oil prices rose for a fifth consecutive week after the Monday holiday as traders were encouraged by the apparent success of the OPEC+ production cuts....after rising 12.6% to $33.25 a barrel on a large drop in US crude supplies and on a continued easing of Covid-19 restrictions last week, the contract price of US light sweet crude for July delivery opened higher on Tuesday on growing confidence that oil producers had been following through on commitments to cut supplies and continued rising to post a $1.10 gain at $34.35 a barrel, as fuel demand picked up after the easing of coronavirus restrictions...however, oil prices tumbled out of the gate on Wednesday on reports that Russia was in favor of easing up on supply cuts as planned in July and then finished $1.54 lower at $32.81 a barrel after Trump said he was working on a strong response to China's proposed security law in Hong Kong...prices slid for a second consecutive session on Thursday as oil industry data showed a steep and surprising build-up in crude stockpiles, but rebounded after the EIA reported a steady improvement in U.S. refining activity, which mitigated the surprise build in crude and diesel fuel supplies, as oil settled 90 cents higher at $33.71 a barrel...oil prices then opened lower and slid to $32.36 a barrel early Friday, but reversed course to finish the day $1.78 higher at $35.49 a barrel, after a spokesman for the president said that despite rising tensions, Trump was not pulling out of the U.S.-China trade deal...oil prices thus finished the week $2.24 or 6.7% higher and posted a record 88% increase for the month, almost doubling the 44.6% gain of September 1990, the second best month on record...
natural gas prices also finished the week higher, but this week's apparent price increase was due to the switch to quotes for July natural gas, which historically trades higher than June gas on anticipation of increased hot weather induced demand...after rising 5.2% to $1.731 per mmBTU on falling gas production last week, the contract price of natural gas for June delivery opened higher and rose 6.2 cents on Tuesday, on an ongoing slowing of gas output, despite falling exports and demand...however, US-China tensions further dented the outlook for LNG exports on Wednesday, as trading in the June natural gas contract expired 7.1 cents lower at $1.722 per mmBTU while the more actively traded contract for July natural gas, which had ended the prior week at $1.881 per mmBTU, fell 5.9 cents to $1.886 per mmBTU....July natural gas prices fell another 5.9 cents on Thursday on a bearish natural gas storage report, but then rose 2.2 cents on Friday to finish the week at a three week closing high of $1.849 per mmBTU on a forecast for stronger air-conditioning demand over the next two weeks...note that although the quoted price for natural gas finished 6.8% higher than last week, the price of the July natural gas contract actually ended 3.2 cents , or 1.7% lower than where it had ended the prior week...
the natural gas storage report from the EIA for the week ending May 22nd indicated that the quantity of natural gas held in underground storage in the US rose by 109 billion cubic feet to 2,612 billion cubic feet by the end of the week, which left our gas supplies 778 billion cubic feet, or 42.2% higher than the 1,834 billion cubic feet that were in storage on May 22nd of last year, and 423 billion cubic feet, or 19.3% above the five-year average of 2,189 billion cubic feet of natural gas that has been in storage as of the 22nd of May in recent years....the 109 billion cubic feet that were added to US natural gas storage this week was more than the consensus forecast for a 101 billion cubic feet increase from a survey of analysts by S&P Global Platts, and was well above the 93 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, but was a bit below the 110 billion cubic feet addition of natural gas to storage during the corresponding week of 2019...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending May 22nd showed that due to a big increase in our oil imports, we had surplus oil to add to our stored commercial supplies of crude oil for the first time in three weeks, but for the 27th time in the past thirty-seven weeks....our imports of crude oil jumped by an average of 2,003,000 barrels per day to an average of 7,200,000 barrels per day, after falling by an average of 194,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 63,000 barrels per day to an average of 3,176,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,024,000 barrels of per day during the week ending May 22nd, 2,066,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 100,000 barrels per day to 11,400,000 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 15,424,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 12,991,000 barrels of crude per day during the week ending May 22nd, 87,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that 1,434,000 barrels of oil per day were being added to the supplies of oil stored in the US....based on that reported data, 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 999,000 barrels per day more than 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 plugged a (-999,000) 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...however, since the media treats these weekly EIA figures as gospel and since these numbers often 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 in the industry...(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 rose to an average of 5,875,000 barrels per day last week, which was still 16.4% less than the 7,028,000 barrel per day average that we were importing over the same four-week period last year....the 1,434,000 barrel per day addition to our total crude inventories included 1,133,000 barrels per day that were added to our commercially available stocks of crude oil and 302,000 barrels per day that were being added to our Strategic Petroleum Reserve....this week's crude oil production was reported to be down by 100,000 barrels per day to 11,400,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 100,000 barrels per day to 11,000,000 barrels per day, while a 11,000 barrel per day decrease in Alaska's oil production to 412,000 barrels per day was not enough to have an impact on the rounded national total....last year's US crude oil production for the week ending May 24th was rounded to 12,300,000 barrels per day, so this reporting week's rounded oil production figure was about 7.1% below that of a year ago, yet still 35.3% 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 71.3% of their capacity while using 12,991,000 barrels of crude per day during the week ending May 22nd, up from 69.4% of capacity during the prior week, but still among the lowest refinery utilization rates of the last thirty years...hence, the 12,991,000 barrels per day of oil that were refined this week were 22.5% fewer barrels than the 16,767,000 barrels of crude that were being processed daily during the week ending May 24th, 2019, when US refineries were operating at a seasonally normal 91.2% of capacity....
with the increase in the amount of oil being refined, gasoline output from our refineries was a bit higher, increasing by 5,000 barrels per day to 7,171,000 barrels per day during the week ending May 22nd, after our refineries' gasoline output had decreased by 331,000 barrels per day over the prior week... since our gasoline production still remains near multi-year lows, this week's gasoline output was 27.3% lower than the 9,863,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 24,000 barrels per day to 4,780,000 barrels per day, after our distillates output had decreased by 88,000 barrels per day over the prior week...after this week's decrease in distillates output, our distillates' production was 7.8% less than the 5,182,000 barrels of distillates per day that were being produced during the week ending May 24th, 2019....
with little change in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 4th time in 5 weeks and for the 12th time in 17 weeks, falling by 724,000 barrels to 255,000,000 barrels during the week ending May 22nd, after our gasoline supplies had increased by 2,830,000 barrels over the prior week...our gasoline supplies decreased this week because the amount of gasoline supplied to US markets increased by 463,000 barrels per day to 7,253,000 barrels per day, and because our imports of gasoline fell by 234,000 barrels per day to 292,000 barrels per day, while our exports of gasoline fell by 34,000 barrels per day to 210,000 barrels per day....even after this week's inventory decrease, our gasoline supplies were still 10.4% higher than last May 24th's gasoline inventories of 230,944,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year...
even with the decrease in our distillates production, our supplies of distillate fuels increased for the eighth time in 19 weeks and for the 13th time in 34 weeks, rising by 5,495,000 barrels to 164,327,000 barrels during the week ending May 22nd, after our distillates supplies had increased by 3,831,000 barrels over the prior week....our distillates supplies rose by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 402,000 barrels per day to 3,266,000 barrels per day, while our exports of distillates fell by 26,000 barrels per day to 885,000 barrels per day and while our imports of distillates fell by 167,000 barrels per day to 155,000 barrels per day....after this week's inventory increase, our distillate supplies at the end of the week were 31.7% above the 126,415,000 barrels of distillates that we had stored on May 24th, 2019, and about 24% above the five year average of distillates stocks for this time of the year...
finally, with the big jump in our oil imports, our commercial supplies of crude oil in storage rose for the 16th time in eighteen weeks and for the thirty-third time in the past 52 weeks, increasing by 7,929,000 barrels, from 526,494,000 barrels on May 15th to a 38 month high of 534,422,000 barrels on May 22nd....with near steady increases including three record increases over past 8 weeks, our crude oil inventories are now 13% above the five-year average of crude oil supplies for this time of year, and over 50% above the prior 5 year (2010 - 2014) average of crude oil stocks for the 4th week of May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels and never fell back....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of May 22nd were 12.2% above the 476,493,000 barrels of oil we had in commercial storage on May 24th of 2019, 23.0% above the 434,512,000 barrels of oil that we had in storage on May 25th of 2018, and 4.8% above the 509,912,000 barrels of oil we had in commercial storage on May 26th of 2017...
furthermore, if we check the total of our commercial oil supplies and the stockpiles of all the refined product made from oil, we find those supplies have just increased by 14,865,000 barrels to a record high of 1,414,785,000 barrels, 10.5% more than the 1,280,243,000 barrel total of the same week a year ago...
This Week's Rig Count
the US rig count fell for the 12th week in a row during the week ending May 29th, and is now down by 62% over that twelve week period....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 17 rigs to 301 rigs this past week, which was the fewest rigs deployed in Baker Hughes records going back to 1940 and 103 fewer rigs than the prior all time low, also down by 683 rigs from the 984 rigs that were in use as of the May 31st report of 2019, and 1,628 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 15 rigs to 222 oil rigs this week, after falling by 21 oil rigs the prior week, leaving oil rig activity at its lowest since June 26, 2009, which was also 578 fewer oil rigs than were running a year ago, and less than a seventh of 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 down by 2 to 77 natural gas rigs, which was the least natural gas rigs running in at least 80 years. down by 107 natural gas rigs from the 184 natural gas rigs that were drilling a year ago, and less than a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those 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..
the Gulf of Mexico rig count was unchanged at 12 rigs this week, with all of those Gulf rigs drilling for oil in Louisiana's offshore waters...that's eleven fewer rigs than the rig count in the Gulf a year ago, when 20 rigs were drilling offshore from Louisiana and three rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equal to the national rig count, just as it has been since the onset of this past winter...
the count of active horizontal drilling rigs decreased by 14 rigs to 271 horizontal rigs this week, which was the fewest horizontal rigs active since May 5th, 2006, and hence is a new 14 year low for horizontal drilling...it was also 591 fewer horizontal rigs than the 862 horizontal rigs that were in use in the US on May 31st of last year, and less than a fifth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 1 to 7 vertical rigs this week, and those were down by 45 from the 52 vertical rigs that were operating during the same week of last year...in addition, the directional rig count decreased by 2 to 23 directional rigs this week, and those were also down by 47 from the 70 directional rigs that were in use on May 31st 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 May 29th, the second column shows the change in the number of working rigs between last week's count (May 22nd) and this week's (May 29th) count, the third column shows last week's May 22nd 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 31st of May, 2019...
strangely, this weeks basin totals show a decrease of 16 rigs, which is 2 more than the number of horizontal rigs removed nationally this week, which would suggest that two horizontal drilling rigs would have been started up in "other" shale basins not tracked separately by Baker Hughes...it's also possible that one or more of the rigs targeting a shale basin was not horizontal, considering that the vertical and directional rigs changes do no seem to be accounted for ....checking the rig losses in the Texas part of Permian basin, we find that 12 rigs were pulled out of Texas Oil District 8, while the rig count in other Texas Permian basins remained unchanged...since the overall Permian rig total was down by 14 rigs, that means that the 2 rigs that were shut down in New Mexico must have been drilling in the western Permian Delaware, to account for the national Permian basin reduction of 14 rigs...elsewhere in Texas, a rig was added in the panhandle Texas Oil District 10, which we would normally figure to be a Granite Wash rig, but that basin shows no change this week...in other states, the two rigs that were pulled out of North Dakota had been drilling for oil in the Williston basin, home of the Bakken shale, while the two rigs that were pulled out of Pennsylvania had been drilling for natural gas in the Marcellus...offsetting those, however, a new natural gas rig started up in Ohio's Utica, as did a natural gas rig start drilling in Oklahoma's Arkoma Woodford...to account for the 2 natural gas rig loss nationally, Baker Hughes shows 2 natural gas rigs removed from "other" basins they don't track separately...with no evidence of any other change in activity elsewhere, we would have to guess those "other" rigs probably had been drilling in Oklahoma and California...
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Columbia Gas of Ohio to begin second phase of cleanup — Columbia Gas of Ohio will conduct the second (and final) phase of cleanup at a former manufactured gas plant site in Portsmouth that is a part of the city’s history. The cleanup comes after testing has shown that there is no current risk to human health or the environment. The northern portion of this site was cleaned up by Columbia Gas in 2018.This second phase involves the cleanup of the southern portion of the site, which is bordered by Second, Jefferson and Madison Streets. A predecessor of Columbia Gas used the site to manufacture gas used for heating, cooking and lighting in the late nineteenth and early twentieth centuries. Once pipelines were laid to provide a dependable source of natural gas, the plant was closed and eventually demolished. Columbia Gas recently tested the southern portion of the site and found byproducts and residues typical of gas manufacturing operations. To be sure the site does not pose a problem over the long run, the company will remove impacted soil and replace it with clean fill. The investigation and cleanup are being conducted after consultation with the Ohio Environmental Protection Agency and the City of Portsmouth.The project is set to begin June 1 and be completed by the end of August.
Industry responds to wastewater site concerns - Marietta Times --Local oil and gas officials believe concerns about a proposed docking facility near Marietta are unwarranted. If the permit is approved by the U.S. Corps of Engineers, a wastewater offloading facility will be built at DeepRock Disposal Solutions on Ohio 7 near Marietta. In a Marietta Times article earlier this month, Devola resident George Banziger noted people are concerned with the health hazards of the proposed facility. One of the concerns is that what will be offloaded is toxic or radioactive.Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, said the brine which will be offloaded is not radioactive, according to the U.S. EPA. He said there is some confusion about the three types of oil field fluids and what will be brought to Marietta.“I think people get things confused between drilling mud, fracking fluid and brine,” he said. Brine is what is on the permit to be hauled in.“Brine is seawater which comes out with the oil and gas molecules,” he said. “It’s old seawater and saltier than what we have now.”Drilling mud is used to bring the drill cuttings to the surface and cool the drill bit. That mud is recovered and reused.There is also hydraulic fracturing fluid that is used to frack a well. It is more than 99 percent water and sand plus some chemicals, which are disclosed, to clean and lubricate the well, Chadsey said. Then there is brine, which comes up to the surface to either be recycled or injected into a class 2 well.“We have been using class 2 wells since the mid 1980s,” he noted.He said when the brine is offloaded, it is unloaded into above ground tanks, filtered and injected back into the ground. He said people seem to think that the brine will be shipped from all over the country, but that would be cost prohibitive. He said Ohio is a full disclosure state, so what is in the wastewater has to be disclosed. “It will be from Pennsylvania, Ohio and West Virginia,” Chadsey explained, noting everything is done under rules from the U.S. EPA. “And we don’t have thousands of injection wells. We have 200 here in Ohio.”
