oil prices again ended little changed this week after trading in a fairly narrow range, as a big drop in US crude supplies was offset by an OPEC announcement that they'd begin increasing production in August...after slipping 0.3% to $40.55 a barrel as improving economic data was offset by rising coronavirus cases last week, the contract price of US light sweet crude for August delivery opened 20 cents lower on Monday on a Sunday WHO report of a record daily increase in global coronavirus cases and drifted lower to end down 45 cents at $40.10 a barrel as traders awaited an OPEC meeting that was expected to recommend an increase in oil output...oil prices were down another 2% in early trading on Tuesday on worries that new clampdowns on businesses to stem surging coronavirus cases would threaten the nascent recovery in fuel demand, but recovered to end 19 cents higher at $40.29 a barrel as a report showed that OPEC and its allies had cut production by more than they had agreed to in June...oil prices were expected to plunge on Wednesday as the OPEC+ alliance was poised to boost their oil output by 2 million barrels per day, but instead rose more than 2% on a surprise draw from U.S. crude and product inventories, and then jumped to a four-month high after Trump moved to diffuse building tensions with China, ending 91 cents higher at $41.20 a barrel...but the finalization of the OPEC+ agreement to begin unwinding their deep production cuts hit prices on Thursday, as they fell 45 cents to $40.75 a barrel as the Saudi energy minister said the kingdom was fed up of volunteering and taking on others’ burdens...oil prices slipped another 16 cents to settle at $40.59 per barrel on Friday, as the US had reported a new daily record of new COVID-19 cases on Thursday and as Spain and Australia reported their steepest daily jumps in months, but still managed to hang on to a gain of 4 cents, or barely 0.1% for the week....
natural gas prices, on the other hand, moved lower this week on moderating temperature forecasts and rising natural gas output...after riising 4.1% to $1.805 per mmBTU last week on forecasts for much warmer than normal weather through the end of July, the contract price of natural gas for August delivery fell 6.6 cents, or 3.7% on Monday on rising natural gas output and forecasts for lower air conditioning demand over the next two weeks than had been previously expected...but prices recovered seven-tenths of a cent on a return of hot weather on Tuesday, and then rose 3.2 cents to $1.778 per mmBTU on wednesday as an increase in pipeline exports to Canada and Mexico and increased AC demand kept the amount of gas going into storage lower than usual for this time of year....but natural gas prices still fell 5.5 cents or over 3% to a two-week low despite a bullish storage report on Thursday as gas output rose slowly while LNG exports held near the lowest level since early 2018...gas prices slipped another half-cent on Friday to end the week at $1.718 per mmBTU on forecasts for less hot weather over the next two weeks than had been expected and thus ended the week 4.8% lower than the prior Friday's close..
the natural gas storage report from the EIA for the week ending July 10th indicated that the quantity of natural gas held in underground storage in the US rose by 45 billion cubic feet to 3,178 billion cubic feet by the end of the week, which left our gas supplies 663 billion cubic feet, or 26.4% greater than the 2,515 billion cubic feet that were in storage on July 10th of last year, and 436 billion cubic feet, or 15.9% above the five-year average of 2,742 billion cubic feet of natural gas that has been in storage as of the 10th of July in recent years....the 45 billion cubic feet that were added to US natural gas storage this week was less than the average 50 billion cubic feet increase that was forecast by analysts polled by S&P Global Platts, and it was well less than the 67 billion cubic feet addition of natural gas to storage during the corresponding week of 2019, and it was also less than the average of 63 billion cubic feet of natural gas that has been added to natural gas storage during the same week over the past 5 years...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending July 10th indicated that because of a near record drop in our oil imports, we had to pull oil out of our stored commercial supplies of crude oil for the 2nd time in six weeks, and for the 13th time in the past forty-four weeks....our imports of crude oil fell by an average of 1,827,000 barrels per day to an average of 5,567,000 barrels per day, after rising by an average of 1,425,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 156,000 barrels per day to an average of 2,543,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,024,000 barrels of per day during the week ending July 10th, 1,983,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 11,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,024,000 barrels per day during this reporting week..
meanwhile, US oil refineries reported they were processing 14,309,000 barrels of crude per day during the week ending July 10th, 36,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 1,052,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US.....so based on that reported & estimated data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 768,000 barrels per day more than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (-768,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the average daily supply of oil and the data for the average daily 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 usually 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 fell to an average of 6,368,000 barrels per day last week, which was 10.2% less than the 7,094,000 barrel per day average that we were importing over the same four-week period last year....the 1,052,000 barrel per day net reduction of our total crude inventories came as 1,070,000 barrels per day were being pulled out of our commercially available stocks of crude oil while 18,000 barrels per day were being added to our Strategic Petroleum Reserve....this week's crude oil production was reported to be unchanged at 11,000,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states fell by 100,000 barrels per day to 10,500,000 barrels per day because a 59,000 barrel per day increase in Alaska's oil production to 457,000 barrels per day was enough to add 100,000 barrels per day to the rounded national total....last year's US crude oil production for the week ending July 12th was rounded to 12,000,000 barrels per day, so this reporting week's rounded oil production figure was about 8.3% below that of a year ago, yet still 30.5% 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 78.1% of their capacity while using 14,309,000 barrels of crude per day during the week ending July 10th, up from 77.5% of capacity during the prior week, but excluding the 2005, 2008, and 2017 hurricane-related refinery interruptions, still one of the lowest refinery utilization rates of the last thirty years...hence, the 14,309,000 barrels per day of oil that were refined this week were still 17.1% fewer barrels than the 17,267,000 barrels of crude that were being processed daily during the week ending July 12th, 2019, when US refineries were operating at 94.4% of capacity....
even with the small decrease in the amount of oil being refined, gasoline output from our refineries was still higher, increasing by 50,000 barrels per day to 8,095,000 barrels per day during the week ending July 10th, after our refineries' gasoline output had increased by 140,000 barrels per day over the prior week... however, since our gasoline production is still recovering from a multi-year low, this week's gasoline output was still 7.7% lower than the 9,855,000 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) increased by 104,000 barrels per day to 4,860,000 barrels per day, after our distillates output had increased by 122,000 barrels per day over the prior week...but even after this week's increase in distillates output, our distillates' production was still 9.3% less than the 5,361,000 barrels of distillates per day that were being produced during the week ending July 12th, 2019....
even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 8th time in 12 weeks and for the 16th time in 24 weeks, falling by 3,147,000 barrels to 248,535,000 barrels during the week ending July 10th, after our gasoline supplies had decreased by 4,839,000 barrels over the prior week...our gasoline supplies decreased this week even though the amount of gasoline supplied to US markets decreased by 118,000 barrels per day to 8,648,000 barrels per day because our imports of gasoline fell by 236,000 barrels per day to 493,000 barrels per day and because our exports of gasoline rose by 77,000 barrels per day to 601,000 barrels per day....but even after this week's inventory decrease, our gasoline supplies were still 6.8% higher than last July 12th's gasoline inventories of 232,752,000 barrels, and roughly 7% above the five year average of our gasoline supplies for this time of the year...
likewise, even with the increase in our distillates production, our supplies of distillate fuels decreased for the fourteenth time in 26 weeks and for the 24th time in 41 weeks, falling by 453,000 barrels to 176,809,000 barrels during the week ending July 10th, after our distillates supplies had increased by 3,135,000 barrels over the prior week....our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 673,000 barrels per day to 3,692,000 barrels per day, even as our exports of distillates fell by 28,000 barrels per day to 1,332,000 barrels per day and our imports of distillates rose by 27,000 barrels per day to 99,000 barrels per day....but even after this week's inventory decrease, our distillate supplies at the end of the week were still 29.8% above the 136,203,000 barrels of distillates that we had in storage on July 12th, 2019, and about 26% above the five year average of distillates stocks for this time of the year...
finally, with the big drop in our oil imports, our commercial supplies of crude oil in storage fell for the 5th time in twenty-five weeks and for the 17th time in the past year, decreasing by 7,493,000 barrels, from 539,181,000 barrels on July 3rd to 531,688,000 barrels on July 10th....but even after that decrease, our our commercial crude oil inventories were around 17% above the five-year average of crude oil supplies for this time of year, and more than 57% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the second weekend of July, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories have generally been rising since September of 2018, except for during last summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of July 10th were 16.6% above the 455,876,000 barrels of oil we had in commercial storage on July 12th of 2019, 29.3% more than the 411,084,000 barrels of oil that we had in storage on July 13th of 2018, and 8.4% above the 490,623,000 barrels of oil we had in commercial storage on July 14th of 2017...
OPEC's Monthly Oil Market Report
Tuesday of this past week saw the release of OPEC's July Oil Market Report, which covers OPEC & global oil data for June, and hence it gives us a picture of the global oil supply & demand situation during the second month of the two month agreement between OEC, the Russians, and other oil producers to cut production by 9.7 million barrels a day from an elevated October 2018 baseline....again, we should caution that estimating oil demand while many countries were just restarting their economies after a month or two of lockdown is pretty speculative, and hence the demand figures we'll be reporting this month should again be considered as having a much larger margin of error than we'd normally expect from this report..
the first table from this monthly report that we'll review is from the page numbered 49 of this month's report (pdf page 58), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures...
as we can see from the above table of oil production data, OPEC's oil output was cut by 1,893,000 barrels per day to 22,271,000 barrels per day during June, from their revised May production total of 24,164,000 barrels per day...however that May output figure was originally reported as 24,195,000 barrels per day, which means that OPEC's May production was revised 31,000 barrels per day lower with this report, and hence June's production was, in effect, a 1,924,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official May OPEC output figures as reported a month ago, before this month's revisions)...
from the above table, we can also see that production decreases of 923,000 barrels per day from the Saudis, 449,000 barrels per day from Iraq, 199,000 barrels per day from Venezuela, and 129,000 barrels per day from the Emirates accounted for the lion's share of the May decrease, even as several other OPEC producers also made further production cuts...to facilitate understanding how each of the OPEC members have been adhering to their latest production cut agreement, we'll next include a table which shows the October 2018 reference production for each of the OPEC members (as well as other producers party to the mid-April agreement), as well as the production level each of those producers was expected to cut their output to....
the above table was taken from an article at Zero Hedge, and it shows the oil production baseline in thousands of barrel per day off of which each of the oil producers will cut from in the first column, a number which is based on each of the producer's October 2018 output, ie., a date before the past year's and last quarter's output cuts took effect; the second column shows how much each participant has committed to cut in thousands of barrel per day, which is 23% of the October 2018 baseline for all participants except for Mexico, while the last column shows the production level each participant has agreed to after that 23% cut...note that sanctioned OPEC members Iran and Venezuela and war-torn Libya are exempt from these cuts...
with a net 8,224,000 barrels per day decrease in their production since April, it appears that OPEC has far exceeded the 6,084,000 barrels per day they had committed to cut...however, the baseline for the agreed to May and June cuts is OPEC's production of October 2018, and the 6,300,000 barrels per day drop in their production represents the output change since April, so we can't really compare the two...moreover, production of some of the OPEC members is still above their target level...for instance, Iraq had committed to cut their production by 1,061,000 barrels per day from their October 2018 level and only produce 3,592,000 barrels per day in June, but they've only cut their production by 789,000 barrels per day over May and June, and thus produced 3,716,000 barrels per day, 124,000 barrels per day more than they were supposed to...
the next graphic from this month's report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from July 2018 to June 2020, and it comes from page 50 (pdf page 59) of the July OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent monthly OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale....
including the 1,893,000 barrel per day cut in OPEC's production from what they produced a month earlier, OPEC's preliminary estimate indicates that total global oil production decreased by a rounded 2.95 million barrels per day to average 86.29 million barrels per day in June, a reported decrease which apparently came after May's total global output figure was revised higher by 350,000 barrels per day from the 89.89 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production fell by a rounded 1,060,000 barrels per day in June after that revision, with lower oil production from the OECD oil producers accounting for 880,000 barrels per day of the non-OPEC output decrease in June...with the decrease in June's global output, the 86.29 million barrels of oil per day produced globally in June were 12.19 million barrels per day, or 12.4% less than the revised 98.48 million barrels of oil per day that were being produced globally in May a year ago, the 6th month of OPECs first round of production cuts (see the July 2019 OPEC report (online pdf) for the originally reported May 2019 details)...with this month's drop in OPEC's output, their June oil production of 22,271,000 barrels per day fell to 25.8% of what was produced globally during the month, down from their 27.1% share in May, and the 30.5% share they contributed in April...OPEC's June 2019 production, which included 515,000 barrels per day from former OPEC member Ecuador, was reported at 29,855,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 7,069,000, or 24.1% fewer barrels per day of oil in June than what they produced a year ago, when they accounted for 30.4% of global output...
Even with the big drop in OPEC's and global oil output that we've seen in this report, there was still a big surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...
the above table came from page 26 of the June OPEC Monthly Oil Market Report (pdf page 35), and it shows regional and total oil demand estimates in millions of barrels per day for 2019 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2020 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for June, which is their estimate of global oil demand during the second quarter of 2020...
OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe have been using an average of 81.95 million barrels of oil per day, which is a 650,000 barrels per day upward revision from the 81.30 million barrels of oil per day they were estimating for the 2nd quarter a month ago (circled in green), largely reflecting coronavirus related demand destruction....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were still producing 86.29 million barrels per day during June, which would imply that there was a surplus of around 4,340,000 barrels per day in global oil production in June, still 5.3% greater than the demand estimated for the month...
in addition to figuring the June surplus, the upward revision of 350,000 barrels per day to May's global output that's implied in this report, combined with the 650,000 barrels per day upward revision to 2nd quarter demand that we've circled in green means that the 8,590,000 barrels per day global oil output surplus we had figured for May would now have to be revised to a surplus of 8,290,000 barrels per day....at the same time, the surplus of 17,690,000 barrels per day that we had previously figured for April, in light of that 650,000 barrels per day upward revision to 2nd quarter demand, would have to be revised to a surplus of 17,040,000 barrels per day...
Also note that in green we've also circled an upward revision of 20,000 barrels per day to first quarter demand....that means that the record global oil surplus of 18,068,000 barrels per day we had previously figured for March would have to be revised to a global oil surplus of 18,048,000 barrels per day...similarly, the 2,180,000 barrel per day global oil production surplus we had for February would now be a 2,160,000 barrel per day global oil output surplus, and the 1,210,000 barrel per day global oil output surplus we had for January would be revised to a 1,190,000 barrel per day oil output surplus.. but even after those revisions, it's obvious the world's oil producers have produced a lot of oil this year that no one wanted..
This Week's Rig Count
the US rig count fell for the 19th week in a row during the week ending July 17th, and is now down by 68.1% over that nineteen week period....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 5 rigs to 253 rigs this past week, which again was the fewest active rigs in Baker Hughes records going back to 1940 and 151 fewer rigs than the all time low prior to this year, and was also down by 701 rigs from the 954 rigs that were in use as of the July 19th report of 2019, and 1,676 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 their first attempt to put US shale out of business....
the number of rigs drilling for oil decreased by 1 rig to 180 oil rigs this week, after falling by 4 oil rigs the prior week, leaving oil rig activity at its lowest since June 5th, 2009, which was also 599 fewer oil rigs than were running a year ago, and less than an eighth 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 fell by 4 rig to 71 natural gas rigs, which was the least natural gas rigs running in at least 80 years, and down by 103 natural gas rigs from the 174 natural gas rigs that were drilling a year ago, and was less than a twentieth of the 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 Sonoma County, California... a year ago, there was just one such "miscellaneous" rigs deployed...
the Gulf of Mexico rig count was unchanged at 12 rigs this week, with 10 of those rigs drilling for oil in Louisiana's offshore waters and two of them drilling for oil offshore from Texas...that was 13 fewer rigs than the 25 rigs drilling in the Gulf a year ago, when 24 rigs were drilling offshore from Louisiana and one rig was operating in Texas waters...while there are no rigs operating off other US shores at this time, a year ago there was also a rig deployed in the Cook Inlet offshore from Alaska, so this week's national offshore count is down by 14 from the national offshore rig count of 26 a year ago
the count of active horizontal drilling rigs decreased by 5 rigs to 215 horizontal rigs this week, which was the fewest horizontal rigs drilling in the US since November 18th, 2005, and hence is a new 14 1/2 year low for horizontal drilling...it was also 614 fewer horizontal rigs than the 829 horizontal rigs that were in use in the US on July 19th of last year, and less than a sixth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...in addition, the vertical rig count was down by four to 15 vertical rigs this week, and those were also down by 41 from the 56 vertical rigs that were operating during the same week of last year...on the other hand, the directional rig count rose by 4 rigs to 23 directional rigs this week, but those were also still down by 46 from the 69 directional rigs that were in use on July 19th 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 July 17th, the second column shows the change in the number of working rigs between last week's count (July 10th) and this week's (July 17th) count, the third column shows last week's July 10th 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 19th of July, 2019...
there were a few more changes in drilling activity this week when compared with the near stagnation of recent weeks, but wtih just three additions, it continues to suggest that prices are still not high enough to encourage the addition of many new rigs to the field...checking the rig counts in the Texas part of Permian basin, we find that one rig was shut down in Texas Oil District 8, or the core Permian Delaware, and another rig was shut down in Texas Oil District 7C or the southern Permian Midland...since the overall Permian basin rig count was down by just 1 rig nationally, that means that the rig that was added in New Mexico would have been set up to drill in the western Permian Delaware, offsetting the Texas decrease...elsewhere in Texas, there was a rig added in Texas Oil District 1, but there was also a rig shut down in Texas Oil District 3, which are both part of the region we associate with activity in the Eagle Ford shale, which stretches in a relatively narrow band through the southeastern part of the state and touches on four Oil Districts...since the Eagle Ford shows an increase of two rigs, that means that at least one more Eagle Ford rig was added in one of those districts, while a rig that wasn't targetting the Eagle Ford was shut down at the same time...in addition, a rig was also shut down in Texas Oil District 7B, which would account for the rig rpulled out of the Barnett shale in the area south of Dallas-Ft Worth....that rig stacked in the Barnett shale had been targeting natural gas, as was the rig that was shut down in Louisiana's Haynesville, and the two rigs that were stacked in Ohio's Utica shale, thus accounting for the decrease of four natural gas rigs nationally...at the same time, the shutdown of a natural rig that had been drilling in Pennsylvania's Marcellus was offset by the addition of a natural rig in West Virginia's Marcellus, leaving the total Marcellus shale count unchanged...
