least 72 hours, in response to Syrian-Russian airstrikes killing 33 Turkish troops Thursday.Germany's Bild newspaper reported Friday that Greece is taking further emergency measures to prevent Erdogan from effectively "opening the gates" on new waves of refugee and migrant hordes seeking entry to the EU, noting the country "completely closed off its borders with Turkey: not just for refugees, but for EVERYONE."The newspaper said 50 naval ships, likely most of them small patrol vessels, have been deployed by the Hellenic Navy to ensure those coming out of Turkey don't get through. Citing a top Greek government official, Bild reported further this will include air support."According to BILD information, the government sent 50 warships to the Greek islands to protect the EU's external borders," the German tabloid said. "Ten helicopters are also supposed to secure the transitions to Turkey on land."Greece's Ekathimerini newspaper said military commandos were being sent to key crossings following an emergency meeting of key government officials Friday to deal with the crisis:Patrols along the land and river border in northeastern Evros have been bolstered since Friday morning, when the first large groups of migrants began to arrive following an announcement on Thursday night by a Turkish government official saying that Ankara would no longer try to prevent Syrians fleeing war in their country from attempting the crossing to the European Union. The army has also dispatched two commando units to help the Hellenic Police guards at the border, and particularly to patrol the more dangerous sections of the Evros River.Turkish TVs broadcast footages showing migrants are boarding boats off Turkish coast, departing to Greek islands pic.twitter.com/YLMEM1lCMk
Third election in a year deepens Israel’s political crisis - In a criminal move caught on video, an Israeli military bulldozer scooped up and moved the body of a young Palestinian demonstrating near Gaza’s fence with Israel on Sunday. To compound the crime, troops fired on Palestinians trying to retrieve his body, wounding two. Twenty-seven-year-old Mohammed Ali al-Naim, a member of Islamic Jihad, had been shot by Israeli forces who lyingly claimed he was laying a bomb near the fence. This war crime, one of countless such criminal acts, and the image of al-Naim’s corpse hanging from the teeth of the bulldozer, caused outrage among the Palestinian citizens of Gaza who have suffered a 13-year-long blockade at the hands of Israel and latterly Egypt and the Palestinian Authority of President Mahmoud Abbas.Israel followed this up with dozens of air strikes throughout the besieged entity as tensions escalated and Palestinian group retaliated by firing rockets into Israel. The army said it was closing roads, schools and a train line near the Gaza Strip.Fighter jets simultaneously launched air strikes on Islamic Jihad positions—Israel views the group as an Iranian proxy—near the Syrian capital Damascus, killing two of its fighters and four pro-Iranian fighters.This stepped-up aggression, launched by Prime Minister Benjamin Netanyahu in a desperate bid to boost his position as “Mr. Security,” takes place in the run up to the election on March 2, the third in less than a year. The result is the deepening paralysis of a government that has almost ceased to function amid the stench of a corrupt and decaying political system that is careening towards fascism and militarism.Like their counterparts all over the world Israeli voters have no substantive choice, despite an array of political parties, as Israel’s democracy has withered under the twin pressures of the decades-long military suppression of the Palestinian people and rising social inequality, among the highest in the world. This latest ballot follows two inconclusive elections in April and September, when neither caretaker Prime Minister Benjamin Netanyahu nor Blue and White Party leader Benny Gantz, a former Israel Defense Forces (IDF) chief of staff, were able to secure a coalition that could command a majority in the 120-seat Knesset. The first bloc is led by Netanyahu’s right-wing Likud Party and his coalition of religious and fascistic parties. The second bloc, the supposedly “centrist” Blue and White party named after the colours of Israel’s flag, is led by Gantz.