Plug abandoned wells: Plan has support of industry, environmentalists - Pittsburgh Post-Gazette Editorial -- Hundreds of thousands of abandoned gas and oil wells throughout the country present an ongoing potential pollution threat, as well as a source of climate-warming methane emissions. A unique proposal to plug those abandoned wells deserves funding from state and federal governments. The plan would use employees of struggling oil and gas companies — many of which are teetering on financial insolvency because of low oil prices — to begin the task of identifying and plugging those abandoned wells. The sheer number of wells is staggering: States have identified more than 55,000 abandoned wells nationwide, but estimates of existing but unidentified wells push that number to 750,000. In Pennsylvania, the state has 8,500 verified orphan and abandoned wells and an estimated 200,000 that have not been identified. Those abandoned wells, left behind during past waves of drilling activity, can create an explosion hazard from oil and gas leaking into water, soil and sometimes nearby homes. They are also a significant source of methane emissions, a powerful greenhouse gas. The proposal not only would benefit the struggling oil and gas industry, which currently has thousands of workers sitting idle, but also would have long-lasting environmental advantages. In a rare show of crossover support, the plan has been endorsed by state energy regulators, industry trade groups, the U.S. House Natural Resources Committee and environmental groups such as Greenpeace and Earthworks. The key, as always, is funding — and such a huge endeavor won’t be cheap. Canada, for instance, has committed $1.7 billion (in Canadian dollars) to plugging abandoned wells and assisting the struggling oil industry. In Alberta alone, the program is expected to maintain 5,200 jobs. The Center for American Progress, a left-leaning think tank, estimated that a nationwide well cleanup fund of $2 billion could support 14,000 to 24,000 jobs. With Congress considering another economic stimulus bill in the coming weeks, this would be the time for Pennsylvania’s delegation to campaign for funding for an abandoned well program. Such a plan would preserve or create jobs while also making a huge environmental impact. It would be money well spent.
Fracking linked to rare birth defect in horses - - A new study has uncovered a link between fracking chemicals in farm water and a rare birth defect in horses—which researchers say could serve as a warning about fracking and human infant health. The study, published this month in the journal Science of the Total Environment, complements a growing body of research linking fracking to numerous human health effects, including preterm births and high-risk pregnancies. This is believed to be the first study to find fracking chemicals in farm water linked to birth defects in farm animals. In 2014, veterinarians at the Cornell University Hospital for Animals in Ithaca, New York, realized that they'd diagnosed five out of 10 foals born on one farm in Pennsylvania with the same rare birth defect. The birth defect, dysphagia, involves difficulty swallowing caused by abnormalities in the throat. Dysphagia causes nursing foals to inhale milk instead of swallowing it, which often results in pneumonia if milk gets into their lungs. "We'd hear a gurgling sound when the foals nursed, and we confirmed they were dysphagic by using video endoscopy to look for milk in their tracheas, instead of in their esophagus where it should be," Kathleen Mullen, a veterinarian and the study's lead author, told EHN. "We treated them by passing a feeding tube so they could eat, and if there was pneumonia from the aspiration, we treated that with antibiotics. The foals generally recovered with time, but some never nursed again." The owner of the Pennsylvania farm the horses came from also owned a farm in New York. Both farms used the same commercial horse feed and sourced hay from the same place—but none of the horses born on the New York farm ever had dysphagia. Additionally, several mares that lived on the Pennsylvania farm for the first half of their gestation had healthy foals after being moved to the New York farm mid-pregnancy, while several mares who started out in New York and were moved to Pennsylvania mid-pregnancy had dysphagic foals. The only difference the farmer identified was that in Pennsylvania, there were 28 fracking wells within seven miles of the farm—two of which were within 1,500 feet of the property's two water wells. There were no fracking wells near the New York farm. The state banned the practice in 2015 following a seven-year review of its health and environmental impacts, during which time there was a moratorium on it.
Hilco, the developer buying Philadelphia's 1,300-acre refinery site has mixed track record - Hilco Global has a long history of buying and salvaging distressed businesses and real estate. It is much sought after by corporate clients, including Exelon Generation and PSEG Power in New Jersey, to unload surplus industrial property. But its record as a developer is mixed. Hilco’s latest acquisition is the 1,300-acre Philadelphia Energy Solutions property in South Philadelphia, the largest oil refinery on the East Coast before it shut down last June after a devastating fire. A subsidiary, Hilco Redevelopment, is buying PES out of bankruptcy for $252 million. The sale is set to close around the end of the month. Hilco officials have not publicly articulated a plan for the PES property — a Hilco spokesperson declined to respond to written questions for this article, saying the company is under a legal commitment to refrain from comments until the sale closes. Hilco officials have told city officials and neighborhood activists they want to redevelop the land as a mixed-used industrial park, possibly warehouses. It’s also likely Hilco will retain many of the site’s fuel storage tanks, which have grown in value with the recent plunge in oil prices. Philadelphia officials, who met Hilco executives before the bankruptcy court auction, seemed relieved that Hilco did not plan to restart the refinery, which had employed 1,100 people, but also was the city’s largest source of air pollution and had become the target of climate activists. Brian Abernathy, the city’s managing director, in January said his initial research suggested Hilco “has a great track record.” ‘Epic turnaround tale’ Sparrows Point, formerly a Bethlehem steel plant, in the process of redevelopment by Tradepoint Atlantic, in Baltimore County. The area is home to Amazon, Under Armor, FedEx, and other warehouses and facilities.
Pennsylvania: 6.8% increase in quarterly natural gas production --Pennsylvania: 6.8% increase in quarterly natural gas production. Pennsylvania has reported a 6.8% increase in quarterly natural gas production, Kallanish Energy reports.Production grew to 1,766 billion cubic feet in first quarter 2020 from Q1 2019, said the new report from the Pennsylvania Independent Fiscal Office.2 days ago
Williams Utility-Scale Solar Projects Set to Power Natural Gas Pipelines, Processing -- Tulsa-based natural gas pipeline giant Williams said Thursday it is entering the solar energy business. The midstreamer, whose pipeline network spans more than 30,000 miles, plans to develop a series of solar photovoltaic farms to help power its gas transmission and processing operations. “Given the current market structures and tax incentives, we are able to make these attractive incremental investments while continuing to enjoy the reliability that the grid provides via natural gas fired power generation,” said CEO Alan Armstrong. “In addition, solar installations at self-consuming industrial sites like this make more sense because there is less incremental land use and less power transmission voltage losses.” Investments, made possible by generous federal and state tax credits, are to target initial candidate sites primarily on company-owned land in Alabama, Colorado, Georgia, Louisiana, New Jersey, North Carolina, Ohio, Pennsylvania and Virginia. The solar farms are to range in capacity from 1 MW to 40 MW, the company said, noting that operations currently draw a combined average of more than 400 MW of electricity from the grid. The company expects agreements with local utilities would allow the sale of excess solar power to be sold back into the grid. The solar farms are expected to begin entering service in late 2021. The solar initiative would allow Williams to leverage its core gas transport business “to create complementary renewable energy investment opportunities that provide attractive shareholder returns while preserving the environment for future generations,” Armstrong said. He cited the complementary nature of baseload gas-fired generation and intermittent wind and solar power. “Natural gas is key to our country’s ability to add more renewable energy to the power grid in large volumes,” he said.
EIA forecasts lower U.S. natural gas consumption in 2020 --In the latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that decreases in natural gas consumption in the United States in 2020 will be driven by declines in natural gas used in the industrial, commercial, and residential sectors. In the U.S. electric power sector, EIA forecasts natural gas consumption to decline in the second half of 2020 after growing in the first half of the year.EIA expects domestic consumption of natural gas in 2020 will fall 3.4 billion cubic feet per day (Bcf/d) compared with 2019, led by a 1.6 Bcf/d decline in industrial natural gas consumption. EIA forecasts lower overall U.S. consumption in 2020 because of reduced economic activity related to the impact of the 2019 novel coronavirus disease (COVID-19) and milder-than-normal temperatures in the first quarter of 2020 that reduced demand for space heating in buildings.In 2020, EIA expects natural gas consumption in the residential and commercial sectors to decrease by 3.7% and 6.9%, respectively. Warmer weather in the first quarter of 2020 was the largest contributor to falling residential and commercial demand; combined residential and commercial demand was down 5.6 Bcf/d in the first quarter of 2020 compared with the first quarter of 2019. January 2020 was the fifth warmest January on record and had 15.3% fewer heating degree days (HDDs) than the 10-year average, a contributing factor to lower demand for the quarter. Residential and commercial demand account for a small fraction of U.S. natural gas consumption outside of winter months when heating demand is high. However, EIA expects weaker economic conditions in the coming months to further reduce average 2020 natural gas consumption in the commercial sector. Weak economic conditions also contribute to lower industrial natural gas demand, which EIA expects to decline in the United States from an average of 21.4 Bcf/d in 2019 to an average of 19.9 Bcf/d in 2020, the first time it has dipped lower than 20.0 Bcf/d since the summer of 2016. EIA forecasts that the natural gas-weighted production index, which estimates manufacturing activity based on subsectors of the manufacturing industry and their relative importance to total natural gas consumption, will fall 15.3% between January 2020 and October 2020. In the first half of 2020, EIA expects natural gas used for electric power in the United States to grow 1.6 Bcf/d compared with the first half of 2019 because of low natural gas prices and lower-than-expected natural gas capacity additions. However, EIA forecasts U.S. natural gas consumption during the second half of 2020 to decline 2.2 Bcf/d compared with the second half of 2019. EIA forecasts rising natural gas prices in the second half of 2020, which will drive down natural gas consumption for electric power.
U.S. natgas futures rise on slowing output despite falling exports and demand - (Reuters) - U.S. natural gas futures rose more than 3% on Tuesday as output slows despite forecasts for demand and exports to decline due to coronavirus lockdowns and milder weather over the next two weeks. On its second to last day as the front-month, gas futures for June delivery on the New York Mercantile Exchange rose 6.2 cents, or 3.6%, to settle at $1.793 per million British thermal units (mmBtu). The July contract, which will soon be the front-month, gained about 6 cents to $1.94 per mmBtu. Looking ahead, futures for the balance of 2020 and calendar 2021 were trading about 25% and 49% over the front-month, respectively, on expectations the economy will snap back as governments lift travel restrictions. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 89.3 billion cubic feet per day (bcfd) so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4 bcfd in November. With milder weather expected, Refinitiv projected demand in the Lower 48, including exports, would ease from 79.6 bcfd this week to 78.9 bcfd next week. That is lower than Refinitiv's forecasts on Friday of 79.7 bcfd this week and 81.4 bcfd next week. U.S. LNG exports averaged 6.5 bcfd so far in May, down from a four-month low of 8.1 bcfd in April and a record 8.7 bcfd in February. Refinitiv said U.S. pipeline exports to Canada averaged 2.2 bcfd so far in May, down from 2.4 bcfd in April and an all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 4.7 bcfd so far this month, the same as in April, down from a record 5.6 bcfd in March.
U.S. natgas futures fall on forecasts for lower demand - (Reuters) - U.S. natural gas futures were little changed on Wednesday with a decline in exports and demand, despite a slowdown in output. On its last day as the front-month, gas futures for June delivery on the New York Mercantile Exchange fell 7.1 cents, or 4.0%, to settle at $1.722 per million British thermal units (mmBtu). The July contract, which will soon be the front-month, was down about 7 cents to $1.88 per mmBtu. Futures for the balance of 2020 and calendar 2021 were trading about 27% and 54% over the front-month, respectively, on expectations the economy will snap back as governments lift coronavirus travel restrictions. Data provider Refinitiv said average gas output in the U.S. Lower 48 states fell to 89.3 billion cubic feet per day (bcfd) so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4 bcfd in November. With milder weather expected, Refinitiv cut its demand projections for the Lower 48 to around 78.5 bcfd for the next two weeks, including exports. That is down from Refinitiv's forecasts on Tuesday of 79.6 bcfd this week and 78.9 bcfd next week. U.S. LNG exports averaged 6.5 bcfd so far in May, down from a four-month low of 8.1 bcfd in April and a record 8.7 bcfd in February. Refinitiv said U.S. pipeline exports to Canada averaged 2.2 bcfd so far in May, down from a six-month low of 2.4 bcfd in April and an all-time high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 4.7 bcfd so far this month, the same as the 11-month low in April and down from a record 5.6 bcfd in March.
US working natural gas volume in underground storage rises by 109 Bcf: EIA | S&P Global Platts — The amount of natural gas in US storage facilities increased by 109 Bcf to 2.612 Tcf in the week that ended May 22, according to US Energy Information Administration data released Thursday. The injection was larger than the consensus expectations of analysts surveyed by S&P Global Platts, which called for a 101 Bcf build. Responses to the survey ranged from an injection of 88 Bcf to one of 114 Bcf. The injection nearly matched the 110 Bcf build reported during the same week in 2019 but was 17.2% larger than the five-year average of 93 Bcf. The long decline in working rigs due to weak crude oil prices has begun to catch up to the US gas market, with production estimates averaging just 86.5 Bcf/d for the week ended May 22, according to S&P Global Plats Analytics. This is down from roughly 92 Bcf/d in mid-April. Production for the third week of May tumbled 2.7 Bcf/d, marking the largest weekly decline in more than two years. While the movement was unusually large for production, it was overshadowed by the dying gasp of residential and commercial demand, which declined more than 7 Bcf/d last week, hitting year-to-date lows. Storage volumes now stand 778 Bcf, or 42.5%, above the year-ago level of 1.834 Tcf and 423 Bcf, or 19.3%, higher than the five-year average of 2.189 Tcf. The recent drop in production was also met with higher power burn demand, which climbed 2.5 Bcf/d this week in response to an 8 degree increase in average temperatures across the US, according to Platts Analytics. LNG feedgas deliveries also continued a downward march that began in mid-April, averaging just 6.3 Bcf/d. Deliveries averaged about 9.5 Bcf/d during the first quarter of 2020 when they hovered between 9 and 10 Bcf/d. With LNG facilities running at roughly half the expected utilization, and continued uncertainty in global markets due to the coronavirus pandemic, there is little upside to support exports through this summer, helping push end-October inventories likely above the 4 Tcf mark. The NYMEX July gas futures contract fell 4 cents to $1.846/MMBtu in trading following the release of the weekly storage report. The remaining summer strip through October fell 4.4 cents to average $1.947/MMBtu. Spreads to next winter remain strong, leading to significant volumes aimed at storage. The winter 2020-21 contract strip is priced roughly 80 cents over the balance of summer at $2.75, even with storage running above normal, due to expectations of further associated gas production declines stemming from weak oil prices. Platts Analytics' supply and demand model expects a 111 Bcf addition to US storage volumes in the week that ended May 29, which would continue to expand the storage overhang.