DUC well report for June
Monday of this past week saw the release of the EIA's Drilling Productivity Report for July, which includes the EIA's June data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions....for the 2nd time in the past sixteen months, this report showed an increase in uncompleted wells nationally in June, as both the drilling of new wells and completions of drilled wells decreased, but completions decreased by almost twice as much.....for the 7 sedimentary regions covered by this report, the total count of DUC wells increased by 35 wells, rising from 7,624 DUC wells in May to 7,659 DUC wells in June, which was still 10.2% fewer DUCs than the 8,530 wells that had been drilled but remained uncompleted as of the end of June of a year ago...this month's DUC decrease occurred as 326 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during June, down by 89 from the 417 wells that were drilled in May and the lowest number of wells drilled in the history of this report, while 291 wells were completed and brought into production by fracking, a decrease of 170 well completions from the 461 completions seen in May, and down by 78.2% from the 1,346 completions seen in June of last year, and also the lowest number of completions in one month since completions have been reported by the EIA....at the June completion rate, the 7,659 drilled but uncompleted wells left at the end of the month represents a 26.3 month backlog of wells that have been drilled but are not yet fracked, up from the 16.5 month DUC well backlog of a month ago, with a recognition that this normally indicative backlog ratio is being skewed by record low completions...
oil producing regions saw a net DUC well increase in June, while natural gas producing regions still saw a modest net DUC well decrease, even as some basins went against that trend....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico increased by 49, from 3,439 DUC wells at the end of May to 3,488 DUCs at the end of June, as 150 new wells were drilled into the Permian, while 101 wells in the region were being fracked....at the same time, DUC wells in the Bakken of North Dakota increased by 7, from 875 DUC wells at the end of May to 882 DUCs at the end of June, as 20 wells were drilled into the Bakken in June, while 13 of the drilled wells in that basin were being fracked...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 2 to 452, as 23 Niobrara wells were drilled in June while 21 Niobrara wells were completed... on the other hand, there was a decrease of 6 DUC wells in the Eagle Ford of south Texas, from 1,301 DUC wells at the end of May to 1,295 DUCs at the end of June, as 35 wells were drilled in the Eagle Ford during June, while 41 already drilled Eagle Ford wells were completed...similarly, DUCs in the Oklahoma Anadarko decreased by 7, falling from 717 at the end of May to 710 DUC wells at the end of June, as 10 wells were drilled into the Anadarko basin during June, while 17 Anadarko wells were being fracked....
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 11 wells, from 579 DUCs at the end of May to 568 DUCs at the end of June, as 59 wells were drilled into the Marcellus and Utica shales during the month, while 70 of the already drilled wells in the region were fracked....on the other hand, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 1 to 264, as 29 wells were drilled into the Haynesville during June, while 28 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of June, DUCs in the five major oil-producing basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 45 wells to 6,827 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 10 wells to 832 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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UTICA SHALE WELL ACTIVITY AS OF JULY 11 -
- DRILLED: 143 (143 as of July 4)
- DRILLING: 110 (111)
- PERMITTED: 501 (500)
- PRODUCING: 2,518 (2,518)
- TOTAL: 3,272 (3,272)
No horizontal permits were issued during the week that ended July 11, and 6 rigs were operating in the Utica Shale. TOP COUNTIES BY NUMBER OF PERMITS:
- 1. BELMONT: 691 (691 as of July 4)
- 2. CARROLL: 530 (530)
- 3. HARRISON: 524 (524)
- 4. MONROE: 438 (438)
- 5. JEFFERSON: 283 (283)
- 6. GUERNSEY: 280 (280)
Harvest Oil selling eastern Ohio wells - Harvest Oil has decided to sell its holding in Appalachian Basin, primarily on eastern Ohio. The company formed two years ago after the bankruptcy of EV Energy Partners. Harvest Oil & Gas, based in Houston, has struck a deal to sell its Appalachian Basin holdings and leave the region. The $20.5 million deal is set to close in August and the buyer hasn't been identified. The buyer is set to pay $14.5 million in cash and use a $6 million note to cover the balance. All of the assets are in the Utica Shale in eastern Ohio, the company said. Harvest said it intends to evaluate the process of winding-up and of returning capital to its shareholders in the event the sale and other contemplated asset divestitures are completed. This evaluation depends on an analysis of net cash available for distribution to stockholders and the amount of net cash needed to satisfy ongoing liabilities during the process. Harvest was previously EV Energy Partners, which filed bankruptcy and reorganized in April 2018. Two months later it emerged as Harvest Oil & Gas.
Daelim Cites Covid-19 in Dropping Stake in Ohio Ethane Cracker - PTT Global Chemical pcl has lost its equity partner in a multi-billion dollar ethane cracker proposed for southeast Ohio. Daelim Chemical USA dropped its stake, citing the Covid-19 pandemic’s impact on the project timeline and the global economy’s impact on its investment plans. PTT affiliate PTTGC America LLC said it would move ahead with the cracker and look for another partner as Daelim aids in the transition. Earlier this year, the companies said a final investment decision (FID) would likely be delayed because of market volatility caused by the coronavirus. It wasn’t the first time an FID for the project has been postponed, but before the outbreak the companies expected to make a decision by the end of June. They said Tuesday a decision on sanctioning wasn’t likely for another six to nine months. PTT has been at work on the facility since 2015. It partnered with Daelim, a South Korean conglomerate, in 2018 to conduct a feasibility study and secure funding for the project, which would be located in the heart of the Utica Shale in Belmont County. “The Ohio petrochemical facility continues to be a top priority for PTTGC America,” said CEO Toasaporn Boonyapipat. “We are in the process of seeking a new partner whilst working toward a final investment decision. We look forward to making an announcement by the end of this year or early next year on this transformative project for the Ohio Valley region.” The first phase of site preparation and engineering work has been completed, with other demolition jobs remaining around the site on the Ohio River. All of the nearly 500 acres required for the plant have also been purchased, and Ohio has contributed more than $70 million in revitalization and economic development grants and loans. The plant, which has secured all major regulatory approvals, would use six ethane cracking furnaces and manufacture ethylene, high-density polyethylene and linear low-density polyethylene, which are used in plastics and chemical manufacturing. It would be similar in size to another cracker underway by Royal Dutch Shell plc in nearby western Pennsylvania that would consume about 100,000 b/d of ethane.
Chesapeake bankruptcy freezes royalty lawsuit - - A lawsuit over Chesapeake Energy’s royalty payments to Ohio landowners is on hold after the company’s recent bankruptcy filing. The class action lawsuit, filed in 2015 by a group of Columbiana County landowners, claimed damages of at least $30 million on behalf of 224 landowners. It is before a federal appeals court. With the bankruptcy filing, “the odds of getting any money out of Chesapeake are very long indeed,” said Dennis E. Murray Jr., an attorney for the landowners. But claims remain against other defendants in the case, and a favorable appeals court ruling could help the same landowners in their lawsuit against the company that purchased Chesapeake’s Ohio assets. Chesapeake pioneered the practice of drilling and fracking large horizontal wells in Ohio’s Utica and Marcellus shales. But the Oklahoma City-based company borrowed billions of dollars as it drilled hundreds of new oil and natural gas wells. The situation became untenable last month in the face of persistently low oil and natural gas prices, and Chesapeake filed June 28 for Chapter 11 bankruptcy. The company has said its restructuring plan will eliminate $7 billion in debt, but has not said how long the process will take. Chesapeake cut its Ohio ties in 2018 when it sold its assets, including a regional office building in Louisville, to Encino Acquisition Partners for $2 billion. EAP is a partnership between the Canada Pension Plan Investment Board and Encino Energy, a private oil and gas company based in Houston. But Chesapeake — along with French energy giant Total, and Jamestown Resources and Pelican Energy, two companies connected to late Chesapeake founder Aubrey McClendon — were being sued in federal court by Ohio landowners who said the companies underpaid royalties.
Utica and Marcellus Shale condensate prices plunge - Pittsburgh Post-Gazette - Prices for Marcellus and Utica shale condensate fell below zero this week as collapsing demand for oil and gasoline pushed specialty grades out of the market. Ergon Oil Purchasing’s price for Marcellus and Utica condensate was a penny per barrel on Monday and Tuesday before dropping to -$0.69 on Wednesday. The price rebounded Thursday to $4.32, but it was still down 91% from the start of the year. Condensate is an ultra-light liquid hydrocarbon produced along with natural gas from some shale wells. It is not as valuable as oil, but prices for the two commodities tend to rise and fall together. Between 2012 and 2014 — when oil prices were high and gas prices were low — condensate and natural gas liquids buoyed producers focused on the liquids-rich areas of the Marcellus and Utica shales in Western Pennsylvania and Ohio, said Tony Scott, managing director of analytics at BTU Analytics.Condensate at $50 a barrel, as it was before the recent collapse, “goes a long way to making those wells economic at the type of gas prices we are seeing today,” he said. Now, regional natural gas prices are still “very weak” and the condensate premium has evaporated. Jesse Mercer, senior director of crude oil markets at Enverus, said it “makes sense that Utica condensate is pricing at next to nothing right now.”The condensate is mostly used in making gasoline. Demand for transportation fuels is down dramatically amid the global economic shutdown associated with COVID-19, as cars and airplanes sit parked.“Refiners are concerned about running out of storage capacity for all the unwanted gasoline, so they are shunning grades that make a lot of gasoline,” he said.“In this crisis, nobody wants a grade that makes none of the stuff you want and only the stuff you don’t have room to store.” In December 2019, the most recent month available, Pennsylvania, Ohio and West Virginia produced 150,000 barrels of oil and condensate per day, according to the U.S. Energy Information Administration. All oil and condensate produced in the three states is light, but Ergon defines Marcellus and Utica condensate as the lightest in that range.Nicholas Andreychek, manager of Appalachian crude and condensate for Mississippi-based Ergon Oil Purchasing, said he has never seen condensate prices like this. On Thursday, the credit rating agencies Moody's and Fitch Ratings both downgraded Denver-based Antero Resources, a Marcellus and Utica-focused operator and the nation’s second-largest producer of natural gas liquids.
Williams Scores Approval for Leidy South Natural Gas Project - FERC on Friday approved the Williams Leidy South natural gas pipeline project that would connect Marcellus/Utica shale supply to demand markets along the Atlantic Seaboard ahead of the 2021-2022 winter. The 582,400 Dth/d pipeline, an extension of the massive Transcontinental Gas Pipe Line system, aka Transco, would source gas produced by Cabot Oil & Gas Corp. and Seneca Resources Co. LLC. The project is to include six miles of large-diameter pipeline loop, two compressor stations and associated facilities in Pennsylvania’s Clinton, Columbia, Lycoming, Luzerne, Schuylkill and Wyoming counties.Williams CEO Alan Armstrong said the project represents one of many opportunities to further reduce greenhouse gas emissions, noting that “there remain more than 80 coal plants in the states Transco serves that can potentially be displaced” by gas.By maximizing the use of the existing Transco transmission corridor and expanding existing facilities in Pennsylvania, Leidy South would “substantially reduce” the amount of new infrastructure and land use required to meet these needs, minimizing community and environmental impact, Armstrong said.“With the growing urgency to transition to a low-carbon fuel future, Williams and its natural gas-focused strategy provide a practical and immediate path to reduce industry emissions, support the viability of renewables and grow a clean energy economy,” the CEO said. Approval by the Federal Energy Regulatory Commission for Leidy South comes at an uncertain time for oil and gas pipelines across the country.Earlier this month, Dominion Energy and Duke Energy canceled the proposed Atlantic Coast gas pipeline project, citing ongoing delays and increasing cost uncertainty. Meanwhile, the future of the Dakota Access crude pipeline, three years after entering service, is increasingly unclear amid an ongoing legal battle over key water-crossing permits.
Appalachian Basin Becoming Petrochemical Hub-- It’s the third leg of a three-legged stool proponents, experts, consultants – even the federal government -- agree is key to the Appalachian Basin once again becoming a U.S. petrochemical hub.Appalachia certainly has the natural gas liquids production (Leg No. 1), as it leads the U.S. in natural gas production, with more than 20% of Marcellus and Utica Shale play production in the form of natural gas liquids (NGLs).Within 18 months, Shell’s massive $6 billion cracker (Leg No. 2) northwest of Pittsburgh should be online, tapping the free-flowing NGLs in Appalachia. And more crackers are expected going forward.But as the petrochemical industry expands in Appalachia, NGL storage (the third leg) becomes an increasingly vital component of NGL infrastructure. The largest announced NGL storage hub proposed for the Appalachian Basin is the Appalachian Storage Hub, a $10 billion, public-private project that would be located along the Ohio River in the basin.What is envisioned in the hub is a system of underground caverns, salt caves and areas where natural gas was extracted. Roughly 100 million barrels of NGLs would be stored, plus the project includes 3,000 miles of pipelines to move the chemicals to industries along a 454-mile corridor in the states of Pennsylvania, Ohio, West Virginia and Kentucky.To keep you up-to-date on Appalachian hub progress, along with other, planned storage facilities in the basin, join industry brethren, including competitors in the Upstream, Midstream and Downstream sectors, at the Fourth Annual Appalachian Hub Conference, presented by ShaleDirectories.com and TopLine Analytics.The one-day conference on Aug. 27, at the Hilton Garden Inn, in the Southpointe Office Park just off Interstate 79 South, south of Pittsburgh, in deference to the ongoing Coronavirus pandemic, for the first time will be a hybrid production: The audience can attend in person, or attend – interact, with speakers – via LIVE streaming. The price is $495.
More common sense needed on fossil fuels - Randi Pokladnik - Last week’s Times Leader (July 5, 2020) carried an op-ed by Greg Kozera, the director of marketing and sales for Shale Crescent USA. In the op-ed Mr. Kozera talked a lot about common sense and our need for fossil fuels: specifically, plastics.In a world drowning in plastic, common sense would dictate that we need to significantly cut down on our production of single-use plastics. According to the Ocean Conservancy, which monitors litter on beaches worldwide, the 10 most common items of litter picked up by volunteers were made of plastic. This included cigarette butts, food wrappers, drink bottles, caps and grocery bags. Not surprising, as plastic packaging makes up about 40 percent of all the plastics produced today.One of the major issues with plastics is that they do what they are intended to do very well; they last forever. Plastics are long-chain carbon polymers that are synthesized from petroleum or natural gas feedstocks. Unlike other naturally occurring long-chain carbon compounds, such as carbohydrates found in plants, plastics will not degrade when exposed to enzymes or bacteria in the environment. Common sense would ask is it wise to expand the production of something that never degrades? According to a study published in 2017 in Science Advances, we have produced approximately 8,300 million metric tons of plastic since the 1950s. Plastic waste now blankets our planet. More than 8 million tons of plastic is dumped into our oceans every year. Peer reviewed studies show that water from the Great Lakes contains a substantial amount of microplastics. Research published in the Public Library of Science disclosed microplastics were in 12 American beers. A study published in ORB Media determined that of 159 tap water samples taken from around the world, 83 percent contained plastic particles. Mr. Kozera points to recycling as a solution to our plastic wastes. In 2017, there were 6.3 billion tons of plastic waste. Only 9 percent was recycled, 12 percent was incinerated and 79 percent ended up in landfills or the environment. I am old enough to remember the Keep America Beautiful anti-litter campaign of the 1970s. Backed by the beverage industry, it was a slick attempt to continue the production of plastic beverage bottles by passing off the responsibility for litter to consumers. Common sense would ask how successful has recycling been if after nearly 50 years, we only recycle 9 percent of our plastic waste.
Wolf, legislature draw closer to more tax breaks for the natural gas industry - State lawmakers voted this week on a bill that would benefit the state’s natural gas industry by providing an incentive for manufacturers that use the gas.The legislation would give tax credits to fertilizer and petrochemical manufacturers that create jobs. The state Senate voted 40-9 Monday to approve the measure. The state House of Representatives agreed Tuesday with a vote of 163-38. At an unrelated news conference earlier Tuesday, Gov. Tom Wolf said he supports the legislation.The measure is similar to a bill the governor vetoed in March. Wolf’s veto message cited the economic hardship created by the coronavirus pandemic and the need for a “responsible use of the Commonwealth’s limited resources. At the Tuesday news conference, Wolf said he was concerned the first version of the bill didn’t have “adequate protections for prevailing wage for the workers” and that it was “fiscally irresponsible” for giving more than $1 billion in potential tax credits.“This has cut the…amount of money available over 25 years by a lot and it has placed a cap per year on the spending, which was not in the original bill, so this is a better bill,” he said.The original bill, HB 1100, passed both chambers of the General Assembly with veto-proof majorities. Backers have been calling for a veto-override vote, though the effort took a backseat as attention turned to COVID-19.The new measure appears to be something of a compromise. It limits the credits to $26.7 million per fiscal year and caps recipients at four, making the maximum annual credit per company $6.7 million. The tax program would begin in 2024 and last until 2050, for a total of nearly $670 million in tax credits.A state Department of Revenue analysis of the previous bill found the annual credit per manufacturing facility could reach $26.5 million, which could have led to more than $1 billion in credits over the course of the program. The new legislation, HB 732, would lower the qualifying threshold a manufacturer needs to invest by $50 million to $400 million, but keeps the combined number of new and permanent jobs required for the incentive at 800.
As Pennsylvania Lawmakers Push Sneaky Petrochemical Corporate Subsidies, Investing in Renewables Would Be Jobs Bonanza | Food & Water Watch --Yesterday, the State Senate passed an amendment to an unrelated bill that will grant massive tax breaks to petrochemical corporations in Pennsylvania, a move that recalls legislation (HB 1100) that was vetoed by Governor Tom Wolf earlier this year.While these corporate handouts are promoted as a powerful tool to create desperately needed jobs, forthcoming research from the national organization Food & Water Watch reveals that the subsidies awarded to energy giant Shell to build a plant in Beaver County created far fewer jobs than supporters predicted, and that a similar level investment in renewable energy projects would create far more employment opportunities.The Food & Water Watch research determined that while the state granted Shell an astonishing $1.6 billion in tax incentives for a project that will create a total of 600 permanent jobs (a cost of $2.75 million for every long-term job), a similar level of investment in wind and solar would create 16,500 jobs, which would almost match the state’s total employment in the oil and gas industries.In response to the Senate vote, Food & Water Watch Executive Director Wenonah Hauter released the following statement: “In the midst of a deadly global pandemic, Pennsylvania lawmakers are creating a secret scheme to hand hundreds of millions of dollars to petrochemical corporations in order to rescue the ailing fracking industry and create more plastic junk. Our research shows that investing in wind and solar provides far more bang for the buck. Instead of giving money to corporate polluters like Shell, lawmakers should put a halt to these absurd petrochemical giveaways, and build a clean, renewable energy industry that will create far more safe and stable jobs.”
Pa. Legislature adopts $670 million tax credit bill for petrochemical plants - A bill aiming to lure petrochemical and fertilizer plants to Pennsylvania with more than $650 million in new tax credits is on the way to Gov. Tom Wolf after the House and Senate passed it by large margins this week. The Democratic governor vetoed a similar bill earlier this year, but his administration was involved in negotiating this one and he said he plans to sign it. Neither bill was the subject of public hearings. House Bill 732 creates a new “local resource manufacturing tax credit” for companies that invest at least $400 million and create at least 800 construction and permanent jobs to build petrochemical or fertilizer plants that use dry natural gas produced in Pennsylvania. A maximum of four companies can qualify for the credits each year and each company’s annual tax credit is capped at $6.7 million. The credit would amount to $667 million in foregone taxes over the 25 years that the credit program would run from 2025 to 2050. The credit is modeled after one used to entice Shell to build its petrochemical plant in Beaver County, but this one is exclusive to petrochemical and fertilizer manufacturers that use dry natural gas rather than ethane. Dry gas is produced abundantly from the Marcellus Shale in northeastern and north-central Pennsylvania and, to a lesser extent, from Pennsylvania’s Utica Shale. The dry gas requirement disqualifies most Marcellus Shale gas produced in southwestern Pennsylvania, which is considered “wet” because it contains natural gas liquids. The bill Mr. Wolf vetoed earlier this year would have incentivized the use of natural gas more broadly, but it contained no limits on how many plants could qualify for the credits and lacked enforcement provisions to ensure companies pay construction workers prevailing wage rates. Pennsylvania’s Department of Revenue estimated the vetoed proposal would have cost $22 million per year per plant in foregone taxes until the end of 2050.