Israel Takes Out Islamic Jihad Militants In Damascus & Gaza In Rare Simultaneous Air Strikes -Damascus once again was rocked by Israeli airstrikes Sunday night, with Syria saying its anti-air defenses were active in confronting a wave of "enemy rockets" from the direction of the Israeli-occupied Golan Heights. In a rare acknowledgement of the attack, Israel confirmed in was behind it, and linked it to rocket fire from the Palestinian territory, Gaza. The Israeli army said in a statement that it targeted Islamic Jihad leaders living in Damascus. "In the Adeliyah region, outside of Damascus, an Islamic Jihad compound was struck, used as a hub of Islamic Jihad's activity in Syria," the statement said. "Israeli military planes targeted Islamic Jihad targets in Gaza" it said further. Palestinian Islamic Jihad confirmed that two of its members were killed in Damascus Sunday night, in a relatively brief attack which war monitors say killed a total of six people. The other four were alleged to be members of a pro-Iranian militia. But Syrian state-run SANA said the country's air defenses were effective, noting they “caused the missiles to deviate from their path, destroying most of the remainder before reaching their goals, and the results of the aggression are still being examined.” Like with prior attacks over the past two years, Israeli jets were said to have fired from outside of Syrian airspace — most of the time from over neighboring Lebanon. Historically, wanted or exiled leaders of Palestinian militant and "resistance" groups have had headquarters in Damascus.
Netanyahu Threatens All-Out War After 90 Rockets Fired From Gaza - Monday witnessed significant escalation over Gaza as Palestinian Islamic Jihad sought to avenge the deaths of three commanders killed in Israeli air strikes on Gaza and Damascus the day before. Israeli media counted some 90 total rockets fired at Israel from the Gaza Strip throughout the day since the attacks began Sunday night, with the IDF claiming its Iron Dome defense system had intercepted the vast majority which came near populated areas. Prime Minister Benjamin Netanyahu had earlier threatened to initiate broader war if the rocket fire didn't cease. Despite an Islamic Jihad spokesman announcing a unilateral cease-fire by the early evening, the rocket fire was reported as continuing later into the night Monday. “We are now hitting with planes, tanks, and helicopters,” Netanyahu said while inspecting an Iron Dome unit in the south. “I’m talking about a war,” Netanyahu, who is entering a final week of campaigning before Israeli national elections, had further told Israel’s Army Radio station. “I only go to war as a last option, but we have prepared something you can’t even imagine.” He also appeared to threaten to kill the heads of Hamas and Islamic Jihad if the rockets continued, saying: “We will continue to strike until the calm returns. If there isn’t quiet, you’ll be next.”
Sanders: Israel run by 'reactionary racist' in Netanyahu - Sen. Bernie Sanders (I-Vt.) called Israeli Prime Minister Benjamin Netanyahu a “reactionary racist” while defending his support for Israel at Tuesday night’s Democratic debate. "I'm very proud of being Jewish. I actually lived in Israel for some months. But what I happen to believe is that right now, sadly, tragically, in Israel, through Bibi Netanyahu, you have a reactionary racist who is now running that country," Sanders said at the debate in Charleston, S.C., just days ahead of the state's Democratic primary. Sanders's comments came the same week that he said he wouldn't be attending the annual American Israel Public Affairs Committee (AIPAC) conference, accusing the pro-Israel lobbying group of providing a platform to “leaders who express bigotry.” “The Israeli people have the right to live in peace and security,” Sanders tweeted Sunday. “So do the Palestinian people. I remain concerned about the platform AIPAC provides for leaders who express bigotry and oppose basic Palestinian rights.” AIPAC shot back that Sanders “has never attended our conference and that is evident from his outrageous comment.” “By engaging in such an odious attack on this mainstream, bipartisan American political event, Senator Sanders is insulting his very own colleagues and the millions of Americans who stand with Israel,” AIPAC said in its statement. AIPAC, founded in 1963 with a mission of promoting the U.S.-Israeli relationship, has long been seen as a power player in Washington politics. The organization garners bipartisan support, but tensions with progressive Democrats have increased in recent years. AIPAC announced earlier Tuesday that former New York City Mayor Michael Bloomberg, who is also running for the Democratic nomination and was on the debate stage Tuesday night, will speak at this year’s conference.