US natural gas futures jump to three-week high -US natural gas futures rose to a three-week high on Friday on forecasts for warmer weather and higher air conditioning demand over the next two weeks. Front-month gas futures for July delivery rose 2.2 cents, or 1.2%, to settle at $1.849 per million British thermal units, their highest close since May 7. For the week, the front-month was up about 6% after rising about 5% last week. But for the month, it was down about 6% after jumping by a 17-month high of 19% in April. Looking ahead, futures for the balance of 2020 and calendar 2021 were trading about 21% and 43% over the front-month, respectively, on expectations the economy will snap back as governments lift coronavirus-linked travel restrictions. Data provider Refinitiv said average gas output in the US Lower 48 states fell to 89.2 billion cubic feet per day (bcfd) so far in May, down from an eight-month low of 92.9 bcfd in April and an all-time monthly high of 95.4 bcfd in November. With warmer weather coming, Refinitiv projected demand, including exports, would rise from 78.5 bcfd this week to 79.3 bcfd next week and 82.4 bcfd in two weeks.
Merrimack Station power plant in Bow gets EPA water permit after decade of dispute - Merrimack Station, the power plant in Bow, has come out on top of a multiyear fight over the use of Merrimack River water for cooling. The EPA has released a water-pollution permit for the coal-fired plant that does not require the construction of any kind of pool or tower to cool hundreds of thousands of gallons of water taken from the Merrimack River for the plant’s boilers and then returned to the river.Such closed-cycle cooling was included in a draft permit issued in 2011 by the EPA and has been sought for decades by environmental groups, who say removing that much water and returning it at a much higher temperature kills river life and alters the ecosystem of the Merrimack River. The permit requires the plan to restrict the times that it discharges water to protect nearby wildlife, and install “wedgewire” screens to limit which organisms get sucked into the plant when it takes water out of the river. Merrimack Station seldom runs these days because much cheaper electricity is usually available from gas-fired plants or solar and wind farms. It ran roughly the equivalent of one month during 2019, turning on only to meet high electricity demand during summer heat waves or, more often, during winter cold snaps when natural gas was not available because it was used for heating. The six-decade-old power plant is financially viable because it receives tens of millions of dollars in what are known as capacity payments that are made regardless of how much electricity it produces. Capacity payments are designed to keep “peaker plants” open to provide power during times of peak need. Similar payments are made to the state’s only other coal-fired plant, Schiller in Portsmouth, also owned by Granite Shore.
Dana Nessel and Enbridge argue Line 5 pipeline shutdown to Michigan judge - Should the Line 5 pipelines under the Straits of Mackinac ever have been built? That was the central question Friday as lawyers for the state of Michigan and Canadian petroleum giant Enbridge faced off in oral arguments in Ingham County Circuit Court stemming from Michigan Attorney General Dana Nessel’s lawsuit challenging the 1953 easement that made way for the pipeline’s construction. Friday’s arguments before Judge James Jamo were the latest in a long and multi-pronged legal battle over the fate of the 67-year old twin pipelines, which transport oil and natural gas liquids beneath the Straits. Nessel, a Democrat who campaigned for office on a promise to shut down Line 5, has mounted multiple challenges against the pipelines, which she alleges pose a threat to Michigan’s environment and economy. Calling Line 5 “a continuing threat of grave harm to critical public rights in the Great Lakes,” the lawsuit under consideration Friday seeks to void an easement that allows Enbridge to run the lines across state-controlled bottomlands in the Straits. Nessel claims the pipelines are a nuisance that violate Michigan environmental law and the common law public trust doctrine. That doctrine requires Michigan to hold navigable waterways and the lands beneath them in trust for public uses such as fishing, boating and recreation. During a live YouTube broadcast that cut out multiple times for extended periods, the two sides each asked Jamo to decide the case in their favor without the need for a trial. State lawyers argued Nessel’s public trust claims are strong enough to compel Jamo to find the pipelines illegal and shut them down. Enbridge lawyers, meanwhile, argued Nessel’s claims were too weak to “get in the door” to court. Assistant Attorney General Robert Reichel asked Jamo to issue a summary decision that the 1953 easement granting Enbridge’s predecessor, Lakehead Pipe Line company, access to the bottom of the straits violated the public trust doctrine. As such, Reichel argued, Jamo should order Enbridge to stop operating Line 5 as soon as possible. “The 1953 easement was, and is, void,” Reichel said. The state’s arguments rest on the tenet that a state can only relinquish public trust resources when doing so would advance protected public rights, or at the very least, do no significant harm to them. The exposed lakebed lines, Reichel argued, are vulnerable to an oil spill that “represents a substantial threat to the exercise of those rights” and thus should never have been approved.
In Wake of Fatal Explosion, PSC Pushes for Answers on Stalled Equipment Replacement Program – Four years after a fatal explosion at a Silver Spring apartment complex, the Maryland Public Service Commission is trying to find a way to remedy the safety concerns surrounding the existence of mercury service regulators routinely found in homes and apartment buildings across the state. The regulators, installed in buildings constructed before 1960, are used to stabilize gas pressure, but in April 2019, after a lengthy investigation, the National Transportation Safety Board determined it was the failure of a mercury service regulator that led to the explosion at the Flower Branch Apartments. Seven people died in the accident on Aug. 10, 2016, including two children. Washington Gas, the utility provider responsible for maintaining the equipment continues to deny that the failure of a regulator led to the explosion and faults the NTSB findings. The fact that the regulator was even inside the apartment building at Flower Branch exposed yet another failure. Washington Gas had promised to remove and replace all mercury service regulators in its Maryland service area by 2013 and recovered a total of $1.962 million from ratepayers to do just that. The company also promised to report annually on its progress. Yet during the proposed decade-long replacement period, the company filed only one report, in 2003, claiming 2,744 of the estimated 42,745 mercury regulators had been replaced.
US LNG cargo cancellations mount for July as weakened global demand persists | S&P Global Platts — About 45 LNG cargoes scheduled to be loaded in July at US export terminals were said to have been canceled by customers — at least half of them tied to Cheniere Energy's two Gulf Coast facilities, according to market sources. The moves reported Thursday reflect the depth of global demand destruction exacerbated by the coronavirus pandemic, with Asian and European buyers fleeing US supplies as summer approaches. Feedgas flows to US liquefaction facilities fell this week to the lowest level since October 2019. The July cancellations, roughly double what was reported for June, represent nearly two-thirds the average volume of US LNG that was produced monthly when the coronavirus began to spread globally in January, according to S&P Global Platts Analytics data. Often billed as a big benefit for US exporters, their contracts call for offtakers to pay a fixed feed when canceling cargoes. Those protections could be complicated if customers were to declare force majeure, something market participants have suggested is possible if the health crisis drags on or deepens. Cheniere has said it doesn't believe the market disruptions from the coronavirus would provide a valid legal basis for an FM claim by one of its counterparties. Low international prices and weaker-than-normal demand have been cited as the main reasons for the cancellations at US terminals that largely began in April and picked up in May and June. North Asian spot LNG prices extended their downtrend Thursday as cargo availability remained ample despite procurement activity in China gaining momentum. The Platts JKM for July was assessed down by 4.8 cents/MMBtu day on day at $2.125/MMBtu, on lower pricing indications. In the Atlantic region, a plunging Eurogas market has sent delivered LNG prices to record lows. Platts assessed the DES NWE/MED markets at $1.371/MMBtu Thursday, down $0.134/MMBtu day on day, the lowest level since Platts began assessing these markets in 2010. The Platts Gulf Coast Marker was assessed at $1.283/MMBtu Thursday, moving lower on bearish sentiment in the Northeast Asian market, which currently provides the most lucrative market for US cargoes. The spread between the GCM and NYMEX Henry Hub front-month has remained in negative territory since late March and implies that the margins on US cargoes being marketed in the spot market are very thin or negative.
'It's too far gone': Old oil wells and pipelines doom big effort to save this Louisiana island - A Louisiana island President Theodore Roosevelt tried to save more than a century ago has been so damaged by the oil industry, so tangled with forgotten pipelines, gouged by canals and pockmarked by oil wells, that the state has finally decided to cut its losses and end a decades-long effort to restore it. But that’s not before pouring nearly $20 million into East Timbalier Island’s recovery, including more than $7 million spent on planning and designing an ambitious new project that the state Coastal Protection and Restoration Authority quietly canceled a few weeks ago. “It’s too far gone,” said Darin Lee, a coastal resource scientist who manages the coastal protection agency's efforts to save East Timbalier, an uninhabited and rapidly eroding ribbon of sand about 40 miles south of Houma, and the two dozen other barrier islands protecting Louisiana’s coast. “None of us wants to give up on this stretch of shoreline. We’ve spent a lot of time there, and a lot of money. But it’s had a cascade of additional costs ... and it’s eroding very, very fast.”The loss of East Timbalier would expose the 700-plus oil wells of Terrebonne and Timbalier bays to waves and storms they were not built to withstand. Also under East Timbalier’s protection are the soft, marshy underbelly of Lafourche Parish, the mouth of Bayou Lafourche, a shipping channel that connects to the Gulf Intracoastal Waterway, and the crowded docks of Port Fourchon, the service hub for 90% of the offshore oil platforms in the Gulf of Mexico.“Anything we can put between us and a hurricane is good for us,” said Windell Curole, manager of the South Lafourche Levee District. "Not having that island there, it’s a concern. Definitely a concern.”Barrier islands are the first line of defense against hurricanes and storm surges. They act as speed bumps, taking some of the power from storms as they hurtle toward the mainland. Louisiana is investing heavily in them. The CPRA and other agencies put more than $800 million into bulking them up over the past 20 years.
U.S. drilling industry says offshore ban would crush jobs, government revenues - (Reuters) - A U.S. ban on new offshore drilling in the Gulf of Mexico, which presidential hopeful Joe Biden promised to enact if elected, would lead to hundreds of thousands of job losses and billions in lost government revenue over 20 years, an offshore drilling industry group said on Tuesday. The report by the Washington-based National Ocean Industries Association comes as Biden and other Democrats hoping to unseat Republican President Donald Trump in November’s election have vowed to shift the country away from planet-warming fossil fuels to help avert the worst impacts of climate change. “It’s important for the public and policymakers to understand the ramifications, which are severe,” NOIA President Erik Milito said in an interview about the study. Biden has said that moving away from fossil fuels would pave the way for big job gains in renewable energy. NOIA said it conducted research on the economic impact of an offshore drilling ban, and analyzed two scenarios: one assuming no new leases, and another assuming no new drilling permits issued beginning in 2022. If no new permits are issued, the offshore industry would have 179,000 jobs in 2040, less than half the 370,000 jobs it would be projected to support under current policies, the report said. Government revenues from the industry, meanwhile, would be $2.7 billion a year instead of $7 billion, it said. With no new leases, jobs and revenues would each be more than 25% lower than the business-as-usual forecast. Last year, drilling in the Gulf of Mexico’s Outer Continental Shelf supported 345,000 U.S. jobs and contributed $28.7 billion to the economy. But that was before the coronavirus pandemic choked off demand for transport fuels, igniting an oil price collapse that put the industry in crisis. NOIA said the report’s forecasts take into account the current industry downturn.
Shell evacuates workers after coronavirus outbreak on Gulf rig - Shell Oil, the U.S. subsidiary of energy giant Royal Dutch Shell, has evacuated nine workers from a company platform in the Gulf of Mexico for testing and treatment of COVID-19, the illness caused by the coronavirus. The workers were airlifted by helicopter to unidentified medical facilities. Five of the workers tested positive for coronavirus, two are waiting test results and two were negative for the virus.
Pro-Gas States Pass Laws Barring Natural Gas Bans, Limits - States friendly to oil and gas development are trying to stop more cities, towns, and other municipalities from banning natural gas connections in favor of electric hookups, which are seen as more climate-friendly. The Louisiana House of Representatives on Wednesday unanimously approved a bill that would ban local governments from prohibiting utility connections, including natural gas hookups. It follows a measure signed in Oklahoma May 19 and similar bills approved in Tennessee and Arizona earlier this year. “What we are trying to do is send a market signal to the rest of the country to say that Louisiana is open for business when it comes to natural gas,” said Tyler Gray, Louisiana Mid-Continent Oil & Gas Association president and general counsel, during a hearing last week. The industry has been delivering essential energy for decades, including during the corornavirus pandemic, Karen Harbert, president and CEO of the American Gas Association, said in a statement about the state laws. “It is short-sighted that any government would consider denying these benefits to their constituents,” she said. The electric-versus-natural gas debated heated up last year when Berkeley, Calif., became the first city to ban natural gas infrastructure in new buildings, starting in 2020. The hope was to reduce reliance on fossil fuels while meeting climate goals. Since then, similar bills have won approval from municipalities in California, Massachusetts, Oregon, Washington, Ohio, and New York.
Louisiana House bill seeks to invalidate parish lawsuits against oil and gas companies - — A committee on Wednesday pushed a bill to the Louisiana House floor that seeks to invalidate environmental lawsuits filed by coastal parishes against oil and gas companies. The House Natural Resources and Environment Committee voted 9-3 to advance Senate Bill 440, by Sen. Michael “Big Mike” Fesi, R-Houma. Advocates say the bill requires the money that the parishes would have spent on the lawsuits to go to coastal restoration efforts. “If we’re going to believe that these lawsuits are about restoring our coasts, then we need to put the money where our coast needs to be restored,” Archie Chaisson, Lafourche parish President, said in support of the bill. The committee voted to add amendments by Rep. Philip Devillier, R-Eunice, that would give the Department of Natural Resources, and Attorney General Jeff Landry sole discretion over the lawsuits instead of the parishes. “In one of largest disasters--this global pandemic--in the history of the world, and I have to be here, fighting for our right, St. Bernard Parish, to sue a company that polluted our parish,” Guy McInnis, St. Bernard Parish president, said. The amendment mirrored parts of a bill that Sen. Bob Hensgens, R-Cameron, withdrew last week. That bill was designed to get the lawsuits out of the hands of private trial lawyers who have been representing the parishes in the suit. Opponents say that neither the Natural Resources Department nor the Attorney General’s office have the money to cover the full cost of the lawsuits. Last week, the department estimated the cost of each of the 42 cases at about $4.3 million, or an aggregate of over $180 million. The committee also approved a resolution by Sen. Sharon Hewitt, R-Slidell, that calls on local governments to drop the lawsuits against oil and gas companies.
'We ran out of time': Bill to nullify Louisiana parish lawsuits vs. oil and gas companies is dead - Oil and gas companies have struck out in their attempt to kill lawsuits filed by seven parishes that accuse the companies of destroying coastal marshes and wetlands during decades of drilling and exploration activities. “We ran out of time,” state Sen. Mike Fesi, sponsor of the legislation, Senate Bill 440, said in an interview Thursday. “We’ll shoot for it next year.” Fesi is a Republican from Houma. The development represents a major defeat for oil and gas companies, who had labeled it their biggest priority during this year’s legislative session, which ends Monday night. “Unfortunately, the shortened session created a timing issue,” Gifford Briggs, president of the Louisiana Oil and Gas Association, and Tyler Gray, president and general counsel of the Louisiana Mid-Continent Oil and Gas Association, said in a statement. “Nonetheless, we look forward to continuing the conversation on ending these meritless lawsuits and bringing our oil and gas workforce home.” The defeat of SB440 represents a major win for the Talbot Carmouche Marcello law firm in Baton Rouge that has filed most of the lawsuits, beginning eight years ago. “The taxpayers of Louisiana had a huge victory today because they’re not going to have to pay to restore the coast of Louisiana,” said attorney John Carmouche. “Big Oil, which damaged the coast, will have to pay for provable damages caused by their operations, and the coast of Louisiana will be restored.”