Shell forced by Covid-19 case increases to slow down addition of workers in Beaver County - Royal Dutch Shell has temporarily halted the steady addition of workers returning to the massive Beaver County petrochemical plant construction site after an increase in Covid-19 cases that are apparently tied not to the site but sharp rises of the novel coronavirus in the community. There have been 17 workers at the Shell plant that have tested positive for Covid-19, up from the six cases that had been confirmed between mid-March and the end of June. Shell had, with the first cases of Covid-19 in the early days of the pandemic, shut down construction on the $6 billion plant and sent all but 300 of its 8,000 construction workers home as the site was deep cleaned and mitigation measures put into place. It has been adding back employees in a measured way, increasing to about 3,500 to 3,700 employees on site now. "Based on contact tracing and what we see going on in the broader community, in increased cases in Beaver and Allegheny counties, we believe that's not reflective of the additional risks occurring at the site but people being in the community," Shell spokesman Michael Marr said during the Petrochemical Development USA conference Thursday afternoon. "We believe we have a good exposure control on site that we've implemented." Further details weren't immediately available about the new cases, but Marr said as the number of cases have grown, Shell has taken steps to prevent more Covid on its site. "We've decided to at least temporarily halt the addition of workers," Marr said. It's a week-by-week decision that is made every Thursday afternoon for the week ahead whether to keep adding workers. "We only will do so when we are comfortable we have sufficient levels of mitigation procedures in place to manage Covid spread," Marr said.
Damning report on Pa.’s failure to protect residents from fracking unlikely to result in major reform · — The recent findings of a massive grand jury investigation into the state’s failure to protect communities from unconventional oil and gas development, known as fracking, were damning, and lent official credence to problems many residents have decried for years. The long-anticipated report outlined explicit ways in which the Department of Environmental Protection and the Department of Health turned a blind eye to the snowballing effects of fracking on Pennsylvania’s residents and skirted constitutional obligations to protect the environment. State officials testified about directives to ignore health concerns and practices that glossed over the harm the public experienced, effectively gaslighting residents whose tap water appeared brown or experienced rashes when they showered, but were told nothing was wrong. The testimony also revealed how officials deferred to the industry and poorly tracked complaints, and how state workers failed to properly test potentially tainted air and water. “More than anything, it is the government’s willingness to use the tools at its disposal to protect people,” Alex Bomstein, an attorney for Clean Air Council, said. “That’s what needs to change.” Despite the two-year effort to bring these findings to light — encompassing 287 hours of testimony before the grand jury, resulting in a 243-page report — it’s unclear if the grand jury’s report will bring about actual, meaningful reforms sought by those who say they’ve been harmed.Several of the report’s recommendations address problems previously raised by advocates in legal cases and unsuccessful pushes for new legislation to better account for the health and environmental impacts of fracking. Some lawmakers said the proposals overreach and are an ineffective way to change policy.State agencies, meanwhile, dismissed the report outright, calling the recommendations unnecessary and crafted by a group of people unqualified to understand environmental law. Many of the issues raised were outdated, they said, and already addressed.
Q&A: Terry Engelder, Penn State scientist whose work led to the shale gas boom, talks about grand jury report on fracking - - interview - In 2007, Terry Engelder, then a professor of geosciences at Penn State, estimated how much natural gas could be accessed in the Marcellus Shale formation using hydrofracking. That calculation led to a drilling boom across the Marcellus region in Pennsylvania.Widely recognized for his work, Engelder has advised state agencies, including the Pennsylvania Department of Environmental Protection. And, his research has received funding from a number of companies in the industry. Now retired and a professor emeritus, Engelder is working on a book called “A Frackademic from Appalachia.” Along with economic benefits, the surge in gas exploration in Pennsylvania led to environmental and health concerns. On June 25, state Attorney General Josh Shapiro announced the findings of a Pennsylvania grand jury condemning the DEP and state Department of Health for inadequate oversight of the natural gas industry.The report outlines problems from brown water caused by fracking to the state dismissing residents’ complaints without investigation. The report also makes recommendations from additional pipeline regulation to increasing the setback of oil gas wells. StateImpact Pennsylvania spoke with Engelder about the grand jury’s findings.
Marcellus Shale region project, others scrapped after increased regulatory requirements and environmental opposition -– The push to bring more economic development to western Pennsylvania, West Virginia and Ohio – referred to as the shale crescent region – has encountered a major glitch after an $8 billion Atlantic Coast Pipeline plan was cancelled in Appalachia and other projects have been slowed or halted. Cancellations come after state regulations and environmental opposition increased. Production from the Marcellus Shale was expected to rebound after some states reopened after coronavirus shutdowns. Fracking in the region has driven down natural gas prices and helped to make the U.S. a net exporter of the fuel for the first time, Bloomberg News reports. In June, the U.S. Department of Energy announced a major initiative in response to President Donald Trump’s Executive Order 13868, “Promoting Energy Infrastructure and Economic Growth” to assess opportunities to promote economic and energy growth in the Appalachian region. “The energy-rich Appalachian region is now the single largest natural gas producing region of the country and increasingly is becoming a major producer of natural gas liquids, including ethane, propane, and butane,” Secretary of Energy Dan Brouillette said in a statement. “These resources can serve as feedstocks for new opportunities in low-cost power generation, petrochemicals, and the manufacturing industry. Harnessing these opportunities will decrease our reliance on foreign-sourced supply-chains, as showcased by the COVID-19 pandemic, and bring back U.S. jobs to this important region of the country.” Richmond-based Dominion Energy Inc. and Charlotte-based Duke Energy Corp. abandoned plans to construct a major pipeline from the region to southern states. Canceling the Atlantic Coast Pipeline project, the companies said in a statement, was due to "ongoing delays and increasing cost uncertainty which threaten the economic viability of the project." Dominion was also impacted by the Virginia Legislature enacting a law in April requiring it to be 100 percent carbon free by 2045. Both companies sold their natural gas assets to billionaire investor Warren Buffett's Berkshire Hathaway Inc. – the largest deal announced in 2020 to buy U.S. energy assets, according to Bloomberg data.
The Atlantic Coast Pipeline Is Cancelled, But Here’s Why That’s Not Enough | Food & Water Watch - With many still grieving a recent Supreme Court ruling allowing the Atlantic Coast Pipeline to cut through the Appalachian Trail, big news hit last Sunday that Dominion and Duke Energy are canceling the pipeline altogether, with Dominion also selling off its remaining fracked gas holdings. The shutdown announcement from Dominion and Duke Energy comes after six years of entrenched legal battles, public protest and direct action to disrupt construction, and a price tag that grew to 8 billion dollars. Duke and Dominion didn’t make their decision out of goodwill — they made it with an eye to their bottom line. Dominion made the right decision for the wrong reasons. While a thriving clean energy economy does have the potential to bring well-paying jobs and increased investments to Virginia, profit isn’t the driving motivation for humanity’s move toward renewable energy. The transition to renewables is non-negotiable, and it needs to be funded by the companies that have wrecked our environment and exploited both people and resources for centuries — whether they want to make that payout or not. We have to move towards renewable energy because refusing to implement change will result in mass death, ecological crisis, and a hugely diminished quality of life. Virginia has the capacity to lead nationally in this transition, and the cancellation of the ACP should be an opening to speed ahead with the hard work of greening our state. Recent changes in the state’s legislative makeup made us hopeful for aggressive environmental legislation. But the last session brought disappointment when the pro-industry Virginia Clean Economy Act railroaded the more ambitious Green New Deal, and passed into law with Northam’s signature. The Virginia Clean Economy Act failed to demand more from Virginia’s fossil fuel corporations than what these companies had already agreed to, making it clear the legislation bent to the whims of industry rather than pushing past its comfort zone. The VCEA also set the deadline for a renewable energy transition at 2050, deemed a dangerously inadequate timeline by the world’s leading climate scientists. And it didn’t require any action to stop the fossil fuel infrastructure already underway in Virginia, projects that will ravage public health and clean air and water in the near term.
Senators hope Berkshire Hathaway invests in West Virginia natural gas projects - — A week after Berkshire Hathaway Inc. announced its purchase of Dominion Energy Inc.’s natural gas transmission and storage assets, a group of West Virginia senators are asking the company to consider investing in natural gas projects in West Virginia.Ten Democratic lawmakers sent a letter to Chairman and CEO Warren Buffett on Monday regarding a possible investment and the impact of the Atlantic Coast Pipeline project’s cancellation.“We think your wager is a wise one and share your belief that natural gas will be a mainstay in the production of American power for decades to come,” the legislators said. “The gas that sits beneath our feet is rich and plentiful, and our people are ready to go to work.”Duke Energy Corp. and Dominion Energy announced July 5 the cancellation of the Atlantic Coast Pipeline because of delays and legal uncertainties. The 600-mile pipeline would have gone from Harrison County, West Virginia into Virginia and North Carolina.Berkshire Hathway’s $9.7 billion deal with Dominion Energy was announced the same day. The agreement includes more than 7,700 miles of pipelines and around 900 billion cubic feet of natural gas storage. “That gave us reason for hope,” Sen. William Ihlenfeld, D-Ohio, said on Tuesday’s “MetroNews Talkline.”
US natgas output rises after W.Va. Mountaineer pipe returns (Reuters) - U.S. natural gas production rose over the weekend after TC Energy Corp’s Mountaineer Xpress pipeline in West Virginia returned to service following unplanned work, according to the company and data from Refinitiv.Pipeline data showed U.S. output climbed to 88.2 billion cubic feet per day (bcfd) on Sunday, up from a low of 87.0 bcfd last week due mostly to the Mountaineer shutdown. One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day. TC Energy’s Columbia Gas Transmission (TCO) unit, which operates Mountaineer, said it returned the 2.6-bcfd pipe to service over the weekend after lifting a force majeure on July 11 that it imposed on July 7 due to unplanned maintenance. “The hard work of our crews and better than forecasted weather conditions led to the early lifting of the Force Majeure and return to service,” TCO said in a notice to customers. Most of the U.S. output increases came from Marcellus and Utica shale with West Virginia up about 0.3 bcfd from last week’s low to 6.9 bcfd and Pennsylvania up about 0.7 bcfd to 19.5 bcfd, according to Refinitiv. Despite last week’s decline in output, Refinitiv said production in the Lower 48 U.S. states has averaged 88.1 bcfd so far in July. That is up from a 20-month low of 87.0 bcfd in June after energy firms shut wells following the collapse in energy prices due to coronavirus demand destruction. Monthly output peaked at 95.4 bcfd in November.
Appalachia gas production edges back toward annual highs as EQT restores output - — Gas production in the Appalachian Basin has recently edged its way back toward highs not seen since early May as output previously curtailed by the region's largest producer, EQT, now appears to be fully restored. In the past week, combined production from the Marcellus and Utica shales has averaged nearly 32.2 Bcf/d – up 1.2 Bcf/d, or about 4% from its mid-May average, S&P Global Platts Analytics data shows. At Appalachia's benchmark supply hub, Dominion South, cash prices have remained near $1.30/MMBtu recently – comparable to levels seen after EQT's production curtailments – as record gas-fired power burns this summer help to balance the additional supply length. On July 16, the cash market at Dominion South was nearly flat to its prior-day settlement, trading down just a half-cent to $1.285/MMBtu, preliminary trade data from S&P Global Platts showed. Roughly half of the recent gain in output has come from just five production meters used by EQT on Equitrans, Rockies Express Pipeline, Columbia Gas Transmission and Texas Eastern Transmission. Over the past five days, upstream receipts from those points have averaged a combined total of 2.7 Bcf/d, which compares to an average 2 Bcf/d in the five days after EQT announced its curtailments. Within the Appalachian Basin, the largest production gains have accrued in the South Pennsylvania dry window, with smaller gains from West Virginia and the Ohio dry – the same three sub-basins that saw steep declines following EQT's mid-May production cuts.Over the balance of this year, Appalachian gas production is likely to remain below previous record-high levels at over 33 Bcf/d as growth is constrained by slower drilling and completion activity, limited midstream capacity and low gas prices.
U.S. natgas futures fall over 3% on rising output, less hot weather (Reuters) - U.S. natural gas futures fell over 3% on Monday on rising output and forecasts for less hot weather and lower air conditioning demand over the next two weeks than previously expected. Traders noted that prices declined despite a drop in liquefied natural gas (LNG) exports this month to their lowest since early 2018 due to global coronavirus demand destruction. Front-month gas futures fell 6.6 cents, or 3.7%, to settle at $1.739 per million British thermal units. Refinitiv said production in the Lower 48 U.S. states averaged 88.1 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Refinitiv forecast U.S. demand, including exports, will rise from 90.4 bcfd this week to 92.2 bcfd next week. That, however, was lower than Refinitiv's outlook on Friday. Pipeline gas flowing to U.S. LNG export plants averaged just 3.2 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport in Texas held at zero for a seventh day for the first time since July 2019 when the first of its three liquefaction trains was in test mode. U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners. Refinitiv said pipeline exports to Canada averaged 2.5 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.5 bcfd this month, up from 5.4 bcfd in June, but below the record 5.6 bcfd in March.
U.S. natgas futures edge up on hot weather forecasts, rising pipeline exports (Reuters) - U.S. natural gas futures edged higher on Tuesday on forecasts for more hot weather and higher cooling demand over the next two weeks and an increase in pipeline exports to Canada and Mexico. Traders noted prices were up even though output continued to rise slowly and liquefied natural gas exports (LNG) remained at their lowest since early 2018 due to a global hit to demand from the coronavirus pandemic. Front-month gas futures rose 0.7 cents, or 0.4%, to settle at $1.746 per million British thermal units. Refinitiv said production in the Lower 48 U.S. states averaged 88.1 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Refinitiv forecast U.S. demand, including exports, will rise from 90.4 bcfd this week to 92.9 bcfd next week. That was higher than Refinitiv's outlook on Monday. Pipeline gas flowing to U.S. LNG export plants averaged just 3.2 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record high of 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport in Texas held at zero for an eighth straight day for the first time since July 2019 when the first of its three liquefaction trains was in test mode. U.S. pipeline exports, meanwhile, rose as consumers in neighboring countries cranked up their air conditioners.
U.S. natgas futures up 2% on rising pipe exports, cooling demand - (Reuters) - U.S. natural gas futures gained almost 2% on Wednesday due to an increase in pipeline exports and as rising air conditioning demand over the next two weeks keeps the amount of gas going into storage lower than usual for this time of year. Prices rose despite a slow output increase and decline in liquefied natural gas exports to their lowest since early 2018. Front-month gas futures rose 3.2 cents, or 1.8%, to settle at $1.778 per million British thermal units. Refinitiv said production in the Lower 48 U.S. states averaged 88.1 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Refinitiv forecast U.S. demand, including exports, will rise from 90.8 bcfd this week to 93.6 bcfd next week. That was higher than Refinitiv's outlook on Tuesday. Pipeline gas flowing to U.S. LNG export plants averaged 3.2 bcfd (33% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. Utilization was about 90% in 2019. Flows to Freeport in Texas held at zero for an ninth straight day for the first time since July 2019 when the first of its three liquefaction trains was in test mode. Refinitiv said pipeline exports to Canada averaged 2.5 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.5 bcfd this month, up from 5.4 bcfd in June, but below the record 5.6 bcfd in
US working natural gas volumes in underground storage rise by 45 Bcf: EIA — US natural gas stocks increased nearly 20 Bcf less than the five-year average due to year-to-date high gas-fired power demand, but the NYMEX Henry Hub balance-of-summer strip remained relatively static despite even smaller builds likely in the weeks ahead. Storage inventories rose 45 Bcf to 3.178 Tcf for the week ended July 10, the US Energy Information Administration reported July 16. The injection was below an S&P Global Platts' survey of analysts consensus that called for a 50 Bcf build. Wider responses to the survey ranged from injections of 42 Bcf to 65 Bcf. The build was also less than the 67 Bcf injection reported during the same week last year and the five-year average injection of 63 Bcf, according to EIA data. It was the third consecutive weekly build that was below the five-year average. Storage volumes now stand at 663 Bcf, or 26.4%, more than the year-ago level of 2.515 Tcf and 436 Bcf, or 16%, more than the five-year average of 2.742 Tcf. Total demand rose by 1.4 Bcf/d during the week after 2.6 Bcf/d of power burn increases were reduced by a 1 Bcf/d drop in LNG feedgas demand and another 500 MMcf/d of declines from the residential and commercial sector, according to S&P Global Platts Analytics. Upstream, supplies rose slightly on an increase in onshore production and an increase in net Canadian imports, pushing total supplies higher by 400 MMcf/d and leaving US supply-demand balances tighter by 1 Bcf/d week on week. The NYMEX Henry Hub balance-of-summer contract, August through October, remained relatively static to average $1.846/MMBtu in trading following the release of the EIA's weekly storage report. Spreads to next winter have remained stable as well. The November-through-March contract strip is priced at $2.71/MMBtu, leaving spreads from balance of summer to next winter in the high 80 cents/MMBtu range. Platts Analytics' supply-and-demand model currently expects a 36 Bcf injection for the week ending July 17, which would be 1 Bcf below the five-year average.
U.S. natgas futures fall to two-week low as output rises, low LNG exports - (Reuters) - U.S. natural gas futures fell over 3% to a two-week low on Thursday as output slowly rises and liquefied natural gas exports hold near their lowest since early 2018. That price decline came despite a smaller-than-usual storage build that was in line with estimates and forecasts hot weather expected to keep air conditioning demand high over the next two weeks. The U.S. Energy Information Administration (EIA) said U.S. utilities injected 45 billion cubic feet (bcf) of gas into storage during the week ended July 10. That was close to the 47-bcf build analysts forecast in a Reuters poll and compares with an increase of 67 bcf during the same week last year and a five-year (2015-19) average build of 63 bcf for the period. The increase boosts stockpiles to 3.178 trillion cubic feet (tcf), 15.9% above the five-year average of 2.742 tcf for this time of year. By the end of the injection season in October, analysts expect U.S. inventories will reach a record high near 4.1 tcf. Front-month gas futures fell 5.5 cents, or 3.1%, to settle at $1.723 per million British thermal units, their lowest close since July 1. Refinitiv said production in the Lower 48 U.S. states averaged 88.1 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. As consumers crank up their air conditioners, Refinitiv forecast U.S. demand, including exports, will rise from 90.8 bcfd this week to 93.5 bcfd next week.