U.S. halts offensive military operations in Afghanistan as part of Taliban deal - — The United States has ceased offensive military operations in Afghanistan against the Taliban in accordance with an agreement to reduce violenceahead of a possible peace deal, the top U.S. military commander here announced Saturday.Gen. Austin “Scott” Miller told reporters in Kabul that “our operations are defensive at this point. We stopped our offensive operations as part of our obligations, but we remain committed to defend our forces.”The week-long reduction in violence is a precondition to a U.S.-Taliban peace deal that both parties have said they plan to sign at the end of the month.U.S. and Afghan officials have cautioned that the deal is fragile, as there are many armed groups in Afghanistan who don’t see peace as being in their interest. But U.S. officials said monitoring mechanisms in place will be able to identify whether attacks are the work of “spoilers.” Just hours after the agreement went into effect, local security forces reported a number of clashes between government and Taliban forces. But Miller and senior Afghan officials said the violence does not necessarily constitute a breach of the agreement.Afghanistan claims the Islamic State was ‘obliterated.’ But fighters could regroup.Standing beside the Afghan acting minister of interior and acting minister of defense, Miller described the reduction in violence as a “trial period” during which U.S. and Afghan government forces reserve the right to defend themselves if attacked.“This is a conditional effort. It’s a trial period,” he said. “We are all looking at this to see that all sides are able to meet their obligations.”If it holds, the United States and the Taliban have said they will sign a peace deal in the coming days.
No Financing And No Demand- Chinese Refiners Run Into Trouble -International banks are suspending credit lines for some independent oil refiners worried about the growing risk of defaults across industries because of the coronavirus epidemic, Reuters reports, citing industry sources. According to the sources, at least three private refiners, or teapots, have had credit lines to the tune of $600 million suspended by banks including French Natixis, Dutch ING, and Singapore DBS Group Holdings.“All our applications for new open-account credits are frozen ... these clean credits are pivotal as we buy 6 to 8 million barrels of oil each month,” one source told Reuters.Refiners, both private and state, have already reduced their run rates in response to the slump in fuel demand resulting from the outbreak, and now they have deepened these cuts, Bloomberg reported last week.The average as of last Thursday was about 10 million bpd, down by 25 percent on the same time last year, when the average run rates were at a record high of close to 13 million bpd. Analysts expect the low run rates to continue at least until the end of this month, but if it spills into March, some refiners—notably independent refiners—will start experiencing a lack of storage space, too, after earlier this month they took advantage of low prices to stock up on crude.Now, on top of that, the teapots that have accounted for a large portion of China’s increased thirst for oil that was instrumental in oil price recovery after the crisis, are having financing trouble.“We were told by our banks that so long as the open-account credits are for oil heading to Shandong, it will be very hard chance winning approvals,” another Reuters source said.The three refiners refused credit line extensions have combined oil import quotas of about 240,000 bpd, R euters reports. If more banks become wary of defaults among refiners, this could hit imports over a longer term.
Shipping lines face troubled waters as oil tankers, container carriers and cruise lines stop calling on China for fear of catching the coronavirus --Port calls to China are becoming less frequent, as fear of catching the coronavirus and a slowdown in the Chinese economy have deterred cruise liners, container ships, oil tankers and bulk carriers alike from stopping at the country’s harbours.Commercial vessels have stopped arriving, with port calls falling by an estimated 30 per cent in February, and container throughput estimated to decline by between 20 and 30 per cent, according to Clarksons – a shipping research company. The coronavirus outbreak, which has sickened more than 75,000 around the world and killed more than 2,400, is adding to the woes of an industry that is already suffering from the US-China trade war. As many as 600 of the 3,700 passengers on the cruise ship Diamond Princess – moored in Yokohama outside Tokyo – contracted the virus while in close proximity to one another, which further deterred vessels from calling on mainland China, where more than 99 per cent of confirmed afflictions and deaths are. As China’s labour force returns to work in phases after an extended Lunar New Year holiday imposed by the government in an effort to contain the epidemic, shipyards are slowly ramping up construction.Still, vessel owners expect delivery to be delayed. Nine of the 19 Chinese shipyards surveyed by Clarksons put their yards on complete suspension on February 14, with none at full production.“We foresee the delay to be between one to two months, depending on the capability and resilience of different shipyards,” said Zhou Jian-Feng, managing director of Wah Kwong Maritime Transport Holdings, which has two ships under construction at Chinese shipyards, and has several other projects underway.