In Louisiana, Covid-19 Has Achieved What Big Oil Protesters Could Not - Until two months ago, James Howell was right-of-way manager for an independent land company contracted by energy companies. When Covid-19 hit, Howell was working on 10 projects, for pipelines running between two and 300 miles long. Howell pulled titles, filed permits and assessed property values. But his most important duty was to earn the trust of strangers. He preferred to do it face to face. ‘‘I want to build a personal relationship,’’ he says, ‘‘so they don’t see a big bad oil company but just another guy. I’m trying to find a way to get in the door and relate to them.’’ Landowners can be skeptical when a man holding a business card and a folder full of official documents comes calling. Howell has never been greeted by a shotgun, though he has heard of a colleague who has. But like a bartender or a reporter, Howell has found that most people are flattered to find someone to listen to their troubles. ‘‘People want to talk. If you’re honest about what you need, you’ll do well.’’ Howell has encountered protesters, particularly during the construction of the Bayou Bridge Pipeline, which carries crude oil through the ancient cypress swamps of the Atchafalaya Basin, one of the nation’s richest ecological habitats, and under the bayou that provides drinking water to the United Houma Nation, before terminating at the Mississippi River. At one job site, Howell was greeted by chants of ‘‘Get your oil out of our boil!’’ from protesters who dressed as crawfish and chained themselves inside crawfish pots. ‘‘I was pretty impressed by that,’’ Howell says. ‘‘It was creative.’’ Covid-19 has achieved what the protesters could not: In early March, Howell’s pipeline projects were suspended. The rest of the month, Howell and his document specialist — his wife, Whitney — sat alone in their office in downtown Baton Rouge, ‘‘buttoning everything up.’’ They wanted to make sure that when the shutdown ended, however many months or years from now, they would be able to unlock the dusty office and immediately resume work. Howell is 33; he has been doing right-of-way for 13 years. Just about his whole family is in right-of-way. He is unsure whether his three children will do right-of-way; in quarantine, his oldest, a 5-year-old, informed him that when he grows up, he wants to catch poisonous snakes and create antivenom.
Stop counting on foreign tankers - The global collapse in oil prices due to the coronavirus and a production dispute between Russia and Saudi Arabia have forced scores of tankers waiting off American ports for demand to return. While they are full with American oil, almost none of these tankers are American flagged. While that is not unusual, it is a major problem for national security.Today, the United States military has access to only nine government and commercial tankers suitable for operations abroad, but it has projected it needs at least 80 tankers to transport fuel from oil refineries to American forces during a large war. There are another nearly 60 American flagged tankers that transport cargo among American ports, but they would need to mostly stay home to keep the domestic economy running. This lack of American tankers is not a new problem, but it has grown worse since the last United States military campaigns out in the Middle East.In those operations, American troops counted on foreign tankers to carry their fuel overseas or bought fuel from local refineries. That may not work in the future. Many of the foreign tankers the United States military would rely on are now flagged by China, which built its own fleet of tankers and influences a critical portion of the world tanker market through financing, pooling agreements, and port management. These tankers are unlikely to be available to the United States military in any future crisis where China may be the adversary or may oppose American operations. Most of the world tanker fleet is not controlled by China, but there is still no guarantee the United States can charter them. Foreign crews, many of whom are Chinese or Russian, may not want to sail into a conflict. Further, as with the current oil glut, tankers may not be available to move military fuels because they are full of oil or other refined products.Without the tankers, Navy ships would be stuck in port, Air Force planes would be grounded, and Army and Marine units ashore would run out of gas. American forces would lack the ability to deploy to defend our allies, sustain operations, and could lose a war. Two simple and low cost moves could solve this problem. Establish a tanker security fleet of commercial American tankers and increase the proportion for United States military fuel bought from American refineries and not foreign ones.
Kinder Morgan Pipeline ruptures SAWS water project - Call it a case of two pipelines coming together – though not in a way either one wanted. Contractors building Kinder Morgan’s Permian Highway Pipeline (PHP) on May 21 punctured the Vista Ridge Pipeline, a project of the San Antonio Water System (SAWS) built to deliver water from the Carrizo Aquifer in Burleson County to thirsty Bexar County. The puncture was described by SAWS official Steve Clouse, who was quoted in a Rivard Report story about the incident, as a “pinhole” that allowed about 60,000 gallons of water to escape. It reportedly happened in a rural area about two and a half miles south of Uhland. According to the SAWS web site, the water line had just become operational on May 11. Clouse told the Rivard Report that water service was not disrupted, as SAWS filled water tanks to supply customers during the repair process, which was estimated to take a few days. Kinder Morgan VP Allen Fore said the company is reviewing the incident “and working with the water agency as they address repairs to the line, which are underway.” The Vista Ridge Pipeline was part of a $3.4 billion dollar deal “to initiate the delivery of almost 16.3 billion gallons of water annually from Burleson County.” The project’s 142 miles spans six counties.
U.S. Drops 17 Rigs, with 14 Lost in Permian, as Rate of Decline Slows - The U.S. rig count fell another 17 rigs to drop to 301 during the week ended Friday (May 29), another sharp weekly decline that nonetheless suggests a flattening of the recent downward trajectory in onshore activity. According to data from Baker Hughes Co. (BKR), the United States saw 15 oil-directed rigs and two natural gas-directed rigs exit the patch during the week, putting the overall domestic tally nearly 700 units behind the 984 rigs running at this time last year. U.S. operators have now laid down nearly 500 rigs since mid-March, one of many signs of the economic shocks delivered by the Covid-19 pandemic.Two directional units and one vertical unit joined 14 horizontal rigs in exiting the patch for the most recent week. Gulf of Mexico activity held steady at 12, according to BKR.In Canada, one oil-directed rig packed up shop, dropping the Canadian count to 20, down from 85 in the year-ago period.The combined North American rig count finished the week at 321, versus 1,069 a year ago.Among plays, the Permian Basin shed another 14 rigs to drop to 148, a fraction of the 452 rigs active at this time last year. The Marcellus Shale and Williston Basin each dropped two rigs on the week, while the Arkoma Woodford and Utica Shale each added one.Among states, Texas dropped 11 rigs to fall to 127, versus 480 a year ago. New Mexico, North Dakota and Pennsylvania dropped two a piece. California saw one rig depart overall, while Ohio added one, according to BKR data.The dislocations from Covid-19 to global energy demand have led to shut-ins and production cutbacks in the United States, and a recent report by Goldman Sachsanalysts found that operators are responding by increasing oil and natural gas hedging into 2021.Using information from exploration and production operators covered by Goldman, analysts estimated that through March, 47% of 2020 natural gas production was hedged, along with 66% of oil.“Our update on covered producer hedging on the back of 1Q2020 results suggests an increase in 2020 oil hedging to recent highs, while 2021 liquids/natural gas hedging is above historical averages,” analysts said. “Relative to last quarter, we saw an 18% increase in 2020 oil production hedged,” with 60% of the increase resulting from increased hedges and 40% from lower production because of shut-ins and reduced activity. This comes as the International Energy Agency expects the crisis to result in a sharp pullback in global natural gas and oil investments, with Lower 48 spending falling by half year/year. The decline in investments worldwide has “serious implications” for security and the transition to alternative fuels, the global energy watchdog said in the World Energy Investment 2020 report.
Permian Basin, other associated gas plays lead US production to 16-month low | S&P Global Platts — US natural gas production is hovering near a 16-month low in late May as historically weak commodity prices prompt many operators to slow drilling activity and curtail output at marginal wells. On May 20, US output tumbled to 85.5 Bcf/d, down more than 9% from its record high at 94.3 Bcf/d in November, modeled data from S&P Global Platts Analytics shows. The recent and precipitous drop in US production, which has fallen about 6.5 Bcf/d over the past five weeks, tracks similarly steep declines in crude prices and active oil-directed drilling rigs. In May, benchmark West Texas Intermediate crude prices have averaged just $26.77/b, keeping internal rates of return in negative territory for many US producers, S&P Global Platts data shows. On Thursday, the US rig count declined for an eleventh consecutive week, falling by 12 to 357, according to data published by Enverus DrillingInfo. Since January, the US rig count has fallen by nearly 485, or about 57%. While the Permian Basin accounts from nearly half of that decline, other oil-weighted plays have also seen steep reductions, including the Bakken, Denver-Julesburg, Eagle Ford and the SCOOP/STACK, which together account for 155 rigs lost since late January. By comparison, the largest dry gas plays – including the Marcellus, Utica and Haynesville – have lost a combined total of just 25 rigs as many operators hold the line on drilling amid recent strength in forward gas prices. Recent rig cuts and well curtailments in West Texas have seen the Permian Basin lead the decline in US gas production. Over the past two weeks, associated output has averaged 10.6 Bcf/d, down 1.2 Bcf/d compared to the March average. More recently, Permian gas production has slipped below 10 Bcf/d. Over the same comparison period, SCOOP/STACK production has declined by some 760 MMcf/d, closely followed by the Bakken with a 620 MMcf/d contraction. Output from the Denver-Julesburg is down by over 370 MMcf/d. Eagle Ford production has eked out a modest gain over that period. Until late May, US dry gas plays had seen recent production gains across the board, led by the Haynesville, which is still trending about 600 MMcf/d above its March average. While the Utica also remains up about 100 MMcf/d since March, output from the Marcellus has fallen over that period, owing mainly to recent production curtailments by the US' largest gas producer, EQT. On May 16, EQT said it would curtail production at certain of its Pennsylvania and Ohio wells in response to low gas prices. A recent SEC filing by the company's midstream spinoff, EQM, shows that the curtailments total about 1.4 Bcf/d and will continue through at least the end of June.
US shale industry braces for wave of bankruptcies - The biggest independent shale oil groups in the US reported a record combined loss of $26bn in the first quarter as the sector braces itself for a wave of bankruptcies over the next two years.The collapse in crude demand brought about by the coronavirus pandemic forced more than $38bn in write-offs among top producers, according to analysis by Rystad Energy, sending net losses tumbling well below an average of $2.9bn in the past six years.US energy groups have been caught in the eye of the storm as lockdowns aimed at stemming the spread of Covid-19 slashed energy demand and crashed the oil market.The sweeping impairments reported by the 39 publicly listed US shale oil producers analysed by Rystad — which exclude majors and gas-focused companies — underline the pressure being faced by the industry as a result of the pandemic.“The bottom line is there is going to be a wave of bankruptcies and restructurings,” said Regina Mayor, global head of energy at KPMG. Analysts predict 250 companies could go bust before the end of next year unless oil prices rise fast enough to start generating cash for producers wilting under punishing debt loads.A recent rally has taken the price of West Texas Intermediate, the US marker, back above $30 a barrel, having traded in negative territory last month. But it remains down by half since January — and well beneath average break-even oil prices in the shale patch — leaving many more producers teetering on the brink of bankruptcy.“I don’t think $30 oil saves a lot of those producers who are sitting in the emergency room on a gurney waiting on a heart transplant,” said Buddy Clark, a lawyer at Haynes & Boone in Houston, Texas. “There are more bankruptcies to come.”Already 17 smaller US oil and gas producers, with total debt of around $14bn, have filed Chapter 11 bankruptcy this year, according to data from Haynes & Boone. Analysts at Rystad estimate the total could rise to 73 before the year is out. Another 170 would follow next year if prices remain around current levels. The shale boom has doubled American oil output since 2008 and crude exports have surged, allowing President Donald Trump to boast of US “energy independence”.But a model in which producers rely heavily on borrowed money while delivering meagre returns has caused investor patience to wear thin. The industry was already struggling to generate cash and hold on to investor support in 2019 when WTI averaged $57 a barrel. Now, with WTI down by around half this year and little access to financing, the pandemic and oil-price crash it caused are set to accelerate defaults, according to rating agency Fitch.
Rise of remote working is 'biggest threat to oil demand,' says analyst - Working from home has become the norm, and if the trend continues even after the pandemic abates, it could pose a big risk for oil, analysts are warning. "The biggest threat to oil demand is the rise of remote working," Bernstein said in a recent note to clients. "A decrease in commuting and business air travel is clearly negative for oil demand." Gasoline represents a sizable portion of overall oil demand — within each barrel of refined crude about 45% is used for gasoline — and, according to RBC, about 28% of gasoline demand in the U.S. is from people driving to and from work. Oil prices are, of course, driven by supply and demand dynamics, so a change on one side of the equation can send prices into a tailspin. Oil took a hit in April as billions of people around the world were subjected to some form of lockdown measures in an effort to slow the spread of Covid-19. With air and road travel coming to a virtual standstill, oil demand fell off a cliff. West Texas Intermediate, the U.S. oil benchmark, plunged below zero and into negative territory for the first time on record since no one wanted to take physical delivery of crude with demand expected to remain depressed. Now, WTI is on track for its best month ever as economies have started to reopen, and as producers have announced record output cuts. But demand might not ever fully recover. Twitter and Shopfiy are among the companies that have announced permanent work-from-home options, and more companies are expected to follow suit. "Pretty much every company out there with a sizable commercial real estate footprint is thinking about this now," said Dan Klein, head of scenario planning at S&P Global Platts. "While it's probably too early to tell how prevalent this structural shift in working from home will become after the restrictions are lifted, it's clear that a certain percentage of workers will never go back to commuting, at least every day," he added. The firm believes between 1 million barrels per day and 1.5 million bpd will be permanently lost. A man wearing a protective mask crosses an empty street during the coronavirus pandemic on May 18, 2020 in New York City. Cindy Ord | Getty Images Prior to the outbreak of Covid-19, worldwide demand stood at roughly 100 million bpd, according to the International Energy Agency. Klein said an even bigger risk could be the impact on business air travel, especially over the longer-term, as employees get used to using Zoom, Skype and Microsoft Teams. "Right now you're challenging that notion that business travel is the cost of doing business," he said, noting that the demand hit could be 1.5 million bpd to 2 million bpd. Raymond James added that heightened unemployment as well as online education will also eat away at demand. "We assume that vehicle fuel consumption in 2021 will be impacted by 1.6 million bpd versus pre-COVID levels, all else held constant, with the impact decreasing to 400,000 bpd in 2022." When it comes to jet fuel consumption, the firm believes a slowdown in business travel will mean 2 million bpd of demand loss in 2021, before recovering slightly to 800,000 bpd in 2022.