U.S. natgas holds near 2-week low on less hot weather - (Reuters) - U.S. natural gas futures held near a two-week low on Friday on forecasts for less hot weather over the next two weeks than previously expected. Prices remained weak even though pipeline exports to Mexico are on track to hit a record high this month. Front-month gas futures fell 0.5 cents, or 0.3%, to settle at $1.718 per million British thermal units, the lowest close since July 1. For the week, the front-month was on track to drop about 5% after rising almost 21% in the prior two weeks. Refinitiv said production in the Lower 48 U.S. states averaged 88.2 billion cubic feet per day (bcfd) so far in July, up from a 20-month low of 87.0 bcfd in June but still well below the all-time monthly high of 95.4 bcfd in November. Traders noted output was rising as EQT Corp boosted production in Appalachia. Refinitiv forecast U.S. demand, including exports, will rise from 90.8 bcfd this week to 93.0 bcfd next week and 93.3 bcfd in two weeks. That, however, was lower than Refinitiv's outlook on Thursday. Pipeline gas flowing to U.S. LNG export plants averaged 3.3 bcfd (34% utilization) so far in July, down from a 20-month low of 4.1 bcfd in June and a record 8.7 bcfd in February. Utilization was about 90% in 2019. Refinitiv said pipeline exports to Canada averaged 2.4 bcfd so far in July, up from 2.3 bcfd in June, but still below the all-time monthly high of 3.5 bcfd in December. Pipeline exports to Mexico averaged 5.56 bcfd so far this month, up from 5.44 bcfd in June and on track to top the record 5.55 bcfd in March.
Utica, Haynesville Down as US Drops Five Rigs - A drop-off in the Utica and Haynesville shales saw the U.S. rig count fall five units to finish at 253 for the week ending Friday (July 17), according to the latest figures from Baker Hughes Co. (BKR). Four natural gas-directed rigs exited the patch in the United States during the week, joined by one oil-directed rig. The 253 active U.S. rigs as of Friday compares with 954 rigs running at this time last year. All of the domestic declines occurred on land, with the Gulf of Mexico continuing to run 12 rigs, down from 25 a year ago. Five horizontal and four vertical units departed, partially offset by the return of four directional units, according to BKR. In Canada, six rigs — all gas-directed — returned to action during the week, growing the Canadian rig count to 32, versus 118 in the year-ago period. The combined North American rig count ended the week at 285, versus 1,072 at this time last year. Among plays, the Utica saw the largest net drop for the week, with two rigs exiting to leave the gassy play with just six active rigs, down from 17 in the year-ago period. The Barnett Shale, the Haynesville and the Permian Basin each dropped one rig. On the other side of the ledger, the Eagle Ford Shale picked up two rigs on the week to grow its tally to 11, versus 67 a year ago. Among states, Texas saw the largest drop week/week at three units, followed by Ohio, which dropped two. Louisiana and Pennsylvania each dropped one rig week/week, while New Mexico and West Virginia each added one, BKR data show.The number of oil and natural gas wells likely to be drilled around the world this year is forecast to hit its lowest level since at least the early 2000s, with North America the most impacted from slumping demand in the age of Covid-19, according to a recent analysis from Rystad Energy. The firm said it expects the number of drilled wells globally this year to decline by 23% to 55,350 from 2019’s 71,946 wells. Meanwhile, Raymond James & Associates Inc. analysts estimate that the decline in the U.S. oil and gas rig count may be close to a bottom, and the current commodity strip could allow activity to grind higher.
There’s no roadmap to the other side of the natural gas bridge. These states are making one. --In early June, the attorney general of Massachusetts, Maura Healey, filed a petition with state utility regulators advising them to investigate the future of natural gas in the Commonwealth. Healey described the urgent need to figure out how the gas industry, which helps heat millions of homes throughout freezing Northeastern winters, fits into the state’s plan to zero-out its greenhouse gas emissions by 2050 — especially considering the fuels burned for indoor heating and hot water are responsible for about a third of the state’s carbon footprint.Eliminating emissions from this sector means venturing into uncharted waters. While many states are rapidly developing wind and solar farms to cut carbon from their electric grids, few are tackling the thornier challenge of reducing the gas burned in buildings. Officials in California and New York, which both have binding economy-wide net-zero emissions laws, have recently come to the same conclusion as Healey: Meeting state climate goals is going to require changes to the way gas utilities are regulated. Earlier this year, both states opened up precisely the kind of investigation that Healey is requesting in Massachusetts.Natural gas, a fossil fuel, has long been called a “bridge” to a cleaner energy future because burning it has a much lower carbon footprint than burning coal or oil. But research has called that narrative into question by showing that methane leaking across the natural gas supply chain raises its climate impact significantly. Recent developments have called the economics of natural gas into question, too: In early July, the developers of the high-profile Atlantic Coast Pipeline decided to abandon the projectafter an onslaught of lawsuits made the pipeline too expensive to build.California, Massachusetts, and New York haven’t decided whether — or to what extent — natural gas can remain in their energy mixes. But the point of these investigations is much larger than those questions. There’s no established roadmap for managing the transition to zero-emissions buildings, and there are serious consequences to getting it wrong — huge cost burdens on residents, mass layoffs and bankruptcies at utilities, and of course, climate disaster.
Trump Overhauls Key Environmental Law To Speed Up Pipelines And Other Projects : NPR - In Atlanta today, President Trump announced a "top to bottom overhaul" of the regulations that govern one of the nation's most significant environmental laws. The aim is to speed up approval for major projects like pipelines and highways, but critics say it could sideline the concerns of poor and minority communities impacted by those projects, and discount their impact on climate change. Speaking at a UPS facility, Trump decried the "mountains and mountains of bureaucratic red tape in Washington, D.C.," and recalled being frustrated by it as a builder in New York. He said one of the first projects to benefit from his streamlining would be the expansion of a freeway south of Atlanta. "We are reclaiming America's proud heritage as a nation of builders and an nation that can get things done," he said. The 50-year-old National Environmental Policy Act, or NEPA, was signed into law by President Richard Nixon. It requires federal agencies to consider the environmental effects of proposed projects before they are approved. It also gives the public and interest groups the ability to comment on those evaluations. The administration's new regulations are expected to reduce the types and number of projects that will be subject to review under the NEPA, shorten the timeline for reviews, and drop a requirement that agencies consider the cumulative environmental effects of projects, such as their contribution to climate change. The changes weaken a law that's played a major role in limiting the Trump administration's agenda of "energy dominance." In just the last week, environmental reviews have sidelined a series of controversial oil and gas pipeline projects, including the Keystone XL, the Dakota Access and the Atlantic Coast pipelines. But environmental groups warn the new rules will sideline the environmental effects of pipelines, highways and other projects. "What the Trump administration is doing is fundamentally changing those regulations and really gutting them," says Sharon Buccino, a senior attorney at the Natural Resources Defense Council. What's more, Buccino says the law was designed to give a voice to communities long hurt by pollution from highways, pipelines and chemical plants that are disproportionately located in their neighborhoods. "NEPA gives poor and communities of color a say in the projects that will define their communities for decades to come. Rather than listen, the Trump administration's plan aims to silence such voices," says Buccino. Trump announced the proposed rules at the White House in January and said he wanted to streamline an "outrageously slow and burdensome federal approval process" that can delay major infrastructure projects for years. He said the country's infrastructure used to be the envy of the world but red tape has delayed projects making the U.S. "like a Third World country." The average times for agencies to complete an environmental impact statement is currently 4 ½ years, says Mary Neumayr, chair of the White House Council on Environmental Quality. When the proposal was announced, she said this delay "deprives Americans of the benefits of modernized bridges and roads that enable them to get home to their families."
Destructive plan to search for oil in Southwest Florida retreats --The Conservancy’s long-term persistence has paid off, as the extremely destructive oil project proposed by Tocala, LLC has been withdrawn. Once in our sights, the Conservancy will fight against a bad project every step of the way. For the past six years, the environmentally sensitive lands of Collier and Hendry counties have been at direct risk of a damaging seismic survey that would have used thousands of explosive-laden shot holes to search for oil reserves. And for the past six years, the Conservancy of Southwest Florida and others in the environmental community have fought this plan. The ebb and flow of gas prices during that period map play a role in the project’s feasibility, but what’s clear is that the Conservancy’s long-term commitment to fight Tocala’s ill-conceived proposal has delayed the project for years. Thankfully, it now appears that Tocala’s thousands and thousands of proposed shot holes are no longer being pursued. These shot holes – up to 8,800 proposed at one point – would have been packed with explosives and placed up to 100 feet deep to create the seismic waves used to record the oil reserve data. The Conservancy identified that these shot holes would not only pock-mark the landscape, but also pose a threat to our aquifers. Shot holes can act as conduits for pollutants to enter our drinking water supply. Further, this large project, originally proposed on over 100,000 acres, also threatened endangered species. The project would have been located on a mix of public and private lands, but all of it is important habitat to the Florida panther and other imperiled species. Perhaps the most disturbing part of Tocala’s proposal was that its survey was going to include public lands like the Dinner Island Ranch Wildlife Management Area. As a member of the Ranch’s Management Advisory Group, the Conservancy has long expressed concern about how privately owned mineral rights under the Ranch could result in threats to surface resources on this 21,000+ acre preserve. Dinner Island Ranch was acquired specifically to protect Florida panther habitat and the habitats of other vulnerable species. Tocala’s project would have not only threatened wildlife, but also critical restoration projects.
Florida Defends Its Shores Ten Years After the BP Oil Disaster Was Finally Contained | Audubon - Ten years ago today, the BP Deepwater Horizon oil disaster, which killed up to 1 million birds, turned a corner. Following the oil rig’s initial explosion and sinking on April 20, 2010, the deep-sea well spewed 210 million gallons of oil into the Gulf of Mexico for 87 days. On July 15, 2010, after many unsuccessful attempts to stop the flow of oil, the well was finally capped. Research over the following 10 years has revealed that, in addition to the miles of oiled beaches in the Florida Panhandle, ocean currents had also carried oil just offshore of Tampa Bay, and as far away as the Atlantic Coast. Much still remains deep on the ocean floor. For many Floridians, this was not only a devastating disaster to a state known for pristine beaches, productive fisheries, and abundant wildlife—this was also a wake-up call. If the Sunshine State's environment and economy could be affected so much by an oil spill that started three states over in Louisiana, one can only imagine how dire the effects could be if drilling were allowed directly off Florida's coast. Congress is currently considering the National Defense Authorization Act, which authorizes funding for Department of Defense programs and activities, and this legislation presents an opportunity for an amendment to extend the ban on oil drilling off Florida’s coast. Sen. Marco Rubio has started the ball rolling in the Senate. He has submitted an amendment to extend the moratorium as part of the Act, but the Senate leaders must allow the vote. Ten years after the Deepwater Horizon disaster brought businesses like Jarvis’s to a halt and oiled vulnerable sea- and shorebirds, Audubon staff continue to work to prevent future disasters. We urge our elected officials to make the moratorium permanent, protecting the wildlife and coastal communities of the eastern Gulf of Mexico now and into the future.
Bayou Bridge Pipeline 'Trampled' Landowner Rights, Court Rules— A Louisiana appeals court ruled Thursday that Bayou Bridge Pipeline, which was constructed as the final stretch of the controversial Dakota Access Pipeline, “trampled” landowners’ rights when it cut across their properties without their permission. The company cut down hardwood trees, trenched and laid pipelines without ever first receiving authorization from property owners. Only after the property owners complained, the company sought the land it desired through eminent domain. The Third Circuit Court of Appeal for the state of Louisiana reversed a lower court’s ruling that the plaintiffs were entitled to just $150 apiece for their land and awarded them instead $10,000 plus legal fees for violation of the landowners’ due process rights. But the court said the pipeline company was entitled to take the land through eminent domain, since doing so is legal under Louisiana law. Louisiana is one of the few states where oil and gas companies can expropriate land if their project is deemed to be for public benefit. Judge Keith Comeaux of the 16th District Court in St. Martin Parish in a December 2018 order calculated, based on expert testimony from Energy Transfer Partners, that landowner plaintiff Theda Larson Wright was entitled to 37 cents for the land Bayou Bridge cleared and built the pipeline under and Peter K. Aalestad and his sister Katherine Aalestad should each receive $2.17. But Comeaux awarded them each $75 apiece instead for the land and another $75 for the trees Bayou Bridge cut down, though he agreed with the expert that the trees were worthless because the properties are so remote. The Atchafalaya Basin through which the Bayou Bridge Pipeline runs, is the largest remaining river swamp in North America, containing many old growth trees and endangered species. The 44-page order issued Thursday by the Third Circuit five-judge panel said Bayou Bridge Pipeline “trampled” the property owners’ due process rights as landowners when it “consciously ordered construction to begin” on their properties. Bayou Bridge “eviscerated the constitutional protections laid out to specifically protect those property rights. Therefore, we find the trial court committed legal error when it failed to compensate Defendants when BBP tread upon those constitutionally recognized rights,” the order said. The court found that Bayou Bridge violated the property owners’ rights and “[t]o decide otherwise would give entities such as BBP the unrestrained ability to decide whether another citizen’s property rights can be restricted and makes a mockery of the state’s carefully crafted laws of expropriation.”
Covington offshore operator places long-term bet on deepwater project despite recent downturn -- After about a decade in development, Covington-based LLOG Exploration is moving forward on an oil and gas discovery in the Gulf of Mexico despite a tumultuous market in the past few months. LLOG Exploration specializes in deepwater production and expects to drill inside a discovery known as Taggart which sits 140 miles southeast of New Orleans in the Gulf of Mexico under the Devils Tower Spar. The spar is owned by Williams, a publicly traded Tulsa, Oklahoma-based energy business. LLOG Exploration inked a deal with Williams, where the businesses would use a tie-back, which refers to an underwater connection between a new oil and gas discovery and an existing production facility. In recent months, the Louisiana oil and gas industry has struggled since several service businesses have filed for bankruptcy, on-shore exploration businesses are shutting in wells and oil futures plummeted below $0 per barrel at one point while there was a glut of oil and gas in storage tanks. As of Friday, there are 12 active rigs in the Gulf compared to 26 rigs one year ago. Across Louisiana, there are 31 rigs which include on-shore and offshore facilities down from 69 rigs one year ago. But LLOG Exploration is bullish that its investment will pay off, especially since it won't go into production until 2022. "We recognize the current challenging oil market, but we believe that we will see improved pricing in the market," said the company in a statement. "LLOG believes that smart investment through a down cycle can create advantaged barrels as we see pricing recovery over the full life of the project."
U.S. gives Delfin another year to build Louisiana floating LNG project - (Reuters) - U.S. energy regulators on Wednesday granted Delfin LNG a second one-year extension until September 2021 to complete its proposed floating liquefied natural gas export facility off the coast of Louisiana. The U.S. Federal Energy Regulatory Commission in September 2017 authorized Delfin to build its project by September 2019. The company in June 2019 asked FERC for a 3-1/2-year extension, but the agency only gave it one more year until September 2020 to finish the project. Since Delfin still has not started building the facility, it asked the FERC in June for a second one-year extension, which the agency approved on Wednesday. Delfin’s project seeks to use existing offshore pipelines to supply gas to up to four vessels that could produce up to 13 million tonnes per annum (MTPA) of LNG or 1.7 billion cubic feet per day (bcfd) of natural gas. In the past, the company said it planned to make a final investment decision (FID) to build the facility in 2020, which should enable it to enter service in mid-2024.
Buckeye starts crude exports from Corpus Christi's South Texas Gateway terminal — Buckeye Partners said it started loading the first cargoes of crude oil for export on July 16 from its brand-new South Texas Gateway terminal at the Port of Corpus Christi. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up While US crude exports have slipped amid the coronavirus pandemic, the Port of Corpus Christi became the nation's top crude-exporting hub late last year. The Aframax Minerva Libra began loading 789,484 barrels of crude destined for Northwest Europe, according to data from Kpler, a data intelligence company, and S&P Global Platts. "The milestone reached by Buckeye Partners on loading its first vessel at the South Texas Gateway Terminal is monumental, particularly as our nation's economic recovery from COVID-19 gets underway," said Port of Corpus Christi CEO Sean Strawbridge in a statement. "The oil and gas industry has gone through a period of unprecedented demand destruction that is only now beginning to show signs of reversing. The loading of this vessel with crude from the Permian Basin is a sign that this economic downturn is changing direction." Operations are expected to ramp up as additional phases of construction are completed by the first quarter of 2021. When fully operational, the terminal will be able to export 800,000 b/d from two deepwater docks. The terminal will have 8.6 million barrels of storage capacity with the ability to expand to about 10 million barrels, according to Buckeye. A third deepwater dock also could be added. Houston-based Buckeye owns 50% of the terminal with Phillips 66 Partners and Marathon Petroleum each own 25%. "This world-class facility will play a critical role in serving global energy markets from South Texas and the Port of Corpus Christi," said Khalid Muslih, Buckeye president of global marine terminals.
Fracking Services Company Files for Chapter 11 - Hi-Crush Inc has revealed that it has voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. The company made the filings to implement the terms of a restructuring support agreement it has entered into, Hi-Crush outlined. This agreement is said to be with certain noteholders collectively owning or controlling approximately 94 percent of the aggregate outstanding amount of the company's 9.5 percent senior unsecured notes due 2026. The terms of the agreement provide for a comprehensive restructuring of the company's balance sheet to be implemented through the commencement of Chapter 11 cases, according to Hi-Crush. The company said the prearranged plan, if implemented, will result in the elimination of approximately $450 million of unsecured note debt and an ongoing reduction in annual interest expense of greater than $43 million. Hi-Crush said that during the Chapter 11 proceedings, the company will continue to operate its business in the normal course without disruption to its vendors, customers, or employees, and added that it will have sufficient liquidity to meet its financial obligations during the restructuring process. “We are very pleased to have reached this agreement with our various lenders,” Robert E. Rasmus, chairman and chief executive officer of Hi-Crush, said in a company statement which was posted on Hi-Crush’s website. “The agreement will allow Hi-Crush to maintain normal operations and continue delivering high quality services to our customers. We will also significantly improve our balance sheet and enhance our company's financial flexibility over the near and long-term,” he added. “We expect to emerge from this process in an even stronger market position, with an enhanced ability to execute on our operational strategy and grow our business over the long-term,” Rasmus continued. Hi-Crush describes itself as a fully-integrated provider of proppant and logistics services for hydraulic fracturing operations. The business offers frac sand production, advanced wellsite storage systems, flexible last mile service and innovative software for real-time visibility and management across the entire supply chain, according to its website.