China's top container ports unclog backlog as virus curbs ease - (Reuters) - China’s top container ports are loosening the backlog of cargoes on their docks as workers return to their jobs after coronavirus travel curbs that kept them away and jammed up global supply chains have been eased. The flu-like epidemic, which originated in the city of Wuhan, an inland logistics hub in Hubei province, has killed more that 2,700 and infected over 78,000 in China alone, and caused massive port congestion due to labor shortages caused by city lockdowns across the country. China is the largest container cargo handler - processing around 30% of global traffic or around 715,000 containers a day in 2019 - and the virus clampdown impacted supply chains of everything from sneakers and machine parts to technology components and food items. Executives from U.S. poultry processor Sanderson Farms Inc (SAFM.O) said on an earnings call on Thursday that operations at China’s ports were slowly getting back to normal and most of its shipments have been delivered. The company has shipped or received orders from Chinese buyers for about 18 million pounds of chicken products since Beijing lifted a ban on imports of U.S. poultry late last year. The average wait time for container vessels at Zhoushan (601018.SS) in southern China - the third-largest container port in the world by annual handling capacity - spiked to more than 60 hours in the week of Feb. 11-17, when travel curbs on workers returning from the prolonged Lunar New Year holiday forced ports to operate with skeleton staffing.
Oil Trader Collapse Sparks Alarm Over China's Private Refiners- The collapse of an oil trader linked to one of China’s independent refiners is ratcheting up concern over the financial stability of a sector that accounts for about a quarter of the nation’s crude processing capacity. Hontop Energy, which purchases oil on behalf of private refiner Shandong Tianhong Chemical Co., went into receivership in February, according to documents filed with Singapore’s accounting regulator. Its demise brings focus onto the financial health of many of China’s private refiners, known as teapots, which have built up massive debt loads to modernize infrastructure and procure crude on a global scale. Hontop’s fall is reverberating across the world of oil trading as many Western merchants and oil companies like Trafigura Group and BP Plc have built teams over the last five years that are dedicated to supplying teapots. And as the coronavirus epidemic threatens profit margins and coincides with a broader credit crunch in China, traders and bankers are increasingly wary about their exposure to the refiners. “Many of the teapots are already on a credit redflag list of banks in Singapore,” Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies said. “The virus has certainly tightened cash-flows and exacerbated banks’ concerns.” While traders don’t expect the financial problems of teapots to have much of an impact on China’s overall crude demand, they say it will likely result in widespread delays and isolated cases of distressed cargoes as buyers and sellers reassess relationships. Both Hontop and Shandong Tianhong are units of Chinese conglomerate China Wanda Group, which itself has been struggling to juggle its debt load. Repeated attempts to get comment from Hontop and Wanda were unsuccessful.