Former Federal Reserve Governor Rebukes Fed for Using Covid-19 Funds to Bail Out Fossil Fuel Industry - A former Federal Reserve board of governors member on Thursday called on her former colleagues to stop using Covid-19 relief funds to bail out the "dying" fossil fuel industry, calling the decision a threat to the planet's climate and a misguided use of taxpayer money."These concessions to the fossil fuel industry are a risky investment in the past," Sarah Bloom Raskin wrotein a New York Times op-ed. "The Fed is ignoring clear warning signs about the economic repercussions of the impending climate crisis by taking action that will lead to increases in greenhouse gas emissions at a time when even in the short term, fossil fuels are a terrible investment."Raskin's opinion piece sparked praise from climate campaigners like 350.org co-founder Jamie Henn."This should cause some waves," Henn tweeted.Henn on Thursday penned an opinion piece for Common Dreams arguing that Mike Sommers, CEO of the American Petroleum Institute (API), is spewing lies to the public when he claims the industry doesn't want—and hasn't actively pushed for—a bailout from the Fed.As Henn wrote:The truth is that despite Sommer's best efforts to spin a fairytale about oil companies tightening their belts and lifting themselves up by their bootstraps, corporate socialism is exactly what API wants. In fact, the fossil fuel industry, and the American Petroleum Institute in particular, have been at the forefront of corporate efforts to profit off the coronavirus pandemic and government relief efforts.Climate advocacy group Friends of the Earth program manager Lukas Ross, in a statement Wednesday, alsorejected Sommers' protestations."Oil lobbyists are spewing blatant lies, and we have the receipts," said Ross. "Big Oil has already nabbed $1.9 billion in giveaways thanks to corporate tax cuts from the last stimulus." "If polluters want to deny the existence of the ongoing bailout," Ross added, "Congress should swiftly repeal these blatant corporate tax giveaways and make fossil fuels ineligible for stimulus lending programs."
New filing to defend Colorados oil & gas pollution rules - Environmental Defense Fund and Healthy Air & Water Colorado today came to the defense of rules adopted last year by the Air Quality Control Commission that strengthened regulations to reduce climate and air pollution from oil and gas industry operations across the state.Two separate lawsuits were filed in March (one by group of Western Slope counties and another by Weld County) seeking to roll back the new methane and ozone pollution regulations that were adopted unanimously by the AQCC in December of 2019. Thirty- five local government entities including counties, municipalities, and public health departments from across the state as well as thousands of ordinary Coloradans supported the rules. EDF and Healthy Air & Water Colorado filed motions (available here and here) to intervene in both cases in order to defend those rules.“This policy has been enormously successful and highly cost-effective, elevating Colorado to become a national leader in forward-thinking solutions. Rolling back clean air protections in the middle of the COVID crisis is a disservice to the state, and ultimately to the industry itself. It would compromise our public health at a time when we can least afford it, and amplify our climate problems.” “These commonsense clean air protections are entirely achievable and will make Colorado’s air healthier for everyone to breathe. Instead of attacking pollution safeguards during a public health crisis, we should seize every opportunity to clean our air and reduce emissions that can make Coloradans sicker. These rules will do just that – and benefit every single one of us”
Upcoming Rule Could Expand Oil, Gas Drilling in National Forests - Bloomberg Law -A proposed U.S. Forest Service rule stands to weaken a check on oil and gas development in national forests and possibly give the Interior Department more sway over land leasing decisions, legal analysts and conservationists say. The rulemaking, announced in 2018, aims to align the Forest Service’s leasing practices with those of the Bureau of Land Management to speed up fossil fuel development in national forests and grasslands nationwide, including oil and gas-rich forests in Ohio, Mississippi, and Colorado.The White House is reviewing a draft of the proposed rule, which will be published in June or July, Tracy Parker, Forest Service acting director of minerals and geology management, said in an interview.The BLM, part of the Interior Department, is in charge of oil and gas leasing on all federal lands, including those managed by the Forest Service—which is part of the Agriculture Department. Federal law prohibits BLM from leasing in national forests without Forest Service consent, Parker said. The Forest Service is remaking its oil and gas regulations at a time when it is weakening environmental checks and balances under the National Environmental Policy Act and joining with the BLM in prioritizing logging and fossil fuels development on federal public lands, said Hana Vizcarra, staff attorney at the Harvard Law School Environmental and Energy Law Program.The Forest Service, which last updated its oil and gas rules in 1990, wants to make quick oil and gas leasing decisions, “streamline” the approval process, and remove roadblocks to oil and gas development, according to the rulemaking announcement.The Forest Service and BLM have to deliver oil and gas to the public, and “there’s a need there that our regulations are consistent and are working well together,” Parker said.But any Trump administration push to expedite oil and gas development in national forests affects climate change and threatens drinking water in cities nationwide, said Randi Spivak, public lands director for the Center for Biological Diversity.Forest Service data shows drinking water for 180 million people in 68,000 communities nationwide originates in national forests, some of which are being drilled for oil and gas. “Fracking can pollute surface and groundwater,” Spivak said. “The Trump administration wants to put polluters over the interests of people, water, climate and wildlife.”
PUBLIC LANDS: Energy developers seek leases near iconic Utah park -- Friday, May 22, 2020 --Oil and gas companies have proposed more than 150,000 acres of federal land for potential development in the canyons of eastern Utah, some as close as a mile and a half from the famous Arches National Park.
Trump administration slows on fracking plans after outcry for impacted Navajo Nation -The Trump administration has relented and will allow more time for opinions on plans to lease public land to oil and gas companies after outrage that the tribal communities who would be most affected were unable to join the scheduled "virtual" meetings and are being severely impacted by the coronavirus.Department of Interior (DOI) Secretary David Bernhardt agreed on Wednesday to extend the comment period on drilling plans for areas around Chaco Canyon Historical Park in New Mexico.Last week, the Bureau of Land Management (BLM), part of the DOI, held a series of Zoom meetings - despite the fact that many Native American communities in the area have limited access to internet. A Federal Communications Commission report found that less than half of households on tribal lands have access to fixed broadband service. The Navajo Nation, who are most impacted by the fracking plans, has now surpassed New York as the area with the highest number of coronavirus cases per capita in the US. Navajo Nation has a population of around 173,000 people across their lands in Arizona, Utah and New Mexico. The tribe has 4,153 confirmed cases and 144 deaths from Covid-19.The crisis prompted Doctors Without Borders - who typically work in war zones - to send a team to the Navajo Nation, the first time the organisation has done so in the US.The Chaco Canyon region is home to thousands of sacred, ancestral sites of indigenous peoples including the Hopi, Navajo and Zuni. It was named a UNESCO World Heritage site in 1987. In a statement to The Independent, Food & Water Action organizer Margaret Wadsworth said: “This extension is a victory for the communities fighting to protect Chaco and the people whose health and well-being are threatened by more fracking. The Bureau of Land Management should have made this decision in the first place. "The Navajo Nation has been devastated by the COVID-19 pandemic, and could not meaningfully participate in hearings where their voices would be essential. The real task for the BLM is to create a plan that puts the protection of our air, water, and health first, and not the interests of oil and gas corporations.”
Court rejects bid to revive cancelled US pipeline program (AP) — A federal appeals court on Thursday turned down the Trump administration’s request to revive a permit program for new oil and gas pipelines, an outcome that industry representatives said could delay more than 70 projects across the U.S. and cost companies up to $2 billion. The case originated with a challenge by environmentalists to the Keystone XL crude oil pipeline from the oil sands region of Canada to the U.S. It’s now affecting oil and gas pipeline proposals across the nation. The U.S. Army Corps of Engineers permitting program allows pipelines to be built across streams and wetlands with minimal review if they meet certain criteria. Environmental groups contend the program, known as Nationwide Permit 12, leaves companies unaccountable for damage done to water bodies during construction. “This is huge,” said Jared Margolis with the Center for Biological Diversity. “Hopefully this gives us a chance to put a pause on these major oil pipelines.” Army Corps spokesman Doug Garman said the agency was not commenting because the matter is still in litigation. Government attorneys, backed by 19 states and numerous industry groups, had argued the cancellation would delay construction of pipelines used to deliver fuel to power plants and other destinations. U.S. District Judge Brian Morris in Montana said in a pair of recent rulings in the Keystone case that Army Corps officials had failed to adequately consult with wildlife agencies before reauthorizing the permitting program in 2017. Its continued use could cause serious harm to protected species and critical wildlife habitat, he said. A two-judge panel of the 9th U.S. Circuit Court of Appeals denied an emergency request to block Morris’ ruling. They said in a one-page decision that the government, states and industry groups had not demonstrated sufficient harm to justify reviving the program while the case is still pending. The issue could take months to resolve barring further court intervention. In the absence of the nationwide permit, companies will have to apply for numerous individual construction permits on lines that sometimes cross hundreds of water bodies. That could cause delays of a year or more on more than 70 pending pipelines, increasing their combined costs by $2 billion, said Paul Afonso, chief legal officer for the American Petroleum Institute.
Trail of spills haunts Dakota Access developer -Federal pipeline inspectors didn't like what they found when they looked at construction of the Permian Express pipeline. Unqualified welders were fusing the pipe together in central Texas, using unapproved methods. Regulators with the Pipeline and Hazardous Materials Safety Administration (PHMSA) were alarmed enough in May 2016 to seek a $1.3 million fine against the builder, a subsidiary of Energy Transfer Partners LP. Company attorneys, though, said the pipe was sound and the problems flagged by PHMSA were "insignificant deviations." Four months later, the new pipeline leaked more than 33,000 gallons of oil through a hole next to a weld. It took crews 12 days to find the leak. It was one of 349 leaks, spills and other accidents since 2012 on pipelines operated by Energy Transfer and its subsidiaries. That record could signal trouble ahead for Energy Transfer's most famous project, the Dakota Access pipeline. The company's accident history has taken on renewed importance after U.S. District Judge James Boasberg in March ordered a broad review of the pipeline giant's performance on safety and the environment. His order was part of long-running litigation with tribes who oppose Dakota Access. Boasberg might even shut down the line while the review is done. His decision on whether he'll let it keep operating should come sometime after tomorrow, when briefs are due before the U.S. District Court for the District of Columbia (Energywire, March 26).Energy Transfer's Sunoco subsidiary ranks eighth-worst for volume spilled per mile for the last three years on pipelines carrying hazardous liquids such as crude oil, according to PHMSA performance data. It's had more accidents harming people or the environment than any other operator in the last five years — 38 — but it has one of the largest pipeline systems." Water concerns are paramount for the Standing Rock Sioux Tribe, which has led opposition to Dakota Access. The tribe says a pipeline spill fouling its water supply would be an existential threat. The company says chances of a catastrophic spill are "infinitesimal." Energy Transfer and its subsidiaries, though, have reported causing water contamination. Of 313 spills reported since 2012 on liquid lines, 35 caused water contamination and one was linked to tainted drinking water in a private well. On top of that, Dallas-based Energy Transfer and its subsidiaries are linked to 19 groundwater contamination sites in the most recent monitoring report from the Texas Groundwater Protection Committee. Thousands of demonstrators camped out to protest the pipeline as construction moved closer to Lake Oahe, a dammed section of the Missouri River in North Dakota a half-mile from the Standing Rock Indian Reservation that supplies water to the Standing Rock Sioux.In December 2016, with protests in the headlines, the Obama administration declined to grant a final permit for the pipeline to cross under the lake. President Trump, who has business and political ties to Warren, reversed course (Greenwire, Jan. 24, 2017). Four days after his inauguration, to which Warren had contributed $250,000, Trump issued an executive order accelerating Dakota Access (Energywire, Jan. 27, 2017).
Canadian gas exports to US likely to remain low well into June: Platts Analytics | S&P Global Platts — Below-normal exports of Canadian gas to the US Pacific Northwest and Midwest are likely to continue well into June as AECO basis continues to strengthen and incentivize storage injections in Alberta, according to S&P Global Platts Analytics. Exports to the US Pacific Northwest through Kingsgate have run under capacity this summer. While the market was previously expecting these flows to pick up by June, sentiments are now skewing toward this underutilization continuing throughout the month. Exports at Kingsgate have averaged 2.1 Bcf/d since May 5, according to Platts Analytics. Some of the weakness is due to maintenance. Kingsgate typically flows at capacity, which is closer to 2.3 Bcf/d or higher. The maintenance schedule for Gas Transmission Northwest, a subsidiary of TC Energy, reports there is 2.227 Bcf/d of capacity at Kingsgate. Elevated storage injections in Alberta are prompting Kingsgate to continue to move volumes well below capacity. High injection demand in Alberta has driven AECO basis to its highest value in years. AECO basis to Henry Hub has averaged minus 24 cents/MMBtu so far this summer after averaging 19 cents/MMBtu in May. This has collapsed the spread between AECO and the downstream PG&E Malin hub. AECO is trading at a 7 cent/MMBtu discount to Malin this summer compared to a $1.11/MMBtu discount last summer. June futures had AECO trailing Malin by about 20 cents/MMBtu or more up until the past week, but the June contract has moved to 11 cents/MMBtu behind Malin. This suggests weak exports to the Northwest could persist at least until late June, according to Platts Analytics.Exports from Western Canada into the US Midwest have averaged 3.1 Bcf/d summer to date, according to Platts Analytics. Exports to the Midwest were 3.9 Bcf/d since last summer until May 21. Earlier forecasts had exports averaging 3.4 Bcf/d this summer. The lower exports are also likely due to the injection strength so far on the NOVA Gas Transmission storage system this summer.
Alaska LNG Project receives federal regulatory approval (AP) — The Federal Energy Regulatory Commission issued a decision authorizing construction of the Alaska LNG Project, concluding an environmental impact statement process of more than three years. The commission announced Thursday it approved the state’s plans for the estimated $43 billion pipeline project that will move large volumes of North Slope liquefied natural gas, The Alaska Journal of Commerce reported. The Alaska Gasline Development Corporation submitted an application for the massive project in April 2017. “As anybody in the infrastructure development process knows, to go through the (National Environmental Policy Act) process in three years is an exceptionally fast time,” said Frank Richards, president of the state of Alaska public corporation. Oil producers Exxon Mobil Corp., ConocoPhillips Co. and BP PLC and the state spent more than $600 million on work to achieve the approval, with a state share of about $240 million. The project includes a gas treatment plant, an 807-mile (1,299-kilometer) buried pipeline from the North Slope to the Kenai Peninsula and a liquefaction plant at Nikiski capable of producing up to 20 million metric tons (22 million tons) of liquefied natural gas per year for export to Asian markets. The project could generate around 18,000 jobs during construction and about 1,000 new jobs during its 30-year operational life, according to estimates by the gasline development corporation and the Alaska Department of Labor and Workforce Development. The project would also provide natural gas to the Fairbanks area and other communities along the pipeline route that currently rely on fuel oil for heating and some power generation.