Risk of premature births 50% higher for mothers near flaring - Houston Chronicle- The practice of burning excess natural gas during drilling operations significantly increases the risk of premature births for mothers living nearby, according to an analysis of births in the South Texas region encompassing the Eagle Ford Shale.When done in high amounts, the practice, known as flaring, was associated with a 50 percent greater chance of preterm birth compared to women with no exposure, according to the analysis by researchers at the University of Southern California and University of California Los Angeles. Researchers analyzed more than 23,000 births in the Eagle Ford region between 2012 and 2015.The study was published Wednesday in the peer-reviewed Environmental Health Perspectives journal. “It’s a pretty large effect,” said Lara Cushing, an assistant professor of environmental health sciences at UCLA’s Fielding School of Public Health and one of the authors. “It’s on par with what you see for moms who smoke during pregnancy compared to moms who don’t.” A high amount of flaring was defined as 10 or more nightly flare events within three miles of the pregnant woman’s residence. Using satellite observations, researchers estimated that more than 43,000 flaring events occurred in the Eagle Ford region between 2012 and 2016.Flaring releases chemicals including benzene, fine particulate matter, carbon monoxide, carbon dioxide and nitrogen oxides, pollutants that contribute to climate change and have been linked to harmful human health effects. The practice of flaring increased with the fracking boom as companies drilling for more lucrative oil sought to get rid of the cheaper natural gas that comes out of the ground with the crude. Without pipeline capacity to get the gas to market, oil companies sought and received permission from Texas regulators to burn it away. Oil companies operating in the Permian Basin of West Texas burned a record $750 million worth of natural gas in 2018, or 238.1 billion cubic feet, according to a report by the Institute for Energy Economics and Financial Analysis, a nonpartisan group in Ohio that researches industry trends. The Texas Oil and Gas Association, a trade group, said the methodology of the preterm birth study is problematic because it used proximity to flaring as an indicator of exposure. TXOGA also noted that the study’s authors said that more research would be necessary to establish a link between flaring and preterm birth rates.
Stitt recommends energy firm CEO to head Oklahoma Commissioners of the Land Office -- The CEO of an oil and gas company that allegedly shorted the Oklahoma Commissioners of the Land Office on royalty payments is being recommended by Gov. Kevin Stitt to serve as the new head of that state agency. Stitt is recommending that Elliot Chambers, CEO of White Star Petroleum Holdings LLC, be appointed as the new secretary of the Commissioners of the Land Office, an agency that manages public lands and a trust funds for the benefit of education. A special CLO meeting is scheduled for 8 a.m. Tuesday to consider the appointment. White Star Petroleum filed for bankruptcy in May 2019, listing the Commissioners of the Land Office among thousands of creditors. When White Star sought permission through bankruptcy court to auction off its leases, an attorney for the CLO objected, stating White Star first needed to get written permission from the CLO and pay the royalty payments it had shorted the agency plus interest that had accrued. Documents obtained from the CLO through an Open Records Act request show that the agency calculated the money it was owed to be $207,233.62 and noted that White Star had failed to include certain statutorily required details on its check detail report, forcing the agency to use estimates. White Star challenged the amount but eventually agreed to pay a settlement amount of $176,148.57. The CLO governing board approved that settlement in February but The Oklahoman checked with the CLO Friday and was told the agency still hadn't received its money
Environmental Groups Argue Details Are Missing On Proposed Wisconsin Pipeline Relocation --Multiple environmental groups say a Canadian energy firm hasn't provided enough information for state regulators to decide whether to grant waterway and wetlands permits for a proposed pipeline relocation project in northern Wisconsin. Regulators and the company say details have yet to be submitted and reviewed. But the Wisconsin Department of Natural Resources said it's made a tentative decision to approve the permits with modifications. Enbridge Inc. is proposing a roughly 40-mile reroute of Line 5 outside the Bad River Reservation in Ashland and Iron counties that would cross more than 180 waterbodies and temporarily impact at least 109 acres of wetlands. Enbridge is looking to move its pipeline after the Bad River Band of Lake Superior Chippewa filed a lawsuit to shut down and remove Line 5 from the tribe's reservation. Midwest Environmental Advocates (MEA) and nine other organizations submitted comments, raising concerns about the route, surveys and plans that have yet to be completed. "DNR seems to be proceeding through the process without a complete permit application, which is really troubling," said Rob Lee, MEA staff attorney. The agency contends it's still early in the process with more work yet to be done, according to Ben Callan, the agency's section chief of integration services within the Bureau of Environmental Analysis and Sustainability. While the application is deemed complete, he said that doesn't mean that the project has met the agency's standards.Callan added the agency plans to incorporate public input as part of an environmental impact statement, which must be completed before any decision is made. Callan said a timeline for that review hasn't been determined. He noted the EIS would include details on the environmental and socioeconomic impacts of the project, which would also be subject to public comment. However, the groups highlighted that Enbridge has yet to identify the exact route since it's still working with landowners to acquire property for the project. MEA also argues that Enbridge has failed to provide accurate or sufficient information on specific waterway crossings and its plans to avoid or minimize environmental impacts, as well as ownership information. Groups said the company informed regulators that it had only completed surveys for about 70 percent of affected waters.
Midstream oil sector facing end of growth era as ominous earnings season looms — The midstream oil sector enters the earnings season for one of the toughest quarters in the industry's history as its struggles to manage lower crude volumes, project delays, and wary investors all amid an ongoing pandemic that's far from under control in North America. After years of rapid growth from Texas to Alberta to keep up with surging oil production volumes, the midstream sector suddenly sees itself overbuilt much more quickly than expected and facing shrinking flows of both crude and cash. The second-quarter earnings cycle kicks off first with reports from rail companies and then gets into the biggest pipeline players, such as Enbridge and Enterprise Products Partners, at the end of July with analysts mostly looking past weak quarterly earnings and paying more attention to forward-looking guidance. Existing contracts with minimum-volume commitments keep the pipeline firms' bottom lines from being decimated as badly as the oilfield services sector, but the pain is still tangible. "The midstream companies are frustrated because they want more investors to take a look at them," said Pearce Hammond, a midstream analyst with Simmons Energy. "There are supply-and-demand worries, and concerns that the dividends aren't sustainable. And then the environmental issues are even more tricky and challenging." It certainly doesn't help that earnings reports are coming following a series of major setbacks for individual pipeline projects, including the still-pending, court-ordered shutdown of the three-year-old Dakota Access Pipeline, the continued legal suspension of the long-delayed Keystone XL Pipeline, and the decision to outright cancel the Atlantic Coast gas pipeline that was still facing a myriad of legal and regulatory hurdles. As Morningstar's director of oil research, Sandy Fielden, put it, "No one is building any pipeline anymore. And, if they are, it's against the backdrop of a never-ending struggle in the permitting process. And what's the value of doing that anyway?" Supply and demand The broad consensus is the second quarter likely will represent the low point in the coronavirus-induced crash in the oil sector. But US crude production remains about 2 million b/d below its mid-March level and there are a wide variety of opinions about how quickly global demand will recover and whether the US shale sector will be able to follow. "They built for 13 million b/d of US oil production or higher, and we're way below that right now," Hammond said. "US oil production is not going to hit its previous highs for awhile, so global demand is really going to be key." "And the midstream companies are wanting to save on capital spending, so they're not eager to move on new projects right now," he added.
Federal ruling on Weld County emissions could make life harder for oil and gas industry – A federal appeals court ruled Friday that an emissions-heavy section of northern Weld County that’s currently excluded from limits on air pollution imposed on the Denver metro area should be counted, potentially ratcheting up pressure on the oil and gas industry to operate more cleanly or cut output. The U.S. Court of Appeals for the District of Columbia Circuit determined that the Environmental Protection Agency incorrectly left a swath of Weld County abutting the Wyoming state line out of the nine-county “nonattainment” area that centers on Denver, meaning emissions from hundreds of oil and gas wells in that part of the county could soon be added to the metro area for air pollution measurement purposes. Robert Ukeiley, senior attorney for the Center for Biological Diversity, said the ruling effectively means that Weld County energy operations near the Wyoming border will have to “comply with the more protective standard” that the metro area is under in terms of their emissions output. “Oil and gas, including in northern Weld County, is responsible for our smog problem, and the court told the EPA enough is enough,” Ukeiley said. “You have to get (the industry) to reduce their pollution.” The ruling from the appeals court sends the matter back to the EPA for further consideration. The lawsuit against the EPA was brought by the Center for Biological Diversity, the Sierra Club, the National Parks Conservation Association and the Boulder County Board of Commissioners. Heat and sunlight bake pollutants, including some of the chemicals emitted by oil and gas operations, to form ozone, or smog. For more than 15 years, Colorado has flunked federal air quality health standards with ozone air pollution exceeding a decade-old federal limit of 75 parts per billion, which was tightened to 70 parts per billion under President Barack Obama. The World Health Organization recommends no more than 50 parts per billion to protect human health.
Conservation groups file new lawsuit against Keystone XL pipeline - (UPI) -- A coalition of conservation and landowner groups sued the Trump administration Tuesday challenging its approval for construction of the Keystone XL pipeline through federal lands in Montana. Filed in the U.S. District Court for the District of Montana, the lawsuit by the Bold Alliance, the Center for Biological Diversity, the Sierra Club and others accuses the Bureau of Land Management and the U.S Fish and Wildlife Service's review of the project of being "riddled" with errors and omissions and their approval of its constriction was made "in reliance of flawed data and outdated spill response plans." "The Keystone XL project was never in the public interest, yet this administration continues to flaunt key environmental lases in its effort to promote the dirty and dangerous pipeline," Jared Margolis, senior attorney at the Center for Biological Diversity, said in a statement. "The project would be devastating for the people and wildlife in its path, and regulators have repeatedly failed to fully address its environmental risks, including oil spills." According to the lawsuit, the Bureau of Land Management unlawfully granted a right-of-way and temporary use permit for the pipeline on Jan. 20 as it based its decision on environmental review documents that violate the National Environmental Policy Act, the Endangered Species Act and the Administrative Procedure Act.The lawsuit also accuses the Bureau of Land Management of violating other statutes when it issued a notice that it would proceed with construction of the pipeline prior to being granted all the permits necessary, several of which still remain outstanding. "The Trump administration keeps trying to fast-track and rubber-stamp the boondoggle Keystone XL pipeline project, but they keep losing 'bigly' every time we take them to court," Bold Alliance founder Jane Kleeb said in a statement mocking President Donald Trump who used the non-word in a debate while he was running for the country's highest office. The lawsuit is the latest to bog down construction of the controversial project that upon completion would deliver some 830,000 barrels of crude tar sand oil a day from the Canadian city of Hardisty, Alberta, to Steel City, Neb.
Open valve leads to crude oil spill in western North Dakota (AP) — An open valve led to a crude oil spill on a well pad in western North Dakota, state environmental officials said. The North Dakota Department of Environmental Quality was notified Wednesday of the spill that happened Tuesday northeast of Fairfield in Billings County. Operator Scout Energy Management, LLC estimates about 7,560 gallons of oil were released, impacting rangeland. Officials said a valve was left open on a recirculation pump due to human error. Personnel from the agency are inspecting the site and will continue to monitor the investigation and remediation.
Federal appeals court temporarily halts Dakota Access pipeline shutdown - — A federal appeals court on Tuesday temporarily halted a judge’s order that the Dakota Access Pipeline be shut down in three weeks. The U.S. Court of Appeals for the District of Columbia Circuit issued an “administrative stay” of the judge’s order. Though the appeals court said it “should not be construed in any way as a ruling on the merits” of the case, the Bismarck Tribune reported. The stay will remain in place until the appeals court rules on whether developer Energy Transfer can keep oil flowing while the court decides the Texas-based company’s appeal of the shutdown order. U.S. District Court Judge James Boasberg last week ordered the line shut down by Aug. 5 pending a lengthy environmental review. The line began pumping oil more than three years ago. Energy Transfer estimates it would take three months to empty the pipeline of oil and complete steps to preserve it for future use. Pipeline supporter GAIN Coalition, which includes businesses, trade associations and labor groups, called the order “a key step forward in reaffirming the Dakota Access Pipeline’s critical role in the American energy infrastructure network.” North Dakota Republican U.S. Sen. Kevin Cramer, another supporter, called the temporary halt “common sense.” But Earthjustice attorney Jan Hasselman, who represents the Standing Rock Sioux Tribe, said the move is not significant. Hasselman said in a statement an administrative stay is typical and “is not in any way indicative of how the court is going to rule — it just buys the court a little additional time to make a decision.” The line was the subject of months of protests in 2016 and 2017, sometimes violent, during its construction near the Standing Rock Sioux Reservation that straddles the North Dakota-South Dakota border. The tribe took legal action against the pipeline even after it began carrying oil from North Dakota across South Dakota and Iowa and to a shipping point in Illinois in June 2017. The $3.8 billion, 1,172-mile pipeline crosses beneath the Missouri River, just north of the reservation. The tribe draws its water from the river and has concerns about pollution. The company maintains the line is safe.
North Dakota's oil production dropped a record 30 percent in May - May was not a merry month for the oil and gas industry in North Dakota, with production dropping by record amounts for a second month in a row. North Dakota oil production fell 30 percent month over month to 850,000 barrels per day in May, setting a back-to-back record with April, when production fell a record 15 percent to 1.2 million barrels per day. That’s the lowest production has been since 2013. Natural gas production, meanwhile, dropped a record 23 percent to 1.9 billion cubic feet per day. That followed on April’s record 14 to 15 percent decline to 2.7 billion cubic feet per day. “Every operator was shutting in everything,” North Dakota Director of Mineral Resources Lynn Helms said. “We just saw a tremendous decline.” The inactive well count has hit 6,100 — the highest ever — triple what it was in April. Curtailment, however, is higher than even that number reflects. According to figures from North Dakota Pipeline Authority Justin Kringstad, the number of wells shutting in at least 75 percent of production is 6,700. These wells are spread across the Bakken map. They are not in particular areas, they don’t reflect particular well types, and they are not limited to any particular operators. Helms said the bottom has probably already been reached, and predicted better numbers when July production is reported two months from now. “By the time July numbers come out, we may be back to that million number or higher,” he said. Prices, meanwhile, were terrible for May, while differentials were worse, Helms said. Differentials refer to the cost of transporting oil and gas to markets. The average differential for WTI and North Dakota crude was $14 on a $28 barrel. “There was no incentive for North Dakota operators to produce and market North Dakota crude oil, unless they had that crude oil hedged,” Helms said. “And there was a significant amount of hedging that was out there. That is kind of what sustained activity as it was in the month of May.” Even that support may turn out to be thin, given the legal issues facing Dakota Access pipeline, ordered by a federal court to shut down by Aug. 5 while more environmental study is done. A temporary stay of that shutdown is in place for now, while a higher court determines whether it should stand.
Federal judge blocks Trump administration's easing of rule on methane emissions - (Reuters) - A federal judge in California late on Wednesday blocked a rollback by the Trump administration of a rule on slashing emissions of the powerful greenhouse gas methane from oil and gas operations on federal and tribal lands. U.S. District Judge Yvonne Rogers of the Northern District of California said in her ruling that the administration’s easing of the Waste Prevention Rule was contrary to the Interior Department’s mandate to ensure safe and responsible drilling on public lands, and failed to consider scientific findings relied upon by previous presidential administrations. The Obama-era rule was meant to curb emissions from flaring and venting of natural gas and to reduce leaks. The Obama administration said the rule would fight climate change and wasted fuel costs. The ruling was the latest blow to the Trump administration, which has pursued a policy of energy dominance, or maximizing fossil-fuel production while slashing regulations that protect the environment. The courts have also recently blocked pipelines, Keystone XL and Dakota Access. Methane, an invisible gas, is more efficient in trapping heat than carbon dioxide, the main greenhouse gas. But it lingers for less time in the atmosphere, so reducing methane emissions could help rein in the worst impacts from climate change and warming. The Interior Department eased the rule in September 2018, by reducing the amount of methane required to be captured at drilling locations and relaxing measures on well completions and leak detections. David Bernhardt, now secretary of the interior, said at the time the rule would “encumber energy production” and prevent creation of jobs. Leaks from U.S. oil and gas drilling, along with a boom in agricultural production worldwide, are driving up global emissions of methane, two studies showed this week. California Attorney General Xavier Becerra said the ruling was crucial to addressing air pollution generated from his state’s public lands.
Calif. Operator Files Chapter 11 Bankruptcy-- California Resources Corp. filed for bankruptcy with a plan to hand ownership to lenders, kicking off what could turn into the next wave of collapses among oil drillers and the businesses that depend on them. Under a proposal the company negotiated with senior lenders as part of its bankruptcy planning, shareholders will be wiped out and investors holding the company’s $1.3 billion, 2017 loan will get 93% of a reorganized California Resources. Lower-ranking creditors will share 7% of the new company if they vote in favor of the proposal. The plan must be approved by U.S. Bankruptcy Judge David R Jones after lower-ranking creditors have a chance to object. The company joins more than 200 oil explorers that have filed for court protection since 2015, and more may be coming in a matter of weeks. Denbury Resources Inc. and Noble Corp. missed their July debt payments, and Chaparral Energy Inc. asked lenders for more time, setting them on course for a possible default. With oil prices hovering around $40 a barrel, the industry simply isn’t able to support debts taken on when prices were near peak levels. California’s biggest crude producer has been weighed down by massive borrowings since its spinoff from Occidental Petroleum Corp. in late 2014, right at the start of the previous downturn in the crude market. Low levels of cash and stricter state drilling regulations added to the pressure on California Resources, despite a $320 million investment from Tom Barrack Jr.’s Colony Capital Inc. last year. The company said it owed more than 50,000 creditors about $6.1 billion, according to a Chapter 11 petition filed in federal court in Houston. About $5 billion of those liabilities are funded debt that may be reduced as part of the reorganization.
Bankrupt Fracking Companies Are Harming the Climate and Taxpayers - Fracking companies are going bankrupt at a rapid pace, often with taxpayer-funded bonuses for executives, leaving harm for communities, taxpayers, and workers, the New York Time reports. Nearly 250 U.S. oil and gas companies are expected to file for bankruptcy by the end of next year — more than went under in the last five years combined — as demand craters due to the pandemic, a global price war, and falling renewable energy prices. These failing companies often neglect well maintenance and plugged well repairs to save money, causing tons of ultra-heat-trapping methane to continue gushing into the atmosphere. Shale wells typically cost $300,000 to close — far more than the estimates used by companies, regulators and financial analysts — and an analysis prepared for the Times found companies have failed to reserve sufficient funds, as required by law, to remediate their well sites, leaving taxpayers to foot the cleanup bill. As a result, early estimates show substantial increases in methane concentrations over Texas and New Mexico oil fields in March and April 2020 compared to the previous year. The Trump administration is seeking to effectively eliminate methane leak detection and repair requirements. One drilling site, abandoned by Extraction Oil & Gas in Greeley, Colorado, is situated just 700 feet from an elementary school serving the community's fast-growing immigrant population where air pollution monitors recorded 100 periods of elevated levels of toxic benzene over the course of seven months last year. Those wells were originally planned to lie closer to a more affluent, majority white charter school, but were moved after an outcry from that school's parents. Extraction Oil & Gas paid 18 of its officers and key employees a combined $6.7 million in "retention agreements" last month, three days before it filed for bankruptcy protection. Extraction is hardly alone, Chesapeake Energy declared bankruptcy in May after paying $25 million in executive bonuses just weeks before. Diamond Offshore Drilling got a $9.7 million COVID-stimulus tax refund in March and then paid its executives the same amount as cash incentives to remain with the company as it undergoes bankruptcy proceedings. "It seems outrageous that these executives pay themselves before filing for bankruptcy," "These are the same managers who ran these companies into bankruptcy to begin with."