Coronavirus flight cancellations top 200,000, sending jet fuel prices to more than 2-year lows - Airlines have canceled more than 200,000 flights as the coronavirus continues to spread, prompting travel restrictions and a sharp drop in demand for trips to and within China. More than 76,700 people have been sickened by the virus, which has killed at least 2,249 people, health officials said. Close to 98% of the reported cases are in China but some officials are worried about a crop of new infections elsewhere, including Iran and South Korea. Airlines around the world, including the three U.S. carriers that serve China — Delta, United and American — have halted service to the mainland and Hong Kong because of the virus. In February alone, the number of flights that were scheduled to fly to, from and within China are down 80% from a year ago, according to aviation consulting firm Cirium. From Jan. 23 to Feb. 18, 99,254 scheduled flights didn’t fly, close to 90% of them domestic China trips, the firm added. That’s sending jet fuel prices, generally airlines’ second-biggest expense after labor, down sharply. While benchmark jet fuel prices in the U.S. and Singapore have recovered some ground from hitting the lowest levels since mid-2017, they’re each down 17% so far this year, according to data from S&P Global Platts. “Pent-up demand” may help firm up prices in the second half of the year but “2020 is compromised as far as jet [fuel] demand is concerned,” said S&P Global Platts energy analyst Claudio Galimberti. Normally, lower costs would be welcome news for airlines, but weaker demand is expected to hit revenue and profits this year. The Asia-Pacific air travel market has become more important since the SARS outbreak that began in 2002. The region accounted for 35% of global demand last year, up from 27% in 2002, the trade group said. China is expected to overtake the U.S. as the world’s largest air travel market by the middle of this decade. Air travel demand globally is set to fall for the first time since 2009 and cost airlines some $29 billion — mostly in the Asia-Pacific region — in revenue, the International Air Transport Association said Thursday.
3 Energy Sectors Most Threatened by the Coronavirus - At a time when the energy sector is weighed down by debt and reeling from low commodity prices, American energy producers are now bracing for the biggest demand shock to hit the markets in decades: the effects of the coronavirus outbreak in China and beyond. While the outbreak may not sweep the globe as swine flu did in 2009, the fear of a global epidemic managed to shave 975 points off the Dow Monday morning, and experts seem to agree that the economic effects of the fallout are likely to be more severe.Here are the three energy sectors that are likely to be hardest hit by the coronavirus epidemic, and why:
- #1 Oil, Grounded by Demand. Oil and natural gas prices have remained low for the past year and could remain that way with the biggest oil importer now grounded.China, the world’s top oil importer, bought 41.24 million tonnes of crude in 2019, equivalent to 10.04 million barrels per day (bpd). But just two months after the outbreak of the virus, Chinese oil demand is down sharply because of dwindling air travel, road transportation and manufacturing.China consumes 13 of every 100 barrels of oil that the world produces, and global oil companies are likely to feel the heat to some extent. Bloomberg has reported that Chinese oil demand hasdropped by about 3 million barrels a day, or ~20% of total consumption.The d rop marks the largest demand shock in the market since the global financial crisis that ended in 2009. It’s also the most sudden shock the market has suffered since the Sept. 11 attacks nearly two decades ago.
- #2 Natural Gas, Already A Wreck. Natural gas prices recently tumbled to historical lows and are down nearly 15% since the start of 2020 with excess supply and inventory build up pressuring prices. The coronavirus outbreak is not helping the situation, either. The global LNG leader Royal Dutch Shell has warned that the coronavirus outbreak is alreadyhurting LNG demand and forcing it to reroute supplies previously earmarked for mainland China.And the situation might not improve any time soon. Last year, RBC predicted that natural gasprices might take years to fully recover.
- #3 Battery and Energy Storage.Last week, Utility Dive—which covers news and trends in the utility industry—warned that the coronavirus epidemic “… is going to be a very big deal” with respect to Chinese manufacturing. Eight provinces in the country have already announced work stoppages as a result of the outbreak, which has negatively impacted multiple solar manufacturing campuses. This is highly significant considering that most of the world’s solar panels are made in China.China also happens to be home to most of the world’s lithium-ion battery manufacturing. Utility Dive has warned that the country’s battery storage production capacity could contract by 10%–or 26 GWh–compared to earlier forecasts.
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