Iranian gasoline starts to arrive in fuel-starved Venezuela | S&P Global Platts — An Iranian tanker carrying gasoline has arrived over the weekend in Venezuelan territorial waters as the country deals with severe fuel shortages and US sanctions. The clean tanker Fortune -- laden with 30,000 mt of gasoline -- was north of the Venezuelan port of Puerto La Cruz as of Sunday morning, data from Platts trade flow tool cFlow showed. The Iranian Embassy said late Saturday in a tweet that one of its tankers arrived in Venezuelan waters escorted by the country's navy. This was also confirmed in a tweet by Venezuela's new oil minister Tareck El Aissami. The shipment comes amid rising political tensions between the US and the two OPEC members. US sanctions against both Iran and Venezuela have had a severe impact on their oil sectors. US officials have been watching reports of the Iranian gasoline shipments to Venezuela but have so far not taken any action to block them. Meanwhile, Iran has repeatedly warned of a "firm response" if the US takes action against its oil tankers. A senior US official said Sunday that Iran, Cuba, Russia and China were "engaged in malign activities and meddling around the world. The United States denounces their actions everywhere but especially in the Western Hemisphere, and we will not abide by their support of the illegitimate and tyrannical regime of Nicolas Maduro." The US National Security Council called Venezuela's imports of Iranian gasoline "an act of desperation." "It will not stop Venezuela's chronic fuel shortages or alleviate the suffering that Maduro has inflicted on the once prosperous people of his country," the council said May 21 on Twitter.
Watch- Venezuela Sends Large Fighter Jet Escort For Tankers As Iran's Flag Flies Over Caracas -To pretty much everyone's surprise it appears the five Iranian gasoline tankers will be able to offload their fuel to Venezuela without incident, despite US threats to thwart what Washington sees as illicit sanctions-busting. It remains that the return trip could be a different story, however. Dramatic video emerged early this week showing the first couple of tankers' arrivals within Venezuelan coastal waters, accompanied by what appeared a large Venezuelan military escort, as Maduro officials promised. First tanker to successfully arrive, the Fortune, docked by Monday, while all are now reported in Caribbean waters, with the second vessel soon to reportedly to dock as well, already safely within Venezuela's Exclusive Economic Zone. Venezuelan military Sukhoi 30MK2 and F-16 aircrafts escort Iran's second tanker on its journey to a Venezuelan port. pic.twitter.com/tfGFLNMzo9— Camila (@camilateleSUR) May 26, 2020 According to multiple widely circulating videos, Maduro's military deployed multiple warships to escort the tankers along with what appears at least a half-dozen Russian-produced fighter jets and F-16s. No doubt the Pentagon and Trump administration has monitored the images closely. There were growing fears of a 'tanker war' Caribbean-style given that last month Trump reportedly ordered a US naval build-up in the region against alleged Maduro government narcotrafficking. Though with plenty of oil, Venezuela has struggled to obtain gasoline for domestic consumption given its network of broken and derelict refineries, which its ally Iran has responded to by delivering 1.53 million barrels of gasoline and refining components. Venezuelan officials declared the fuel delivery as a "landmark in struggle for sovereignty" while unusually an Iranian flag appeared over downtown Caracas: Iranian flag flying in central Caracas today #Venezuela #Iran pic.twitter.com/4EwqfR90ql — CNW (@ConflictsW) May 25, 2020 Given that Maduro made good on his promise to send significant armed forces to provide security for the tankers, it's likely the White House saw too many 'unknowns' if the US Navy were to attempt an intercept of the fuel.
Help us protect the headwaters of the Amazon from oil companies, elders say - (Reuters) - Indigenous leaders are calling for help to stop oil companies drilling in the headwaters of the Amazon river in the wake of the coronavirus pandemic, warning that encroaching on their homelands would destroy a bulwark against climate change. In video shared with Reuters on International Day for Biological Diversity on Friday, communities in Peru and Ecuador said pressure to exploit their territory would intensify as governments seek to reboot economies reeling from the virus. “We have taken care of the rainforest all our lives and now we invite everyone to share in our vision,” Domingo Peas, a leader from Ecuador’s Achuar nation, told Reuters Television. “We need to find a new route, post-oil, for economic development, for the well-being of all humanity, not just indigenous people.” The Achuar are among 20 indigenous nationalities representing almost 500,000 people living in a swathe of rainforest straddling the Peru-Ecuador border, often referred to as the Amazon Sacred Headwaters. Existing and proposed oil and gas blocks cover 280,000 square miles in the region, an area larger than Texas, according to a report published in December by international advocacy groups including Amazon Watch and Stand.earth. Oil is currently being extracted from 7% of these blocks. Ecuador and Peru have plans to exploit at least an additional 40%, including in forests teeming with wildlife, such as Ecuador’s Yasunà National Park, the groups say.Home to jaguars, pink river dolphins, anacondas, howler monkeys and thousands of other species, the region, in many areas barely touched by the modern world, is seen as integral to the wider health of the Amazon, the world’s largest rainforest. Scientists fear that the ecosystem has now been cleared so extensively to grow soy and other export crops that it could flip from being a net absorber of carbon dioxide into a major emitter of the greenhouse gas. With massive fires last year underscoring rampant deforestation in Brazil, preserving pristine forest in remote parts of Peru and Ecuador offers a unique opportunity to nurture the resilience of the wider biome, indigenous leaders say. “Caring for the forests of the Amazon, is caring for your life and future generations,” said Rosa Cerda, vice president of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon.Although communities in Ecuador and Peru have had some success in using lawsuits to block new exploration, past oil and mining projects suggest that carving new roads through trackless landscapes can trigger rapid deforestation. Leaks from pipelines pollute rivers used for drinking water, harming people and wildlife.
Trafigura takes a bet with North Sea oil on post-lockdown revival - (Reuters) - Commodities trader Trafigura has seized the moment and taken a rare dominant position in the North Sea crude market over the past two weeks as oil demand jumped, trading sources said. A combination of OPEC-led global production cuts, cheap freight rates and oil stuck in floating storage sent crude markets into overdrive starting at the end of April as fuel demand looked set to pick up with easing lockdowns. Differentials to benchmark dated Brent for grades around the world have shot up $6 a barrel in many cases, returning to trade at levels not seen since March before the peak lockdown period in April. In the last two weeks, Trafigura has snapped up 14 North Sea crude cargoes, including five Brent Blend and seven Forties and one each of Troll and Ekofisk. The cargoes are for delivery to Rotterdam or for loading between end-May and June 11. The volume of Forties, the largest crude underpinning the dated Brent benchmark, is equivalent to about half the June loading program. Trafigura declined to comment. Taking such large scale positions has not been seen for several years after they were made by other major traders like Glencore, Royal Dutch Shell and Vitol. The Geneva-based firm traded 6.1 million barrels per day of crude and refined products in 2019, making it the second biggest independent trader after Vitol. Unlike its rivals, Trafigura does not have a significant refining system. Its main interest is a stake in the 400,000 barrel-per-day Vadinar refinery in India. The record contango that arose due to the collapse in demand caused by the lockdowns had encouraged a vast build-up of oil in storage. Crude differentials have jumped so much that small quantities of floating storage have been released, though the market structure will have to flip into backwardation before the bulk is marketed.
Russian Gas Flow To Europe Drops As Poland Transit Deal Expires Authored by Tsvetana Paraskova via OilPrice.com, The flow of natural gas from Russia to Europe via the Yamal-Europe pipeline crossing Poland completely stopped on Tuesday after a two-and-a-half-decade-old transit deal between Russia and Poland expired and after the COVID-19 pandemic battered gas demand in Europe. The Russia-Poland transit deal for natural gas from the Yamal peninsula to Germany, via Belarus and Poland, expired on May 17. Poland has aligned its legislation with the energy regulations of the European Union (EU) and Polish operator Gaz-System began offering capacity bookings on the Polish section of the Yamal-Europe pipeline in accordance with EU regulations.Poland has been trying to wean itself off Russian energy supplies and has become one of the first eastern European countries to have booked U.S. liquefied natural gas (LNG) cargoes.With the end of the gas transit agreement with Russia, Poland is moving to a more liberalized natural gas market, but it expects that Russia will continue to send similar volumes of gas before the transit deal expired, a Polish official told Reuters last week.For July 1 through October 1, Poland’s Gaz-System has already sold 80 percent of the capacity on the pipeline made available as a result of termination of the transit contract, the company said on May 15. The remaining available capacity will be auctioned in June, July, and August at monthly auctions for monthly volumes.But the capacity bookings for the first days following the expiration of the gas transit showed little appetite for gas in Europe, according to analysts.Gaz-System told Reuters that the capacity booked for Sunday was much lower than for the previous days. So, “there is no need for the pumping stations to work for 24 hours a day at such low orders for the transit service,” the company said. Commenting on the drastic decline in gas flows from Russia via Poland, VTB Capital said in a note, as carried by Bloomberg: “Such a significant reduction in gas transit is primarily driven by weak demand in Europe amid warm winter, high levels of gas in underground storage and demand distortion due to Covid-19.”
India - Thick smoke from oil refinery triggers fresh panic - Triggering a fresh wave of panic among locals, dense plumes of smoke were seen coming from the Hindustan Petroleum Corporation Limited plant in Vishakhapatnam on Wednesday, May 21. According to reports, the smoke was diffused from the Crude Distillation Unit (CDU) at HPCL, which the company clarified was due to “technical snag” and “temperature issues”. The situation was swiftly brought under control by the people at the site, the operations were resumed as normal and no casualties have been reported. The recent incident at HPCL was viewed with heightened dread because of the recent styrene gas leak from an LG Polymers plant in the city that killed at least 12 people and had injured over 600. But, the HPCL PRO Kalidas told ANI that the situation is currently restrained. Kalidas said, "Due to a technical snag and temperature issues plant-3 restarted, thick smoke came out when the plant was started. Immediately a team of HPCL technical swung into action and took immediate measures to stop smoke, catalyst backup, situation under controlled and resumed operations." While at HPCL plant the situation did not escalate into another disaster, in the latest development of the previous Vizag gas leak, the Supreme Court has denied interfering with the order issued by the National Green Tribunal (NGT) directing the LG Polymers to deposit Rs 50 crores for the damage caused by the harmful styrene gas. NGT had also set up a five-member committee under the leadership of former Andhra Pradesh High Court Judge B Seshasayana Reddy to visit the site of the accident and submit a report. Meanwhile, the work at the plant has been put on hold after the incident which killed at least a dozen of its workers.
Mobil Oil ask for five year extension on move to cleaner shipping fuel - An oil company is dragging its heels on a move to cleaner shipping fuels, as health officials call for "immediate" action. Mobil Oil New Zealand said it was not opposed to the move, in its submission to the Environment Select Committee in March, but holding off until late 2023 was"required". In its submission, Mobil said the Government should consider waiting for "a minimum of five years" before signing Annex VI of Marpol, the international convention for the prevention of pollution from ships. The Ministry of Transport has said it plans to join Annex VI, which regulates air pollution from ships, by November 2021. New Zealand's domestic fleet can use the cheaper, low-grade fuel until Annex VI regulations are enforced.But the Ministry of Health has called for immediate accession, saying the delay "to manage fuel price fluctuations" comes at the "expense of the health of New Zealanders". More stringent Annex VI regulations took effect globally on January 1, when the sulphur limit of 3.5 per cent by mass for marine fuels dropped to 0.5 per cent. Mobil said New Zealand's capability to accede would depend on the availability and cost of low sulphur fuel within the New Zealand market. This would require "significant changes" to both marine fuel supply infrastructure and the domestic marine vessel fleet, the submission said. "We expect that any reduction in marine fuel oil sulphur limits will result in significant costs both to our business and the business of our customers," the submission said. New Zealand's domestic fleet, including inter-island ferries, are not yet required to use the low sulphur fuel.Mobil said compliant fuels were likely to trade at a higher price than high-sulphur marine fuel oil, which would have cost repercussions for the domestic marine industry. "There may also be other, broader economic impacts for New Zealand." Ministry of Transport environment, emissions and adaptation manager Glen-Marie Burns said before New Zealand could ratify the treaty, they must make changes to domestic legislation. "We estimated it would take approximately 18 months to align our domestic legislation ..." They advised Cabinet that November 2021 was "the earliest timeframe" that they could accede. Annex VI obligations would come into effect three months later.
Global energy investment expected to tumble 20% in 2020 due to COVID crisis: IEA - (Reuters) - Global energy investment is expected to plunge by around 20% or $400 billion in 2020, its biggest fall on record, because of the new coronavirus outbreak, the International Energy Agency (IEA) said on Wednesday. The Paris-based IEA said this could have serious repercussions for energy security and the transition to clean energy as the global economy recovers from the pandemic. Governments are easing restrictions put in place to curb the spread of the virus after the confinement of around 3 billion people brought the global economy to a near standstill. At the start of the year, global energy investment was on track for a 2% increase in 2020, its biggest growth in six years, the IEA said. A total of $1.8 trillion was invested in the sector in 2019. “The historic plunge in global energy investment is deeply troubling for many reasons,” said Fatih Birol, the IEA’s Executive Director. “It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers,” he said, adding that it could hurt the move towards cleaner energies. The IEA said revenues for governments and industry are set to plummet by over $1 trillion in 2020 due to the fall in energy demand and lower prices. Global energy companies have cut investments and shelved projects to shore up their finances due to the crisis. The IEA said higher debts after the crisis will pose lasting risks to investments. Investment in oil and gas is expected to fall by almost one-third. The IEA said if investment in oil stays at 2020 levels, it would reduce the level of global supply in 2025 by almost 9 million barrels a day, a clear risk of tighter markets if demand moves back to pre-crisis levels.
The stealth peak in world oil production - Monthly fluctuations will make it difficult to pinpoint a peak until long after it occurs. But, let's note the difference between world output in November 2018 which was 84.5 million barrels per day (mbpd) versus December 2019 which was 83.2 mbpd when the world economy was supposedly still in high gear. (These numbers are for crude plus lease condensate which is the definition of oil on major oil exchanges.) Between these two dates monthly oil production was occasionally lower than December 2019, but never higher than November 2018. Does this mean oil production has reached an all-time peak? Recent developments tend to suggest an affirmative answer. With the dramatic drop in both oil consumption and oil prices since the onset of the pandemic, the oil industry is now flat on its back. Capital spending on new projects has been slashed drastically in the wake of these developments. Revenues are dropping as oil production is being shut in awaiting higher prices and as many firms file for bankruptcy. To believe that the world will soon return to and exceed its November 2018 oil consumption, one must believe in a quick resolution to the current downturn and the infections that led to it and also that confidence among consumers worldwide is still high. Germany re-opened many of its retail stores about a month ago, but the flood of consumers seeking to satisfy pent-up demand did not appear. It is important to note that this is happening in a country with a substantial social safety net in which the official unemployment rate is 5.8 percent as of April 30. In the United States, the world's largest economy, the official unemployment rate stands at 14.7 percent. Is there any reason to believe that Americans will be more eager than Germans to flock to retail stores as lockdowns are lifted in the United States? Last week the Chinese government dropped the long-time practice of targeting economic growth saying it won't announce a target for this year. Could it be that the Chinese economy won't grow at all in 2020? Zero growth is not exactly an exhilarating target for the government to announce. If consumers worldwide are reluctant to spend, then the world economy will continue to slump. And, spending will likely not reach the pace it did in 2019 until there is solid job growth and a feeling of job security among many more people. Meanwhile, low oil prices will make it difficult for the world's oil companies to justify spending on new supplies even as the natural production decline for existing wells takes its toll on production capacity.