US oil, gas rig count rises for first time in over 4 months, up 9 on week: Enverus — After more than four months of weekly decreases, the US oil and gas rig count rose by nine to a net 288 the week ending July 15, rig data provider Enverus said, signalling a a widely awaited trough to a difficult year for the upstream industry grappling with the coronavirus and its devastation of crude demand. Stay up to date with the latest commodity content. Sign up for our free daily Commodities Bulletin. Sign Up The rise in rig activity marked a cessation of weekly rig count decreases which from early March to July reached a total loss of nearly 560 rigs from domestic fields. For the week ended July 15, oil rigs rose by 10 on week to 202, while rigs chasing natural gas fell by one to 86. Rigs rose nominally across most of the largest basins, although they dropped by two in the Permian Basin, the US' biggest petroleum play, leaving 131. Also shedding two rigs was the Utica Shale, mostly found in Ohio, leaving seven rigs. The Eagle Ford Shale of South Texas and the SCOOP/STACK play of Oklahoma gained two rigs each, for totals of 12 and 10, respectively. The Williston Basin of North Dakota/Montana (12 rigs), the Haynesville Shale of East Texas/Northwest Louisiana (34 rigs), and the Marcellus Basin mostly in Pennsylvania (28 rigs) all gained one rig each. Click here for full-size image. Matt Andre, analyst for S&P Global Platts Analytics, said the continued rig decline in the Permian is likely a result of rig contracts rolling off. "But all non-Permian major oil basins have apparently stabilized, that is, stopped declining for the most part," Andre said. All major oil basins have been severely affected by rig reductions since mid-March. The Permian at its lowest was down 297 rigs, or 69%, over the four-month period, while the Bakken was down 41 rigs, or 79%, and the Eagle Ford was down 65 rigs, or 87%.
Bill to hobble development of ANWR and Tongass advances in US House - Alaska Public Media The U.S. House Appropriations Committee approved a bill Friday that would erect barriers to oil development in the Arctic National Wildlife Refuge and logging in the Tongass National Forest.The provisions are tucked into the Democrats’ appropriations bill for the Interior Department and the Forest Service. The Republican-led Senate is sure to block them, so the measures serve primarily as a statement of Democratic values and to draw attention to what environmentalists view as endangered land in Alaska.One provision says the government can only auction off drilling rights on the Coastal Plain of the Arctic Refuge with a minimum bid of half a billion dollars.The Interior Department is expected to announce an ANWR lease sale soon. Alaska’s delegation in Congress wants to see the area developed. But Alaska’s sole House member isn’t on the appropriations committee, so it fell to Rep. Dan Newhouse to try to remove the ANWR provision. “In addition to creating new jobs in Alaska and across the nation, opening this minuscule area to oil exploration, empowers the United States to reduce our dependence on foreign sources of oil and expand our domestic energy supply,” Rep. Newhouse, R-Wash., said during the House Appropriations Committee’s session on the bill. Newhouse’s amendment also aimed to remove a sentence in the bill to block new logging roads in the Tongass. The Newhouse amendment failed, leaving the anti-development measures for the Tongass and the Arctic Refuge in the bill. The legislation next goes to the full House, where it will likely pass. The Senate is working on its own bill. As Newhouse acknowledged during the debate, the Alaska provisions don’t stand much chance in the conference committee where the two bills will be reconciled.
Wolf Richter: The Great American Shale Oil & Gas Massacre: Bankruptcies, Defaulted Debts, Worthless Shares, Collapsed Prices of Oil & Gas - The Great American Oil Bust started in mid-2014, when the price of crude-oil benchmark WTI began its long decline from over $100 a barrel to, briefly, minus -$37 a barrel in April 2020. Bankruptcies of US companies in the oil and gas sector started piling up in 2015. In 2016, the total amount of debt listed in these filings hit $82 billion. Bankruptcy filings continued, with smaller dollar amounts of debt involved. In 2019, the shakeout got rougher.And this year promises to be a banner year, as larger oil-and-gas companies with billions of dollars in debt collapsed, after having wobbled through the prior years of the oil bust. The 44 bankruptcy filings in the first half of 2020 among US exploration and production companies (E&P), oilfield services companies (OFS), and “midstream” companies (gather, transport, process, and store oil and natural gas) involved $55 billion in debts, according to data compiled by law firm Haynes and Boone. This first-half total beat all prior full-year totals of the Great American Oil Bust except the full-year total of 2016: The cumulative amount of secured and unsecured debts that the 446 US oil and gas companies disclosed in their bankruptcy filings from January 2015 through June 2020 jumped to $262 billion: The three biggies: In the first half of 2020, nine of the 44 US oil and gas companies that filed for bankruptcy listed over $1 billion in debts, including the three biggies with debts ranging from $9 billion to nearly $12 billion, according to data by Haynes and Boone. These three companies – oil-field services companies Diamond Offshore and McDermott and natural-gas fracking pioneer Chesapeake – are the biggest in terms of debts that have toppled in the Great American Oil Bust so far. Those three companies combined listed $31 billion in debts, accounting for 56% of the $55 billion in total debts listed by all 44 companies to file so far this year: Since 2015, there have been 239 bankruptcy filings by oil-and-gas companies in Texas – the largest oil producing state in the US – of the 446 total US filings. So far this year, Texas accounts for 39 filings of the 44 total filings in the US. Of note, Chesapeake is headquartered in Oklahoma, but it filed in U.S. Bankruptcy Court for the Southern District of Texas and counts as a Texas bankruptcy. The Great American Fracking Bust took on absurd proportions when the price of WTI in the futures market plunged to minus -$36.98 on April 20, 2020, in an epic WTF moment for the entire oil industry. Since then, the price has bounced off and currently trades just over $40 a barrel, where the US fracking industry is still burning large amounts of cash: Surviving in this pricing environment for overleveraged permanently cash-flow negative companies in the fracking business has proven to be tough – and for investors, who kept buying their hype over the years, it has turned into a massacre. Investors have not only poured billions of dollars into supplying these companies with debt capital – including the $262 billion listed in bankruptcy filings since 2015 – but also into supplying them with equity capital as these companies sold new shares to raise money, and these billions in equity capital have now disappeared without trace. Those billions from those share sales don’t even get mentioned in bankruptcy filings.
Fracking Firms Fail, Rewarding Executives and Raising Climate Fears - The day the debt-ridden Texas oil producer MDC Energy filed for bankruptcy eight months ago, a tank at one of its wells was furiously leaking methane, a potent greenhouse gas, into the atmosphere. As of last week, dangerous, invisible gases were still spewing into the air.By one estimate, the company would need more than $40 million to clean up its wells if they were permanently closed. But the debts of MDC’s parent company now exceed the value of its assets by more than $180 million.In the months before its bankruptcy filing, though, the company managed to pay its chief executive $8.5 million in consulting fees, its top lender, the French investment bank Natixis, later alleged in bankruptcy court. Oil and gas companies in the United States are hurtling toward bankruptcy at a pace not seen in years, driven under by a global price war and a pandemic that has slashed demand. And in the wake of this economic carnage is a potential environmental disaster — unprofitable wells that will be abandoned or left untended, even as they continue leaking planet-warming pollutants, and a costly bill for taxpayers to clean it all up. Still, as these businesses collapse, millions of dollars have flowed to executive compensation. Whiting Petroleum, a major shale driller in North Dakota that sought bankruptcy protection in April, approved almost $15 million in cash bonuses for its top executives six days before its bankruptcy filing. Chesapeake Energy, a shale pioneer, declared bankruptcy last month, just weeks after it paid $25 million in bonuses to a group of executives. And Diamond Offshore Drilling secured a $9.7 million tax refund under the Covid-19 stimulus bill Congress passed in March, before filing to reorganize in bankruptcy court the next month. Then it won approval from a bankruptcy judge to pay its executives the same amount, as cash incentives. “These are the same managers who ran these companies into bankruptcy to begin with,” . MDC’s listed telephone number appears to be disconnected, and repeated attempts to contact its C.E.O., Mark Siffin, and the company’s bankruptcy lawyers were unsuccessful. Whiting Petroleum and Diamond Offshore did not respond to requests for comment, and Gordon Pennoyer, a Chesapeake spokesman, declined to comment. Almost 250 oil and gas companies could file for bankruptcy protection by the end of next year, more than the previous five years combined, according to Rystad Energy, an analytics company. Rystad analysts now expect oil demand will begin falling permanently by decade’s end as renewable energy costs decline, energy efficiency improves, and efforts to fight climate change diminish an industry that has spent the past decade drilling thousands of wells, transforming the United States into the biggest oil producer in the world. The environmental consequences of the industry’s collapse would be severe. Even before the current downturn, methane, a powerful greenhouse gas, was being released from production sites in America’s biggest oil field at more than twice the rate previously estimated, according to a recent study based on satellite data. Some experts say that with the industry in disarray, efforts to fix leaks of methane, which pound for pound can warm the planet more than 80 times as much as carbon dioxide over a 20-year period, may fall by the wayside. Low natural gas prices may lead to increases in flaring or venting, the intentional release of excess gas, the International Energy Agency said this year.
Biden says fracing “not on the chopping block” in his $2 trillion climate plan - --Joe Biden on Tuesday will unveil clean-energy and infrastructure plans that seek to balance progressives’ demands for bold action on climate against protecting swing-state jobs in a coronavirus-altered economy. Biden’s plan includes $2 trillion in spending over four years and sets the goal of a 100% clean-energy standard by 2035, people briefed on the proposals said. That’s more spending over a shorter period than the $1.7 trillion, 10-year plan that Biden had offered during the Democratic primary. The proposal is another key element of Biden’s broader plan to pull the U.S. out of the recession touched off by the pandemic as he builds his argument into the November election against President Donald Trump. With the energy plan, the Democratic nominee will seek to both revive the economy and address deeper systemic problems that existed before the virus hit. Yet the challenge for Biden lies in convincing progressive voters that he hasn’t left them short even as he set aside some of the more ambitious moves called for in the Green New Deal championed by left-wing Democrats including Representative Alexandria Ocasio-Cortez. During a virtual fundraiser Monday night with dozens of renewable energy developers and advocates, Biden said clean energy would offer an opportunity for American workers to rebound from multiple predicaments. “It makes it all easier in a bizarre way,” he said. “We’re facing a historic set of crises: a pandemic, an economic crisis and systemic racism. And the most sweeping crisis of all -- climate change -- touches each one, and it exacerbates the threats to global health and to the economy and racial justice.” Biden also said he understands the urgency to act, telling donors that “2050 is a million years from now in the minds of most people. My plan is focused on taking action now, this decade, in the 2020s.” In his initial climate proposal from June 2019, 2050 was the target for net-zero emissions.
2020 oil, gas drilling to hit at least 20-year low | Oil & Gas Journal -- The number of drilled wells globally is expected to reach around 55,350 this year, said Rystad Energy, the lowest level since at least the beginning of the century as oil and gas activity, including the drilling market both in terms of wells drilled and related demand for drilling equipment, has been stymied by the COVID-19 pandemic. The decline is a staggering 23% fall from 2019’s number of 71,946 wells. Rystad Energy’s forecast, which extends to 2025, does not expect last year’s number to be met or exceeded within the considered timeframe. Drilled wells are expected to partly recover to just above 61,000 in 2021, as governments ease travel restrictions, boosting oil demand and prices. Then numbers will rise further to just above 65,000 in 2022 and remain just below 69,000 until the end of 2025. North America is likely to be most affected, with the country’s rig count already down to historic lows just a few months into the downturn. Although modest recovery is possible in second-half 2020, drilling activity will remain more than 50% below the levels seen at the same time last year. Of the 55,350 wells to be drilled in 2020, 2,238 are offshore and 53,112 are onshore. Before the pandemic, Rystad Energy had expected total wells to rise year-over-year to 74,575, of which 2,896 would be offshore wells and 71,679 onshore wells. “Both new wells and drilling lengths will be pared down as E&P’s scale down investments, affecting the entire supply chain associated with these services. This includes drilling tools, which will decline by 35% in 2020 compared to 2019,” said Reza Hassan Kazmi, energy services analyst at Rystad Energy. When looking at drilling tools, Rystad Energy includes blowout preventers (BOPs), downhole drilling tools, drill bits, drill pipe, jars, drill collars, and other drilling tools except downhole pumps used for artificial lift, under the generic service segment. Drilling length, another key driver for drilling tools, especially for drill pipes, drill collars, heavy-weight drill pipes and drill bits, is also estimated to drop by 25% this year before improving in 2021. At a more granular level, such as the regional or country level, the percentage decrease in wells will not always result in a proportional reduction in total drilling lengths, as drilling depths per well could greatly vary between different regions and countries.
US warns firms about sanctions for work on Russian pipelines (AP) — The Trump administration is hardening its efforts to prevent the completion of new German-Russian and Turkish-Russian natural gas pipelines by warning companies involved in the projects they'll be subject to U.S. sanctions. Secretary of State Mike Pompeo announced Wednesday the administration is ending grandfather clauses that had exempted firms previously involved in the pipelines' construction from sanctions. The move will likely increase tensions in already fraught U.S.-European ties as well as anger Russia. It opens the door for U.S. economic and financial penalties to be imposed on any European or other foreign company for work on Nord Stream 2 and the second TurkStream line. The administration believes the pipelines will increase dependence on Russian energy.
Russias Nornickel fights cover-up accusations over Arctic oil spill (Reuters) - Pressure is mounting on Russian mining company Norilsk Nickel over an Arctic oil spill that has wiped about 17% off its share price, left it with a hefty compensation bill and exposed it to accusations of covering up the full extent of the damage. Nornickel, as it is better known, denies the cover-up allegations by green campaigners, a regional governor and a former official at Russia’s environmental watchdog, who have spoken out publicly and, in some cases, published tests, photographs and witness accounts to support their allegations. Their evidence, which Reuters has been unable to verify, shows diesel has spread into a lake and, according to witnesses, into a river that feeds into the Arctic Ocean. Nornickel, citing official tests and satellite images, denies pollution has spread into either body of water. It says it has contained the leak, from a power station near the industrial city of Norilsk on May 29, and that it has recovered 90% of the diesel by using containment booms and pumps. It also denies hiding the extent of the damage, saying the vast number of companies, regulators and others officials involved in the clean-up operation guarantees full transparency. “We cannot imagine how it would be possible to hide anything in such conditions,” a company spokeswoman said. “An investigation into the incident is being carried out by regulatory and monitoring agencies.” Reuters has no independent evidence to support the allegations that Nornickel has suppressed information. Nornickel’s shares fell 5% in one day in Moscow on Monday after Russia’s environmental watchdog demanded over $2 billion in damages. Nornickel said on Wednesday it disputed the size of the claim and the methodology used for its calculation. President Vladimir Putin in June chided Vladimir Potanin, the billionaire boss of Norilsk, for not replacing the source of the spill, a fuel tank, in timely fashion and said significant damage had been caused to the fragile Arctic environment. Potanin told Putin Nornickel would spare no expense to restore the environment and was committed to fund programs that would increase the deer population and maintain rare fish stocks. Nornickel has said publicly it is also committed to a federal investigation into the incident, takes full responsibility for what happened, and wants to avoid a repeat.
Philippine Oil Spill Threatens Recovering Mangrove Forests -An oil spill on July 3 threatens a mangrove forest on the Philippine island of Guimaras, an area only just recovering from the country's largest spill in 2006. This latest spill stems from an explosion onboard a floating power barge in the 13-kilometer (8-mile) waterway between the city of Iloilo and Guimaras Island. Operator AC Energy Inc. said the incident spilled 48,000 liters (12,700 gallons) of fuel oil into the Iloilo River and its tributaries before being contained eight hours later. But the Philippine Coast Guard said around 251,000 liters (66,300 gallons) of oil had spread around the waterway. The day after, July 4, the Coast Guard estimated it had collected 130,000 liters (34,300 gallons) of oil.Some of the oil was swept out of the containment area by strong waves and carried across to communities in Guimaras."The root cause has yet to be determined," AC Energy said in a statement. "But initial findings reveal that the discharge is due to the ignition of fuel oil in storage which ruptured the barge's fuel tank."AC Energy said it took responsibility for the explosion and that the cleanup could take around two weeks. Reports from the Iloilo City Disaster Risk Reduction Management Office (ICDRRMO) state that the oil spill has affected 321 families along the coast. The provincial office has ordered an immediate evacuation. The spill comes as a blow to residents of Guimaras, who, nearly 14 years ago, suffered a similar disaster on a bigger scale. On Aug. 11, 2006, the oil tanker M/T Solar, owned by Sunshine Maritime Development Corp. and chartered by Petron, the Philippines' largest oil company, sank off the southern coast of the island, leaking 500,000 liters (132,000 gallons) of bunker fuel. The mangroves only began to show signs of recovery last year, but are now threatened by this latest incident. The spill has disrupted the area's fishing sector, with fishers no longer going out to sea and aquaculture culture farms contaminated. Residents have reported milkfish and lobsters swimming in the oil slick and have reached out to their municipal offices for support.
PCG charges energy firm over oil spill in Iloilo City waters - — Authorities on Saturday said they had filed a complaint against a thermal energy company for the oil spill incident in Iloilo City over a week ago. The Philippine Coast Guard said that it sued Ayala-owned AC Energy, Inc., its president John Eric Francia and Power Barge 102 plant manager Roberto Gambito. The case was filed with the Iloilo Provincial Prosecutor’s Office on Friday for violation of Section 107 of the Fisheries Code. Under Section 107, those found administratively liable for aquatic pollution may face closure of their business and be ordered to pay up to P500,000 and “an additional fine of P15,000 per day until the violation ceases and the fines are paid.” The coast guard said in a statement that Commander Joe Mercurio of the Coast Guard Station–Iloilo, and their legal affairs team “found sufficient evidence to prove the negligence” of the firm and the two other respondents over the July 3 incident where around 48,000 liters of oil spilled into waters after AC Energy's Power Barge 102 in Lapuz district's Barrio Obrero exploded. The PCG reported that the explosion contaminated the coastal areas of approximately 23 communities in Iloilo City, municipality of Dumangas, and Guimaras as well as a one-hectare mangrove forest. The blast also displaced hundreds of families or 400 residents, the PCG added. PCG Commandant, Vice Admiral George Ursabia, Jr. said that rehabilitation of the affected forest and communities is still ongoing. About 72 percent of the oil has been recovered while the shoreline cleanup is 15-percent complete. Dr. Rex Sadaba of the University of Visayas advised PCG’s marine protection unit to wait for the spilled oil at the mangrove stems to dry first, the agency said.
"Four Times Worse Than Exxon Valdez Disaster": Decaying Oil-Laden Tanker Off Yemen A Ticking Time Bomb - For the past five years there's been a stranded oil tanker in the Red Sea off Yemen's coast, near the terminal of Ras Isa in an area controlled by Houthi rebels. It is loaded with 1.1 million barrels of crude oil and was deserted at sea when the war started, after Yemen's Houthis seized the Japanese-made vessel from Yemen's government. The United Nations is now warning that the badly damaged tanker - damage considered "irreversible" after it hasn't been worked on or maintained for over five years - is on the brink of a disastrous oil spill which "would be four times worse than Exxon Valdez" off Alaska in 1989, according to a UN official. The FSO Safer is already witnessing spillage into the sea and is in danger of sinking into the ocean altogether, new reports say.“Prevention of such a crisis from precipitating is really the only option,” Executive Director of the United Nations Environment Program Inger Andersen warned this week. “Despite the difficult operational context, no effort should be spared to first conduct a technical assessment and initial light repairs.”Time is running out, officials and environmentalists say. They also warn it could possibly explode, releasing dangerous toxic gases into the air, due to gas leakage after lack of maintenance. A UN team is currently attempting to gain access to the site to inspect it and initiate whatever temporary light repairs are possible. For years the Houthis have blocked access to any international inspections teams. However, the current heightened looming threat of a disastrous spill, and the potential to destroy local livelihoods and the environment for years to come, has reportedly led to a breakthrough, with permission recently being issued.
$16B LNG Funding Deal Bucks Slowdown - Total SA’s Mozambique liquefied natural gas project has completed as much as $16 billion in funding involving a score of banks, despite a slowdown in energy investment as the coronavirus hammers the global economy. It is the biggest foreign direct investment in Africa yet, according to law firm White & Case LLP, which advised the financiers. Financial close is expected by the end of September, it said. The African Development Bank will provide $400 million in senior loans and the Japan Bank for International Cooperation signed a loan agreement for as much as $3 billion for the scheme in northern Mozambique, they said Thursday in separate announcements. The amount raised, which includes a loan from the Export-Import Bank of the U.S., matches the African nation’s gross domestic product. Oil India Ltd., a partner, also confirmed the financing in a statement. A Maputo-based spokeswoman for the Total-led project didn’t respond to a request for comment. The financing achievement underscores the faith being shown in the $23 billion project known as Mozambique LNG. While crude oil has staged a partial comeback from the worst effects of the pandemic, the gas market continues to face a massive oversupply. Despite this, lenders are betting on the country’s location in southern Africa for ease of export, and the sheer size of gas deposits linked to the project. The project, which could be transformational for the country’s economy, still faces significant challenges including its location in an area where an Islamist insurgency began in 2017. Similar schemes, including Exxon Mobil Corp.’s Rovuma LNG to be built next to Total’s facility, have been delayed due to depressed energy prices and the pandemic. Mozambique LNG’s funding effort still raised $600 million more than planned, with pricing at pre-coronavirus levels, according to Societe Generale SA, the financial adviser for the project.
China refinery output hits record in June on strong margins, demand recovery - (Reuters) - China’s daily crude oil throughput in June climbed 9% from the same month a year earlier, hitting the highest level on record, as refiners ramped up processing on healthy margins amid a recovery in demand for gasoline and diesel. ADVERTISEMENT China processed 57.87 million tonnes of crude oil last month, according to data released by the National Bureau of Statistics (NBS) on Thursday, equivalent to about 14.08 million barrels per day (bpd). That was up from 13.63 million bpd in May, beating the previous record set in December last year. Throughput for the first half of this year totalled 319.09 million tonnes, equal to about 12.8 million bpd, up 0.6% from the same period a year ago. Refiners cranked up processing in the second quarter as domestic fuel demand started to recover, after deep production cuts during February and March when the coronavirus outbreak peaked in China. “Refinery processing was elevated in June as both state refiners and independents maxed out utilisation rates to capitalise on healthy margins,” said Chen Jiyao, a consultant with FGE, speaking ahead of the data release. Diesel demand was supported by new construction projects and a boost in manufacturing activity, while gasoline consumption saw a further recovery from the pandemic in June when China’s Dragonboat festival holiday boosted driving, said Chen.
Oil slips as traders eye supply cut easing at OPEC meeting - Oil steady ahead of OPEC meeting despite surge in COVID-19 infections - Oil prices were little changed on Monday as the market waits for direction from an OPEC meeting later this week that is expected to recommend an increase in output. That lack of price movement came despite concerns demand could take a hit if some governments reverse lockdowns after global coronavirus cases rose by a record daily amount. The World Health Organization reported a record daily increase in global coronavirus cases on Sunday, with the total up by more than 230,000. In the United States, infections surged over the weekend as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state. Brent futures fell 1 cent to $43.23 a barrel, while West Texas Intermediate crude rose 8 cents, or 0.2%, to $40.63. Oil traders remained on edge as the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts. OPEC and allies including Russia, a group known as OPEC+, are expected to ease their production cuts to 7.7 million barrels per day (bpd) after a recovery in global oil demand. "That seems a quite risky option, with the safer being a one month extension ... It may be time to brace for volatility once again," OPEC+ cut output by a record 9.7 million bpd for May, June and July. A gradual rise in oil demand as countries ease coronavirus lockdowns and record supply cuts by OPEC+ are bringing the oil market closer to balance, OPEC Secretary General Mohammad Barkindo said on Monday. Libya, meanwhile, re-imposed force majeure on all oil exports on Sunday because of a renewed blockade by eastern forces. The move comes only two days after Libya exported its first crude cargo in six months.
Oil prices drop on demand recovery fears amid U.S. virus surge - Oil prices fell around 2% in early trade on Tuesday on worries that new clampdowns on businesses to stem surging coronavirus cases in California and other U.S. states could threaten the nascent recovery in fuel demand. U.S. West Texas Intermediate (WTI) crude futures slid 84 cents, or 2.1%, to $39.26 a barrel at 0138 GMT, while Brent crude futures fell 77 cents, or 1.8% to $41.95 a barrel.Both benchmark contracts lost just over 1% on Monday.California's governor on Monday ordered bars to shut and restaurants, movie theatres, zoos and museums in the country's most populous state to cease indoor operations as coronavirus cases and hospitalizations soared.The state's two largest school districts, in Los Angeles and San Diego, also said they would teach only online when school resumes in August.California's moves follow the recent reinstatement of some restrictions in other states, such as Florida and Texas."With the California soft lockdown now framing the picture, July could be an even more challenging month for oil than expected with even more demand woes emanating from coronavirus-linked uncertainty," AxiCorp market strategist Stephen Innes, market strategist said in a note.The market will be closely watching data on fuel consumption due later on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration. Analysts estimate U.S. gasoline stockpiles fell by 900,000 barrels and crude oil inventories fell by 2.3 million barrels in the week to July 10, a preliminary Reuters poll showed. With fuel demand growth hampered, the market will also be eyeing the next move from the Organization of Petroleum Exporting Countries and its allies, together known as OPEC+, whose market monitoring panel is set to meet on Tuesday and Wednesday.
Oil end higher as traders weigh uncertainty over next move for OPEC+ - Oil futures erased earlier losses to end higher on Tuesday, getting a boost from some weakness in the U.S. dollar, as traders weighed uncertainty over the next move for OPEC+ on production levels, and a forecast for a weekly decline in U.S. supplies. Prices for oil remained vulnerable to losses in the wake of mounting tensions between the U.S. and China, as well as a continued rise in COVID-19 infections in the U.S. and elsewhere — both of which can hurt energy demand. “Crude prices reversed earlier losses as a weaker U.S. dollar persisted and gave most commodities a boost,” U.S. benchmark crude futures are back above the $40 level, but still below the last week’s key high of $41.08, he added. In a note, Moya attributed earlier price declines to “concerns OPEC+ could trigger a taper tantrum,” reducing the size of the current cuts of 9.7 million barrels per day to 7.7 million barrels per day, even as coronavirus restrictions are no longer steadily easing. “WTI crude will not be able to stay near the $40 level if coronavirus spread continues to damage reopening efforts that will be accompanied with much softer demand for crude,” he said. West Texas Intermediate crude for August delivery CL.1, -0.04% on the New York Mercantile Exchange rose 19 cents or 0.5%, to settle at $40.29 a barrel after trading as low as $39.07. September Brent crude BRN.1, -0.09%, the global benchmark, climbed by 18 cents or 0.4% at $42.90 on ICE Futures Europe. Analysts said the Monday decision by California Gov. Gavin Newsom to reverse the reopening of indoor operations at restaurants, bars, movie theaters and other venues in the state dented sentiment and could make a meeting this week by members of the OPEC+ alliance’s monitoring committee more interesting. “With the California soft lockdown now framing the picture, July could be an even more challenging month for oil than expected with even more demand woes emanating from coronavirus-linked uncertainty. So, it will be especially necessary for OPEC+ to present a centralized front while addressing these and other issues that may pop up,”
Oil rises slightly as OPEC+ complies with production cuts (Reuters) - Oil prices rose slightly on Tuesday as OPEC and its allies cut production by more than agreed to in June, although demand concerns lingered due to increased cases of COVID-19 in the United States. Brent crude LCOc1 futures settled up 18 cents at $42.90 a barrel, after moving lower earlier in the session. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 19 cents to $40.29 a barrel. Crude futures strengthened in post-settlement trading, rising after the American Petroleum Institute, a trade group, said U.S. crude inventories fell more than expected in the latest week. The market will be watching for additional weekly data Wednesday from the U.S. Energy Information Administration. [EIA/S] Analysts estimate that U.S. gasoline stockpiles fell by 600,000 barrels and crude oil inventories by 2.1 million barrels last week, a preliminary Reuters poll showed. The Organization of the Petroleum Exporting Countries and its allies led by Russia, collectively known as OPEC+, have delivered compliance of 107% with their agreed oil output cuts in June, an OPEC+ source said on Tuesday. The market is eagerly awaiting news from OPEC+ on the next level of production cuts. OPEC’s Joint Technical Committee meets on Tuesday, with the Joint Ministerial Monitoring Committee due to meet on Wednesday.
OPEC+ set to roll back some production cuts but risks sending prices lower again - OPEC+ production cuts have brought oil prices back from the brink, but the group will have to tread carefully to avoid triggering a new price collapse when it begins to reverse those reductions. The Joint Ministerial Monitoring Committee, which reviews OPEC+ production, meets on Wednesday, and will consider whether the the group should keep 9.6 million barrels a day off the market, or roll that back by about 2 million barrels a day, as sought by Saudi Arabia. OPEC+ has been policing its members and demanding high compliance of its latest round of cuts. "The question is, going forward, if you start easing, which they're going to do, can they keep it together or do they open the flood gates?" said Helima Croft, RBC head of global commodities strategy. "Can you hold discipline within the producer organization?" Croft said the wild card is whether there's another wave of Covid-19 cases, large enough to force more economic shutdowns or even a lockdown by another country. "There's a lot of optimism that the market can handle anything that is thrown at it, in terms of Covid," said Croft. "Does [ OPEC+] have enough of an early warning system? They're going to have to be really nimble because there's so much uncertainty about a second wave." Oil prices began to fall early in the year, on the decline in China demand as it shut parts of its economy due to the spreading virus. A price war between Saudi Arabia and Russia then made the situation worse, and in March, oil took a sharp leg down, as the U.S. and Europe took steps to lock down economic activity. By April, the price even sank into negative territory as investors got trapped in expiring futures contracts, in a market with no buyers and too much oil. West Texas Intermediate crude futures for August were at $40.52 per barrel Wednesday, trading flattish. Brent, the international benchmark was just above $43 per barrel. The International Energy Agency said last week that the worst effects of the coronavirus on oil demand have passed, but the impact will linger. It said oil demand would be down by 5.1 million barrels a day in the second half of 2020. While that's half of the 10.75 million drop in demand in the first half, the rise in oil prices could entice more producers to add oil to the market. "They're itching to put more oil on the market and cash in on this $40 a barrel price improvement they've gotten," said John Kilduff, partner with Again Capital. "I think it's a little early. I'm not sure the market can really absorb any additional barrels right now."
Oil Set To Plunge As OPEC Seeks To Boost Output By 2 Million Barrels -Four months after OPEC cobbled together a record production cut to offset the demand destruction unleashed by the covid-19 lockdowns, R-OPEC+ (i.e., OPEC plus Russia and a bunch of non-OPEC exporters) is set to slowly resume pumping more after an alliance of producers led by Saudi Arabia wants to increase oil production starting in August, amid signs that demand is returning to normal levels following coronavirus-related lockdowns Bloomberg and the Journal reported overnight.Bloomberg confirms as much, noting overnight that "having successfully doubled crude prices over the past few months through unprecedented output cuts, the OPEC+ alliance led by the Saudis and Russia is poised to begin unwinding these stimulus measures. As fuel demand recovers with the lifting of coronavirus lockdowns, the producers are about to open the taps a little." According to the report, alliance members will meet via zoom on Wednesday to debate the group’s current and future production, which include plans to restore some 2 million in production following the record production cut in April which saw Saudi Arabia push for a 9.7 million b/d in production stoppages as the pandemic led to a collapse of oil demand. More from BBG: The JMMC will consider whether the 23-nation alliance should keep 9.6 million barrels of daily output off the market for another month, or restore some supplies as originally planned, tapering the cutback to 7.7 million barrels. As the demand recovery gains traction, members are leaning toward the latter option, according to several national delegates who asked not to be identified. Shipping schedules for August are already being set, so the course is more or less locked in, one said. While all this sounds great in principle, in practice it will likely send the price of oil crashing because just as there was a massive uphill battle in April to get everyone on the same page (and even that did not stop oil from hitting a record negative price on April 20), so now that production quotas are being eased, the result will be a furious scramble to outproduce everyone else, as OPEC's most characteristic feature is exposed for the entire world to see: cheating. “If OPEC clings to restraining production to keep up prices, I think it’s suicidal,” a person familiar with the Saudis' thinking told the Journal. "There’s going to be a scramble for market share, and the trick is how the low cost producers assert themselves without crashing the oil price."
OPEC+ eases record oil cuts as economy recovers from pandemic - (Reuters) - OPEC and allies such as Russia agreed on Wednesday to ease record oil supply curbs from August as the global economy slowly recovers from the coronavirus pandemic but said a second wave of the virus could complicate rebalancing in the market. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day, or 10% of global supply, after the virus destroyed a third of global demand. From August, cuts will officially taper to 7.7 million bpd until December. However, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said the effective curbs would be deeper because countries which overproduced in May-June would make extra cuts in August and September to make up, so total cuts would end up amounting to about 8.1 million to 8.3 million bpd. “As we move to the next phase of the agreement the extra supply resulting from the scheduled easing of production cuts will be consumed as demand continues on its recovery path,” Prince Abdulaziz after a meeting of a ministerial advisory panel to OPEC+, known as the JMMC. He said Saudi oil exports in August would remain the same as in July because about 0.5 million bpd of extra barrels the kingdom was set to pump would be used domestically. Oil prices LCOc1 have recovered to almost $43 a barrel from a 21-year low below $16 in April. The recovery has allowed some U.S. producers to resume production. Russia and OPEC rely heavily on oil revenue but they will be keen not to push prices too high to give a further boost to rival U.S. oil output growth. On Tuesday, OPEC said it saw demand recovering by 7 million bpd in 2021 after falling by 9 million this year. However, fears of a second wave of coronavirus are weighing heavily on the market and OPEC+ said in documents seen by Reuters that “a second strong wave” could deepen the hit to demand to 11 million bpd this year. Under such a negative scenario, OPEC would fail to address a huge global stocks overhang by the end of the year, it said. Such a scenario could also put in jeopardy OPEC’s plans to supply an extra 6 million bpd of crude to the market next year. “The expected forecast draws are at the mercy of the outcome of the COVID crisis and could be weighed down further by the prospect of Libya’s production coming back,”
Oil jumps more than 2% on surprise U.S. inventory draw - Oil prices rose more than 2% on Wednesday, supported by a sharp drop in U.S. crude inventories, but further gains were limited as OPEC and its allies are set to ease supply curbs from August as the global economy gradually recovers from the coronavirus pandemic. Brent crude was up 75 cents, or 1.75%, at $43.65 a barrel, and West Texas Intermediate crude rose 91 cents, or 2.26%, to settle at $41.20 per barrel. Prices were boosted after data from the Energy Information Administration showed U.S. crude inventories fell 7.5 million barrels last week, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. "The story of the report is we will see more draws in the coming weeks," "We will see tightening of supplies and the market is signalling that we are going to need more oil pretty soon, probably by August." The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day (bpd), or 10% of global supply, after the virus destroyed a third of global demand. After July, the record cuts are due to taper to 7.7 million bpd until December. Saudi Arabia's energy minister Prince Abdulaziz bin Salman said OPEC+ was moving to the next phase of its oil cut pact when the group is expected to ease their reductions as oil demand recovers. Russian Energy Minister Alexander Novak said a partial restoration of production would benefit the market and that Russia would raise oil output by around 400,000 bpd from August. "OPEC+ managed to orchestrate the greatest balancing act ever seen in oil market history. But now, the alliance is ready to start concluding the show," On Tuesday, OPEC said it saw demand recovering by 7 million bpd in 2021 after falling by 9 million bpd this year. The global benchmark Brent has recovered to about $43 a barrel from a 21-year low below $16 in April. The rebound in prices has allowed some U.S. producers to resume suspended production, a move that is set to weigh on OPEC's decision on Wednesday. Prices were also supported by promising early data for a potential COVID-19 vaccine, but the resurgence of the coronavirus in the United States and other countries still kept traders on edge. "Although the demand for crude has jumped in recent weeks, rising coronavirus cases in the United States along with some cities in other major economies reimposing shutdowns have the potential to hit demand,
Oil rises after U.S. crude stocks drop, focus on OPEC+ meeting - Oil prices rose more than 2% on Wednesday, supported by a sharp drop in U.S. crude inventories, but further gains were limited as OPEC and its allies are set to ease supply curbs from August as the global economy gradually recovers from the coronavirus pandemic. Brent crude was up 75 cents, or 1.75%, at $43.65 a barrel, and West Texas Intermediate crude rose 91 cents, or 2.26%, to settle at $41.20 per barrel. Prices were boosted after data from the Energy Information Administration showed U.S. crude inventories fell 7.5 million barrels last week, compared with analysts' expectations in a Reuters poll for a 2.1 million-barrel drop. "The story of the report is we will see more draws in the coming weeks," said Phil Flynn, analyst at Price Futures Group. "We will see tightening of supplies and the market is signalling that we are going to need more oil pretty soon, probably by August." The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day (bpd), or 10% of global supply, after the virus destroyed a third of global demand. After July, the record cuts are due to taper to 7.7 million bpd until December. Saudi Arabia's energy minister Prince Abdulaziz bin Salman said OPEC+ was moving to the next phase of its oil cut pact when the group is expected to ease their reductions as oil demand recovers. Russian Energy Minister Alexander Novak said a partial restoration of production would benefit the market and that Russia would raise oil output by around 400,000 bpd from August. "OPEC+ managed to orchestrate the greatest balancing act ever seen in oil market history. But now, the alliance is ready to start concluding the show," said Rystad Energy's senior oil markets analyst Paola Rodriguez-Masiu. On Tuesday, OPEC said it saw demand recovering by 7 million bpd in 2021 after falling by 9 million bpd this year. The global benchmark Brent has recovered to about $43 a barrel from a 21-year low below $16 in April. The rebound in prices has allowed some U.S. producers to resume suspended production, a move that is set to weigh on OPEC's decision on Wednesday. Prices were also supported by promising early data for a potential COVID-19 vaccine, but the resurgence of the coronavirus in the United States and other countries still kept traders on edge.