Russia sees global oil market balancing in June-July - (Reuters) - Russia’s energy ministry sees global oil demand and supply balancing in the next two months, it said on its Twitter feed on Monday, citing the minister Alexander Novak. Leading oil producers are due to hold an online conference in around two weeks on how to further police joint efforts to steady a global oil market hammered by overproduction and a demand drop linked to the coronavirus pandemic. “For now, the surplus stands at around 7-12 million barrels per day. The energy ministry is counting on the market to balance out in June - July thanks to a consumption increase,” the ministry quoted Novak as saying at a state council meeting on energy. The minister also said supply has already dropped by 14 million to 15 million barrels per day thanks to the OPEC+ deal and output cuts in other countries. OPEC+ - a group made up of the Organization of the Petroleum Exporting Countries and other leading oil producers including Russia - agreed last month to cut their combined output by almost 10 million bpd, or roughly 10% of global production. They also expected other large oil producers, such as the United States, Canada and Norway, to make additional cuts. The RIA news agency, citing an unnamed source familiar with the minister’s speech at the state council meeting, reported that the energy ministry considers non-OPEC+ countries to have already cut output by 3.5 million to 4 million bpd. RIA also said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. The energy ministry declined to comment on output volumes. Sources have told Reuters that OPEC and its allies want to maintain existing oil supply cuts beyond June, when the OPEC+ group is due to meet next.
Oil is on track for its best month ever after rebound, but traders say it's 'not out of the woods' - In the last two months, oil has hit two very different first-of-its kind milestones. In April West Texas Intermediate, the U.S. oil benchmark, plunged below zero and into negative territory for the first time on record. Meanwhile May is shaping up to be WTI's best month ever, going back to the contract's inception in 1983—an astonishing turnaround month-on-month. Improvements on both the demand and supply side of the equation have pushed prices higher. Data shows that people in the U.S. and China are starting to hit the road again, while producers around the globe have cut output at record rates in an effort to prop up prices. The contract has jumped more than 70% in May and posted four straight weeks of gains, but some traders warn that the near-term outlook for oil remains uncertain, and that prices could head back into the $20s after settling around $33 on Friday. Additionally, part of WTI's blistering rally this month is due to the historic low from which it bounced. Prices are still about 50% below January's high of $65.65, significantly cutting into profits for energy companies, which are often saddled with debt. A number of U.S. energy companies have already filed for bankruptcy protection, including Whiting Petroleum, which was once a large player in the Bakken region. If prices stay at depressed levels, there could be more casualties. Still, the market has shown signs of rebalancing itself, and analysts say that if demand continues to improve and producers keep wells shut-in, the worst could be over for oil. "The oil market rebalancing continues to gather speed, driven by both supply and demand improvements ... These improvements are taking out the risk of a sharp pull-back in prices although we re-iterate our view that the rebalancing will take time," Goldman Sachs said in a recent note to clients. "We believe that the next stage of the oil market rebalancing will be one of range-bound spot prices with the most notable shifts being a decline in implied volatility as well as a continued flattening of the forward curve without long-dated prices rising yet," the firm added. While demand for petroleum products fell off a cliff in April, the outlook is improving as economies around the world begin to reopen. Raymond James, which has been tracking shelter-in-place orders, said that of the 3.9 billion people worldwide who have been under lockdown at some point since January, 3.7 billion, or 95%, have experienced some sort of reopening. Chinese demand for oil in April rebounded to 89% of what it was a year earlier, according to IHS Markit, and the firm expects May demand to be 92% of 2019′s level. During February's low, demand in China, the world's largest oil importer, fell to just 40% compared to a year earlier. In the U.S., all 50 states have begun the reopening process to varying degrees, which means people are once again driving. Data from the Energy Information Administration has shown an uptick in gasoline demand, although there's still a way to go before the pre-coronavirus levels are reached.
Oil prices climb as faith in supply cuts grows - Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up as coronavirus lockdowns ease. Brent crude futures were up 29 cents, or 0.8%, at $35.82 per barrel. West Texas Intermediate crude futures gained 2.3%, or 74 cents, to trade at $3402. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday. "The current recovery in oil prices has primarily been driven by supply considerations. The world's swing producers, the OPEC+ group, is more than living up to expectations to adhere to the 9.7 million barrels per day (bpd), or perhaps even bigger, self-imposed and co-ordinated output restraint," said oil broker PVM's Tamas Varga. "As lockdown restrictions are being eased, the demand side of the equation also provides support." The market was buoyed by Russia saying that its oil output had dropped close to its target of 8.5 million bpd for May and June under the supply deal agreed by major producers (OPEC+). Russia's energy ministry on Monday quoted minister Alexander Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July. OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year. The world's major producers, including Saudi Arabia and Russia, agreed in April to cut their collective output by nearly 10 million bpd for May and June. Data from energy services business Baker Hughes, meanwhile, showed that the U.S. rig count hit a record low of 318 in the week to May 22, also indicating lower future output.
OPEC daily basket price increases to 29.75 USD per barrel (Xinhua) -- The Organization of the Petroleum Exporting Countries (OPEC) daily basket price increased to 29.75 U.S. dollars a barrel on Tuesday, compared with 28.06 dollars last Friday, according to OPEC Secretariat calculations released on Wednesday. Also known as the OPEC reference basket of crude oil, the OPEC basket, a weighted average of oil prices from different OPEC members around the world, is used as an important benchmark for crude oil prices.
Russian minister, oil majors discuss output cut extension: sources - (Reuters) - Russian Energy Minister Alexander Novak met with domestic major oil companies on Tuesday to discuss the implementation of global oil production curbs and the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters. The meeting is a further sign that Moscow is committed to supporting any future joint steps to stabilise oil markets for as long as may be required, after slashing its production to close to its quota under the global deal. A source, familiar with the meetings detail, said no decision was made. “Novak has just asked for opinions, whether to extend (the deal) or not. The opinions were divided almost equally,” the source said. He added that it was decided to analyse the market, wait for demand to improve when the planes, grounded due to the coronavirus-combat measures, start to fly again. Kommersant daily, citing three sources in oil industry, said Russia may keep the current level of cuts until September. The Kremlin said on Tuesday that the OPEC+ deal participants will look at how the situation on global oil markets develops before taking any policy decisions if additional efforts were needed to support the energy market and address overproduction. Kremlin spokesman Dmitry Peskov also said the deal on global oil production cuts agreed last month had definitely proved effective and helped ward off negative scenarios on oil markets.
Oil prices climb, bolstered by ongoing supply curbs - (Reuters) - Oil prices rose on Tuesday, supported by signs that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing. Brent crude LCOc1 futures gained 64 cents, or 1.8%, to settle at $36.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose $1.10, or 3.3%, to settle at $34.35 a barrel. The Organization of the Petroleum Exporting Countries and producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to support prices at a time when coronavirus pandemic quarantines have slashed fuel demand. Russian Energy Minister Alexander Novak was due to meet oil producers on Tuesday to discuss the possible extension of current cuts beyond June, sources familiar with the plans told Reuters. Some other nations including major Gulf producers Saudi Arabia, United Arab Emirates and Kuwait have already pledged to go beyond their commitments. The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June. “All the talk about balance in a couple of months seems to be supportive,” said Phil Flynn, senior analyst at Price Futures Group. On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help cut a global surplus of about 7 million to 12 million bpd by June or July. “Global crude supply in June will likely be down 12 million bpd from March levels,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
Oil drops more than 4% in second negative session in three on U.S.-China tensions Oil futures tumbled on Wednesday after U.S. President Donald Trump said he was working on a strong response to China's proposed security law in Hong Kong and as some traders doubted Russia's commitment to deep production cuts. Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed during a telephone call on further "close coordination" on oil output restrictions, the Kremlin said. Still, many felt Russia was sending mixed signals ahead of the meeting in less than two weeks between the Organization of the Petroleum Exporting Countries and its allies. The group known as OPEC+ is cutting output by nearly 10 million barrels per day (bpd) in May and June. "It sounds great on paper, but the market is holding back excitement until we get a few more details about whether there will be cuts, how many barrels will be cut, and the length of the cuts," said Phil Flynn, senior analyst at Price Futures Group. Brent crude fell $1.43, or 3.95%, to settle at $34.74 a barrel, while West Texas Intermediate crude settled $1.54, or 4.48%, lower at $32.81 per barrel. Meanwhile, tensions between the U.S. and China continued to rise after China announced plans to impose new national security legislation on Hong Kong, prompting protests in the street. U.S. Secretary of State Mike Pompeo said he had certified that Hong Kong no longer warrants special treatment under U.S. law as it did when it was under British rule, a blow to its status as a major financial hub. Gloomy forecasts over the economic impact of the pandemic also weighed on crude. Economists estimate another 2 million Americans filed initial applications for unemployment insurance last week. The U.S. Labor Department will report on Thursday. The euro zone economy will probably shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning a the outcome would be between medium and severe. In another sign of weak fuel demand, Japan's refineries operated at only 56.1% of capacity last week, the lowest since at least 2005.
Oil prices take a 4% drop over tensions with China and worries about Russia – After climbing slowly for the past week, U.S. oil futures on Wednesday took a 4% drop and analysts blamed it on growing tensions between the U.S. and China. July West Texas Intermediate oil fell $1.54 or 4.5% and settled at $32.81 a barrel in trading on the New York Mercantile Exchange. Front-month July Brent crude lost $1.43 or about 4% at $34.74 a barrel on ICE Futures Europe. Some blamed the fall on reports that Russia favored easing up on supply cuts as planned in July. Market Watch reported that Moscow wants to start easing the cuts in keeping with the terms of the output curbs agreed to by the Organization of the Petroleum Exporting Countries and its allies earlier this year. “The July target is in line with the current OPEC+ deal, which has a record-breaking combined production cut of 9.7 [million barrels per day] among participants,” said Robbie Fraser, senior commodity analyst at Schneider Electric. “However, some in the group are likely to voice support for extending cuts beyond July—particularly if the market remains clearly oversupplied amid lackluster summer driving demand,” he said in a daily note. Traders also kept an eye on rising tensions in Hong Kong as China looks to impose new security laws that would end the country’s autonomy, and worsening relations between the U.S. and China. Secretary of State Mike Pompeo announced Wednesday in a tweet that he told Congress that Hong Kong is no longer autonomous from China. The announcement could pave the way for the Trump administration revoke its special treatment—it is exempt from tariffs levied on Chinese imports. “Traders are concerned that expected recovery in [energy] demand may be delayed if U.S.—China—Hong Kong political tension grows, and hence is weighing in on prices,” Manish Raj, chief financial officer at Velandera Energy, told MarketWatch. “This timing impact is seen in [the] futures curve, whereby near months have declined while outer month contracts are holding steady.”
Oil drops as surprise U.S. stock build douses demand recovery hopes - Oil prices slid for a second consecutive session on Thursday as U.S. industry data showed a steep and surprising build-up in crude stockpiles, dampening hopes of a smooth demand recovery as the world begins to ease its way out of coronavirus lockdowns. The decline extended losses from Wednesday on uncertainty about Russia's commitment to deep oil production cuts in the lead-up to a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, dubbed OPEC+. U.S. West Texas Intermediate (WTI) crude futures were down 4.4%, or $1.44 at $31.37 a barrel at 0402 GMT after slipping as much as 5% to a low of $31.14 earlier in the session. Brent crude futures dropped 3.2%, or $1.10 to $33.64 per barrel. "A surprise to consensus API (American Petroleum Institute)inventory build (data) and fear of Russia turning up production weighs on oil prices," said Stephen Innes, chief global markets strategist at AxiCorp. "As is often the case during a run-up up to an OPEC+ meeting, the focus is squarely on Russia's commitment and understandably so as historically they have been the laggard within the OPEC+." Data from U.S. industry group API showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts' expectations for a draw of 1.9 million barrels. Gasoline stocks rose by 1.1 million barrels, more than 10 times the build analysts had expected, and stocks of diesel and heating oil rose by 6.9 million barrels, nearly four times as much as anticipated. "It just indicates that demand recovery is progressing but it's not strong enough yet to be really self-sustaining," National Australia Bank's head of commodity research, Lachlan Shaw said. The market will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API. With WTI holding above $30, OPEC+ will be closely watching to see whether U.S. oil shale oil producers, who have breakeven prices in the high $20 and low $30 dollar range, step up production.
WTI Slides After Official Data Confirms Big Crude Build - Oil prices rebounded (after a phone call between Saudi Arabia’s Crown Prince and Russia on Wednesday was described by The Kremline as positive) from their ugly reaction to a surprising (and large) crude inventory build reported by API but remained lower ahead of the DOE data on the heels of investor anxiety over Russia's willingness to extend production cuts.“Crude oil looks like it has reached a consolidation stage,” said Ole Hansen, head of commodities strategy at Saxo Bank.“The global economic outlook and risk of new pockets of Covid-19 outbreaks will dictate the speed of demand recovery.”Things could escalate quickly if API's surge in stocks is echoed by the EIA. Crude inventories have recently posted declines, something that was considered a sign of demand recovery in the oil market and extrapolated to match a rebound in the economy. Today’s EIA data is crucial in determining whether that rising crude demand continues or if it was just a fluke. DOE:
- Crude +7.928mm (-2.32mm exp)
- Cushing -3.395mm
- Gasoline -724k (-675k exp)
- Distillates +5.495mm (+2.55mm exp)
Official DOE data confirmed API's surprise surge in crude stocks with a 7.93mm build (and distillates saw their 8th weekly build in a row)... As rig counts collapse near series lows, US crude production continues to plunge...