Oil Prices Get Boost from Trump China Move-- Oil jumped to a four-month high after U.S. President Donald Trump indicated that he doesn’t want to add more sanctions against Chinese officials for now in a move to diffuse tensions with Beijing. Crude futures in New York rose 2.3% Wednesday. The decision to refrain from further restrictions added positive momentum to a market already supported by a U.S. government report showing that crude stockpiles contracted by the most this year. Earlier, Saudi Arabia and Russia said OPEC+ will taper its output curbs in August, but the supply increase will be offset as demand recovers and laggard members compensate for overshooting quotas by making extra reductions. “No conflict with China is good for oil.” The large draw from American stockpiles in the Energy Information Administration report was largely due to declining imports, signaling the end of excess shipments from Saudi Arabia. At the same time, U.S. gasoline demand increased for the 11th consecutive week to the highest since late March. “Lower imports was a big reason for the draw, and the import number is a good number for what we’re going to see for the next few months,” “Those 2 million barrels per day that OPEC might add on the first day of August won’t hit until September or October.” Crude has traded in a tight range around $40 a barrel in July as lower supply and recovering demand is tempered with nervousness over a pandemic that’s still raging in many parts of the world. There are patchy indications of a market recovery, with sulfurous crudes in short supply and key swaps in the North Sea market -- known as contracts-for-difference -- signaling additional strength. In physical markets, Bakken crudes strengthened Wednesday morning following reports that the U.S. Court of Appeals for the District of Columbia Circuit issued an administrative stay on a lower court order that the Dakota Access Pipeline to shut down next month. West Texas Intermediate for August delivery advanced 91 cents to settle at $41.20 a barrel in New York. Brent for September settlement climbed 89 cents to end the session at $43.79 a barrel. CFDs in the North Sea closed in their strongest backwardation since February on Tuesday, according to Bloomberg fair-value data, pointing to supply tightness in some corners of the market. The 23-nation OPEC+ coalition, led by Riyadh and Moscow, will taper its curbs to 7.7 million barrels a day in August from 9.6 million currently, Saudi Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak said on Wednesday at the meeting of the group’s monitoring committee. Yet coalition members that didn’t fulfill their commitments to cut output in May and June -- such as Iraq and Nigeria -- will make up for it with extra reductions in August and September, the prince said at the start of the conference.
Oil falls as OPEC+ plans to raise output while virus cases increase - (Reuters) - Oil prices fell 1% on Thursday after OPEC+ agreed to ease record supply curbs and as new infections of the novel coronavirus continue to surge in the United States. Both benchmark Brent and U.S. crude have remained above $40 a barrel for the last several weeks. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, lowered daily supply beginning in May and demand worldwide has rebounding, helping prices to stabilize. Fears of a second wave of cases of COVID-19 - led by the United States - are keeping the rally in check. Nearly 600,000 people worldwide have died of the disease, according to a Reuters tally. Brent fell 42 cents, or 1%, to settle at $43.37 a barrel. U.S. West Texas Intermediate (WTI) crude fell 45 cents, or 1.1%, to settle at $40.75 a barrel. Both benchmarks rose 2% on Wednesday following a sharp drawdown in U.S. crude inventories. [EIA/S] International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are rebalancing, with prices of about $40 per barrel expected in coming months. OPEC+ agreed on Wednesday to scale back oil production cuts from August, reducing cuts by 2 million barrels per day to 7.7 million bpd through December. “Nobody could really expect OPEC+ to keep the 9.7 million bpd curtailments into August,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu. “Boosting output by 2 million bpd is not little, but the demand recovery, even though a little slower than expected, justifies it.”
Oil prices slip as coronavirus cases surge (Reuters) - Oil prices edged lower on Friday as concerns about the surge in coronavirus cases sapping fuel demand while major crude-producing nations ready increases in output. The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil. Fuel demand has broadly recovered from a 30% drop in April after nations worldwide restricted movements and businesses shuttered. Consumption remains below pre-pandemic levels, however, and fuel purchases are falling again as infections rise. Brent crude futures LCOc1 fell 23 cents a barrel to settle at $43.14 per barrel. U.S. West Texas Intermediate (WTI) crude CLc1 fell 16 cents to $40.59. Both contracts were little changed from a week earlier. Lawmakers in the United States and the European Union are set to debate more stimulus over the coming days. Benchmark crude fell 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August. U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for an 11th week in a row, according to data from energy services firm Baker Hughes Co (BKR.N). Firms have slowed reductions as some consider returning to the well pad with crude prices up from historic lows. Energy firms could start adding rigs later this year if prices remain stable at higher levels. “U.S. rig activity will bottom near 250 rigs or roughly today’s levels,” analysts at Raymond James said. They expect the rig count to average 270 in the second half of 2020.
Oil Prices Falter As Supply Surge Looms | Rigzone -- Oil snapped its two-day rally amid a weaker demand outlook underscored by the OPEC+ alliance’s decision to taper production cuts and U.S. economic data signaling a slowing recovery in the labor market. After hitting a four-month high in the prior session, U.S. crude futures fell 1.1% on Thursday. OPEC+ plans to add at least 1 million barrels a day of output to the market in August after almost three months of historic curbs to ease the impact of the coronavirus pandemic. Adding to supply concerns, traders are weighing the potential for tension between the world’s top oil producers. Saudi Arabia’s energy minister Abdulaziz bin Salman Al Saud said the alliance’s March deal was reached as the kingdom was fed up of volunteering and taking on others’ burdens. The comments imbued a “little bit of nervousness” into the market as investors look to “get a full picture of the relationship between Russia and Saudi Arabia,” said Phil Flynn, senior market analyst at Price Futures Group Inc. “We know that the last disagreement between Russia and Saudi Arabia created a production war the world will never forget.” Oil also came under pressure as equities weakened in the U.S. Labor Department figures showed the number of Americans filing for unemployment barely dropped last week, signaling the labor-market recovery is stalling as virus cases surge around the country. In addition to supply worries, a lackluster demand picture is also spooking investors. The pace of oil-demand improvements is starting to slow, driven by a sharp pullback in the U.S., according to Goldman Sachs Group Inc. Signs of a slowing recovery in the U.S. “does not bode well for gasoline demand,” said John Kilduff, partner at Again Capital LLC. “With the increased measures in various states due to the renewed Covid outbreak, it’s another negative for the gasoline demand outlook.” The Organization of Petroleum Exporting Countries and its allies will withhold 7.7 million barrels a day from the market in August, compared with 9.6 million currently. The actual cut next month will be 8.1 million to 8.3 million barrels a day due to the compensatory curbs from members including Iraq and Nigeria. However, Saudi Arabia’s energy minister Abdulaziz bin Salman Al Saud said the OPEC+ oil production cuts deal will continue until April 2022 and may extend beyond two years if warranted. The producer group will take more measures if needed to deal with the impact from the virus on oil markets. West Texas Intermediate for August delivery declined 45 cents to settle at $40.75 a barrel in New York. Brent for September settlement fell 42 cents to end the session at $43.37 a barrel. It traded at a 13-cent discount to the October contract, the smallest in nearly two weeks, a sign of tighter supply.
Forecasters See More Oil Demand Destruction -- The recovery in global oil demand looks like it’s going to be slower than expected, as a resurgence in Covid-19 cases forces the re-imposition of lockdowns. All three of the world’s main oil forecasting agencies — the International Energy Agency, the U.S. Energy Information Administration and the Organization of Petroleum Exporting Countries — have increased their assessments of demand destruction in the third quarter of 2020, even as they see the depth of the crisis in the second quarter being less bad than previously thought. In their latest monthly reports, the three agencies all saw third-quarter global oil demand falling further behind last year’s level than they did in June, as the chart above shows. The average loss compared with the same period in 2019 is now 7.5 million barrels a day, compared with less than 7 million forecast a month ago and 6.5 million seen in May. The fourth quarter looks a little better, but demand is still expected to be somewhere between 3.7 million and 4.6 million barrels a day below the same period in 2019. The IEA and EIA are at the more optimistic end of that range, with OPEC seeing the effects of demand destruction lingering longer. Those numbers are still a lot better than the levels of demand destruction seen in the second quarter, which the three groups now see averaging 16.4 million barrels a day. All three have trimmed their assessment of the demand loss in the April to June quarter in their latest reports, but it still amounts to almost 1.5 billion barrels over the period, enough to power the entire world for half a month. A resurgence in Covid-19 cases, particularly in North and Latin America, is leading to new lockdowns and causing concern that the rebound in oil demand will falter. Congestion on U.S. city streets is still well down on pre-lockdown levels. Delays in Los Angeles are about a third of what they were before restrictions were imposed, while in New York they’re at about 60% of normal levels. In Europe the picture is a bit different, with congestion on Berlin’s roads almost back to levels seen before restrictions were imposed, and other major cities on the continent not far behind. The pace of economic recovery has slowed in several major economies, including the U.S., Canada and the U.K., with activity remaining around 60% of pre-pandemic levels, according to Bloomberg Economics’ daily gauges. Despite the concerns, the Joint Ministerial Monitoring Committee of the OPEC+ group of oil-producing countries recommended yesterday that members ease back on output cuts from the beginning of August. The size of the headline output cut will be reduced from 9.6 million barrels a day to 7.7 million, but some of that increase in supply will be offset by deeper reductions from those countries that failed to implement in full the curbs they agreed for May and June. Much of the rest will be soaked up by higher domestic consumption in the producing countries themselves, leading Saudi Energy Minister Prince Abdulaziz bin Salman to remark that the additional volume of oil reaching the global market next month will be “barely felt.”
OPEC+ deal compliance reaches 108% in June - Production of OPEC+ countries in June decreased by almost 2 mln bpd compared to the previous month and reached 33.4 mln bpd. The agreement to reduce oil production this month saw 108% compliance against 89% a month earlier, according to the July report of the International Energy Agency (IEA).“On the supply side, global oil production fell sharply in June to stand 13.7 mb/d below the April level. The compliance rate with the OPEC+ supply agreement was 108%. This includes overperformance by Saudi Arabia which cut production by 1 mb/d more than required, reducing OPEC crude output to its lowest point in nearly three decades. This solid performance by the OPEC+ group has been supplemented by substantial market-driven cuts, mainly in the United States,” the report said. According to the report, in June Russia 100% fulfilled its quota for reducing oil production. In total, OPEC countries in June reduced oil production by 112% of the plan, and non-OPEC countries – by 99%.
IMF slashes growth forecasts in the Middle East again amid an 'unusually high level of uncertainty' - The International Monetary Fund revised its growth forecasts for the Middle East and North Africa downward again amid an "unusually high level of uncertainty," according to its latest regional economic report. It now expects MENA economies to contract 5.7% in 2020. In April, it predicted that the region would shrink 3.3% for the year. "The unusually high level of uncertainty regarding the length of the pandemic and its impact on firm closures, the resulting downside risks (including social unrest and political instability), and potential renewed volatility in global oil markets dominate the outlook," the report said. Jihad Azour, director of the IMF's Middle East and Central Asia department, said the region experienced "twin shocks" with the coronavirus pandemic and depressed oil prices. "Managing this crisis had a big impact and a toll on the economy and this is why we had to revise our growth rates downward this year," he told CNBC's Hadley Gamble on Sunday. "I would say (the downgrade is) in line with most of the countries in the world, but in our part of the world, with the diversity of the economies and the linkages that exist between oil exporting and oil importing, this is going to be a challenge going forward," he said. The IMF also lowered its expectations for the global economy last month, and now sees a contraction of 4.9% in global gross domestic product in 2020.
UN: 700 Die In Syrian Camp For ISIS Families - "Explosive" Situation For Renewed Terrorism ISIS has long been out of international media headlines, but sprawling refugee camps full of what are said to be Islamic State families and sympathizers remain in eastern Syria. Days ago the United Nations issued an alarming report detailing that the some 70,000 mostly women, children, and elderly connected to ISIS at the al-Hol and Roj camps remain in "very dire conditions". The UN counterterrorism chief Vladimir Voronkov announced late last week that 700 people "recently" died in the two camps, according to information his office had received. Al-Hol and Roj are essentially massive open-air prison camps in the desert, administered by Syrian Kurdish forces backed by the United States. Voronkov underscored that driving the high fatality rate are "lack of medicine, lack of food" - and though there have been recent reports that coronavirus may be in the camps, it's unclear the extent to which COVID-19 is a factor. A UN team was reported to have entered the largest of the two camps, al-Hol, earlier this month. The populations there are in a legal limbo of sorts, and their fate uncertain. From a counterterrorism point of view, the UN office warned the camps post a "huge problem" as they remain "very dangerous" for the prospect of a renewed Islamic State terror campaign. Voronkov warned: "they could create very explosive materials that could be very helpful for terrorists to restart their activities" in Syria and Iraq.
Yemen fragmenting under pressure of war, collapsing economy and COVID-19 -- The five-year-old Yemen war is creating a catastrophe of immense proportions in the Middle East’s poorest country. Last week, Saudi Arabia launched scores of air strikes on the capital Sana’a, Saada and other cities in the north under the control of the Houthi rebels, with the aim of killing top officials. The attacks followed the Houthis firing missiles and drones at the Saudi capital Riyadh and military installations in Jizan, Najran, Khamis Mushayt, and Abha. While the Saudis said they had intercepted and destroyed two missiles and six drones, the Houthis claimed they had hit the Tadawin camp where Saudi and Yemeni leaders were meeting, killing and injuring dozens, as well as the Saudi Ministry of Defence. The Houthis said their attacks were in response to the crimes of the Saudi-led coalition, the latest being the killing of four civilians, including a child, in a naval attack in May on the country’s north-western province of Hajjah, and the ongoing naval blockade of Hodeidah port that is preventing the most basic commodities, including food and pharmaceuticals, reaching Yemen’s people. Around 14 million of Yemen’s 28 million population are on the brink of starvation, while 80 percent are reliant on food aid. The Saudis’ 257,000 aerial strikes and the United Arab Emirates (UAE) naval blockade have caused the deaths of at least 230,000 civilians, both directly and indirectly due to hunger and disease, and displaced 3.6 million. Save the Children estimated last year that at least 75,000 under the age of five have starved to death since the onset of the war. The worst cholera epidemic on record has infected an estimated 1.2 million people and led to at least 2,500 deaths, while the recent floods have sparked a dengue fever outbreak in Hadramawt. The United Nations has recorded 137,000 cases of cholera and diarrhea this year, nearly a quarter of them in children under five. Armed gangs, militias, and former Saudi mercenaries terrorise the people and extort money. Hospitals and schools do not have basic necessities, while water supplies, telecommunications, electricity generation and the road system barely function, if at all, due to the Saudi-led coalition’s airstrikes. Human rights organisations have reported extrajudicial detentions, beatings, nail removal and electric shocks in Yemen’s unofficial detention centres and prisons, which have expanded during the war, with abuses committed by all parties to the war. This is in addition to the atrocious conditions in the official prisons and detention centres. The recent escalation in fighting follows the failure of the Riyadh Agreement, backed by the US and France and signed by the Hadi government and the secessionist Southern Transitional Council in November last year, for a power sharing deal, as well as the Saudis’ efforts over the last four months to effect a ceasefire. The Houthis have been reluctant to agree a ceasefire under conditions where the Saudi-led coalition has failed to make headway in a costly war it had in 2015 expected to win in a matter of weeks.
With U.S. Backing, U.N. Confronts Tehran Over Nuclear Work – WSJ —Rafael Grossi spent more than a decade sleuthing around Iran’s nuclear activities. Now he leads global efforts to contain that work and is facing down Tehran in an increasingly tense test of the United Nations’ atomic agency’s authority. Since becoming chief of the International Atomic Energy Agency on Dec. 3 with strong U.S. backing, Mr. Grossi has steered the agency into a deepening confrontation with Iran over enforcement of nuclear-weapons control rules. Now Mr. Grossi is assessing when to up the ante. In an interview with The Wall Street Journal at IAEA headquarters, he said the agency won’t retreat, warning that if Tehran doesn’t grant access by the end of this month, it “will be bad.” U.S. officials have urged him to update IAEA members soon on Tehran’s cooperation, an ostensibly procedural step that could set dominoes falling and further threaten the embattled 2015 Iran nuclear deal. It would allow Washington to try to take Iran to the U.N. Security Council over its IAEA stonewalling—a move likely to spark opposition from Russia and China and fury from Tehran. The Trump administration has praised Mr. Grossi for his handling of the standoff. Washington, which quit the 2015 nuclear deal in 2018, this year bolstered the IAEA with extra money as it cut funding to other U.N. agencies. Some diplomats say the Argentine diplomat’s approach risks killing the nuclear accord, known as the JCPOA. “We need to avoid a reckless and a hasty step,” said a senior IAEA diplomat. “Under certain circumstances, the JCPOA may even cease to exist.”
Azerbaijan Threatens To Strike Armenian Atomic Plant Amid Worst Border Fighting In Years - The Azerbaijani Ministry of Defense warned on Thursday, that its forces could carry out a precision strike on the Metzamur power station in western Armenia if Yerevan decided to hit Azerbaijani strategic installations.This after renewed fighting along the historically contested border early this week, as the AP described: Armenia and Azerbaijan forces fought Tuesday with heavy artillery and drones, leaving at least 16 people killed on both sides, including an Azerbaijani general, in the worst outbreak of hostilities in years. Skirmishes on the volatile border between the two South Caucasus nations began Sunday. Azerbaijan said it has lost 11 servicemen and one civilian in three days of fighting, and Armenia said four of its troops were killed Tuesday. In response to Armenian threats to hit the Mingchevir water tank in northern Azerbaijan, the Azerbaijani Defense Ministry spokesman, Colonel Waqif Dargankhali, threatened: “The Armenian side should not forget that the latest missile systems available to our army are capable of hitting the Metzamur Atomic Energy Station with high accuracy, which will turn into a great tragedy for Armenia.”These statements reported in Interfax come against the backdrop of the military escalation in the border region between Armenia and Azerbaijan, which the two sides have accused each other of causing.Moscow and Tehran have confirmed that they would do their utmost to reduce the tension between Baku and Yerevan, while Turkey aligned with Azerbaijan, has vowed to make Armenia “pay the price” for clashing with Azerbaijan. Azerbaijan's Defence Ministry states that it can hit Armenia's Metsamor Nuclear Power Plant "with high accuracy", something it says would be a "great catastrophe for Armenia". https://t.co/jguSHiZ5q8 Meanwhile, the press secretary for the Armenian Ministry of Defense, Shusha Stepanian, announced on Thursday the resumption of clashes on the border between Armenia and Azerbaijan.
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