Oil rises as higher U.S. refinery rates offsets surprise crude build - (Reuters) - Oil futures rose about 2% on Thursday as a steady improvement in U.S. refining activity offset a surprise build in crude and diesel inventories and on worries that China’s new Hong Kong security law could result in trade sanctions. Brent for July rose 55 cents, or 1.6%, to settle at $35.29 a barrel on its second to last day as the front-month. U.S. West Texas Intermediate (WTI) crude rose 90 cents, or 2.7%, to settle at $33.71. That move in U.S. crude narrowed Brent’s premium over WTI to its lowest since mid-April. U.S. crude inventories rose 7.9 million barrels last week, exceeding expectations, due to a big increase in imports from Saudi Arabia, the Energy Information Administration (EIA) said. The EIA’s report, however, also showed refiners boosted output and gasoline stockpiles fell unexpectedly, while crude inventories at the U.S. Cushing storage hub in Oklahoma fell 3.4 million barrels. [EIA/S] The market initially fell due to the big increase in crude stocks, but switched into positive territory when it saw the drawdown at the Cushing delivery point for WTI, said Bob Yawger, director of energy futures at Mizuho in New York. Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely. Markets are also concerned Washington could slap trade sanctions on China due to Beijing’s move to impose a new security law on Hong Kong. Uncertainty about Russia’s commitment to continuing deep output cuts kept the rally in check. Saudi Arabia and other OPEC producers are considering an extension of record output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
Oil prices fall as U.S. fuel demand remains weak -- Oil prices edged lower on Friday after U.S. inventory data showed lackluster fuel demand in the world's largest oil consumer while worsening U.S.-China tensions weighed on global financial markets. Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT and U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries. "The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up," OCBC economist Howie Lee said. "Beyond the short term, the bullish momentum still looks rather intact." Thursday's data from the Energy Information Administration showed that U.S.crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said. "Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping," RBC Capital Markets analyst Christopher Louney said in a note. Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June. Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.
U.S. oil futures up 88% in May, biggest monthly rise on record - U.S. oil futures reversed course to finish higher Friday, getting a boost as traders eyed developments in the U.S. relationship with China, and as another drop in U.S. oil rigs suggested further domestic production declines. Oil prices soared after a spokesman for President Donald Trump said that despite rising tensions, Trump was not pulling out of the U.S.-China phase one trade deal,” said Phil Flynn, senior market analyst at The Price Futures Group, telling MarketWatch that the news “caused oil traders to cover.” News on Trump’s press conference came out after oil futures settled. Trump said the U.S. would take steps to sanction Chinese officials over Beijing’s plans to impose new security laws that could undercut Hong Kong’s autonomy. He did not, however, discuss reneging on the U.S. trade deal with China. West Texas Intermediate crude for July delivery rose $1.78, or 5.3%, to settle at $35.49 a barrel on the New York Mercantile Exchange. Front-month U.S. benchmark WTI futures rose 88.4% for May, for its best month on record, based on data going back to 1983, according to Dow Jones Market Data Global benchmark Brent saw its July contract tacked on 4 cents, or 0.1%, to end at $35.33 a barrel on ICE Futures Europe Friday. It expired at the end of the session. Front-month prices rose 39.8% for the month, which was the strongest monthly rise since March 1999. The new front-month August contract settled at $37.84, up $1.81, or 5%, Friday. The move higher for U.S. prices started right after the Baker Hughes report on U.S. drilling rigs, and “prices began to gain momentum as futures hit new session highs, broke above Thursday’s highs, and ultimately traded to new highs for the week into the primary session close,” said Tyler Richey, co-editor at Sevens Report Research. Baker Hughes BKR, +0.73% on Friday reported that the number of active U.S. rigs drilling for oil declined by 15 to 222 this week. The total active U.S. rig count, meanwhile, also fell by 17 to 301, according to Baker Hughes.
Oil jumps nearly 90% in May to $35, registering best month on record - Oil jumped more than 5% on Friday, the last trading day of the month, capping off its best month in history as an uptick in demand as well as record supply cuts pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, finished May with a gain of 88%. To put the number in context, WTI's second best month on record was Sept. 1990, when it gained 44.6%. But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract's imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed. Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019's number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma — the main delivery point for WTI — decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet. On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts. In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March's record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output. The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting. On Friday the contract gained $1.78, or 5.28%, to settle at $35.49 per barrel. Earlier in the session it traded as low as $32.36 per barrel as geopolitical tensions weighed on sentiment. International benchmark Brent crude gained 4 cents, or 0.11%, to settle at $35.33 per barrel. For the month Brent gained 39.81%, for its best month since 1999. .
Imprisoned Saudi Princess Basmah hoped she would be granted mercy in Ramadan, but her cousin Mohammed bin Salman has turned a blind eye -- Fourteen months after she was abducted, jailed, and accused of trying to flee Saudi Arabia, Princess Basmah bint Saud bin Abdulaziz al-Saud hoped she would be freed this Ramadan, but her pleas have fallen on deaf ears.Every year the king, Salman bin Abdulaziz Al Saud, issues pardons for hundreds of prisoners as a gesture of goodwill during the Islamic holy month, which this year ran from April 23 to May 23.On April 16, the princess broke her 13-month silence to reveal on Twitter that she was in jail, and begged her uncle King Salman and cousin Crown Prince Mohammed bin Salman for freedom. "I am beseeching my uncle ... and my cousin ... to review my case, and to release me as I have done no wrong. My current health status is VERY critical," she said in a series of tweets.Those tweets were deleted shortly afterward, and all her communications from prison were cut. Her office reposted the tweets on April 27.Basmah and her 28-year-old daughter, Suhoud al-Sharif, wereabducted at their apartment building in Jeddah on March 1, 2019, and detained shortly after.They were later taken to the high-security al-Ha'ir prison, where they have remained since. Basmah was initially charged with using a fake passport and suspected of trying to flee the country. The charge was dropped in May 2019, but she remains in prison.
Gulf States force India and other South Asian states to repatriate impoverished migrant workers - Bowing to pressure from the sheikhs and oligarchs who rule the Arabian Peninsula’s Gulf States, India and other South Asian countries are being forced to repatriate millions of impoverished migrant workers whose labour is no longer needed. All six Gulf Cooperation Council (GCC) members—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE)—have moved to dramatically slash expenditures and “overhead” after the COVID-19 pandemic triggered global economic distress, including a Saudi-initiated oil-price war. The consequent collapse in oil prices has left gaping holes in their state budgets, even as tourism and other sources of revenue dry up. The result has been the mass layoff of millions of migrant workers. Those fortunate enough not to have lost their jobs have often been forced to accept huge wage cuts. A migrant worker in Saudi Arabia working as a chef for one of the country’s many princes told the WSWS that his wage was cut in half after the COVID-19 crisis erupted. Prior to the outbreak of the pandemic there were 23 million or more migrant workers in the Gulf States, from South Asia, the Philippines, Egypt, Palestine, elsewhere in the Middle East, and East Africa. Constituting more than half of the Gulf States’ total workforce, the migrant workers have long filled construction and numerous other menial and low-paid jobs. Millions of women serve as domestics and health care workers. The migrant workers are ensnared in the kafala system, which ties a worker’s employment contract to their right to be in the country. This has created a super-exploited workforce comprised of people who lack any citizenship rights in countries ruled by absolute monarchs, and who are under constant threaten of being ordered to go home should they be fired or laid off or when their contract expires. However, the COVID-19 pandemic, the imposition of international travel bans and state-lockdowns, and the sudden loss of their employment mean that the newly jobless migrant workers facing expulsion have lacked the means or right to return home. As the Gulf States oligarchs have refused to provide the “disposable” migrant workers with financial support, they have become increasingly desperate. This has made the ruling elite, ever fearful of social opposition, all the more determined to expel them. Scapegoating the migrant workers also serves as a mean of deflecting mounting discontent among the officially-recognized “native” population of the Gulf States.
Historic Opportunity - Israel Reveals Date Of Planned West Bank Annexation --The head of the Governmental Coalition in Israel, Mickey Zohar, revealed that the measures to legislate the process of imposing Israeli sovereignty on all Jewish residential communities in the West Bank will begin in early July. The Likud MP said in a radio interview on Tuesday, that the government will approve the draft law on this, and then it will be submitted to the Knesset for approval, expecting that these measures will continue for only a few weeks. Representative Zohar announced that the concerned authorities are currently working on mapping in order to reach understandings with the American administration about the areas that Israel will impose their sovereignty over in the West Bank.In response to a question about whether the White House would insist on the establishment of a Palestinian state in exchange for the annexation, the head of the government coalition said: “He opposes this demand, expressing his conviction that Israel will not give up the annexation in any case.” He stressed that the government would also not agree to freezing construction work in isolated residential compounds in the occupied West Bank, but was ready to freeze construction in places not close to those that would be imposed on Israeli sovereignty.Netanyahu: "we don't intend to change" July deadline for annexation of West Bank territory. ‘We have historic opportunity, which hasn't existed since 1948, to apply sovereignty...in Judea & Samaria""It is a big opportunity & we will not let it pass by"https://t.co/RENO36aNer— Ben White (@benabyad) May 26, 2020Haaretz presents Monday remarks of PM Netanyahu as follows: Israel will not miss a "historic opportunity" to extend its sovereignty to parts of the West Bank, Prime Minister Benjamin Netanyahu said on Monday, calling the move one of his new government's top tasks. Netanyahu has pledged to put Jewish settlements and the Jordan Valley in the West Bank under Israeli sovereignty. He has set July 1 as a starting date for cabinet discussions on the issue, which has also raised alarm within the European Union.
Netanyahu becomes the first Israeli prime minister to stand trial over corruption and fraud cases -- The trial against Israeli Prime Minister Benjamin Netanyahu began in Jerusalem on Sunday, marking the first time in Israel's history that a sitting prime minister has ever faced trial. The 70-year-old began his fifth term as prime minister this month as part of a power-sharing agreement with his rival Benny Gantz after a series of back-to-back elections failed to result in a coalition government over the past year. Netanyahu has refused to step down from power despite growing calls for his resignation and dwindling support from the Israeli public over his legal woes. Last year, Netanyahu was indicted on bribery, fraud, and breach of trust charges as part of three separate corruption cases:"Case 1,000" refers to accusations that Netanyahu received expensive gifts from wealthy business magnates in exchange for favors. "Case 2,000" refers to allegations that Netanyahu promoted a particular newspaper in exchange for more positive coverage. And "Case 4,000" alleges that Netanyahu granted regulatory benefits to a major Israeli telecommunications company in exchange for favorable media coverage.The maximum sentence for bribery is 10 years in prison, according to Haaretz. Netanyahu is the first Israeli prime minister to be indicted while in office. Previous leaders who faced similar situations resigned before charges were even handed down.
Trump Slams Libya "Foreign Interference" & Urges "Rapid De-escalation" In Erdogan Call - After weeks of military gains by Libya’s Government of National Accord (GNA), President Trump has called for a deescalation during his phone call with Turkey’s President Erdogan. Turkey is the GNA’s only foreign ally.This is bound to once again raise questions about the US position. Nominally the US is backing the GNA, but at times Trump has expressed support for their enemy, the Libyan National Army (LNA). The deescalation would be seen as bailing out the LNA from recent losses. “President Trump reiterated concern over worsening foreign interference in Libya and the need for rapid de-escalation,” White House spokesman Judd Deere said in a statement.The LNA has a lot of foreign allies, from France and Russia to virtually the whole list of Gulf Arab states. LNA leader Khalifa Hafter, was a CIA asset in the past, and the US has criticized Russia for being too close with him, despite their own long history of backing him. Reuters reports:As the LNA has promised to respond with a massive air campaign, diplomats have warned of the risk of a new round of escalation with the warring sides’ external backers pouring in new weaponry.Turkey “will not bow to threats by Haftar or anyone else,” Turkey’s presidential spokesman Ibrahim Kalin said separately in an interview on NTV.LNA General Commander Field Marshal Khalifa Haftar: Every Turkish solider, mercenary sent by Erdogan to Libya and every traitor who has allowed the occupier to return is a target of our armed forces. Do not show them any mercy. #Libya #LibyaReview pic.twitter.com/ywJNeGfvkx— Libya Review (@LibyaReview) May 23, 2020It’s not clear where Turkey is going with this, as they mostly want maritime rights and a military base.Those are likely secured already, but the GNA probably feels very little need to step down in the face of recent gains.
Chinese provincial official urges shut down of CNPCs Dalian refinery (Reuters) - A vice governor in China’s northeastern Liaoning province appealed to the central government to shut down Dalian Petrochemical Corp, at the annual national parliament conference (NPC), according to an NPC report issued on Monday. A subsidiary of China National Petroleum Corp (CNPC), the 410,000 barrels-per-day (bpd) plant is CNPC’s biggest refinery and one of the oldest in the country. It is also China’s largest processor of Russia’s East Siberia Pacific Ocean blend crude transferred via pipeline. The refinery has had several severe accidents in the past decade, including an oil spill in 2010, an explosion in 2013 and a fire in 2017, stoking safety and pollution concerns as it is located less than 10 kilometres from the port city of Dalian. “I sincerely appealed (to) the industrial ministry and state-owned assets supervision and administration commission to coordinate with CNPC to shut down Dalian refinery as soon as possible,” said Chen Xiangqun, a vice governor at Liaoning, according to the NPC report. Beijing had vowed in 2017, soon after the fire at Dalian refinery, to relocate all small- and medium-sized chemical plants to planned chemical parks and out of urban areas by 2020, and move the larger plants by 2025. According to the petrochemical industry layout, CNPC’s Dalian refinery was due to move to Changxing island, where the 400,000 bpd Hengli Petrochemical is located. But there has been no update on its relocation since the layout was jointly issued by the state planner and industrial ministry in 2018.
China's hermit investors fill doubled oil storage with crude bet – (Reuters) - Chinese financial investors betting on a rebound in oil prices are filling commercial storage tanks held by the Shanghai futures exchange just as fast as the exchange can find them. Despite a more than doubling of storage capacity over the past six weeks to 57 million barrels, with tanks sourced from state and private refiners, nearly all existing storage is set to be filled by end-June, two industry sources with knowledge of deliveries said. The flood of purchases has come from companies little-known to the oil industry which have been bidding up Shanghai futures , China’s only oil futures contract, since early April when global oil prices slumped as COVID-19 hammered demand. “We call them ‘hermit’ investors,” said a state oil official whose firm recently delivered cargoes into the contract. “They are hedge funds backed by rich individuals, trading affiliates of brokerages.” The buying pushed Shanghai crude futures prices above global benchmark Brent, encouraging state companies like Sinopec, PetroChina and Zhenhua Oil to deliver Middle East crude into the contract, the sources said. Between late April and the end of June, some 50 million barrels of oil valued at roughly $1.8 billion — equivalent to five days of China’s total purchases — are expected to be pumped into a dozen delivery points managed by International Energy Exchange (INE), the sources said. Most of the oil is Iraq’s Basra Light and Oman crude, they said. “With deliveries started in late April and based on our tracking, the 50 million barrels’ space will be more or less filled towards the end of June, taking in mostly April and May loading cargoes,” said the second state oil official. INE did not respond to a request for comment. The Shanghai Futures Exchange, which owns the INE, declined to comment on storage or buyers, saying: “This involves trade secrets of the participants, and is not public information.” Chinese oil stockpiling is normally driven by state giants which sweep up cargoes to fill the government’s strategic petroleum reserves or commercial reserves held by refiners. However, in the current downturn, stockpiling has been driven by financial investors who believe oil is set to bounce strongly off its lows, said the second official.
